Gerald Tebben, a Coin World columnist for more than 30 years, also contributes to Coin World’s Coin Values and edits the Central States Numismatic Society’s journal, The Centinel. He collects coins that tell stories.
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Tax on checks
This check was issued June 17, 1865, on the Delaware County National Bank shortly after the bank converted to a national bank from a branch of the State Bank of Ohio. The check, printed during the state bank days, has the word BRANCH crossed out and NATIONAL handwritten in its place. The check bears a 2 cent Internal Revenue stamp. Image courtesy of author.
With the nation at war with itself, the United States government shook every tree it could find to raise money to prosecute the Civil War. It issued paper money that was backed by nothing more than the government’s full faith and taxed everything it could.
The newly created Internal Revenue Service taxed mortgages, bonds, contracts, bank checks and a host of other documents.
The initial bank check tax, instituted in 1862, was 2 cents on checks drawn for $20.01 and more. Tax dodgers quickly figured out that if they wrote a bunch of $20 checks instead of one big one they could avoid the tax.
The government wised up in 1864 and applied the tax to all checks.
Not surprisingly, the tax didn’t disappear after the Civil War or after the Indian Wars. It didn’t go away until years after the Spanish American War.
For decades checks bore stamps that looked much like postal stamps. Most stamps on 19th century checks are specially issued BANK CHECK stamps. But in the early years, when the government was not able to provide enough of the special check stamps, general U.S. Internal Revenue stamps were OK. The stamps were “canceled” by being written on in ink so they could not be reused.
Sharpies figured out they could bleach out the ink cancelations and reuse the stamps, much to the government’s consternation.
Philatelists have studied the 19th century revenue stamps extensively, but few people collect them. Despite their great history and Civil War connection, canceled bank check stamps tend to catalog for 50 cents or less.
For check collectors, the stamps add a bit of sparkle, but a check’s primary value comes from who signed it, what’s pictured on it, which bank it was drawn on and where it was issued.