Paper Money

Notes with watermark woes: Collecting Paper

Watermarks are frequently used today as counterfeit deterrents. 

Watermarks are designs added to the paper when it is made that, when held up to the light, reveal some type of design or portrait. 

The latest renditions of our Federal Reserve notes (except for the $1 and $2 issues), for example, incorporate watermarks as one of many counterfeit deterrents. 

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Lest you think that this is some newly developed concept, be aware that watermarks have been used (albeit sparingly) on paper money since the Revolutionary era. The appeal is, of course, that counterfeiters would be hard pressed to imitate or procure special watermarked paper.

If we look at obsolete notes that were in circulation prior to the Civil War, however, we find that the use of watermarked paper was a seldom chosen option. There were a couple of reasons for this situation.

The first reason was financial — watermarked paper was more expensive than unwatermarked paper, and antebellum bankers were all concerned about cost. 

The second reason was that unscrupulous or highly leveraged banks were not all that concerned about counterfeits.

Counterfeiters tended to focus on viable, high profile, successful banks, not banks that were just interested in getting as many notes as possible into circulation and then moving on so that there could be no unpleasant redemption confrontations. As a result, watermarked obsolete notes are available but not commonplace. 

Interestingly, a number of Southern states notes are often found on watermarked paper because the Union embargo of Southern ports meant that any paper that became available was used.

I have recently come to the conclusion that using watermarked paper was not without its problems. A number of notes that I have seen recently appeared to have “body tears.” However, a closer inspection shows that the watermark had failed and that these tears were actually the margins of the watermarked letters separating from the rest of the note. 

The note illustrated is a $10 issue on the Bank of Chester, Chester, S.C. Printed by Toppan, Carpenter, Casilear & Co., the paper, appropriately enough, has a large “TCC & Co.” watermark. 

As can be readily seen, there is a large crescent shaped separation around the “C” in “Co.,” and other letters in the watermark have similar but less apparent separations. I tend to think of this note as kind of an interesting error rather than simply having a defect. 

If you have an interest in bank note printing then you probably want to keep an eye out for notes with this type of problem so that you can add one to your collection.

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