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Of Gold and Unbacked Notes of the Past
September 08, 2009

Look at gold. It has broken through $1,000 a troy ounce for the third time. This will bear watching going forward, but having just finished a holiday weekend, my mind has been looking backward rather than forward.

A family gathering took me to St. Paul, Minn. It was a great time to catch up.

I took a look at Prosperity Heights grade school that I started kindergarten at 49 years ago this month. It looks remarkably unchanged except for what appears to be a gymnasium addition.

I have many memories from the place that I left in the middle of second grade. I remember the whole school watching the liftoff of John Glenn, who then became the first American to orbit the earth in 1962. A number of televisions had been placed at various spots in the halls.

Hobby wise, I date my coin collecting days as starting after I left the Twin Cities, though I do have one numismatic item from that time.

My father thought $2 bills were a curiosity that I should be aware of. He gave me one. I thought it was so neat that I have kept it all these years, though once or twice I used it in my young years as collateral for a loan from my father in anticipation of future allowance income.

My father was an accountant who wanted me to be aware of how the world of finance worked.

The note is a Series 1953 Red Seal, which is another name for a United States Note. This series was a legacy of the Civil War when the Union was forced to issue paper money that had no backing of gold or silver.

The U.S. Note issuance came to be frozen at $346 million and was not finally abolished until the 1990s. By that time, it was irrelevant to the economy and its issuance was a fiction. $100 U.S. Notes were moved around from an unissued vault at Treasury to a vault that had the designation as "Issued."

But in my childhood, you could find $2 and $5 U.S. Notes in change if you watched closely. I obtained a $5 years later when I was a paperboy.

It is perhaps appropriate to discuss unbacked paper money from former times as a counterpoint to the present unbacked notes and gold's price reaching four digits.

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About the Author
David C. Harper has been a coin collector since 1963. He joined the Krause Publications editorial staff in 1978 and is currently editor of Numismatic News and World Coin News. He also edits two books annually, North American Coins & Prices and Coin Digest. He is the author of the Class of '63 column that runs each week in Numismatic News. His first bylined numismatic article appeared in the June 1971 issue of Coins Magazine and his various Krause Publications assignments included a stint as editor of the magazine 1980-1983. Harper received a bachelor of science degree from the University of Wisconsin-Oshkosh in 1977. He had a double major of journalism and economics.

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