The E-Sylum:  Volume 11, Number 11, March 16, 2008, Article 18

QUERY: WHAT BANKNOTES WERE USED BY THE U.S. GOVERNMENT FOR PAYMENTS IN 1840?

Nick Graver writes: "In connection with the December 1840
Cherokee steamboat sinking, what kind of paper money would
the U.S. Government have employed to settle the obligations
with the Indian tribes?"

[Great question.  Greenbacks didn't come along until the
Civil War.  There were plenty of private issue banknotes
in circulation in the 1840s, but which notes would the U.S.
have used for payments?  I put the question to a couple of
our resident paper money students. -Editor]

Dave Bowers writes: "As a long-time 'collector' of shipwreck
and treasure stories I have learned not to take newspaper
accounts and try to directly convert them to numismatic facts.
It would be interesting to see contemporary records of the
loss. If federal funds were involved, there should be some
paperwork. I had not heard of 'kegs' being used to transport
paper, but sealed waterproof packets and boxes sometimes
were.  Kegs were often used for coins, nails, hardware, and
heavy items, as they could be rolled easily.  If a local
museum or historical society retained any examples, these
would provide tangible evidence. Also, the Bureau of Indian
Affairs (or its counterpart at the time) would have had
record as to the type of payment made that could be exchanged
at par for goods or services.  I would rather imagine that
if currency was involved, it would have been determined to
have been "sound" by the government.  No doubt there is
historical info available about Fort Gibson, too.

"In 1840, federal silver and gold coins were both readily
available at par (gold coins having been out of circulation
from 1821 until August 1834). However, Spanish-American coins
were also widely used in commerce. As to paper money, there
were no federal bills in general circulation. Many state-
chartered banks issued bills.  It could be researched to
find what specific type of paper was considered "good" in
the region in 1840.  Shipping them to the West (as the prairie
states were then called) was very popular, and this was done
by brokers and speculators in New York, Cincinnati, Chicago,
and elsewhere. I am not aware, however, that they would have
been of much use to Indians, unless they could be readily
used in commerce at their end. In 1840 the Panic of 1837 was
still being felt, the value of paper money was uncertain.
(For example, NEARLY ALL of the banks in Michigan had failed
by that time). In summary, more research is needed."

Wendell Wolka adds: "There are numerous references to notes
being shipped from the bank note companies to banks in 'boxes'
which were sealed.  I have always assumed these were wooden
due to the weight of, say, a thousand four-subject sheets.
Wood would also provide some minimal security and protection
for the notes."

 ARTICLE RECOUNTS 1840 ARKANSAS STEAMBOAT CASH SPILL
 esylum_v11n10a24.html

  Wayne Homren, Editor

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