BANKNOTES OF NEW ULM, MINNESOTA

 

The Central Bank was organized in May 1859 by John W. North of Northfield, and Franklin Steele of Minneapolis. It is said that North and Steele were more interested in the bond markets, and were not actual bankers. They hired August H. Wagner, a well-known New Ulm citizen/merchant to serve as vice-president, and Albert H. Merrick (sp?), a bookkeeper in St. Paul, to serve as the cashier (see advertisement from New Ulm Pionier newspaper for the Central Bank). It is said that the remote location of New Ulm at that time was deliberately chosen for the ‘Central Bank' so as to reduce the likelihood that the banknotes would find their way to the home office for redemption … the home office being in New Ulm. The notes were redeemed by J. Jay Knox & Co. of St. Paul and by August H. Wagner of New Ulm. The Central Bank did not do a regular banking business but simply established a redeeming office, with no banking building.

Some sources indicate that the banknotes of the Central Bank actually did enjoy a short-lived acceptance and heavy circulation within the St. Paul community, with most of the notes that survived showing heavy wear. However, the short-lived acceptance did not last … sometime during 1860, the Central Bank had been acquired by brothers Henry and John Jay Knox of St. Paul. The brothers established the J. Jay Knox and Co., and became a prominent banking establishment in St. Paul.

The Knox brother had big plans for the New Ulm Central Bank, but the Civil War greatly pressured bonds of the northern states in the early summer of 1861. Banknotes suffered serious losses and forced the failure of banks nationwide. This was also the tipping point for free banking in Minnesota. Also, the hope that the Minnesota 7s would find their footing was extinguished. Henry and John J. Knox saw the writing on the wall and gave up their effort to issue more notes and supporting the circulation of the notes of the New Ulm Central Bank. The New Ulm Central Bank banknotes were presented for redemption, but the Knox brothers refused payment, and the state forced the bank into liquidation. The state auditor sold the bonds on deposit for a deep discount, leaving only enough hard money (silver/gold) to pay holders 30 cents on the dollar for the New Ulm Central Bank banknotes. The weight of the financial crisis forced the closure of the New Ulm Central Bank. According to the New Ulm Pioneer (Pionier) newspaper of July 6, 1861: The owners of the Central Bank of New Ulm, J. J. Knox & Co. of St. Paul closed their doors June 26th … It also stated that they could not stand the run made on them caused by the absolute depreciation of all Northwestern paper money and they were forced to close their office. At the time of closure, the banknotes still in circulation amounted to a little over $5,000.00.

The banknotes issued by the New Ulm Central Bank were, like most banknotes of the time, beautifully ornate. All of the New Ulm Central Bank banknotes were printed by the American Bank Note Company who was a high security engraving and printing firm in the years prior to the Civil War. The company produced paper money, postage stamps, stock and bond certificates. All of the New Ulm Central Bank banknotes were only printed on one side, being blank on the back side, and only four denominations were issued: $1, $2, $5, and $10. The dimensions of these notes varied since they were cut down from sheets, but the average size was approximately 170mm x 71mm (6.7 inches x 2.8 inches). All of the banknote shown are examples of uncirculated, unsigned, and cancelled notes (as can be seen by the punch holes).

 

ONE DOLLAR BANKNOTE: New Ulm is shown on the bottom center of the note. This is the only Minnesota banknote showing a Santa Claus vignette (ornamental illustration). Shows jovial Santa Claus seated in his sleigh with reindeer guiding him over the rooftop. The banknote also features, lower left, a portrait of Peter Stuyvesant, the last director-general of the colony of New Netherlands, now known as New York City. The tradition of Saint Nicholas … Santa Claus … Peter Stuyvesant go hand-in-hand, but not enough room here to elaborate. Peter Stuyvesant's portrait is also shown on different Santa Claus notes. It is said that the German heritage of New Ulm was undoubtedly a factor in the selection of these images on the note.

To read the complete article, see:
When New Ulm had its own money (https://www.nujournal.com/life/lifestyle-feature/2021/11/20/when-new-ulm-had-its-own-money/)

 

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