Refunding Certificate
Encyclopedia
The Refunding Certificate, issued only in the $10
denomination, was a type of interest
-bearing banknote
issued by the United States Treasury. Their issuance reflects the end of a coin-hoarding period which began during the American Civil War
, and represented a return to public confidence in paper money.
In 1879, when the bonds were issued, silver
coins were in wide circulation and coins minted in gold
were just beginning to make their appearances at bank
s nationwide. Notes totaling $40,012,750 were paid out, including the majority, some $39,398,110 in the fourth quarter of 1879, as long lines of people gathered at Post Office branches and Treasury offices. The Refunding Certificate originally promised to pay 4% annual interest in perpetuity
. The obligation on these notes reads as follows:
However, in 1907, Congress passed an act that ended the interest accrual of the certificates, and fixed the value of them at $21.30, over twice their face value. By January 1, 1885, all but $260,000 in face value had been redeemed, and since that time most others have met the same fate.
Only a few 1879 Refunding Certificates were imprinted with the inscription, "Payable to Order". Only two are known to be in existence today. Most were inscribed "Payable to Bearer" and even these are rare, down to just a few dozen in numismatic collections.
United States ten-dollar bill
The United States ten-dollar bill is a denomination of United States currency. The first U.S. Secretary of the Treasury, Alexander Hamilton, is currently featured on the obverse of the bill, while the U.S. Treasury is featured on the reverse. The United States ten-dollar bill ($10) is a...
denomination, was a type of interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
-bearing banknote
Banknote
A banknote is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. In addition to coins, banknotes make up the cash or bearer forms of all modern fiat money...
issued by the United States Treasury. Their issuance reflects the end of a coin-hoarding period which began during the American Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
, and represented a return to public confidence in paper money.
In 1879, when the bonds were issued, silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
coins were in wide circulation and coins minted in gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
were just beginning to make their appearances at bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s nationwide. Notes totaling $40,012,750 were paid out, including the majority, some $39,398,110 in the fourth quarter of 1879, as long lines of people gathered at Post Office branches and Treasury offices. The Refunding Certificate originally promised to pay 4% annual interest in perpetuity
Perpetuity
A perpetuity is an annuity that has no end, or a stream of cash payments that continues forever. There are few actual perpetuities in existence...
. The obligation on these notes reads as follows:
- "This certifies that the sum of Ten Dollars has been deposited with the Treasurer of the United States under Act of February 26th, 1879 convertible with accrued interest at 4 per cent per annum into 4 per cent bonds of the United States issued under the Acts of July 14, 1870 and January 20, 1871 upon presentation at the office of the Treasurer of the U.S. in sums of $50. Or multiples thereof."
However, in 1907, Congress passed an act that ended the interest accrual of the certificates, and fixed the value of them at $21.30, over twice their face value. By January 1, 1885, all but $260,000 in face value had been redeemed, and since that time most others have met the same fate.
Only a few 1879 Refunding Certificates were imprinted with the inscription, "Payable to Order". Only two are known to be in existence today. Most were inscribed "Payable to Bearer" and even these are rare, down to just a few dozen in numismatic collections.