This introduction reveals the basics of paper money collecting, including:
* the hobby’s attractions
* why it is growing in popularity
* the fundamentals of paper currency collecting
* how surprisingly inexpensive it can be
* housing and displaying your collection
What are the attractions of collecting paper money?
This exciting hobby is growing in popularity for many reasons. For one thing it’s becoming increasingly easy to find interesting and attractive banknotes from around the world, with great visual, historical and cultural interest – often for only a few pence each. A banknote collection can be a fine investment. Many notes have been growing quite dramatically in value over the years, sometimes even over a few months. Besides this, the hobby is a great educator. It has something to teach everyone, about foreign culture, history, economics – and much more. As communication technologies brings the ‘global village’ ever closer, it becomes ever more desirable to have a knowledge of foreign affairs and cultures. It’s amazing how much knowledge of this kind you naturally absorb while enjoying this hobby. But collectors also love banknotes for their rich visual appeal. Every banknote collection is most definitely an art collection – and one of growing value.
A banknote collection makes a powerful conversation piece which rarely fails to arouse interest and admiration. Even an inexpensive collection makes a fabulous display of some of exquisite pieces of printing and graphic design. An exceptional amount of work and skill goes into the design of banknotes by artists and engravers of outstanding skill and talent. The design and manufacturing process is a field of study in itself – but many of the methods used are shrouded in secrecy to make forgery difficult. Nevertheless, forgeries do occur and these are often worth more than the genuine article to collectors!
As collectors’ items, banknotes have distinct advantages over stamps and coins: They have a much larger surface area, creating more room for interesting information and attractive artwork. Compared to a coin, a banknote is extremely lightweight and thin, making a large collection much easier to store and transport. Over the postage stamp, the banknote has the advantage of having two sides, and again, a much larger surface area.
Banknote enthusiasts enjoy individualist status; the hobby is regarded as intriguingly different. It has a certain prestige attached to it; people tend to assume that a banknote collector must be well-off – but this is often not the because many attractive banknotes can be obtained for well under 50p each. The hobby has a refreshing dignity to it; the banknote collecting fraternity is generally an honest, friendly community, with a genial camaraderie born of a common interest.
The hobby is still much less widespread than stamp and coin collecting, although interest is growing every year. Many stamp and coin collectors are now considering banknotes as the promising new collecting frontier. The hobby holds many of the same pleasures as stamp and coin collecting: One gets the same thrill at finding that elusive item to fill a gap in a series or a set. There is the same reverence one feels for owning something that has been preserved in perfect condition for a hundred years. There is the same satisfaction of travelling to a collector’s fair to hunt down bargains and meet fellow enthusiasts and develop one’s knowledge.
The cost of collecting paper money
The ever-growing availability of cheap and varied material from around the world has already brought the hobby well within reach of even those on the tightest budget. This is one collecting field where prices are actually falling in many areas, mainly where new issues are concerned. For this, we can thank the effects of inflation. In comparison to western countries, many countries have steep inflation rates, making their currency sink in value in relation to our own. Thus, their currency notes become ever cheaper for us to obtain. Some typical cases from recent years include Brazil, Peru, Argentina, Russia, Zaire, Iraq, Yugoslavia and Turkey. In fact, we can even obtain notes with denominations of 50,000,000,000 or more for a dollar or two! Another exciting source of very cheap notes has recently emerged: the new ex-Soviet republics. Here is an opportunity to obtain the very first issues of several new republics for mere pennies. One can only imagine the value these first issues will have to collectors in future years.
For under $1 each, you can obtain some beautiful, older notes from earlier this century – the golden age of banknote design. Germany and Hungary for example, both suffered runaway inflation in the first half of this century, rendering their banknotes less valuable than the paper they were printed on in some cases. Nevertheless, they were wonderful examples of the engraver’s art. Even notes from the early 1700′s can still be bought for well under $20 – the Assignat notes of the French Revolution, for example.
Conversely, well-off collectors world-wide, pay large sums of money for single rare notes. Sometimes this will be to fill a gap in a valuable collection. Sometimes it will be with a view to passing the item on to a fellow collector or dealer – for an even higher price. Collectable banknotes are one field where real bargains and quick profits can be made – if you know what to look for. Experience will soon teach you this.
A theme for your papermoney collection
A banknote collection is an expression of its owner’s personal tastes and interests. There are no set rules regarding collecting themes; you can be as individualistic as you like. Some collectors specialize in notes from one country only – often their own. Some collect from groups of countries; British Commonwealth, Europe, or Africa, for example. Others collect notes from one period in history – WW2 for example. Others collect notes with some rare peculiarity, like those with printer’s errors. Some collect forgeries. The scope is limited only by your imagination. Many collectors start out just buying anything that happens to appeal. Some prefer to be more specialised. A specialised collection does have a unique appeal and can often be sold for more than the combined values of its individual components. However, the pitfall of becoming too specialised is that suitable material will be increasingly hard to find. But why not compile a specialised collection while simultaneously building a more general, free-style one? For more suggestions on thematic collecting see our Collecting Tips sheet No. 10 (free on request with orders totalling $40 or more).
The profit potential of collecting
The investment potential of banknotes has been evident over the years. Some items have seen a growth in value of 10,000% since the end of the last war! American Confederate States notes, for example, could then be bought for about 25c each in the USA. Now, they are hard to find for 100 times that amount. Even the indiscriminate collector can expect profit in the long-run, for most banknotes tend to rise in value. Scarcity and demand are the chief factors that govern market values, and banknotes are only produced in limited numbers, so when production of each note ceases, the existing examples can only become increasingly scarce and therefore increasingly valuable.
Sometimes banknotes soar in value due to some historic or newsworthy event. For example, various European banknotes greatly increased in value where they were replaced with the new Euro currency. Hong Kong notes doubled or even tripled in value around the time of the Chinese take-over. Many alert collectors and investors anticipate these rises in value and realise big profits be buying up the notes before they rise in value. Remember the recent volcano in Monserrat? One month, Monserrat notes were just as desirable as any other East Caribbean State banknote. As soon as the volcano rendered the island uninhabitable, shrewd dealers and collectors world-wide bought every Monserrat note they could obtain, knowing that it was unlikely that any more would be printed.
If a banknote collector ever fall s hard of heel, he has a valuable nest egg in store, which he can sell at one of the specialist collectors’ auctions – often at an amazing profit. Many collections however, are passed on within the family – to a son, a daughter or a grandchild. Indeed, a banknote collection makes a superb family heirloom, for besides being a thing if monetary value, and a gold-mine of interesting information, it also conveys the spirit of the compiler.
Where to obtain collectable paper money
Many people become interested in paper money after building a small collection of surplus notes left over from holidays or business trips abroad. Apart from this obvious source, old banknotes often turn up in antique shops, street markets, car boot sales, and ephemera lots at auction. Occasionally you’ll hear of a friend who has discovered a small bundle of notes in his attic, or an odd note in a book, placed there for safekeeping years ago, then forgotten. Most collectors, however, sooner or later start looking for a specialist banknote dealer. When selecting a dealer, your interests will be best protected if you select one who belongs to the International Bank Note Society (IBNS). This organisation has stringent rules and regulations and a strict code of ethics. Any member who breaks these can be expelled or penalised. If you ever have a grievance with one of them, you have a reputable organisation to seek redress with. Apart from that, you will want to consider a dealer on the basis of:
a) his prices
b) the accuracy of their grading (see the topic ‘How important is the condition of a note’)
c) the frequency of his price lists
d) the variety of notes offered
e) his general friendliness and helpfulness
f) whether his lists include descriptions and illustrations
g) how long it takes him to dispatch your orders.
How to get value for money when buying collectable banknotes
Well-established dealers are usually more or less familiar with current market values, although their prices may somewhat. If you want to check that you are getting value for money, you will need a comprehensive and up-to-date reference book. The best of these is the Standard Catalogue of World Paper Money. This publication comes in three volumes. Volume Two covers national banknotes up to about 1961. Volume One is devoted to specialised issues (notes from private banks, regional notes, etc). Volume three is devoted to modern issues dating from 1961 approximately and is updated more regularly than the other two, to keep pace with all the new notes that are issued. Together, the three volumes list each of the 50,000+ banknote designs ever issued world-wide, along with illustrations and the current market values in each of three grades of condition. It should be noted, however, that no catalogue can be completely reliable as a guide to values. See our Collecting Tips Sheet No.6 for more on this subject. It’s free on request with orders totalling $40 or more. Values can change very quickly, especially when such factors as inflation are present. Nevertheless, the overall tendency is for banknotes to rise in value in the long run on the collectors’ market.
How important is the condition of a bank note?
The condition of a note will affect its value dramatically. You should therefore familiarise yourself with the standard gradings of condition. Basically, they are as follows:-
‘UNC’ = ‘Uncirculated’ (perfect mint condition)
‘XF’ = ‘Extremely Fine’ (almost perfect – a single crease perhaps)
‘VF’ = ‘Very Fine’ (a few creases and folds, but no tears. Still fairly crisp.)
‘F’ = ‘Fine’ (well used – edge tears, discoloration, etc. Crispness may have gone.)
‘VG’ = ‘Very Good’ (well worn, with tears, dirt, pinholes, etc. Probably somewhat limp.)
‘G’ = ‘Good’ (limp, small pieces missing, very dirty, graffiti, etc.)
It is now common practice to use the letter ‘A’ prefixing these grades when the note described is ‘almost’ up to the indicated grade. For example an ‘AUNC’ or ‘AU’ note is almost uncirculated. In other words, it is almost perfect, with only the slightest fault, such as a bend, a very slight discoloration of the paper, or a tiny edge nick for example. However, it is too good to be classed as XF or XF+. The same strict grading standards apply, regardless of a note’s age. Some dealers wrongly think that very old notes are allowed a little flexibility of grading and will make such misguided statements as “It’s XF, considering its age”. This is misleading; an UNC note has to be the same as it was when if left the printing press, whether it is 100 days old or 100 years old. Usually, an UNC note is worth at least twice as much as it would be in VF. This is because UNC examples are almost always harder to obtain than well-circulated ones. Unless your budget is unlimited, you will therefore have to make a choice between quantity and quality of condition at some stage. To help you better understand the grading of condition, see our Collecting Tips sheet No. 1. And for a better insight into how condition affects value, see our Collecting Tips No. 4 (both sheets are free on request with orders totalling $40 or more).
Housing and displaying your collections
* Use low-slip, inert album leaves, free from banknote-harming solvents. (Multi-Master leaves are excellent value.)
* Keep your collection away from radiant heat, moisture and sunlight, in a safe place.
* Keep it neat and uncluttered. If you have two or three notes on one page, centralise each exactly, for best effect.
* Interleaves between pages add effect, helping the viewer focus on each page in turn.
* Annotating your collection adds meaning, interest and value. Write or type your captions as neatly as you possibly can. If doing it by hand, a good quality black pen should be considered. Avoid blue biro! Centralise your text below the note. Include as many interesting facts as you like – it all adds interest – especially for those who are unfamiliar with the hobby. It will also serve to remind you later of the special features of each note.
* Try to find labels that you can peel off your leaves without leaving a trace. Shop around; they do exist!
* Organise your notes into logical groups, perhaps by country or in time sequence. It makes a better conversation-piece that way.
* Consider including complementary items to add spice to your collections. Relevant newspaper cuttings, photos of issuing banks, and other forms of paper money, like promissory notes, cheques and travellers cheques, all add interest and value to your collection.
* If you know in advance that someone will be viewing your collection, take time in advance, to go over it with a critical, objective eye, repositioning items where necessary.
* Allow your viewer a chance to become absorbed. Although you will be keen to convey your own points of interest, remember, a thing of beauty can only best be fully appreciated in moments of undivided attention. When your viewer makes some comment reflecting his or her own points of interest, use that as a cue, and respond with some of your own interesting observations and anecdotes. Remember: some people tend to lose interest in anything that is pushed upon them too eagerly. Others, will be positively influenced by your enthusiasm. Remember that your banknote collection is a rare and important historical archive.
* Don’t be disheartened if your viewer does not seem to appreciate the beauty and fascination of banknotes. Most people do, but the hobby is not for everyone! That’s why it’s a good idea to include some items of almost universal interest. For example: WW2 items, 19th century items, British Commonwealth, hyper-inflation notes, and anything particularly scarce, unusual, exotic, and visually striking.