Some tips for the beginner on paper money collecting, including where to obtain it, specialising , values, trading, authenticity and condition.
Paper money is older than you might think. The practice of producing paper currency dates back to China in the 13th century, when it was seen as a way of being able to produce lots of money at little or no cost, paper being far less costly than metal. The first banknotes in Europe were issued by France in the 1600s. Needless to say, if you are lucky enough to own any of these early notes, they are worth a great deal. By the early 20th century, most countries in the world were issuing and using paper currency. Today the paper currency collecting market is thriving - it's a hobby that can easily become a profitable business as well; a hobby that combines elements of economics, politics, history and geography.
Where to start if you are interested in pursuing this fascinating hobby? Old banknotes from most countries are generally easy to obtain at flea markets or collectors fairs. If you become more serious about the hobby, and start buying from dealers, make sure your dealer belongs to the International Bank Note Society, (ISBN) whose members are bound by strict rules and ethics. There are many reference books available that give current prices for paper money from the United States as well as other countries. Many collectors consider banknotes to be almost miniature works of art, and a lot of people collect them purely for their visual appeal. Many banknotes feature intricate designs and have been produced by eminent artists or engravers. Most serious collectors of paper money specialize in a particular theme - you can specialize by continent, by country, by issue date, or even by theme. Many banknotes feature a portrait of the country's then president or head of state, or an image that instantly evokes that country. Collectors can concentrate on notes from a particular era, for example World War II. Also highly sought after by collectors are banknotes from the Civil War period, which are more like postage stamps, although much larger. The date on a banknote can be confusing - unlike coins, the date on notes is not changed each year; the date on the note is the date the design was first used or issued. In addition to banknotes themselves, some collector's branch out into old shares, certificates of deposit, etc. Many of these also have elaborate and decorative designs and are of interest historically.
Generally speaking, investing in paper currency is still a good investment and prices in recent years have held steady or increased. Extremely collectible and valuable are notes from countries which no longer exist or have changed their name, such as Eastern European countries. The paper currency of many European countries was suddenly worth more to collectors, when the Euro became the common currency in a dozen European countries in 2002. Similarly, the Hong Kong dollar bills are worth a lot more since the territory was handed back over to China. The opposite can also apply; if a country or government that issued paper money is suddenly overthrown, its currency can be instantly worthless. A good example is German banknotes from the early 1920s, which were almost worthless as soon as they were printed due to the rampant inflation. In the US, national bank notes are still very collectible. These were issued during the period from 1863 to 1929 by more than 14000 individual banks; the practice ended because of the financial slump of 1929.
Like rare books or stamps, the value of banknotes depends largely on their condition. Paper currency uses a standard grading system for condition, ranging from 'uncirculated' which is basically money that is as new, to 'good'. The term 'good' usually describes a note that has been in circulation for some time and has the expected amount of wear and tear. Many serious collectors will deal only in uncirculated notes. Things that can lower the value of a collectible banknote include tears, holes and faded colors, creases and missing corners.
Banknotes have always been obvious targets for forgers and counterfeiters. Nowadays, banks and governments strive to keep their currency forgery-proof, using combinations of intricate designs, watermarks, and serial numbers. Most surviving counterfeit notes are from the end of the 19th century, when technology did not really exist to make the notes safe from being copied. In the United States, millions of dollars are spent every year in fighting forgeries and trying to make banknotes ever more difficult to copy. As far as collecting old banknotes, as with stamps, sometimes the forgery or the note with the error can be worth more than the original.
And what of the future? Australia has used plastic notes for several years and many other countries are experimenting with this concept. Somehow it's just not the same as a crinkly new banknote.
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