Grading Paper Money

Tips To Help You

by Larry Weeks,

Senior Writer, &

Expert Numismatist

As is true of all collectibles, condition is of primary importance. Every collector strives for the “Best Known” category, but there are other factors to consider. Of these, perhaps the most important is rarity. Some notes, as the early Confederate States of America notes issued in Montgomery, are valuable regardless of the condition. Even a third or half of a note is collectible. This is also true of many “Large-Sized” U.S. issues, as well. Today, many modern notes are rare as to condition. This is especially true of many “Star” notes and others with rarely found errors. The key to these is a certified grade, a factor which will be further discussed in this article. The old advice, “Buy the best grade you can afford,” still applies, but rarity should always be appreciated.

In addition to grades, another important factor to consider is eye appeal. This mostly applies to the contrast and color of a particular note. As opposed to a faded issue brought on by improper storage or handling, a note with deep original colors is much more desirable. In this realm a note with missing pieces and holes can still be an attractive issue and worth a premium. Recently, I saw this in reference to a 1864 $500 Confederate note. In terms of grading standards, the note had all the qualifiers for a Very Fine issue, but the faded appearance resulted in a much lower asking price.

Depending on how you've acquired any notes you may now have in your collection or accumulation of worldwide currency, probably you have already entered into the exciting and sometimes controversial realm of grading. Grading means assigning a condition of preservation to a note. Happily, banknote grading is, in my opinion, generally easier to master than coin grading and therefore not quite so subject to broad interpretation and controversy as is the grading of a coin. For one thing, a note is basically a two-dimensional object, while a coin is three-dimensional. The grades that banknote collectors use are essentially analogous to that of the coin collector, although the 70-point grading scale, where the state of UNCIRCULATED is broken up into eleven different substates (MS-60 to 70), is starting to rear its ugly head in the world of banknotes, though seemingly restricted for the moment to the more rare U. S. and world notes.

In any case, if you're actively acquiring notes by buying or trading for them, you need to have a good working knowledge of grading so that you can make astute decisions when purchasing or swapping these items. Also, you'll probably want to get an idea of what the items you already have may be worth. To some collectors, this monetary value is of little concern and they collect what they like (and what they are able to afford) without regard to the value the item might bring in the collector market. In fact these collectors may well derive the most pure pleasure from their holdings. Most paper money collectors, however, like to think that what they're buying may at some future date appreciate in value. In general, the paper money grading standard begins with lowest, “Poor” and continues to “Uncirculated”. However, it is important, to understand that additional qualifiers apply to all of the grades. For example, a note can be Uncirculated and limp as a rag or it may be stiff and warrant the description of being “Crisp Uncirculated”. Of the two, the crisp uncirculated piece will demand the highest price. Also, notes in the various grades may have uneven borders, stains, cancellations, and various other imperfections. A brief description of each grade goes as follows:

Poor:

A note which is identifiable as to type but is in deplorable condition exhibiting numerous defects, as ragged edges, tears, tape repairs, missing pieces and various other damage. As previously noted, notes in this condition are only collectible if they are very rare pieces.

Fair:

Notes meeting this grade are just slightly better than poor, perhaps a little less dirty, torn, and mutilated. The main point is that more of the note is present along with the detail. This is another grade which is only acceptable with rare or very scarce issues.

Good:

Notes in this grade may be quite attractive in terms of color and detail, but they may have holes and small missing pieces. Also, they tend to be very limp and exhibit many wrinkles and folds. They are collectible and often bring the prices on scarce notes to an affordable level for many collectors.

Very Good:

 Notes in this grade will have most of their original color and may be quite attractive. The  major difference is the number of times the note has been folded. Numerous folds through the center may have resulted in pinholes and a loss of central detail. Also, there may be small tears into the design from the edge of the note. There is much confusion with this grade and this is a point where split grades may be assigned, as G-VG.

Fine:
Notes of this grade have seen a considerable amount of circulation and exhibit the signs as numerous creases, folds, wrinkles, and minor tears along the borders which do not enter the design. Except with rare notes, Fine is the lowest grade most collectors will accept. With this grade, it is a common practice to qualify a particular note as Fine but with a edge tear not extending into the design. Another would be “Fine” but with a reverse stain located in the central part of the design.

Very Fine:

The key to this grade is the brightness and color remaining in the design. Also, there is a limit of three vertical and horizontal folds. In addition, the paper is crisp and the edges and corners show slight wear with no tears in the border areas or central parts of the design. There may be a minimal amount of soil smudging and staining but not enough to detract from the overall grade of the note. Extremely Fine: This is an extremely attractive note, showing only minor evidence of handling. According to the grading standards of the International Bank Note Society, or IBNS, an EF note may exhibit a maximum of three light fold or one strong crease. An Extra Fine note is bright and without signs of soil. To the casual observer, it should appear just about new. There will be only very minute wear on the corners or edges.

About Uncirculated:

The next step up from Extremely Fine, this is a note which would grade Uncirculated except for some very minor handling or use such as a so-called wallet fold where the note has a very slight fold (not a creased fold). An Almost Uncirculated note might have a slight bend or wrinkle. This note design is very bright, giving a overall new appearance. It is a “new car” with a dent in the door.

Uncirculated:

As the name implies, this is a original, crisp note which has never been placed into circulation. It will show absolutely no folds or creases, bent corners, or stains. The design will be flawless, just as it was when it left the printing presses. Any distractions or problems will place the note in a lower grade category.

An additional point - notes, like coins, have sometimes been cleaned or had their appearance improved in some way. Some collectors have no problem with this, others feel, as with coins, that the items shouldn't be altered in any way. For notes, alterations can include actually washing the note, trimming it, erasing graffiti, pressing the note, mending tears, etc. The buyer should be aware that a note can be washed and pressed to improve its grade and a note altered in this way should not command the price of a note naturally appearing in this grade. Words of advice on mending tears, if you are inclined to mend tears, please don’t use cellophane tape. Sooner or later it makes a mess of whatever it’s been taped to as it turns yellow and brittle. If you feel you need to tape a tear, use the permanent translucent tape that's now widely available.

Hopefully this clarifies grading a little if you're a beginner or at least serves to demonstrate my interpretation of it and what kind of grading criteria you should expect and demand.