National Bank Note

In addition, banks were required to maintain a redemption fund[1] amounting to five percent of any outstanding note balance, in gold or "lawful money."

Bonds eligible as collateral for posting to the Treasury were said to have "circulation privilege" and the interest they bore provided seigniorage to the National Banks.

One design used for many years featured a portrait on the obverse, near the left edge, and the bank's name printed in prominent shaded type in the middle.

Most, but not all, large size national banknotes showed the charter number of the issuing bank on the obverse.

The issuing bank's charter number was carefully positioned inside the engraved border, as well as overprinted elsewhere on the obverse.

To aid Treasury workers in sorting banknotes, later large size notes also showed a letter to indicate the region of the country in which the issuing bank was located—"N" for New England, "E" for East, "S" for South, "M" for Mid-West, "W" for West, and "P" for Pacific coast.

With the advent of small-size banknotes came significant design changes for all types of paper currency including National Bank Notes.

As a result of the changes, each denomination now had the same portrait and, except for minor variations, the same decorative features that would characterize all types of United States currency from the late 1920s to the early 1990s.

Similarly, the issuing bank's charter number was omitted from the engraved border, and now simply overprinted in dark ink.

The passage of the Gold Reserve Act created an accounting gain for the Treasury, part of which was used to provide funds to retire all bonds against which National Banks Notes could be issued.