Did You Know Danville Once Made Its Own Money?

Above is a $10 note issued by the Danville Bank in 1858. It is signed by William T. Sutherlin as president. Photo courtesy of Gus Dyer.

DANVILLE, VA- When you’re running low on money, people joke that it’s time to make your own. But it’s actually no joke. That’s exactly what happened for decades here in the city of Danville. In fact, during the mid to late part of the 1800s, thousands of communities across America had their own currency.

Going Back in Time

But why did communities need to create their own currency? To answer that, let’s go back in time a bit farther, to the nation’s beginning. To pay for the revolution, the Continental Congress printed America’s first paper money, called “continentals.” They made a mistake, however, as printing them in such large quantities led to inflation. People lost faith in the money and started using the saying “not worth a continental” to mean “worthless.”

On and off from 1791 over the next 45 years, the nation tried to set up a national bank. Each time, either Congress or the president would refuse to renew the bank’s charter, once it expired. And that led to the situation in 1836, where states chartered banks and some unchartered “free” banks sprung up as well. From 1836 until the Civil War, most currency was issued by local banks.

In Danville, the only local institution to do this was called, unsurprisingly, The Danville Bank. This was a private company, unaffiliated with or regulated by the local government. Its president was William T. Sutherlin, and their banknotes carried his signature.

Now fast forward a few years to the Civil War. Not surprisingly, residents across the country hoarded the few gold and silver coins they had. Even copper pennies were hard to come by. Because of this shortage, individual states and several local governments issued small denomination notes. And we do mean small. Danville, which had incorporated as a town in 1835, issued 25 cent, 50 cent and 75 cent notes.

Above is a Corporation of Danville 25c note. The town issued small denomination notes due to the lack of coins during the Civil War. Photo courtesy of Gus Dyer.

One Tiny Drawback

The major drawback to this system was geography. The further a person traveled from the place that issued these notes, the less likely that someone would accept them at face value. Say you wanted to get away from the war and head out to California. To do that, you crossed the border from Virginia into North Carolina, looking to buy supplies and a ticket. Even if they had heard of the bank that issued the notes, a $10 Danville Bank bill might only get you $5 worth of supplies, if it was accepted at all.

Why the concern? Bank failures were common at that time period, so even if you had a legitimate note from a real bank, there was no guarantee it was actually worth anything. And again, that’s if it was real. The country had a counterfeiting problem at the time, with some notes created for banks that didn’t exist.

Developing a solution

To alleviate this problem (initially, just for northern banks), and to raise funds for the war effort, the federal government developed the national bank system in 1863. Under this system a local bank could become a “national bank’’ by depositing a minimum of $50,000 dollars with the Treasury Department. In exchange, the bank would receive an equal amount of national bank notes, all backed by the federal government. Although these notes were all similar in design, creating uniformity of the circulating currency, they did bear the name of the issuing bank, and the name of the locality where that bank was located.

This system worked quite well and was quickly adopted by the southern banks after the war. In Danville there were to be a total of five different national banks. The first, again unsurprisingly, was the First National Bank of Danville. It operated from 1865 until 1868. Although there are rumors to the contrary, no notes from this bank are officially known to still exist.

The second national bank to form in the city was the Planters National Bank of Danville. It was established in 1872 but changed its name in 1899 to the First National Bank of Danville, assuming the name of the now defunct previous institution. This bank survived into the 1970’s but merged with other banks and eventually became part of Bank of America. In 1909, two new national banks were established, the National Bank of Danville, which lasted until 1917, and the American National Bank of Danville, which still exists today. Finally, there was the Virginia National Bank of Danville, which existed from 1912 until 1915.

Above is a $5 note issued by The National Bank of Danville. A rather hubristic title, since there were already two other national banks operating in the city. The bank only lasted until 1917. Photo courtesy of Gus Dyer.

What shut down the system?

The national bank system finally came to an end in the 20th century. That happened due to the banking reforms brought about by the Great Depression. Even so, the notes continued to circulate for some time after. In fact, they are still legal tender, although usually worth more than face value as collector items.

This article was written by Danville Historical Society Digital Consultant Brian Carlton and Vice President Gus Dyer.