Back from the Dead

By modern standards, some very unusual entities issued paper money in pre-Civil War America. One such firm was allegedly a library in the tiny Hamilton County, Ohio, a hamlet of Newtown. Originally settled as Mercersburg in 1792, Newtown counted fewer than 450 inhabitants as late as 1880. In the early 1800s, this would not seem like the best place to open a library. However, local newspapers show that the state legislature granted the Newtown Library Company a charter in February 1808.

The business purchased books and other periodicals and served as a repository for reading materials for about 13 years. It decided to close its doors around 1821. The library’s holdings were sold at public auction and the corporation was dissolved, although its charter was never canceled.

All was quiet for nearly two decades, until the summer of 1841. A group of eastern “investors” suddenly picked up the old library’s charter and resuscitated the venerable institution on paper, claiming that they intended to open a “manual labor school.” As if by magic, bank notes started to appear. At first glance, and by design, these notes seemed to be issued by the Hamilton County Bank of Newtown. Engraved by the reputable firm of Durand, Hammond & Mason of Cincinnati, the high-quality notes looked like issues from a solid institution. However, a closer inspection reveals they were the issues of the Newtown Library Co., whose name appears in a much smaller font arched around the central vignette of Minerva with two allegorical women. With bank notes from this era, it has always been more important to inspect the details in the fine print rather than focus solely on the headlined information.

Alarming Situation

The Cincinnati Enquirer of July 31, 1841, issued a clear warning: 

“The HAMILTON COUNTY BANK, otherwise the defunct NEWTOWN LIBRARY, is about ready to commence operations, at a broker’s office on Third street as we learn from the Republican. Let it be nipped in the bud—before its blushing honors come upon it.”

Other newspapers quickly sounded the alarm. On August 4, 1841, the Cleveland Herald, also quoting the Cincinnati Daily Republican newspaper and commenting on new shinplaster issues, noted that:

“One is a rotten concern resuscitated called the Newtown Library Company. By the hocus pocus of a broker it is changed into the lofty sounding name of ‘Hamilton County Bank.’” The Republican says: “The words ‘Newtown Library Company,’ the only legal title this defunct corporation is entitled to, appear in small letters so arranged as not to strike the eye, while the words HAMILTON COUNTY BANK reach across the bill.”

Apparently, this negative publicity was enough to kill this fraud before too much damage was done. The notes are quite rare today, with only a handful of $1s and a $5 known.

The Newtown Bank Deception

Amazingly, this story has another chapter. After five years of inactivity, another group of financiers tried the same fraud. The Cleveland Herald, on May 20, 1846, published a letter from Cincinnati stating:

“It appears, then, that a company of financial resurrectionists, after a long search in the crowded cemetery of defunct corporations, have discovered the soulless body of an old institution called the “Newtown Library Association” [Company] which they claim is immortal, or rather, perpetual. This old rotten carcass, reeking with the putridity of a thirty years’ interment, is suddenly hauled out of its grave, set upon its legs, restored to life by the galvanic process, and rechristened the “Newtown Bank.” The better to deceive the unwary public, it is designed that the notes of the institution should have the semblance of those of the Independent Banks of this State. Application was made to the large and respectable houses of Rawdon, Wright & Hatch and Tappan [Toppan], Carpenter & Co., of this city, to do the engraving, but they very properly declined any participation in this new scheme of finance. They then applied to a smaller concern, and, I am told, with success.”

The smaller company referred to in this letter was Doolittle & Munson, a Cincinnati firm whose notes were often used by banks and other issuers on the fringes of legitimacy. Their notes were undoubtedly less expensive to have produced. By the same token, they were not of the same quality as those that “mainline” companies executed.

The second fraud’s perpetrators’ plans are outlined in a news item in the May 19, 1846, edition of the Buffalo, New York, Daily National Pilot newspaper, quoting the Cincinnati Atlas newspaper:

“We understand a company of financiers shortly intend putting in circulation, in the neighborhood of Memphis, Tennessee, a batch of shinplasters, based upon the defunct Newtown Library Association [Company] of this county. The institution is to be called the ‘Bank of Newtown,’ and the notes payable at any point which may best suit the ends of the persons engaged in the fraud—the place of payment being left blank in the engraved note. We caution the people of Tennessee and Mississippi, or any other place where this illegal paper may show itself, not to touch it.”

So, in 1846 this second group intended to float large amounts of notes in the south. Had the plan been given more time to develop, the target areas for placing notes in circulation would have undoubtedly expanded. Some expressed concerns that the designs were intended to be confused with those of the state’s new independent banks. The workmanship, as it turns out, was not nearly up to those standards. 

Not much else is known about this second scheme. However, the scarcity of notes today suggests that, like the first 1841 fraud, this 1846 attempt was stifled early on thanks to an alert press. 

Many frauds like this were perpetrated across the country in the years before the Civil War. This situation was somewhat unique in that two separate plans, virtually identical in almost all respects, were attempted just five years apart with the same end result: discovery and termination.

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A version of this article appears in the September 2024 issue of The Numismatist (money.org).