What are the attractions of banknote collecting?

This exciting hobby is growing in popularity for many reasons. For one thing it's becoming increasingly easy to find interesting and attractive banknotes from around the world, with great visual, historical and cultural interest often for only a few pence each. A banknote collection can be a fine investment. Many notes have been growing quite dramatically in value over the years, sometimes even over a few months. Besides this, the hobby is a great educator. It has something to teach everyone, about foreign culture, history, economics - and much more. It's ideally suited to today's forward thinking person. As communications technology brings the 'global village' ever closer, it becomes ever more advantageous to have a rich of foreign affairs and cultures. It's amazing how much knowledge of this kind you can naturally absorb while enjoying this hobby.
A banknote collection makes a powerful conversation piece. There are very few people whom curiosity and admiration is not aroused by a banknote collection. It's a fabulous array of strikingly impressive artwork. Banknotes are perhaps the finest pieces of graphic design to be found anywhere. An incredible amount of work and skill goes into the design of some examples by artists and engravers of exceptional skill. The design and manufacturing process is a field of study in itself. Some of the methods used are shrouded in secrecy, to make forgery difficult.
As collector's items, banknotes have some important advantages over stamps and coins. For one thing, they have a much larger surface area, making them a better vehicle for interesting information and attractive artwork. Compared to a coin, a banknote is extremely lightweight and thin, making a large collection easier to store and transport. Over the postage stamp, the banknote has the advantage of having two sides, and again, a much larger surface area. Generally, they are also less prone to forgery.
Banknote enthusiasts enjoy individualist status because the hobby is regarded as intriguingly different. It has a certain prestige attached to it; people tend to assume that a banknote collector must be wealthy - although this is often far from true. The hobby also has a refreshing dignity to it. The banknote collecting fraternity is basically an honest, friendly, community, with the genial camaraderie born of a common interest.
The hobby is still much less widespread than stamp and coin collecting, although the gap is narrowing. Many stamp and coin collectors are turning to banknotes as the promising new collecting frontier. Banknote collecting holds many of the same pleasures as stamp and coin collecting: One gets the same thrill at finding that elusive item to fill a gap in a series or a set. There is the same reverence one feels for owning something that has been preserved in perfect condition for a hundred years. There is the same satisfaction of travelling to a collector's fair to hunt down bargains and meet fellow enthusiasts and develop one's knowledge.

What will it cost?

The ever-growing availability of cheap and varied material from around the world is now bringing the hobby well within reach of those with a limited budget. This is one collecting field where prices are actually falling in many areas, mainly where new issues are concerned. For this, we can thank the effects of inflation to the United Kingdom, many countries have steep inflation rates, making their currency sink in value in relation to our own. Thus, their currency notes become ever cheaper for us. Some typical cases from recent years include Brazil, Peru, Argentina, Russia, Mexico, Zaire, Iraq, Yugoslavia and Turkey. In fact, we can obtain notes with denominations of 50,000,000,000 or more for a pound or two! Another exciting source of very cheap notes has recently emerged: the new ex- Soviet republics. Here is an opportunity to obtain the very first issues of several new republics for mere pennies. One can only imagine the value these first issues will have to collectors in future years.
For under £1 each, you can obtain some beautiful, older notes from earlier this century the golden age of banknote design. Germany and Hungary for example, both suffered runaway inflation in the first half of this century, rendering their banknotes less valuable than the paper they were printed on in some cases. Nevertheless, they were wonderful examples of the engraver's art. Even notes from the early 1700's can still be bought for well under £10 the Assignat notes of the French Revolution, for example.
Conversely, serious collectors world-wide, pay large sums of money for single rare notes. Sometimes this will be to fill a gap in a valuable collection. Sometimes  it will be for investment. Sometimes it will be with a view to passing the item on to a fellow collector or dealer - for an even higher price. Banknotes are one field where real bargains and quick profits can be made - if you know what to look for. Experience will soon teach you this.

A theme for your collection.

A banknote collection is an expression of its owner's personal tastes and interests There are no set rules regarding collecting themes; you can be as individualistic as you like Some collectors specialize in notes from one country - often their own. Some collect from groups of countries, British Commonwealth, Europe, or Africa, for example. Others collect notes from one period in history - WW2 for example. Others collect notes with some rare peculiarity, like those with printer's errors. Some collect forgeries. The scope is limited only by your imagination. Many collectors start out just buying anything that happens to appeal. Then as the years pass, they often tend to become more specialized. A specialized. A specialized collection has a unique value and appeal. It can often be sold for more than the combined values of its individual components. However, the pitfall of becoming too specialized is that suitable material will be harder to find and often much more expensive. But why not compile specialized collection while simultaneously building a more general, free-style one?

The profit potential.

The investment potential of banknotes has been evident over the years. Some items have seen a growth in value of 20,000% since the end of the last war! American confederate States notes, for example, could then be bought for 20c in the USA. Now, they are hard to find for 100 times that amount. Even the indiscriminate collector can expect profit in the long-run, for most banknotes tend to rise in value. Scarcity, and demand, are the factors which govern value, and banknotes are only produced in limited numbers. After production of each note ceases, it can only become increasingly scarce.
Sometimes banknotes soar in value due to historic events. For example: Hong Kong notes have been selling for double or triple the book value since 1997, due to the Chinese take-over. Many collectors were easily able to predict this in advance, and many took a successful gamble and bought up every Hong Kong note they could find. Let's face it, a 300% profit in twelve months is far better than any stock market investor can hope for. Remember the recent volcano in Monserrat? One month, Monserrat notes were just as desirable as any other East Caribbean state banknote. As soon as the volcano  rendered the island uninhabitable, the shrewd dealers of the world bought every Monserrat note they could find, knowing that it was unlikely that any more would be printed.
If a banknote collector suffers less fortunate circumstances, he has a valuable nest egg in store, which he can sell at one of the specialist collectors' auctions often at a good profit. Many collections, however, are passed on, to a son, a daughter or a grandchild. The banknote collection makes a great family heirloom, for besides being something if monetary value, it is a goldmine of fascination and discovery, while at the same time conveying something of the Spirit of the compiler. Every collection reflects something of the compiler's personality.

Where to obtain collectable paper money.

Many people become interested in paper money after building a small collection of surplus notes left over from holidays and business trips abroad. Apart from this obvious source, old banknotes often turn up in antique shops, street markets, car boot sales, etc. Occasionally you'll hear of a friend who has discovered a small bundle of notes in his attic, or an odd note in a book, placed there for safekeeping years ago, then forgotten.
Most collectors, however, sooner or later start looking for a specialist banknote dealer. When selecting a dealer, your interests will be best protected if you select one who belongs to the International Bank Note Society (IBSN). This organization has stringent rules and regulations and a strict code of ethics. Any member who breaks these can be expelled or penalized. If you ever have a grievance with one of them, you have a reputable organization to seek redress with. Apart from that, you will want to consider such factors as the following: -
a) Their prices.
b) The accuracy of their grading.
c) The frequency of their price lists.
d) The variety of notes offered.
e) Their general friendliness and helpfulness.
f) Whether their lists include descriptions and illustrations.
g) How long it takes them to dispatch your orders.

How to get value for money.

Most well established dealers are more or less familiar with current market values, although their prices may vary a little. If you want to check that you are getting value for money, you will need a comprehensive reference book. The best of these is the Standard Catalogue of World Paper Money. This publication comes in three volumes. Volume Two is the main volume, dealing with national banknotes. Volume One is devoted to specialized issues (notes from private banks, regional note, etc.) Volume Three is devoted to modern issues only and is updated more regularly than the other two, to keep pace with all new notes that are issued.
Together, the three volumes list each of the 50,000 or so notes ever produced, along with illustrations and the current market values in each of three grades of condition. It should be noted, however, that no catalogue could be completely reliable as a guide to values. Values can change very quickly, especially when such factors as inflation are present. Nevertheless, the overall tendency is for banknotes to rise in value in the long run.

How important is the condition of a note?

The conditions of a note will affect its value dramatically. You should therefore familiarize yourself with the standard grading of condition. Basically, they are as follows:
'UNC' = 'Uncirculated' A perfectly preserved note, never mishandled by the issuing authority, a bank teller, the public or a collector. Paper is clean and firm, without discoloration. Corners are sharp and square without any evidence of rounding. (Rounded corners are often a tell-tale sign of a cleaned or “doctored” note.)
    NOTE: Some note issues are most often available with slight evidence of very light counting folds which do not “break”
    the paper. Also, French-printed notes usually have a slight ripple in the paper. Many collectors and dealers refer to such
    notes as AU-UNC.
'AU' = 'About Uncirculated' A virtually perfect note, with some minor handling. May show very slight evidence of bank
counting folds at a corner or one light fold through the centre, but not both. An AU note cannot be creased, a crease being a
hard fold which has usually “broken” the surface of the note. Paper is clean and bright with original sheen. Corners are not
rounded.
    NOTE: Europeans will refer to an About Uncirculated or AU note as “EF-Unc” or as just “EF”. The Extremely Fine note
    described below will often be referred to as “GVF” or “Good Very Fine”.
'EF or XF' = 'Extremely Fine' A very attractive note, with light handling. May have a maximum of three light folds or one strong crease. Paper is clean and firm, without discoloration. Corners are sharp and square without any evidence of rounding. (Rounded corners are often a tell-tale sign of a cleaned or “doctored” note.)
'VF' = 'Very Fine'  An attractive note, but with more evidence of handling and wear. May have several folds both vertically and horizontally. Paper may have minimal dirt, or possible colour smudging. Paper itself is still relatively crisp and not floppy. There are no tears into the border area, although the edges do show slight wear. Corners also show wear but not full rounding.
'FF' = 'Fine' A note that shows considerable circulation, with many folds, creases and wrinkling. Paper is not excessively dirty but may have some softness. Edges may show much handling, with minor tears in the border area. Tears may not extend into the design. There will be no centre hole because of excessive folding. Colours are clear but not very bright. A staple hole or two would would not be considered unusual wear in a Fine note. Overall appearance is still on the desirable side.
'VG' = 'Very Good' A well used note, abused but still intact. Corners may have much wear and rounding, tiny nicks, tears may extend into the design, some discoloration may be present, staining may have occurred, and a small hole may sometimes be seen at centre from excessive folding. Staple and pinholes are usually present, and the note itself is quite limp but NO pieces of the note can be missing. A note in VG condition may still have an overall not unattractive appearance.
‘G’ = 'Good' A well worn and heavily used note. Normal damage from prolonged circulation will include strong multiple folds and creases, stains, pinholes and/or staple holes, dirt, discoloration, edge tears, centre hole, rounded corners and an overall unattractive appearance. No large pieces of the note may be missing. Graffiti is commonly seen on notes in G condition.
'F' = 'Fair' A totally limp, dirty and very well used note. Larger pieces may be half torn off or missing besides the defects
mentioned under the Good category. Tears will be larger, obscured portions of the note will be bigger.
'PR' = 'Poor' A “rag” with severe damage because of wear, staining, pieces missing, graffiti, larger holes. May have tape holding
pieces of the note together. Trimming may have taken place to remove rough edges. A Poor note is desirable only as
a “filler” or when such a note is the only one known of that particular issue.
It is now common practice to use the letter 'A' prefixing these grades when the note described is 'almost' up to the indicated grade. For example an 'AUNC' or 'AU' note is almost Uncirculated. In other words, it is almost perfect, with only the slightest fault, such as a bend, a very slight discoloration of the paper, or a tiny edge nick for example. However, it is too good to be classed as EF or EF+.
The same strict grading standards apply, regardless of a note's age. Some dealers wrongly think that very old notes are allowed a little flexibility of grading and will make such misguided statements as "It's EF, considering its age". This is misleading; an UNC note has to be the same as it was when if left the printing press, whether it is 100 days old or 100 years old. Usually, an UNC note is worth at least twice as much as it would be in VF.
This is because UNC examples are almost always harder to obtain than well-circulated ones. Unless your budget is unlimited, you will therefore have to make a choice between quality and quantity of condition at some stage.
A word on crimps to otherwise uncirculated notes. Due to inclusion of wide security foils, crimps appear at the top and bottom edge during production or counting. Thus notes which are uncirculated have a crimp. Examples without these crimps are beginning to command a premium.

Housing and displaying your collection.

a] Use low-slip, inert album leaves, free from banknote-harming solvents. (Multi-Master leaves are excellent value).
b] Keep your collection away from radiant heat, moisture and sunlight, in a safe place.
c] Keep it neat and uncluttered. If you have two or three notes on one page, centralize each exactly, for best effect.
d] Interleaves between pages add effect, helping the viewer focus on each page in turn.
Annotating your collection adds meaning, interest and value. Write or tape your captions as neatly as you possibly can. If doing it by hand, a good quality black pen should be considered. Avoid blue biro! Centralize your text below the note. Include as interesting facts as you like – it all adds interest – especially for those who are unfamiliar with the hobby. It will also serve to remind you later of the special features of each note.
Try to find labels that you can peel off your leaves without leaving a trace. Shop around; they do exist! Organize your notes into logical groups, perhaps by country or in time sequence. It makes a better conversation piece that way.
Consider including complementary items to add spice to your collection. Relevant newspaper cuttings, photos of issuing banks, and other forms of paper money, like promissory notes, cheques and travellers cheques, all add interest and value to your collection.
If you know in advance that someone will be viewing your collection, take time in advance, to go over it with a critical, objective eye, repositioning items where necessary.
Allow your viewer a chance to become absorbed Although you will be keen to convey your own points of interest, remember, a thing of beauty can only best be fully appreciated in moments of un distracted focus. When your viewer makes some comment reflecting his or her own points of interest, use that as a cue, and respond with some of your own interesting observations and anecdotes. Remember: some people tend to lose interest in anything that is pushed upon them too eagerly. Others will be positively influenced by your enthusiasm. Remember that your banknote collection is a rare and important historical archive.
Don't be disheartened if your viewer does not seem to appreciate the beauty and fascination of banknotes. Most people do, but the hobby is not for everyone! That's why it's a good idea to include some items of almost universal interest. For example: WW2 items, I9th century items, British Commonwealth, hyper-inflation notes, and anything particularly scarce, unusual, exotic, and visually striking.

Collecting Scottish Banknotes.

Notes from the 18th and 19th century are scarce and rarely turn up on the market but the notes of the 20th century offer a wealth of material for the collector. During the 20th century the following banks were issuing notes:
The Bank of Scotland
The British Linen Bank
The Caledonian Banking Company
The Clydesdale Bank
The Clydesdale and North of Scotland Bank
The Commercial Bank of Scotland
The National Bank
The National Commercial Bank
The North of Scotland Bank
The North of Scotland and Town and County Bank Limited
The Town and County Bank Limited
The Royal Bank of Scotland
The Union Bank of Scotland
Collectors could be forgiven for being overwhelmed by the choice available . With so many banks, I would advise that most collectors start by getting one note from each of the Banks that issued notes during the 20th century.
(The issues of the Caledonian Banking Company and The North of Scotland and Town and County Bank and The Town and County Bank would need to be excluded from this listing because they are scarce) You may then decide to collect just one denomination from any or all of the banks, or just concentrate on one bank and collect every issue from that bank. The possibilities are endless! Others take one of the three banks issuing notes to day and then decide to collect the notes from each of the constituent banks in that bank's family tree. The Bank of Scotland absorbed the British Linen Bank, the Caledonian Banking Company and the Union Bank of Scotland. The Clydesdale Bank absorbed the North of Scotland Bank, the North of Scotland and Town and County Bank and the Town and County Bank and at one stage was also known as the Clydesdale and North of Scotland Bank before reverting to the Clydesdale Bank title. The Royal Bank of Scotland absorbed the National Commercial Bank which itself was a merger between the National Bank and the Commercial Bank.
The collector is immediately struck by the wonderful engraving of these Scottish issues. There's much variety, they're colourful and they're different.! While the English series has been fairly conservative with its designs over the years, the Scots haven't held back! Denominations have been issued from the £1 to the £100. In 1988 the £1 was discontinued by all but the Royal Bank of Scotland. The lowest denomination for the Bank of Scotland and the Clydesdale Bank is the £5 and the highest denomination for all banks is the £100. A collector can keep busy for quite some time with the many varieties that the Scottish series has to offer. Once you begin you will find much to keep you interested. The Scottish series does not command the premiums seen in the English series for first and last prefixes. This may be because there is so much to keep the collector busy with size and design changes.

Tips on Collecting Scottish Banknotes.

A note on grading Scottish notes. Until the late 1950's Scottish notes were not issued to bank tellers in flat packs as they are today. The £1 notes were issued in rolls and the larger denominations from the £5 up were folded twice envelope fashion . The rolls on the £1 note often left evidence of a light central fold. Larger denominations would have two fold lines. This is perfectly normal and to be expected. What may vary is the sharpness of the fold. If this fold does not exist in these larger notes of the period , it is highly likely that someone has tried to flatten the note in the past in an attempt to remove the fold lines. Buyers beware! (As old habits die hard it is very common indeed to see these fold lines of notes being issued in the late 1960's so do not dismiss them!)
In the early part of the 20th century the £10 is probably the scarcest denomination. For some reason this denomination was never popular with the public and while most banks were known to issue this denomination it is much scarcer than the £5 or £20. This does not apply to notes issued after 1970.