During the Reconstruction, the inflation crisis intensifies. To cope with rising prices, large quantities of notes are released. The government fails to maintain sufficient gold and paper in its reserves, generating the panic of 1873. In transactions, users prefer gold. The paper loses its popularity.
The Specie Payment Resumption Act of 14 January 1875 requires the parity between gold and paper, defining the date of 1 January 1879 for the authorization to redeem the legal tender in species. Inflation of paper money is curbed and users regain confidence. Meanwhile the economy has restarted, freed from the aftermath of the Civil War.
Driven by this renewed optimism, the Congress Act of February 26, 1879 makes a real gift to savers by creating a bond with an annual rate of 4% in perpetuity, the Refunding Certificate.
This certificate is simple to use. Without timed coupons, it is repaid by the Treasury as a one shot on the date desired by the owner. Only one denomination is provided, $ 10, but refunds are made for face multiples of $ 50. The operation involves $ 40 million worth of bonds that were sold out almost entirely in the fall of 1879.
Two formats are issued for the certificate to be either nominative or anonymous to the bearer. Obverses are very similar except for a space to identify the depositary in the nominative version. The reverse side is completely different, being in the nominative version the receipt to be signed by the Treasury officer. Friedberg considers both variants as federal paper money.
The operation was lucrative for the user and almost all Refunding Certificates have been repaid. Much rarer, the nominative version has survived in only two copies. One of them is kept at the Bureau of Public Debt. The other one, graded Choice about New 58 PPQ by PCGS, was sold for $ 425K including premium by Lyn Knight in October 2005. It is estimated $ 300K for sale by Stack's Bowers in Baltimore on October 25, lot 3024.
SOLD for $ 780K including premium