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Treasury Coin Notes Nearly Bankrupt U.S. Treasury
We've all heard about businesses going bankrupt, but what about the United States Treasury? In 1892, the U.S. Treasury's gold reserves were nearly depleted when holders of Treasury Coin notes furiously redeemed them for gold bullion. The Treasury's problems began when Congress promised silver mining companies that it would make monthly purchases of $2 million in silver at the "highest prevailing market price." This mandatory purchase of silver, as stipulated by the Bland Alison Act of 1878, was facilitated by the issuance of Treasury Coin notes. The Act was called a "boondoggle" by many because noteholders would exchange their Treasury Coin notes for gold bullion immediately after receiving them. This loophole was possible because, under the fine print of the Treasury Coin note, it stated that the notes were redeemable for either gold or silver bullion. Before long, there was a market surplus of silver and a dangerously low reserve of gold. Finally, in 1892, the U.S. Treasury repealed the Bland Alison Act, ending an embarrassing chapter in the U.S. Treasury Department's history.

Due to the limited issue, many Treasury Coin notes are extremely rare. Collectors named the rarest Treasury Coin note, a $1,000 bill, the "Grand Watermelon" note because the zeros on the reverse side resemble watermelons. Prized by collectors, the Grand Watermelon note has been appraised at more than one million dollars and is owned only by a small number of collectors and museums, including the American Currency Exhibit at the Federal Reserve Bank of San Francisco.