Collectors of U.S. Small Size currency have had stars in their eyes for decades, and for good reason. The best estimates of spoilage percentage early on in the small size era has been pegged at less than 1 percent. My friend Jim Hodgson has this figure more precisely averaged out to a current figure of 1.2 to 1.3%. This makes for some very low printings and slim chances for survival in the high attrition world of circulating paper money. There are exceptions, and all the figures in this article are approximate as there is no definitive census on Small Size star notes as a whole. There are some dedicated individuals who keep a star census in one collecting area, such as Federal Reserve Bank Notes, but information changes rapidly in this broad and interesting field of collecting. There is also an understandable reticence of these researchers and collectors to release this information for public consumption, as the pieces they are seeking would geometrically increase in price.

It is beyond the scope of this short article to cover all the aspects and interesting anomalies in this fascinating area of collecting, but some of the misconceptions regarding the production and distribution of star notes need to be laid to rest. Star notes are produced as replacement notes for misprinted notes deemed defective, and in some cases to replace special numbered notes, such as those numbered 000 000 000. Star notes are the first notes printed when a newly designed note is ready for the presses and are a separate serial number block. These notes are then inserted individually or in large groups, replacing the misprinted notes, which are then recorded as unfit for circulation and destroyed. No attempt is made to duplicate the serial number of the defective notes they replace.

One might think that these replacement notes would be used only for the series and district of issue, but the opposite has proven to be the case more often than not. I can cite my personal experience of buying a pack of $20 1928B FRNs issued on the Kansas City district, which contained three consecutive 1928 series Kansas City district star notes. There are also many reported cases of finding different series and district stars, such as $1 FRN ] B*'s (New York district), intermingled with a pack of notes from a later series, 1977A Atlanta, for example. This is serious food for thought, as it explains why many stars are impossible to find in any condition. If we go back to the example 1928 stars on Kansas City above, it is obvious that star notes were used in a supply and demand fashion. There were evidently enough 1928 series stars printed for this denomination and district to replace all the defective notes from 1928, 1928A, and 1928B series issued on Kansas City. This would explain why no $20 1928A Kansas City stars are known, and possibly only one $20 1928B J* is currently known to exist on this district. Because star notes were used for subsequent series of issue many series and districts were just not needed, and none were printed. Now ad to this the change in obligation on these earlier FRNs, which were redeemable in gold and quite likely any remaining supplies were destroyed.

This could also explain why $500 1928 series FRNs are so rare in any grade. The most recent sale of a Philadelphia example bearing serial number C000 000 122* brought $41,800 at auction. With only two others rumored to exist, and only one of those with a recorded serial number, it is easy to understand why such an item would bring two and a half times the high catalog estimate. This series had very low issues on regular blocks and the stars were possibly only issued in 10 sheet runs of 120 notes. With such low printings, coupled with the change in obligation necessitating the remaining unissued notes be destroyed, the under bidders may have a very long wait for a second chance.

I would like to thank my friends Robert Azpiazu, Jim Hodgson, and Marc Michaelsen for helping me sort through the morass of BEP misinformation for this and future articles. It is unlikely one could find any other area of numismatics with so many hidden and uncharted rarities waiting to be discovered.

Scott Lindquist

R. M. Smythe

slindquist@smytheonline.com