Ranney Letter #21
Lyman sends Henry a short note with a five dollar bill to renew his newspaper subscriptions to three Eastern papers. Lyman says the banknote is from “the N.O. Bank which I think will go there without much if any discount, it goes at par here.” Until Federal Laws were passed during the Civil War, State-chartered banks printed their own currency. Some varieties of this money were more widely accepted than others, depending on the remoteness of the bank and its perceived solvency. Rather than flatly refuse the notes of a distant or shaky bank, people would sometimes “discount” the note, saying in effect, “I’ll take this, but only at 90¢ on the dollar” or some other amount below the par or face value of the note. Historians disagree on how common this practice was, often citing the fact that people were taught in elementary school how to “discount” in their heads. Personally, I don’t see the point of taking a note at 90¢ or 95¢ on the dollar, if you think the issuing bank is likely to not honor the paper. The reason people were taught how to quickly calculate discounts was that many of these notes carried interest. They were promises to pay a month or two in the future, so people needed to know how much the five or seven percent interest would come to over that length of time.
Lyman briefly answers Henry’s questions about the size of the firm he works for, saying they do about $140,000 a year and that they sell a lot of goods at wholesale prices to smaller merchants who lack the capital to go East and buy for themselves.
Van Buren Arks. Oct 17th 1852
I recd yours of — Sept. And was glad to hear from you again. Enclosed you will find a five dollar bill (5$) on the N. O. Bank, which I think will go there without much if any discount, it goes at par here. This as you will no doubt understand is to pay for another year of the Tribune, Atlas, & Blade which I wrote you about some time since, as the two former papers have already stopped, the year having run out I suppose.
You wished me to give youth amy of goods sold by the firm with which I am staying. We have four stores in different parts of the State and two here in this place. The goods for the other stores all pass through the stores here before they go out to the branches. We sell in the year about 140,000$ here and and at the branches. We wholesale a great many goods here in the course of the year. The country merchants buy, some who have not capital enough to go east to buy for themselves.
I have to cut my letter short as I am writing on Monday morning, and I have now to close.
L. A. Ranney