New York and Massachusetts banks operated in states with good bank regulations that resulted in well-run banks. As a result, their banknotes were in common circulation in their local areas. As you observed, the farther one travelled from the city of issue, the larger the discount on the banknotes, because anyone wishing to exchange the banknote for specie would have had to undertake the expense to travel to the city of issue to exchange the banknote for gold coin.

For a resident of New York City, his everyday money would have been local banknotes. As you suggest, I expect that a smart New Yorker would have gone to a money broker to purchase, at a discount, banknotes that would have circulated at par in Nantucket.

Depending on the size of the banks on or near Nantucket, I suspect he might have purchased banknotes issued by a Providence bank, as money from the nearest city might very well have been the circulating medium on Nantucket.

Alternately, he might have gone to a New York bank to purchase some gold coins - which would have been accepted wherever one travelled. By 1850, gold coins were readily available in larger cities.

For example, In J.S. Holliday's The World Rushed In, which is based on the diary of William Swain, a '49er from the Buffalo, New York area, Mr. Swain describes purchasing gold coins for his journey to California in April 1849 at a Buffalo bank for only a 1% premium in local banknotes.

A bank in New York City in 1850 would have had a ready supply of gold coins on hand for their customers who were importers, as customs duties were required to be paid in specie.

As you know, the real difficulty for anyone in 1850 would have been in obtaining smaller denomination coins, as the California Gold Rush had resulted in silver coins being more highly valued as bullion than as coins and, therefore, disappearing from circulation.

Dave Bowers mentions, in his Obsolete Paper Money, that Nantucket, being a whaling port, was an early home to a bank. Whether a New York City money broker would have had any Nantucket banknotes in stock, however, would have depended on the patterns of commerce at the time.

Banknotes from Boston might have also passed at par on Nantucket, again depending on the patterns of commerce at the time. It seems reasonable that a New York City money broker would have had Boston banknotes in stock.

Shurouq writes:

To read the earlier E-Sylum article, see:QUERY: 1850S AMERICAN PAPER CURRENCY IMAGES SOUGHT(www.coinbooks.org/club_nbs_esylum_v16n32a11.html)