elf Republic of Texas $500 Note January 1840

Texas was an independent Republic from 1836 (after the Battle of San Jacinto) until it joined the United States in 1845. Notes issued while the capital was in Houston are titled "The Government of Texas"; this changes to "The Republic of Texas" when the capital is moved to Austin.

This note is part of the Fifth Issue of notes, and it is cataloged as Criswell #A9. In "A Guidebook of Southern States Currency" by Hugh Shull, it is ranked as Rarity 8, which is defined as an estimated surviving population of 51-100 pieces.  Few of the survivors will approach the high grade of this note. 

When Texas joined the Union, it sold a vast area (including parts of Wyoming, Colorado, New Mexico, Kansas and Oklahoma) to the United States for $10 million, which was to be used to pay the Republic's debts, including the redemption of its paper money and bonds. A problem developed when notes were redeemed by Texas, went out the back door, and were brought in the front door to be redeemed again.

When this was discovered, they started writing "Cancelled" across the notes. Unfortunately, the ink was water-soluble, so redeemed notes went out the back door, the ink was soaked off, and then they came back for redemption again. The final solution was to razor cut the notes to cancel them and prevent re-presentation.

Five hundred dollars was a tremendous amount of money in 1845 (think in terms of 25 $20 gold pieces!), so they went to extremes to make certain that this note did not come back:

1. The handwritten "Cancelled" is clearly across the face, and the acidity of the ink has burned through the paper in the heavier parts of the letters.

2. A stamp "Funded / and / Canceled /June / 184(8?)" appears over the words OF TEXAS.

3. Razor cut Xs have been applied in two places.

In my opinion, the note has been repaired by a triangle cut from another note, in the area of the "an" of Cancelled.

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