The Historical Significance of SPECIMEN Notes

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SPECIMEN notes are interesting, in part because Specimens of notes that are extremely rare in issued form generally trade at small fractions of the values of the corresponding issued notes whereas Specimens of notes that are common in issued form generally trade at huge premiums ABOVE the values of the corresponding issued notes --- as always, though, exceptions to this general "rule" exist.

By way of example, a Metropolitan Bank $50 1912 “train” note which is unknown in issued form carries a nominal catalogue value of $1500 (I haven't seen one offered lately) whereas a Bank of Canada $1 1867-1967 note that sells for $4.00 in issued form has an established market value of about $350. Although “Supply and Demand” are undeniable driving forces the "collector" part of me would much prefer one Metropolitan Bank $50 Specimen note to four or five $1 1867-1967 Specimen notes!

I’ve attached an image of a fairly typical Specimen note for discussion purposes, i.e., a $10 1880 Bank of Ottawa note. Apart from the fact that this Specimen note was never intended to enter circulation, it differs from a fully-issued note in three, and in only three, ways i.e., (1) it carries a 00000 serial number (but that's still a serial number of sorts!); (2) it lacks a second signature at the left-hand side, and (3) it has four punched cancellation holes in the signature panels.  

So what is the purpose of this thread you ask? Well, if nothing else, I personally feel that SPECIMENS of rare early Canadian currency are historically important artifacts and are likely to be in much greater demand in the future than they are now. With a few notable exceptions (e.g., La Banque Nationale 1922 issues), Specimens of Canadian notes that are rare in issued form are much scarcer than generally believed – and this applies to Chartered notes, Dominion of Canada notes and many/most Bank of Canada issues. As an added bonus, Specimen notes usually show up in EF-UNC condition whereas rare issued notes do not.

I fully appreciate that Specimen notes may not be everyone's "cup of tea" --- however, the contrary argument is that there is a very strong demand for Bank of Canada $1 1867-1967 Specimen notes in the $350 range even though an issued example thereof can be picked up for just $4.00!  

Over to you ......

The image of the Bank of Ottawa specimen note is indeed beautiful. There is no doubt that these notes are under-appreciated.

There are many points in your post that have merit.  However, as you may know, a note's value is not necessarily directly related to its rarity.  It is often more related to its popularity/demand on the  market (among other factors).  A good example is the 1954 Devil's face.  They were issued in the millions and yet their BV and popularity continue to rise.  Now if you consider the collecting public at large, there would be a great deal more collectors interested in obtaining specimens of the DF's than of some obscure non-issued chartered note.  (Incidentally, the DF has a world reputation, and that is one factor that continually pushes its value up)

The collectors who are keen on obtaining specimen DF's are collectors who already may have coveted asterisk replacements, or every prefix, or a completed set of some sort.  Similarily, the same could hold true for the 1867-1967 confederation notes you used as an example. The point is: supply and demand are usually more important factors than simply the exquisite beauty or rarity of a note (or your collector's impulses).

Generally, collectors prefer notes that have been issued and are well known by other collectors.

The specimen notes you are (more or less) championing still remain the realm of specialists.  

Perhaps this realm is ready for expansion, and collectors who will want the type of notes you describe.  On the other hand, the demand may stay constant, as collectors focus more on Bank of Canada issues.  I think it will largely depend on the demographic of the new collectors entering the hobby.  I see this demographic consisting of coin collectors and young Canadians.  In light of this, it would be surprising to see the trend you're suggesting.

I believe you both bring a very interesting point. I too am optimistic that specimen notes will grow significantly in value, all tough they will have to be chosen wisely. As for the BOC specimen, these are hugely undervalued as they come in much smaller numbers “fractions” of the issued notes and this bank has a strong number of collectors. I would much rather like a specimen of a note than certain rare prefixes as it stands out more. As many coin collectors are expanding their collection to paper money, we should start seeing higher demand in specs. This may take time and it won’t be until it’s too late that most people will realize that there are hardly any on the market thus creating an elevation in demand.

As for specimen from the chartered banks I would suggest focusing on the banks that have a strong following or of un-issued notes. There are many issuers of chartered note which only operated in very small districts. Their issued notes are often seen only because no one keeps them for very long. Specimen of low demand issued notes should be avoided. Highly collected chartered notes are usually from banks which were named after a province or huge city. Their specimens should see a healthy annual increase while still being in demand by more than one buyer. Also specimen of highly decorated notes such as those with an ample amount of colors or beautiful vignette would be a terrific choice.

My last point would be to bring up the fact that the higher the price of the note the lower the amount of buyers. Many people will justify spending 300-400 dollars on a note but when the price reaches above $1000 it will put added restrictions on the amount of buyers even considering the note.

In order to kick start the trend on specimen we will need a buyer or too to occupy the majority of them and create a much higher desirability factor. We should then start to see buyers willing to pay strong premiums on the few remaining specs. Troy Macdonald has done this with the bank of Nova Scotia notes and I will let you take a look at the book prices to find out his result.

That makes a lot of sense