Grading Fractional Currency Fifth Issue Notes: How Perforations, Surcharges, and Experimental Varieties Affect Grade Assignment

The Most Misunderstood Fractional Issue

Walk into almost any coin show with a stack of Fractional Currency, and you will find that the Fifth Issue gets the least attention from casual buyers. That is a mistake. Issued between February 1874 and February 1876, the Fifth Issue represents the final chapter of Fractional Currency production, and it packs more grading complexity into a narrow two-year window than most entire series of large-size notes manage across decades. Perforated edges, surcharge varieties, experimental paper types, and a surprisingly wide range of condition survivors all conspire to make Fifth Issue grading one of the most rewarding, and occasionally humbling, exercises in the hobby.

A Brief Overview of Fifth Issue Production

The Fifth Issue was produced at the Bureau of Engraving and Printing under Treasury Secretary William A. Richardson and later Benjamin H. Bristow. Three denominations were printed: 10 cents (Friedberg 1264-1266), 25 cents (Friedberg 1308-1309), and 50 cents (Friedberg 1374-1381, with the Dexter and Crawford portrait notes constituting the bulk of high-value pieces). The obverse designs featured busts of prominent figures, with the 10-cent note bearing William Meredith, the 25-cent note bearing Robert Walker, and the 50-cent note carrying either William Crawford or Samuel Dexter depending on variety.

Production totals were substantial by fractional standards. The 10-cent denomination alone saw combined deliveries exceeding 150 million notes across its plain and perforated variants. Yet surviving high-grade examples are comparatively scarce, largely because these small notes circulated intensively before specie payments resumed in January 1879, after which most fractional notes were redeemed and destroyed.

Understanding Fifth Issue Grading Fundamentals

Before diving into the variety-specific factors, it helps to establish what standard grading criteria look like when applied to Fifth Issue notes. The standard 70-point numerical scale used by PMG and PCGS Currency applies, but several physical characteristics unique to this issue require adjustment in how examiners weight different types of wear and damage.

Paper quality is paramount. Fifth Issue notes were printed on a relatively thin, crisp paper that shows folds readily and is prone to edge fraying. A single diagonal fold through the portrait area on a 25-cent Walker note can drop an otherwise Gem example from a technical 65 EPQ to a 40 Extremely Fine. Graders specifically check for folds at the quadrants of the note, along the vertical center axis, and at the corners, where a microscopic crease can be the difference between an About Uncirculated 55 and an Uncirculated 62.

The Perforation Question: Why Perforated Notes Grade Differently

The most immediately visible variety distinction in the Fifth Issue is the presence or absence of perforations along the note edges. Beginning in late 1874, the BEP introduced perforated-edge versions of the 10-cent and 25-cent denominations as an experiment intended to make separation from printed sheets easier and more uniform. These perforations, created with a roulette-style tool, appear along one or more edges of the note and are cataloged as distinct varieties: Friedberg 1265 (10-cent, perforated) versus Friedberg 1264 (10-cent, plain).

Here is where collectors frequently go wrong: perforations that are complete, even, and fully intact are a grading asset. Perforations that are incomplete, unevenly separated, or show tears into the note body are a serious grading liability. A Fifth Issue 10-cent perforated note with all teeth intact, measuring consistently approximately 2mm in depth, can legitimately trade at a premium over its plain counterpart in the same numerical grade because finding one with fully preserved perforations is genuinely difficult.

PMG and PCGS Currency evaluate perforations as part of their edge assessment. Notes where perforation separation has pulled into the printed border area are typically capped at AU-55 or below regardless of paper brightness. Notes where two or three perforation tips have small separations but no tears into the design can still achieve MS-63 or MS-64 depending on overall eye appeal. True Gem perforated Fifth Issue notes with full intact teeth represent the upper tier of this specialization and routinely bring $400 to $900 in certified form as of recent auction records.

Surcharges on Fifth Issue Notes: What They Are and Why They Matter

A surcharge in Fractional Currency refers to an overprinted notation added to the back of certain notes by the Treasury Department, typically indicating a specific series delivery batch or a printer’s control designation. On Fifth Issue notes, surcharges appear most commonly on 50-cent Dexter and Crawford notes and take the form of printed letters or numbers in the lower margin of the reverse.

The presence, absence, or legibility of a surcharge can move a note several grades on its own. Collectors should understand three distinct scenarios. First, a note that should have a surcharge per its catalog designation but presents without one may have been trimmed, chemically cleaned, or altered, and this warrants close scrutiny of margins and paper surfaces. Second, a note with a faint or partially printed surcharge receives an ink strike notation from grading services, which can reduce the grade by one to two points. Third, a fully struck, sharp surcharge on an otherwise high-grade note is considered a positive attribute and supports Eye Appeal designations like EPQ (Exceptional Paper Quality).

The Friedberg 1374 through 1381 series of 50-cent Fifth Issue notes includes specific surcharge varieties. Friedberg 1379, the Crawford 50-cent with a green reverse surcharge, is among the scarcest surcharge varieties in the entire Fifth Issue, with PMG census data showing fewer than 30 examples graded in all conditions as of recent population reports. A VF-30 example of this note can bring $600 to $800, while a certified 64 EPQ would be an extraordinary find at any price.

Experimental Paper Varieties: The Holy Grail of Fifth Issue Collecting

Perhaps no aspect of Fifth Issue collecting is more misunderstood, or more potentially rewarding, than the experimental paper varieties. During the 1874 to 1876 production window, the Treasury authorized limited test printings on paper stocks different from the standard fiber paper used for regular issues. These included silk fiber paper with visible thread inclusions, a slightly thicker watermarked experimental stock, and in at least one documented instance, a pink-tinted paper used for the 10-cent Meredith note.

The pink paper 10-cent note (sometimes cataloged as Friedberg 1265 variant or listed separately in specialized Fractional Currency references by Bressett and Neil) is one of the most debated experimental pieces in the series. The pink tint was introduced to test counterfeit deterrence properties. Print runs for this experimental paper were extraordinarily small, estimated at fewer than 10,000 notes total, and perhaps as few as 1,500 to 2,000 have survived in any condition. Certified examples in Fine-12 or better are genuinely scarce, with the last publicly recorded auction result of an NGC-graded Fine-15 example bringing $1,450 in a 2021 Heritage Auctions sale.

Grading experimental paper notes requires additional care because the paper stock itself influences how wear presents. The thicker experimental paper tends to show fewer surface abrasions at equivalent circulation levels compared to standard stock, which can make a note appear higher grade than its crease pattern suggests. Conversely, the pink paper variety is more susceptible to toning and chemical migration over 150 years of storage, and notes with heavy brown toning that obscures design details receive net grade reductions even if fold patterns suggest a higher technical grade.

Margin Width and Centering as Grade Determinants

Fifth Issue notes were cut from printed sheets by hand in many cases, and centering varies considerably. The standard grading guideline holds that a note should display margins of at least 1mm on all sides to avoid a “cut close” notation, which typically caps certification at VF-35 even on a technically brighter note. Notes with design elements touching the cutting edge receive “cut into design” notations and are generally not encapsulated by major services unless the historical or variety significance warrants exception documentation.

Centering premiums are real in this series. A Fifth Issue 50-cent Crawford note with equal margins on all four sides, particularly one where the face and back are properly registered, consistently brings 15 to 25 percent more at auction than an equivalent grade example with shifted centering. PCGS Currency specifically notes centering in its holder inserts for notes graded 64 and above, making this an important consideration for registry set builders.

Ink Strike Quality and Its Effect on Grade

The green Treasury seal common to Fifth Issue 50-cent notes and the various red and blue fiber papers interact with grade assignment in ways that newer collectors often overlook. A heavy, well-struck seal with sharp dentils (the tooth-like projections around the seal’s border) is a positive grading factor. A faded, incompletely struck, or smeared seal reduces eye appeal and can prevent the EPQ or PPQ premium designation even on a note that grades numerically at 63 or 64.

Similarly, the red overprint on certain surcharge varieties must show clean, complete impression. Ink that has offset-transferred to an adjacent sheet during storage, creating a ghost mirror image on the face of the note, is a grading problem that services note explicitly. Ghost offsets are surprisingly common on Fifth Issue notes stored in original paper wallets or folded in period-era document files, where adjacent sheets were in close contact for decades.

Building a Grade-Aware Fifth Issue Collection

For collectors assembling a complete Fifth Issue type set by variety, the practical grading guidance comes down to several priorities. For common plain-edge 10-cent and 25-cent notes, aim for PMG or PCGS 64 EPQ or better, where the price premium over 63 is modest but the aesthetic difference is significant. For perforated varieties, a certified 63 with intact perforations is preferable to an uncertified note claimed to be 65, because the specific notation on the holder regarding perforation integrity is worth the encapsulation cost.

For surcharge and experimental paper notes, condition census awareness is critical. Use the PMG census and PCGS Currency population report to identify the top two or three graded examples of each scarce variety before setting a target grade. Chasing a 65 EPQ on a note where the finest known is a 55 is not a productive collecting strategy. In this tier of the series, the finest known grade for a given variety is often in the 45 to 58 range, and a superb Very Fine example of a key-date surcharge note is a legitimately trophy piece.

A Final Word on Raw Versus Certified Fifth Issue Notes

The Fractional Currency market has historically been more tolerant of raw notes than the large-size Federal Reserve Note market, partly because the specialized collector base is smaller and expertise runs deep. However, for Fifth Issue notes valued above $150 in any condition, certification by PMG or PCGS Currency is increasingly the standard, and for experimental paper and surcharge varieties, it is essentially mandatory for serious transactions. The authentication component alone justifies the cost: cleaned, pressed, and trimmed Fifth Issue notes exist in meaningful numbers, and the grading holder provides documentation that a raw note simply cannot.

The Fifth Issue may be the final act of Fractional Currency history, but for dedicated collectors, it offers a first-rate grading education in a compact, historically rich package. Master the perforations, learn the surcharge varieties, and keep an eye out for the experimental papers, and you will find that the smallest notes in American currency history can generate some of the most outsized collecting satisfaction in the hobby.