The discounts mainly reflected the cost of returning the notes to that location for redemption. The non-uniformity of U.S. currency prior to the Civil War was a byproduct of government interference with open competition in banking. It is true that counterfeiters imitated and altered the notes of many state banks. The counterfeiting of state bank notes was generally less profitable than the counterfeiting of today's central bank currencies, because private bank notes don't stay in circulation long. Much like travelers checks, they quickly return to issuer.
Counterfeits are therefore likely to be detected by experts while the trail is still warm.
The Treasury realized that all this new currency threatened to cause a substantial increase in prices, but was unwilling to deny itself the fiscal advantages that the new currency would provide. Today's central bank currency monopolies have grown not from attempts to rectify market failures but from government's appetite for revenue. Contrary to myth, the United States' experience in the nineteenth century does not supply any grounds for restricting private banks from issuing currency. It instead points to the harmful consequences of government restrictions on bank-issued currency. By comparison to public monopoly, privatization raises the quality of currency.