This article is from the Paper Money Collecting FAQ, by Bruce Giese firstname.lastname@example.org with numerous contributions by others.
Before there were National banknotes (1790-1865), many private banks
issued their own paper money without US Government backing. Many of
these notes become worthless when banks closed. Many of them were
counterfeited and altered. When the national bank system was created,
privately issued paper money was taxed to the point of being effectively
outlawed. Unlike US Government paper which has always remained legal
tender, obsolete banknotes are now... obsolete.
If you ever think we live in chaotic times rife with unethical
opportunistic swindlers, just read about the history of these notes
and the 1990s will look tame.
Obsolete notes are more affordable than national banknotes and
more interesting, as far as I'm concerned. :-)