COPE overprinting plate cylinder inks rollers for application of serial numbers and seals on 16-subject sheets of Federal Reserve notes in the 1970s.

The Currency Overprinting Processing Equipment, COPE for short, printed the inverted overprinted error notes during the third printing step. The 16-note subject sheets were accidentally rotated into the wrong position before the serial numbers, Treasury Department seal, and Federal Reserve Bank seals and number indicators were printed. Circa 1970s image shows $5 notes being fed into the COPE, with serial numbers and seals ready to be applied.

A total price of $431.25 was paid in a May 3, 2010, Heritage auction for this PCGS Choice New 63 Series 1974 $20 Federal Reserve note with inverted overprint, bearing the seal of the Federal Reserve Bank of Philadelphia.

Series 1974 inverted overprint errors were not just restricted to the $1 denomination. This inverted overprint $5 note bearing the Federal Reserve Bank of St. Louis seal, graded PMG Choice Uncirculated 64, realized $352.50 in a Sept. 22, 2015, Heritage sale.

This inverted overprint Series 1974 $1 note bearing the seal of the Federal Reserve Bank of Kansas City (Mo.) experienced extensive circulation before it was discovered. Graded PCGS Currency Very Fine 25 Premium Paper Quality, it realized $94 in a Dec. 20, 2011, Heritage sale.

This three-note sequence of Series 1974 $1 Federal Reserve notes bearing the Federal Reserve Bank of Dallas seal has an inverted overprint note sandwiched between notes bearing correctly printed before and after serial numbers. Graded PCGS Currency 64 Very Choice New 64 Premium Paper Quality, the three-note set sold for $352.50 in a Sept. 22, 2015, sale.

Series 1974 $1 Federal Reserve note is from a discovery batch of inverted overprint notes found by Philadelphia professional numismatist Harry J. Forman in a brick of 4,000 notes in 1974. This note realized $488.75 in a Jan. 5, 2007, sale by Heritage Auctions.

It’s been 40 years since an unprecedented flood of Federal Reserve note errors began pouring into circulation.

The errors showed the overprinted elements — green serial numbers and Treasury shield, and black Federal Reserve seal and numbers — upside down on large numbers of notes. Reports of the first examples of the inverted overprint errors came in late October 1976 from Philadelphia professional numismatist Harry J. Forman who discovered a 30-note sequence of misprinted Series $1 Federal Reserve notes.

On the error notes, the overprinted elements, from the third printing step of note production (or overprinting, as the step is also called), are upside down in relation to the note elements printed during the first two stages of printing.

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Such errors were not unknown before 1976. What was remarkable, however, was the number of inverted overprint errors entering circulation; hundreds of different notes were confirmed as being found, and while that number was small in comparison to the millions of notes printed in the series, the population of the errors was the largest ever cataloged.

Coin World began reporting on the inverted overprint errors in the Nov. 17, 1976, issue. Reports continued for months as the number of error notes collectors discovered continued to climb amid the collector frenzy.

Today, collectors should reasonably expect to pay more than $500 for a Crisp Uncirculated example of one of the error $1 notes.

The Series 1974 notes were printed at the Bureau of Engraving and Printing’s only paper money printing facility at the time, in Washington, D.C. The Fort Worth, Texas, satellite printing plant wasn’t brought into production until 1995.

How did the inverted overprint errors happen?

The BEP’s assistant director for operations at the time the Series 1974 notes were being printed, E.J. Prescott, said that, when the errors were printed, the BEP was conducting experiments with the note inspection equipment in connection with its Currency Overprinting Processing Equipment. Changes in procedure during the experimentation factored into producing the rash of errors. According to the BEP, the resulting notes were due to human error “almost exclusively.”

During the experimentation, printed notes were being mechanically moved for inspection instead of being manually retrieved for examination for anomalies that would require their removal from progress toward distribution. This interruption in the usual process apparently played a significant role in creating the errors.

The inverted overprint error notes occurred when 16-subject half sheets were turned the wrong direction before insertion into the overprinting equipment. All of the overprinting elements were thus inverted from their normal positioning.

A misstep in process

BEP officials were unaware of any problems resulting from their experimentation until officials were notified of the error notes already having entered commerce. Officials quickly recognized that the errors were not an isolated incident but indicated a repeating sequence of production problems.

When the Series 1974 notes were printed, the production of U.S. paper money was accomplished in several separate steps (three involving printing). Today’s notes require more steps because of anti-counterfeiting and other security devices incorporated into the notes since the 1990s.

The backs and faces of Series 1974 notes were produced using the intaglio printing process, using engraved plates on which the lettering and devices are incused and reversed. During the printing process, ink is rolled onto the plates, filling the recesses of the design. The resultant printing will feel raised to the touch.

On the first pass through an intaglio printing press, the backs of the notes were printed first with a single color of ink (which, for Series 1974 notes, was green). The back-printed sheets were stacked and the ink was allowed to cure for 48 hours before the sheets were returned to the press for the second printing pass.

During the second pass through the printing press, the elements of the note’s face were printed in one color of ink (which, for these notes, was black). Elements added during this second printing, the primary devices, include the portrait vignette, scrollwork and additional border design features. Again, the notes were stacked and allowed 48 hours for the black ink to dry properly.

The 32-subject notes were then cut down to 16-subject sheets and trimmed for placement into the BEP’s COPE press. This equipment would apply the two-color printing to add, in green, the unique serial numbers along with the Treasury Department seal; and in black, the specific Federal Reserve District seal (12 Federal Reserve Districts exist) and the numerical designation for the individual Federal Reserve District.

The twist

This printing stage is when stacks of the half sheets were inverted from their normal orientation.

The same half sheets of notes were used for all Federal Reserve Districts. When a particular district’s order was completed, technicians would swap out the elements of the COPE press that identified the issuing district before beginning production for another district. If production of one district’s notes was printed on the inverted half sheets and the error not caught during any manual inspection process, inverted half sheets remained in the supply line for use (and apparently were used) to print notes for a new district, resulting in the inverted overprinting for that district’s notes as well.

Once the overprinting was completed, the overprinted notes were cut down into single notes for strapping in quantities of 100 notes per strap, with the straps then put into shrink-wrapped 4,000 notes “bricks.”

Discovering the error notes

Forman, a dealer in Philadelphia, located his 30-note sequence of error notes in a brick of 4,000 Series 1974 $1 Federal Reserve notes bearing the C seal designation for the Philadelphia Federal Reserve District.

Forman discovered a sequential run of 30 notes, all with the inverted overprint error; the notes before and after the sequential run were normal. The inverted overprint notes carried serial numbers C 99348540 B through C 99348569 B.

Forman’s find indicated that 30 16-subject sheets of the $1 notes had been turned upside down prior to the COPE overprinting.

A Gem Crisp Uncirculated example of one of Forman’s discovery notes realized $488.75 in Heritage Auctions’ Jan. 5, 2007, sale.

Additional reports of inverted overprint errors on $1 notes soon followed Forman’s. A week after Forman’s find, paper money dealer Harry Jones in Cleveland reported finding another 30-note sequential run of $1 notes in a 4,000-note brick of notes also bearing the seal of the Federal Reserve Bank of Philadelphia.

Soon after Jones’ find, 22 $1 inverted overprint error notes bearing the seal of the Federal Reserve Bank of Kansas City were identified at a Denver grocery store.

Forman later reported an individual that he knew who had connections with area banks had secured three 4,000-note bricks of $1 notes, examining each one individually.

Four examples with an inverted overprint error were discovered in that 12,000-note acquisition, but were determined to have been caused by a similar but separate occurrence of an inversion of the sheets before entering the COPE processing. They were printed bearing the seal of the Federal Reserve Bank of Philadelphia.

Additional inverted overprint $1 note errors were reported with Dallas Federal Reserve Bank and Atlanta Federal Reserve Bank seals that were also from similar but separate instances of an inversion of sheets before entering COPE processing.

Coverage in the Sept. 1, 1976, Coin World detailed a single COPE invert overprint error note bearing the Federal Reserve Bank of Atlanta seal, serial number F 41863880 B, discovered in Louisiana.

The cause

Prescott stated in November 1976 that an investigation was launched into the printing of several hundred notes bearing the inverted overprint error.

Prescott said that, when the printing errors occurred, automated note examination equipment being tested was mechanically moving printed sheets to a note examiner instead of the inspector manually moving the sheets to the examiner. BEP’s investigation determined the procedural change resulted in the 16-subject sheets being rotated before insertion into the COPE press.

In the 1978 edition of the Coin World booklet, Paper Money Errors, Tom DeLorey and Fred L. Reed explain that the COPE incorporated built-in sensors to ensure that each step is executed correctly and to stop the presses when defects are detected.

A photoelectric eye subsequently added to the COPE prohibits otherwise normal sheets of notes from being inserted upside down or inverted in the way that created the plethora of inverted overprint errors.

Building a set of inverted overprint notes

Collectors may try to assemble a complete collection of Series 1974 $1 inverted overprint Federal Reserve notes by Federal Reserve District. Paper money dealer Frederick J. Bart from Executive Currency in Roseville, Mich., said as inverted overprint errors began to surface, bearing seals for Federal Reserve Districts other than Philadelphia, collectors began to assemble collections of Series 1974 $1 Federal Reserve notes representing all 12 districts.

Bart says he still gets requests for notes of individual districts, but not necessarily a complete set. Examples of inverted overprint errors are also reported for Series 1974 $5, $10 and $20 Federal Reserve notes from different Federal Reserve Banks, so collectors could also consider a denominational inverted overprint error set.

Bart noted that the appearance of the relatively large number of inverted overprints created quite a stir not only in the collector community but the public at large. The general media reported the finds along with the numismatic press, triggering bank tellers and others to begin looking for the notes in hopes of cashing in on the numismatic bonanza. One find in particular pointed out the differences in news coverage between the numismatic press and the less-knowledgeable general press.

In its Jan. 26, 1977, issue, Coin World staff writer Fred L. Reed reported a teller at a Massachusetts bank gave up her job rather than turn over one of the invert error notes. A retailer customer of the bank reportedly mistakenly included the error in the day’s deposits. The teller, recognizing the error, exchanged a normal note for it. The bank customer, though, returned to retrieve the note, but the teller refused to hand it over. Offered a choice between returning the note to the customer or losing her job, she chose job loss. Her decision may have been based on inaccurate reporting in local media of the note’s value (worth a nice premium, the note was not worth losing a job).

The BEP eventually shut down the flood of errors and, over the years, improved its inspection processes to make a similar flood less likely. The notes that entered circulation in 1976 and 1977 remain a tangible reminder of a time when paper money errors dominated the pages of Coin World.