This was done to improve intonation. Frank Converse wrote that it was a James Buckley idea. On the cover of Buckley's New Banjo Book,1860, he is playing a fretted Ashborn with the second fret partially compensated.
Converse was no great admirer of James Buckley, and somewhat sneeringly said that this innovation was "an idea Buckley was permitted to monopolize."
Comment by Jody Stecher on April 17, 2009 at 17:59
Yes, the fret adjustment was to get the interval of a major third more in tune with the fifth harmonic of the overtone series. Great idea if you only play in one key or restrict yourself to tunes that don't modulate. But I guess it was bit of a problem playing in some of the other keys. I used to have an old Serbian tamburitiza that had this feature and I *think* ( this was a long time ago) I once saw this feature on a small hybrid of fretted banjo and sanxian (unfretted Chinese banjo-type instrument.with python vellum).
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