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Stamp Notes Circulated
By Fred Reed
October 09, 2007

As a niche, perhaps no genre of U.S. currency is more avidly collected by its enthusiasts than U.S. Postage and Fractional Currency.

These miniature pieces of paper money replaced small change during the Civil War, and for the last quarter century have had their own collector's organization, The Fractional Currency Collectors Board.

When Treasury Secretary Salmon Chase's greenback inflation drove hard money from the marketplace, the U.S. Congress mistakenly monetized postage stamps to replace the coins, which had been withdrawn from circulation.

Congress responded with an Act passed July 17, 1862. This brief law directed the Treasury secretary to "furnish to the assistant treasurers, and such designated depositaries of the United States as may be by him selected…postage and other stamps of the United States, to be exchanged by them, on application for United States Notes." It became effective Aug. 1, 1862.

The Post Office Department was not keen on the plan. Runs on post offices depleted stamp supplies, and Postmaster General Montgomery Blair shut the stamp windows to change buyers on July 22. He wired his postmasters: "[T]his department is not to furnish postage stamps for currency."

The Treasury secretary, who considered his time too important to manage such trivial pursuits, instructed Internal Revenue Commissioner George S. Boutwell to placate the irate Blair. Boutwell and Blair came to an accommodation. Since details to implement the legislation were vague, U.S. Treasurer F.E. Spinner devised prototypes for small notes in lieu of stamps, by affixing stamps to Treasury Department letterhead.

The issued notes largely followed Spinner's designs, and the treasurer has been dubbed "Father of U.S. Fractional Currency," by collectors. Notes were issued in four denominations. The five-cent note (like the one shown) depicted a single Jefferson five-cent stamp. The 10-cent note depicted a single Washington 10-cent stamp. The 25-cent note showed five Jefferson stamps, while the 50-center sported five Washington stamps.

The Treasury Department contracted with bank note printers in New York City to produce these small notes. This made sense. The federal government did not have a security printing division, and National Bank Note Co. was already printing the five- and 10-cent stamps that would appear on the small notes.

Thus NBNC was engaged to print the face side of these notes. For security and political reasons, the American Bank Note Co. was hired to print the backs.

Notes were tiny. Five- and 10-cent notes are only 65 mm by 45 mm. The two higher values are 78 mm by 48 mm. The first notes issued were in large sheets perforated like postage stamps. Five-cent notes were printed on buff-colored paper.

However introduction of these notes was much delayed. Treasury Secretary Chase first saw printed notes on Aug. 16. He directed that note sheets should be accepted as furnished by the Post Office Department - i.e., perforated instead of clipped. Chase considered the perforations as a partial safeguard against counterfeiting. Aug. 21, 1862, was the nominal first day of issue of Postage Currency with a small supply being furnished to Army paymasters.

However weeks went by with no substantial issue of this small change money. Newspaper editors complained. The public was in an uproar. Notes were rationed in New York City. In November a riot erupted in Cincinnati when supply ran out.

Ultimately 124 million of these Postage Currency notes were issued, totaling $20.2 million in revenues. This included nearly 45 million of the five-cent Jefferson notes.

Today, choice examples are still inexpensive and delightful collectibles.

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