Postal currency
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__NOTOC__ Fractional currency, also referred to as
shinplaster Shinplaster was paper money of low denomination, typically less than one dollar, circulating widely in the economies of the 19th century where there was a shortage of circulating coinage. The shortage of circulating coins was primarily due t ...
s, was introduced by the United States federal government following the outbreak of the Civil War. These low- denomination banknotes of the United States dollar were in use between 21 August 1862 and 15 February 1876, and issued in denominations of 3, 5, 10, 15, 25, and 50
cent Cent may refer to: Currency * Cent (currency), a one-hundredth subdivision of several units of currency * Penny (Canadian coin), a Canadian coin removed from circulation in 2013 * 1 cent (Dutch coin), a Dutch coin minted between 1941 and 1944 * ...
s across five issuing periods.Kravitz The complete type set below is part of the National Numismatic Collection, housed at the
National Museum of American History The National Museum of American History: Kenneth E. Behring Center collects, preserves, and displays the heritage of the United States in the areas of social, political, cultural, scientific, and military history. Among the items on display is t ...
, part of the Smithsonian Institution.


History

The Civil War economy catalyzed a shortage of United States coinage—gold and silver coins were hoarded given their intrinsic
bullion Bullion is non-ferrous metal that has been refined to a high standard of elemental purity. The term is ordinarily applied to bulk metal used in the production of coins and especially to precious metals such as gold and silver. It comes from t ...
value relative to irredeemable paper currency at the time.Anderson, p. 303.Reed, p. 298. In late 1861, to help finance the Civil War, the U.S. government borrowed gold coin from New York City banks in exchange for Seven-thirties treasury notesMitchell, 1903, pp. 27–32. and the New York banks sold them to the public for gold to repay the loan. In December 1861, the
Trent Affair The ''Trent'' Affair was a International incident, diplomatic incident in 1861 during the American Civil War that threatened a war between the United States and United Kingdom of Great Britain and Ireland, Great Britain. The United States Navy, ...
shook public confidence with the threat of war on a second front. The United States Department of the Treasury suspended specie paymentsMitchell, 1902, p. 537. and banks in New York City stopped redeeming paper money for gold and silver.Mitchell, 1903, pp. 37–38. In the absence of gold and silver coin, the premium for specie began to devalue paper currency.Mitchell, 1902, p. 552. After the New York banks suspended specie payments (quickly followed by Boston and Philadelphia)Mitchell, 1903, p. 41. the premium on gold rose from 1–3% over paper in early January 1862 to 9% over paper in June 1862, by which time one paper dollar was worth 91.69 cents in gold. This fueled
currency speculation In finance, speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline in value.) Many ...
(e.g., redeeming banknotes for silver coin which was then sold at a premium as bullion),Mitchell, 1902, p. 540. and created significant disruption across businesses and trade.Mitchell, 1902, p. 553. Alternate methods of providing small change included the reintroduction of Spanish quarter dollars in Philadelphia, cutting dollar bills in quarters or halves,Mitchell, 1902, p. 554. refusing to provide change (without charging a premium for providing silver coins), or the issuance of locally issued
shinplaster Shinplaster was paper money of low denomination, typically less than one dollar, circulating widely in the economies of the 19th century where there was a shortage of circulating coinage. The shortage of circulating coins was primarily due t ...
s (i.e., those issued by businesses or local municipalities), which was forbidden by law in many states. Treasurer of the United States
Francis E. Spinner Francis Elias Spinner (January 21, 1802 – December 31, 1890) was an American politician from New York. He served as Treasurer of the United States from 1861 to 1875, and was the first administrator in the federal government to employ women for ...
has been credited with finding the solution to the shortage of coinage: he created postage currency (which led into the use of fractional currency).Blake, p. 32. Postage (or postal) currency was the first of five issues of US Post Office fractional paper money printed in 5-cent, 10-cent, 25-cent, and 50-cent denominations and issued from 21 August 1862 through 27 May 1863. Spinner proposed using postage stamps, affixed to Treasury paper, with his signature on the bottom (see illustration below). Based on this initiative, Congress supported a temporary solution involving fractional currency and on 17 July 1862 President Lincoln signed the Postage Currency Bill into law. The intent, however, was not that stamps should be a circulating currency. The design of the first issue (postage currency) was directly based on Spinner's original handmade examples. Some varieties even had a perforated stamp-like edge. While not considered a legal tender, postage currency could be exchanged for
United States Notes A United States Note, also known as a Legal Tender Note, is a type of paper money that was issued from 1862 to 1971 in the U.S. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money. They were k ...
in $5 lots and were receivable in payment of all dues to the United States, up to $5. Subsequent issues would no longer include images of stamps and were referred to as Fractional Currency. Despite the July 1862 legislation, postage stamps remained a form of currency until postage currency gained momentum in the spring of 1863.Reed, p. 302. In 1863, Secretary Chase asked for a new fractional currency that was harder to counterfeit than the postage currency. The new fractional currency notes were different from the 1862 postage currency issues. They were more colorful with printing on the reverse, and several anti-counterfeiting measures were employed: experimental paper, adding surcharges, overprints, blue endpaper, silk fibers, and watermarks to name a few.
Fractional currency shield A fractional currency shield is a printed "shield" on which is placed 39 different fractional currency notes. Produced in 1866 and 1867 by the Treasury Department, the shields were sold to banks for $4.50 each, for the purpose of having a genuine ...
s which had single-sided specimens were sold to banks to provide a standard for comparison for detecting counterfeits. Postage and fractional currency remained in use until 1876, when Congress authorized the minting of fractional silver coins to redeem the outstanding fractional currency.


Issuing periods and varieties

File:US-Fractional (1st Issue)-$0.50-Spinner Prototype.jpg, alt=Spinner's initial signed design, Spinner's initial signed design (photo) File:US-Fractional (1st Issue)-$0.50-Model.jpg, alt=Original model artwork, Original model artwork File:US-Fractional (1st Issue)-$0.50-Proof.jpg, alt=Working proof with pencil notations, Working proof with pencil notations


Complete type set of United States fractional currency


Portraits of living individuals

Three people were depicted on fractional currency during their lifetime: Francis E. Spinner (Treasurer of the United States),
William P. Fessenden William Pitt Fessenden (October 16, 1806September 8, 1869) was an American politician from the U.S. state of Maine. Fessenden was a Whig (later a Republican) and member of the Fessenden political family. He served in the United States House o ...
(
U.S. Senator The United States Senate is the upper chamber of the United States Congress, with the House of Representatives being the lower chamber. Together they compose the national bicameral legislature of the United States. The composition and powe ...
and Secretary of the Treasury), and
Spencer M. Clark Spencer M. Clark (June 3, 1811  – December 10, 1890) was the first Superintendent of the National Currency Bureau, today known as the Bureau of Engraving and Printing, from 1862 to 1868. Public service Spencer Morton Clark was born in Ve ...
(Superintendent of the National Currency Bureau). Both Spinner and Clark decided to have their portrait depicted on currency, which created controversy. Republican Representative Martin R. Thayer of Pennsylvania was an outspoken critic, suggesting that the Treasury's privilege of portrait selection for currency was being abused. On 7 April 1866, led by Thayer, Congress enacted legislation specifically stating "that no portrait or likeness of any living person hereafter engraved, shall be placed upon any of the bonds, securities, notes, fractional or postal currency of the United States." On the date of passage, a number of plates for the new 15-cent note depicting William Tecumseh Sherman and
Ulysses S. Grant Ulysses S. Grant (born Hiram Ulysses Grant ; April 27, 1822July 23, 1885) was an American military officer and politician who served as the 18th president of the United States from 1869 to 1877. As Commanding General, he led the Union Ar ...
had been completed, as the plate proofs for these exist in the archives of the Smithsonian Institute's National Museum of American History. However, the plates were never used to produce notes for circulation. The only Sherman-Grant examples produced were single sided specimens that were placed on Fractional Currency Shields.Friedberg & Friedberg, p. 183.


See also

* Federal Reserve System * List of people on United States banknotes * Treasury Note (19th century) *
United States postal notes Postal notes were the specialized money order successors to the United States Department of the Treasury's postage and fractional currency. They were created so Americans could safely and inexpensively (for a three cent fee) send sums of money un ...


References


Notes


References


Books and journals

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Further reading

* * {{obsolete U.S. currency and coinage Currency lists Historical currencies of the United States Paper money of the United States Banknotes of the United States