Postal Currency
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__NOTOC__ Fractional currency, also referred to as shinplasters, was introduced by the
United States federal government The Federal Government of the United States of America (U.S. federal government or U.S. government) is the Federation#Federal governments, national government of the United States. The U.S. federal government is composed of three distinct ...
following the outbreak of the
Civil War A civil war is a war between organized groups within the same Sovereign state, state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change government policies.J ...
. These low- denomination banknotes of the
United States dollar The United States dollar (Currency symbol, symbol: Dollar sign, $; ISO 4217, currency code: USD) is the official currency of the United States and International use of the U.S. dollar, several other countries. The Coinage Act of 1792 introdu ...
were in use between August 21, 1862, and February 15, 1876, and issued in denominations of 3, 5, 10, 15, 25, and 50 cents across five issuing periods.Kravitz The complete type set below is part of the
National Numismatic Collection The National Numismatic Collection is the national coin cabinet of the United States. The collection is part of the Smithsonian Institution's National Museum of American History. Overview The National Numismatic Collection comprises approxi ...
, housed at the
National Museum of American History The National Museum of American History: Kenneth E. Behring Center is a historical museum in Washington, D.C. It collects, preserves, and displays the heritage of the United States in the areas of social, political, cultural, scientific, and m ...
, part of the
Smithsonian Institution The Smithsonian Institution ( ), or simply the Smithsonian, is a group of museums, Education center, education and Research institute, research centers, created by the Federal government of the United States, U.S. government "for the increase a ...
.


History

The Civil War economy catalyzed a shortage of United States
coinage Coinage may refer to: * Coins, standardized as currency * Coining (mint), the process of manufacturing coins * '' COINage'', a numismatics magazine * Tin coinage, a tax on refined tin * Coinage, a protologism or neologism In linguistics, a neolo ...
—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 ...
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 shook public confidence with the threat of war on a second front. The
United States Department of the Treasury The Department of the Treasury (USDT) is the Treasury, national treasury and finance department of the federal government of the United States. It is one of 15 current United States federal executive departments, U.S. government departments. ...
suspended specie paymentsMitchell, 1902, p. 537. and banks in
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
stopped redeeming
paper money Paper money, often referred to as a note or a bill (North American English), is a type of negotiable promissory note that is payable to the bearer on demand, making it a form of currency. The main types of paper money are government notes, which ...
for
gold Gold is a chemical element; it has chemical symbol Au (from Latin ) and atomic number 79. In its pure form, it is a brightness, bright, slightly orange-yellow, dense, soft, malleable, and ductile metal. Chemically, gold is a transition metal ...
and
silver Silver is a chemical element; it has Symbol (chemistry), symbol Ag () and atomic number 47. A soft, whitish-gray, lustrous transition metal, it exhibits the highest electrical conductivity, thermal conductivity, and reflectivity of any metal. ...
.Mitchell, 1903, pp. 37–38. In the absence of gold and silver coin, the premium for
specie Specie may refer to: * Coins or other metal money in mass circulation * Bullion coins * Hard money (policy) * Commodity money * Specie Circular, 1836 executive order by US President Andrew Jackson regarding hard money * Specie Payment Resumption A ...
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 in a brief amount of time. It can also refer to short sales in which the speculator hopes for a decline ...
(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 Philadelphia ( ), colloquially referred to as Philly, is the List of municipalities in Pennsylvania, most populous city in the U.S. state of Pennsylvania and the List of United States cities by population, sixth-most populous city in the Unit ...
, 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 shinplasters (i.e., those issued by businesses, local municipalities), which was forbidden by law in many states.
Civil War token Civil War tokens are token coins that were privately minted and distributed in the United States between 1861 and 1864. They were used mainly in the Northeast and Midwest. The widespread use of the tokens was a result of the scarcity of governmen ...
s and
encased postage stamp John Gault was an American entrepreneur and inventor who created the encased postage stamp. Gault used these encased postage stamps as a means to solve a coin shortage during the American Civil War, Civil War as well as ultimately profit from thei ...
s were also used for this purpose.


First Issue: Postage Currency

Treasurer of the United States The treasurer of the United States is an officer in the United States Department of the Treasury who serves as the custodian and trustee of the federal government's collateral assets and the supervisor of the department's currency and coinage pr ...
Francis E. Spinner 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 August 21, 1862, through May 27, 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 July 17, 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 Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment in court for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything ...
, postage currency could be exchanged for
United States Notes A United States Note, also known as a Legal Tender Note, is a type of Banknote, paper money that was issued from 1862 to 1971 in the United States. Having been current for 109 years, they were issued for longer than any other form of U.S. paper ...
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.


Second and subsequent Issues

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 shields 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 A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...
authorized the
minting Minting is a village and civil parish in the East Lindsey district of Lincolnshire, England. The village is situated south from the A158 road The A158 road is a major route that heads from Lincoln, Lincolnshire, Lincoln in the west to Ske ...
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 File:US-Encased Postage-$0.10.jpg, alt=10-cent encased postage stamp designed by John Gault, Encased postage example.


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 (
U.S. Senator The United States Senate is a chamber of the bicameral United States Congress; it is the upper house, with the U.S. House of Representatives being the lower house. Together, the Senate and House have the authority under Article One of the ...
and
Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
), 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 April 7, 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 William Tecumseh Sherman ( ; February 8, 1820February 14, 1891) was an American soldier, businessman, educator, and author. He served as a General officer, general in the Union Army during the American Civil War (1861–1865), earning recognit ...
and
Ulysses S. Grant Ulysses S. Grant (born Hiram Ulysses Grant; April 27, 1822July 23, 1885) was the 18th president of the United States, serving from 1869 to 1877. In 1865, as Commanding General of the United States Army, commanding general, Grant led the Uni ...
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 The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...
*
List of people on United States banknotes Individual portraits of 53 people central to the history of the United States are depicted on the country's banknotesFriedberg including List of Presidents of the United States, presidents, United States Cabinet, cabinet members, members of Unite ...
*
Treasury Note (19th century) A Treasury Note is a type of short term debt instrument issued by the United States prior to the creation of the Federal Reserve System in 1913. Without the alternatives offered by a federal paper money or a central bank, the U.S. government r ...
* United States postal notes


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