Postage and Fractional Currency (History)

The issuing of Postage and Fractional Currency by the United States government came about during the American Civil War, also called War Between The States, a four-year war (1861-65) between the federal government of the United States and 11 Southern states that asserted their right to secede from the Union.

The United Sates government since October 1792 had struck coins. On July 17, 1861 Congress passed an Act allowing the Treasury Department to print and circulate paper money. In December of 1861 the government suspended payments of private specie. At this time the general public looked on paper money with skepticism; because there had been many attempts by private individuals, private banks, and states issuing notes as "a promise to pay in coin, gold, or silver" or "to be used in payment for goods, services, or taxes". The states would recall their notes making them worthless and notes of the private banks and individuals were only as good as long as the banks or individuals had coin to back up the notes. Sometimes, individuals and banks would issue more notes than they could redeem in gold or silver coin with the hopes that it would circulate never returning for redemption. When word got out that a bank didn’t have gold or silver enough to redeem for its issue of paper there would often be a "run on the bank". The first issue of US legal tender paper money was in 1862.

Before the start of the American Civil War (July 21, 1861) the general public on both sides was still skeptical of paper money even if it was issued by the US or Confederate government. This skepticism led to everyone hording all coinage issued. The idea was that it could always be melted down and they would have the value of the metal that it was made from.

The hording of coins created a problem because merchants no longer could make change for a dollar. Some merchants resorted to creating their own "script" in fractional denominations even though this practice was now illegal. The public needed something to replace the coins. The government produced more coins but these were also horded and never got into general circulation.

The Secretary of the Treasury suggested two solutions to congress: 1 Reduce the size and weight of coins. 2. Allow the use of revenue or postage stamps to replace coins. By an Act approved on July 17, 1862 the government authorized the use of US Postage stamps in place of coinage. Immediately people started using postage stamps for small coins. This created another problem because of the glue on the back of the stamps. The stamps would stick together and would not last long in circulation. As a short term solution cases for the postage stamps were made. Encased stamps would be made of tin, led or any cheep mettle so that a stamp could be placed inside and then a piece of clear mica would be placed over the stamp. Since the merchants would bear the cost of the cases advertising was usually placed on the back.

The Postmaster General, Montgomery Blair, made arrangements with the National Bank Note Company for the printing of fractional notes similar to the existing postage stamps. The Post office Department delivered to General F.E. Spinner of the Treasury Department the first printing of postage currency in five, ten, twenty-five and fifty cent denominations in August of 1862.

Spinner had designed the first postage currency thus he is credited as the "Farther of Fractional Currency"