Reference Items
Currency
Encased Postage Stamp

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In 1862, day-to-day commerce in the North became strained by a scarcity of coins whose metallic value had become greater than their denominational equivalent.  Consumers were hoarding coins and the resulting shortages strained commerce, so the public began to accept postage stamps as a medium of exchange.  However, stamps were not well suited as currency because they deteriorated quickly and their gummed backing caused them to stick to wallets, hands and anything else to which they came in contact.

On August 12, 1862, entrepreneur John Gault obtained a patent for his idea of encasing uncancelled U.S. postage stamps in metallic cases, to facilitate their use as coins.  A brass frame which was slightly smaller than a quarter held a mica facing, a stamp of varying denominations, and a cardboard backing, all sandwiched together by a button making machine.  Early pieces were silvered to make them look similar to real coins, but the silvering process was soon abandoned due to expense. 

The stamps utilized came in denominations of 1¢, 3¢, 5¢, 10¢, 12¢, 24¢, 30¢, and 90¢. These stamps were a new pattern for 1861, issued by the Government to eliminate the value of previously issued federal stamps still held in the Confederacy.

Unfortunately for Gault, the individual cost of production exceeded the value of the lower denomination stamps, so Gault sought to finance his endeavor by selling advertising on the back of the encasement.  A number of proprietors took advantage of the medium to advertise a variety of products.  Here, J. C. Ayer promotes his Sarsaparilla.

As the post office struggled to keep up with increased demand for stamps, these encased stamps circulated successfully through the middle of 1863.  When the Government’s new fractional paper currency became widely available, the encasements were plundered for the valuable stamps they contained.

This piece contains a blue, 1¢ stamp bearing the image of Ben Franklin.  On the reverse is "AYER'S SARSAPARILLA TO PURIFY THE BLOOD" with patent information below.


Member - Mike Sorenson
Item #: CIV-267

Broken Banknotes

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The issue of "broken banknotes” marks a strange and chaotic episode in U.S. currency which stemmed from the longstanding public distrust of a central economic authority.

Commencing in the late 1700’s and continuing until the standardization of currency by the federal government at the end of the Civil War, private banks issued all of the paper currency circulating in the U.S. This currency could be redeemed for specie at the issuing bank by personal appearance, whereupon the note was stamped as redeemed and removed from circulation as seen on the $5.00 Bank of South Carolina note pictured above. Until that event, its value was based solely on the holder’s (or recipient’s) confidence that some redemption was possible.

The frequent dissolution of these banks or the fact that some on occasion never existed in the first place gave rise to the term broken banknotes. The hundreds of banks issuing these notes make for great diversity for today’s collectors.

The notes were hand trimmed, dated and signed, usually by the bank president and cashier. Southern affiliation brings a slight premium in value as does an issue date during or near the Civil War. Some collectors are drawn to particular themes such as railroad or riverboat scenes or farm scenes depicting maidens and slaves. Much of this currency was printed by the American Banknote Company who offered a varied selection of patterns and engravings for the issuing bank to choose from as they designed their own notes. But absent federal controls, the process was an open invitation to counterfeiters who needed only a good printing press and sometimes an impressive but bogus bank name to print their own currency.

The issue of broken banknotes ceased after the Civil War as the federal government began printing U.S. backed legal tender notes. By 1866 private and state banks had either joined the national banking system or closed their doors. The colorful and fascinating era of the broken banknote had come to an end.

Member - Mike Sorenson
Item #: REF-240

State Issued Notes

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By 1861, after the Confederate States of America was officially established, Confederate currency was put into circulation throughout the South yet there never seemed to be enough. Each of the Southern states took advantage of their "states’ rights” and issued their own currency. The varied design of these notes offers interesting diversity to the collector.

Alabama was the fourth state to secede and remained the center of political activity until Virginia’s secession four months later. Its currency was surprisingly crude making it an easy target for counterfeiters. Pictured above is an Alabama 25¢ note redeemable at the State Treasury in groups of Twenty Dollars or more. It was issued under act of January 1, 1863. The note bears a simple engraving of a farm/cotton bale scene at its center with a woman's portrait at lower right. The plate marking "M" to the right of the Alabama scroll designates location of the particular note on a sheet, 26 notes being printed at once from a single stone engraving producing multiple notes simultaneously. The hand executed serial #13807 is visible at upper left. Choice uncirculated condition with no folds. Both notes pictured were hand trimmed after the printing and signing process and the uneven margins are evident.

Georgia was the fifth state to ratify the articles of secession. An example of a Georgia $10.00 note is pictured above at right, a uniface note issued on March 20, 1865 only a few days prior to Lee’s surrender at Appomattox Court House. Exhibiting a forlorn hope that the Confederacy could still somehow survive, even at the midnight hour of the war, the note promises redemption on December 25, 1865. It bears a center pavilion scene with an engraving of a locomotive and train at left. Its signatures remain strong as does serial #4240.

Member - Mike Sorenson
Item #: CIV-171

Civil War Tokens

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With the onset of war in 1861, the American public lost confidence in paper currency and began hoarding coins. The resulting shortages of coinage forced merchants to use small cent-size tokens in their place. Some stores produced custom "store cards" with their name, location, and business slogan. Others utilized less expensive "stock" tokens which were more readily available.

Many of these tokens bore interesting patriotic designs and inscriptions, indicative of the sentiments of the day, such as "Union Forever,” or "No Compromise With Traitors!” A few were struck with the famous statement by Treasury Secretary John A. Dix regarding threats by citizens in New Orleans to take down the U.S. flag of a revenue cutter, "If Any Man Attempts To Tear It Down, Shoot Him On The Spot!

Eventually, the federal government decided that the circulation of millions of privately issued Civil War tokens posed a bit of a problem, and they were outlawed by an act of Congress on April 22, 1864. Today, the wide diversity of design makes these Civil War tokens an interesting and affordable area of collecting.

Member - Mike Sorenson
Item #: CIV-168

$1 Legal Tender Note - a.k.a. "Greenback"

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Before 1861, all paper money circulating in the U.S. was issued by private banks chartered by the various states. Many problems were associated with the soundness of this currency (see "broken banknotes elsewhere in this section.)

The start of the Civil War found the nation in a precarious position for an acceptable currency. Public hoarding of coinage or "hard currency" made it quite scarce. In response, under the guidance of Secretary of the Treasury Salmon P. Chase, the first paper money backed by the United States government was issued in 1861. These notes were payable to the bearer on demand, exchangeable for hard currency and were referred to as "Demand Notes." They were issued in denominations of $5.00, $10.00 and $20.00. But the public soon began to exercise their right of "demand" as promised on the notes, and exchanged them for gold from the government coffers. Not many demand notes were issued and most that went into public hands were redeemed and taken from circulation so few examples survive today.

As the government recognized that the federal stockpile of gold could not survive the public's demand, a new item of currency termed the "United States Note" quickly replaced the Demand Notes in 1862 and was issued August 1st. These are also known as "Legal Tender Notes" and were legal tender for all debts, public and private. Their issue added denominations of $1, $50 and $100. These notes, (the $1 proudly bearing the image of Secretary Chase) were issued against, and earmarked for the permanent gold fund held in the treasury always maintained at $346,861,016.00.

These early notes were the first U.S. currency to receive engraving on both sides of the note, spawning the name "Greenbacks".

Member - John Beckendorf
Item #: CIV-154

Fractional Currency

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Civil War Fractional Currency At the outset of the Civil War coins were being hoarded for their metallic value and quickly disappeared from circulation. For change, some merchants issued credits slips, while a variety of other alternate substitutions were devised. Among these were postage stamps that were traded for change.

Stamps were a convenient and logical substitute, but still not perfect as they stuck to each other and to everything else. In some cases stamps were placed in clear marked envelopes. Some merchants encased stamps in a metal disc with a piece of clear mica over the face of the stamp and with an advertisement on the metal back. As enormous quantities were needed, the supply of stamps was soon exhausted.

In the course of these events, small paper notes in simulation of the current postage stamps, and in convenient size and in denominations of 5 cents, 10 cents, 25 cents and 50 cents were issued. These first issues were called Postage Currency and the notes were redeemable for stamps. Pictured here are examples of the First Issue of 21 August 1862.

Member - John Beckendorf
Item #: CIV-153

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