fractional currency

The Civil War economy catalyzed a shortage of United States coinage —gold and silver coins were hoarded given their intrinsic bullion value relative to irredeemable paper currency at the time. In late 1861, to help finance the Civil War, the U.S. government borrowed gold coins from New York City banks in exchange for Seven-thirties treasury notes 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 suspended specie payments and banks in New York City stopped redeeming paper money for gold and silver. In the absence of gold and silver coin, the premium for specie began to devalue paper currency. After the New York banks suspended specie payments (quickly followed by Boston and Philadelphia) 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 (e.g., redeeming banknotes for silver coin which was then sold at a premium as bullion), and created significant disruption across businesses and trade. Alternate methods of providing small change included the reintroduction of Spanish quarter dollars in Philadelphia, cutting dollar bills in quarters or halves, 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 tokens and encased postage stamps were also used for this purpose.

Treasurer of the United States 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). 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, postage currency could be exchanged for United States Notes in $5 lots and were receivable in payment of all dues to the United States, up to $5.The payment obligation printed on first-issue notes states they are "Exchangeable for United States Notes by any Assistant Treasurer or designated U.S. Depositary in sums not less than five dollars. Receivable in payments of all dues to the U. States less than five dollars." 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.

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.The payment obligation for the second issue was slightly different: "Exchangeable for United States Notes by the Assistant Treasurer and designated depositories of the U.S. in sums not less than three dollars. Receivable in payment of all dues to the United States less than five dollars except customs." 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 authorized the minting of fractional silver coins to redeem the outstanding fractional currency.

Issuing periods of United States fractional currency • Issuing period — Period dates — Denominations issued — Features/varieties • data-sort-value="1"|First issue — data-sort-value="1862-08-21"|Aug 21, 1862 May 27, 1863 — $0.05 $0.10 $0.25 $0.50 — Issued as postage currency with two main varieties: 1) edges (straight versus perforated), and 2) monogram (presence or absence of the American Bank Note Co. monogram (ABCo) on the reverse).The reverse of the first issue was originally printed by the National Bank Note Company. As a security precaution, the Treasury moved the printing contract to the American Bank Note Company who added their monogram ABC to the reverse of the remaining first-issue notes. All four denominations bear the stamp motif on the obverse. • data-sort-value="2"|Second issue — data-sort-value="1863-10-01"|October 10, 1863 Feb 23, 1867 — $0.05 $0.10 $0.25 $0.50 — Introduction of numerous anti-counterfeiting measures: bronze oval (obverse), bronze ink surcharge (reverse), use of fiber paper.Also known as membrane paper; two sheets of paper bonded together with fibers embedded. • data-sort-value="3"|Third issue — data-sort-value="1864-12-05"|December 5, 1864 Aug 16, 1869 — $0.03 $0.05 $0.10 $0.25 $0.50 — Sporadic use of surcharges, signatures introduced (except 3-cent) both printed (PS) and autographed (AS), design features (or position indicators) – either the letter "a", the number "1", or both, on the extreme left obverse. • data-sort-value="4"|Fourth issue — data-sort-value="1869-07-14"|July 14, 1869 Feb 16, 1875 — $0.10 $0.15 $0.25 $0.50 — Additional anti-counterfeiting measures: watermarked paper ("US"), embedding of large silk fibers, blue tinted end paper. • data-sort-value="5"|Fifth issue — data-sort-value="1874-02-26"|February 26, 1874 Feb 15, 1876 — $0.10 $0.25 $0.50 — Color tinting in paper, silk fibers. • Illustration — alt=Spinner's initial signed design Spinner's initial signed design (photo) • Illustration — alt=Original model artwork Original model artwork • Illustration — alt=Working proof with pencil notations Working proof with pencil notations • Illustration — alt=10-cent encased postage stamp designed by John Gault Encased postage example.

• Value — Series — SizeSort by size is based on the surface area of the note in square millimetres. Margins and cut may affect the listed dimensions, but generally not more than +/- 2 mm — Fr. no."Fr" numbers refer to the numbering system in the widely used Friedberg reference book. Fr. numbers indicate varieties existing within a larger type design. — Image — Portrait — VarietiesVarieties are taken from the standard paper money reference by Arthur and Ira Friedberg, with additional descriptions in the Kravitz collector's guide • $0.05 — data-sort-value="1862-08-21"|First issue — data-sort-value="2827.5"|65 × 43.5 mm — Fr.1231 — — data-sort-value="Jefferson1"|Thomas Jefferson — 1228 – Perforated; monogram 1229 – Perforated; no monogram 1230 – Straight; monogram 1231 – Straight; no monogram • $0.10 — data-sort-value="1862-08-21"|First issue — data-sort-value="2827.5"|65 × 43.5 mm — Fr.1240 — — data-sort-value="Washington1"|George Washington — 1240 – Perforated; monogram 1241 – Perforated; no monogram 1242 – Straight; monogram 1243 – Straight; no monogram • $0.25 — data-sort-value="1862-08-21"|First issue — data-sort-value="2947.5"|78 × 48 mm — Fr.1280 — — data-sort-value="Jefferson2"|Thomas Jefferson — 1279 – Perforated; monogram 1280 – Perforated; no monogram 1281 – Straight; monogram 1282 – Straight; no monogram • $0.50 — data-sort-value="1862-08-21"|First issue — data-sort-value="2947.5"|78 × 48 mm — Fr.1312 — — data-sort-value="Washington2"|George Washington — 1310 – Perforated; monogram 1311 – Perforated; no monogram 1311a – Same, except 14 versus 12 perf/20 mm 1312 – Straight; monogram 1313 – Straight; no monogram • $0.05 — data-sort-value="1863-10-10"|Second issue — data-sort-value="3078.5"|65.5 × 47 mm — Fr.1232 — — data-sort-value="Washington3"|George Washington — 1232 – No surcharge 1233 – Surcharge "18-63" 1234 – Surcharge "18-63" and "S" 1235 – Surcharge "18-63" and "R-1"; Fiber paper • $0.10 — data-sort-value="1863-10-10"|Second issue — data-sort-value="3078.5"|65.5 × 47 mm — Fr.1246 — — data-sort-value="Washington4"|George Washington — 1244 – No surcharge 1245 – Surcharge "18-63” 1246 – Surcharge "18-63" and "S” 1247 – Surcharge "18-63" and "I” 1248 – Surcharge "0-63" 1249 – Surcharge "18-63” and "T-1" • $0.25 — data-sort-value="1863-10-10"|Second issue — data-sort-value="3078.5"|65.5 × 47 mm — Fr.1284 — — data-sort-value="Washington5"|George Washington — 1283 – No surcharge. 1284 – Surcharge "18-63" 1285 – Surcharge "18-63" and "A" 1286 – Surcharge "18-63" and "S" 1287 – Unissued Friedberg number 1288 – Surcharge "18-63" and "2" 1289 – Surcharge "18-63" and "T-1"; fiber paper 1290 – Surcharge "18-63" and "T-2"; fiber paper • $0.50 — data-sort-value="1863-10-10"|Second issue — data-sort-value="3078.5"|65.5 × 47 mm — Fr.1322 — — data-sort-value="Washington6"|George Washington — 1314 – No surcharge 1315 – Unissued Friedberg number 1316 – Surcharge "18-63" 1317 – Surcharge "18-63" and "A" 1318 – Surcharge "18-63" and "1" 1319 – Unissued Friedberg number 1320 – Surcharge "18-63" and "0-1"; fiber paper 1321 – Surcharge "18-63" and "R-2"; fiber paper 1322 – Surcharge "18-63" and "T-1"; fiber paper • $0.03 — data-sort-value="1864-12-05"|Third issue — data-sort-value="2673"|66 × 40.5 mm — Fr.1226 — — data-sort-value="Washington7"|George Washington — 1226 – Portrait light background 1227 – Portrait dark background • $0.05 — data-sort-value="1864-12-05"|Third issue — data-sort-value="2944"|64 × 46 mm — Fr.1238 — — data-sort-value="Clark"|Spencer Clark — 1236 – Red reverse 1237 – Red reverse; design letter "a" 1238 – Green reverse 1239 – Green reverse; design letter "a" • $0.10 — data-sort-value="1864-12-05"|Third issue — data-sort-value="3807"|81 × 47 mm — Fr.1254 — — data-sort-value="Washington8"|George Washington — • $0.25 — data-sort-value="1864-12-05"|Third issue — data-sort-value="4488.5"|95.5 × 47 mm — Fr.1294 — — data-sort-value="Fessenden"|William Fessenden — 1294 – 1300 Green reverse • $0.50 — data-sort-value="1864-12-05"|Third issue — data-sort-value="5472"|114 × 48 mm — Fr.1328 — — data-sort-value="Spinner1"|Francis Spinner — 1324 – 1330 Red reverse; surcharge "A-2-6-5" • $0.50 — data-sort-value="1864-12-05"|Third issue — data-sort-value="5472"|114 × 48 mm — Fr.1339 — — data-sort-value="Spinner2"|Francis Spinner — 1339 – Green reverse; no surcharge or design figures 1340 – Green reverse; design figures "1” and "a" 1341 – Green reverse; design figure "1" 1342 – Green reverse; design figure "a" • $0.50 — data-sort-value="1864-12-05"|Third issue — data-sort-value="5472"|114 × 48 mm — Fr.1355 — — data-sort-value="Justice"|Justice holding scales — 1351 – 1354 Red reverse; surcharge "S-2-6-4"; (PS) 1370 – 1373a Green reverse; surcharge "A-2-6-5"; fiber paper • $0.10 — data-sort-value="1869-07-14"|Fourth issue — data-sort-value="3634"|79 × 46 mm — Fr.1259 — — data-sort-value="Liberty"|Bust of Liberty — 1257 – Large red seal; watermarked; silk fibers (pink) 1258 – Large red seal; silk fibers (pink) 1259 – Large red seal; silk fibers (violet); blue end paper 1260 – Does not exist 1261 – Smaller red seal; silk fibers (violet); blue end paper • $0.15 — data-sort-value="1869-07-14"|Fourth issue — data-sort-value="4094"|89 × 46 mm — Fr.1269 — — data-sort-value="Columbia"|Bust of Columbia — 1267 – Large red seal; watermarked; silk fibers (pink) 1268 – Large red seal; silk fibers (pink) 1269 – Large red seal; silk fibers (violet); blue end paper 1270 – Does not exist 1271 – Smaller red seal; silk fibers (violet); blue end paper • $0.25 — data-sort-value="1869-07-14"|Fourth issue — data-sort-value="4439"|96.5 × 46 mm — Fr.1303 — — data-sort-value="Washington9"|George Washington — 1301 – Large red seal; watermarked; silk fibers (pink) 1302 – Large red seal; silk fibers (pink) 1303 – Large red seal; silk fibers (violet); blue end paper 1307 – Smaller red seal; silk fibers (violet); blue end paperFr.1304, 1305, and 1306 are unassigned. • $0.50 — data-sort-value="1869-07-14"|Fourth issue — data-sort-value="4982"|106 × 47 mm — Fr.1374 — — data-sort-value="Lincoln"|Abraham Lincoln — 1374 – Large seal; watermarked; silk fibers (pink) 1375 – Delisted Friedberg number • $0.50 — data-sort-value="1869-07-14"|Fourth issue — data-sort-value="4738"|103 × 46 mm — Fr.1376 — — data-sort-value="Stanton"|Edwin Stanton — 1376 – Small red seal; silk fibers (violet); blue end paper • $0.50 — data-sort-value="1869-07-14"|Fourth issue — data-sort-value="4940"|95 × 52 mm — Fr.1379 — — data-sort-value="Dexter"|Samuel Dexter — 1379 - Green seal; silk fibers (light violet); blue end paper • $0.10 — data-sort-value="1874-02-26"|Fifth issue — data-sort-value="4131"|81 × 51 mm — Fr.1265 — — data-sort-value="Meredith"|William Meredith — 1264 – Green seal 1265 – Red seal; long, thin key (in Treasury seal) 1266 – Red seal; short, thick key (in Treasury seal) • $0.25 — data-sort-value="1874-02-26"|Fifth issue — data-sort-value="4557.75"|88.5 × 51.5 mm — Fr.1308 — — data-sort-value="Walker"|Robert Walker — 1308 – Long, thin key (in Treasury seal) 1309 – Short, thick key (in Treasury seal) • $0.50 — data-sort-value="1874-02-26"|Fifth issue — data-sort-value="5858.25"|109.5 × 53.5 mm — Fr.1381 — — data-sort-value="Crawford"|William Crawford — 1380 – Red seal; light pink paper on obverse; silk fibers 1381 – Red seal; blue end paper; silk fibers

• Illustration — The Sherman–Grant 15-cent third issue exists only as an unissued specimen. Three people were depicted on fractional currency during their lifetime: Francis E. Spinner (Treasurer of the United States), William P. Fessenden (U.S. Senator and Secretary of the Treasury), and Spencer M. Clark (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."But now we see upon our current paper money not only the heads of the illustrious men of our country long since gathered to their fathers, but of living secretaries of the Treasury, and even of such subordinate officers as the superintendent of the Currency Printing Bureau, Mr. S.M. Clark." 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 and Ulysses S. Grant 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.