STAMPS AS CURRENCY

Without circulating coinage, merchants and vendors began to struggle to complete transactions. The barter system came into use and the national economy threatened to come to a halt. The most readily available substitute to be used for change was the postage stamp, which was printed in a variety of denominations from One Cent to Ninety Cents. Soon, gummed stamps were in wide circulation allowing merchants to offer viable change for purchases. Of course, circulated Postage Stamps quickly became retched messes, stuck together in unsightly wads.

POSTAGE STAMP ENVELOPES

The earliest attempted solution to the "sticky stamp" problem was to incorporate the use of Apothecary Envelopes. Medications of the time were usually dispensed by pharmacists and doctors in small paper envelopes, approximately 70 by 35-mm in size. These envelopes, and others quickly prepared by merchants, soon became Postage Stamp Envelopes, which carried a specified value in Postage Stamps inside. The envelopes usually had the denomination and the name of the sponsoring merchant on the outside. Unfortunately, it was easy for unscrupulous types to seal three cents worth of stamps or even three pieces of cut newspaper into a 25-Cent envelope. Obviously, another solution was needed.

Today, these Postage Stamp Envelopes are extremely rare, being known by no more than 500 samples representing more than 110 different merchants and denominations. The most common denomination is the 25-cent Envelope. There are about half again as many 50 Cent Envelopes and one quarter as many 10 cent and 75 Cent denominations. Most of the Envelopes are known now by fewer than half a dozen pieces. They occasionally surface in the collections of Fractional or Stamp Collectors at larger auctions and generally sell for between 500 and 1000 dollars.

ENCASED POSTAGE STAMPS

Desperate for a solution to the ongoing change problem, the public was willing to heartily adapt the solution proposed by John Gault. Gault patented an encasement for Postage Stamps, made of a metallic backing and a clear mica lid, which allowed for the viewing of the Postage Stamp placed inside (which helped overcome the problem of fraud seen with the enclosed Postage Stamp Envelopes.)

Gault marketed his encasement to merchants in the Eastern States, mostly in New York. He stamped the company name, address and slogan on the back of the casing and sent the unprepared casings to the merchant. The merchant would then go to the Post Office and purchase stamps in the denominations needed to facilitate change. The denominations of Postage Stamps in 1861 were the 1c, 3c, 5c, 10c, 12c, 24c, 30c and 90c. The merchant would then trim the stamps to size and encapsulate them as an "Encased Postage Stamp." Gault charged two to three cents for each casing, making the One Cent Encased Postage Stamp an expensive proposition for the purchasing merchant.

In numismatic terms, just like Postage Stamp Envelopes, Encased Postage Stamps are extremely rare. The most common varieties from Ayer’s Pills or Ayer’s Sarsaparilla are known by roughly 50-60 specimens. These generally sell for 200-400 dollars in Very Fine to Extra Fine condition. The rarest ones represented small hometown businesses such as Jewelers, Hatters and Hotels and are known by as few as two or three samples. These rarities can sell for as much as 10,000 to 12,000 dollars. Generally, uncommon denominations, such as the 30 and 90 cent Encased Postage Stamps, command a higher price than the more common 5 and 10-cent samples.

Encased Postage stamps are graded on the quality of the stamp enclosed, the condition of the metallic casing and the clarity of the transparent mica covering. As Encased Postage Stamps cannot be taken from their casing without destroying the case itself, the quality and centering of the stamp is key to the grade of the sample. Uncirculated Encased Postage Stamps are prohibitively rare and usually command extremely high prices.

There is a second, non standard type of Encased Postage called a Feuchtwanger Strip, from the same Dr. Feuchtwanger who created the Feuchtwanger Cent. This strip had a metal backing with a mica covering, usually encasing three 3c stamps, for a total of 9 cents. These strips had open ends and stamps could be slid in or out. These strips are not generally graded based upon the condition of the enclosed stamps, because they are not guaranteed to be original.

PRIVATE SCRIP

Gault’s Encased Postage was not widely available to merchants and many solved the change problem by printing their own private notes (scrip, or as they were known at the time, "shinplasters.") This practice was most predominant in the South, where the coinage crisis was the greatest, but was also widespread in the North. All sorts of companies and organizations printed private scrip. Scrip was printed by small towns, counties or even states, by merchants, by railroads, by colleges and even by individuals. Generally these notes were redeemable for goods or services from the issuing merchant. One of the advantages to this arrangement was that if the notes were not redeemed, the issuing merchant would make a substantial profit on the transaction that issued the scrip. Because of this, Private Scrip was generally seen as an unpopular solution to the change problem.

The extensive varieties of this Fractional Private Scrip are many. In general, they can be fairly common or known by only one or two samples. Value of these notes depends largely upon local collector interest, with the scarcer notes generally worth 100-300 dollars.

The United States Post Office was having a very difficult time accommodating the redemption of circulated postage stamps.  It was reported that one day two employees of a New York Railway company brought a bag of 8,400 dollars worth of sticky, circulated postage stamps to their local Post Office for redemption.  This untenable situation forced the Treasury to create facsimiles of postage stamps as a form of making change.  This "Postage Currency" was seen as a serviceable solution to the change problem and soon evolved into the Fractional Currency Issues that we love so much today.

Copyright © 2001 Paul Burkhard
Silver Penny Currency and Coins, LTD

A Comprehensive display of Fractional Notes and Postage Currency has been slated for a future date.