United States Fractional Currency

When we think of denominations in cents, most of us automatically think of coins. But there was a time in our history, in the early 1860s, when 50, 25, 15, 10, 5 and — oddly enough — 3 cents were printed on paper. This was called Fractional Currency. The first issue of these notes was also called Postage Currency, which will be discussed later.

The American Civil War, which began in 1861, required an enormous amount of financing. The federal government needed gold, silver and copper for the war effort. The public already was generally apprehensive about Demand Notes and Legal Tender, because they were backed by the good faith of the federal government. It was an uneasy time for all.

Many people started to panic and began hoarding coins in their homes, thus putting a premium on coins, which essentially disappeared from circulation. Merchants were unable to give small change to customers, so many had to agree on a barter deal.

Something had to be done to manage the crisis.

One plan was for the postage stamp to replace coins. This was not very successful, however, because many of the stamps became damaged and too few were in circulation to make any real difference in easing the coin shortage. A private businessman named John Gault invented a brass case that would go around a postage stamp for protection.

Gen. Francis E. Spinner, Treasurer of the United States at the time, had a similar idea. Read more about him here.

He pasted postage stamps to marked Treasury Department paper, which was sturdier. He then signed them, which gave way to The Postage Currency Bill Law, which Congress approved and President Lincoln signed in 1862. This law forbade postage currency to be issued by any jurisdiction other than the United States government. What would follow would be the first issue of Fractional Currency.

10 Cent First Issue Fractional Currency, Fr#1242, front. PMG graded 64 Choice Uncirculated EPQ Click image to enlarge.

Printed by American Bank Note Company and National Bank Note Company, the First Issue was in denominations of 5, 10, 25 and 50 cents. This was also called Postage Currency.

In 1863, the Treasury Department began printing Fractional Currency, moving away from Postage Currency. This was the Second Issue. Printed in the same denominations as the First Issue, all of the notes included a bust of George Washington inside a bronze-colored oval. The oval was an anti-counterfeiting measure to prevent people from making photos of real notes and turning them into counterfeits.

Numbers (and sometimes letters) were printed on the back corners of these notes. These were called surcharges. According to Q. David Bowers, author of "The Whitman Encyclopedia of US Paper Money," surcharges are believed to be a reference for the type of paper used. Unfortunately, no records were kept to support this view.

10 Cent Second Issue Fractional Currency, Fr#1245, front. PMG graded 58 Choice About Uncirculated EPQ. Click image to enlarge.

10 Cent Second Issue Fractional Currency, Fr#1245, back. PMG graded 58 Choice About Uncirculated EPQ. Click image to enlarge.

The Third Issue of Fractional Currency of 1864 introduced a new denomination: a 3-cent note. This issue also had a variety of designs for each denomination and was printed on both plain and fiber paper.

3 Cent Third Issue Fractional Currency, Fr#1226, front. PMG graded 55 About Uncirculated EPQ. Click image to enlarge.

The Fourth Issue of 1869 consisted of 10, 15, 25 and 50 cent notes. This is the only issue that included a 15-cent note. Continuing with anti-counterfeiting measures, this issue has a red Treasury Seal. Some notes also were printed on watermarked paper and have blue fibers.

10 Cent Fourth Issue Fractional Currency, Fr#1261, front. PMG graded 64 Choice Uncirculated EPQ. Click image to enlarge.

The Fifth Issue of 1874 printed the fewest denominations, 10, 25 and 50 cent notes. This issue had two types of red Treasury Seals: long, thin key and short, thick key. The first notes of this issue had a green seal.

10 Cent Fifth Issue Fractional Currency, Fr#1265, front. PMG graded 64 Choice Uncirculated EPQ. Click image to enlarge.

10 Cent Fifth Issue Fractional Currency, Fr#1264, front. PMG graded 58 Choice About Uncirculated. Click image to enlarge.

Each issue has various designs, ranging from types of paper, fibers, watermarks, ABC monograms, red and green backs and surcharges. Specimens and Proofs were printed to help prevent counterfeiting.

Sources:

• Bowers, Q. D. (2009). Whitman Encyclopedia of U.S. Paper Money
• Friedberg, Arthur and Ira. (2013). Paper Money of the United States. Vermont: Coin & Currency Institute.
• Kravitz, Robert J. (2012). A Collector’s Guide to Postage & Fractional Currency Vermont: Coin & Currency Institute.
• Wikipedia - Fractional Currency
• Wikipedia - Specie Payment Resumption Act