Fr 1228-1231 5-cent Postage Currency

The basis for the Fr. 1228-1231 5-cent Postage Currency's release is a lesson in economics.

Specifications

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History
The first U.S. Jefferson “nickel” was not a coin minted in 1938, but a five-cent Postage Currency note issued 76 years earlier in summer 1862. This tiny change note reproduces a then current five-cent stamp on its face depicting this nations’ third President, Thomas Jefferson.

The Civil War was blazing. As northern Secretary of the Treasury Salmon Chase’s greenback inflation drove hard money from the marketplace, an extreme shortage of small change hobbled commerce. Neither the administration nor Congress proved nimble enough to find a way out of the dilemma.

A very reasonable solution was recommended by New York Tribune Editor Horace Greeley on July 12th Greeley said government coins should be revalued. Under Greeley’s plan, silver half dimes would have passed at six cents; and dimes, quarters and halves would also be revalued upwards 20 percent.

In the interim, postage stamps and private scrip joined barter, omnibus fare tickets and less satisfactory media in circulation. Shinplasters and other change checks intermixed with iron nails and strawberry receipts in the marketplace.

At length, Treasury Secretary Chase recommended to Congress either reducing the silver in the coins or monetizing postage stamps. Congress rejected changing the weight and/or fineness of the silver coinage. Instead Congress responded with an Act passed July 17, 1862, at the end of the Congressional Session before summer recess monetizing stamps. This brief law directed the Secretary of the Treasury to “furnish to the assistant treasurers, and such designated depositaries of the United States as may be by him selected. . .postage and other stamps of the United States, to be exchanged by them, on application for United States Notes.”

This odd duck legislation monetizing postage stamps also outlawed private and corporate small change bills. It became effective August 1st, 1862. The Post Office Department was not keen on the plan. Runs on Post Offices depleted stamp supplies, and Postmaster General Montgomery Blair shut the stamp windows to change buyers on July 22nd. He sent a dispatch to the postmaster of New York City: “[T]his department is not to furnish postage stamps for currency,” Blair wired.

Chase tasked Internal Revenue Commissioner George S. Boutwell to placate the irate Blair. The two apparently struck a deal for the issue of special stamps for change-making purposes. Details of the authorizing legislation were left in the hands of the Treasury Secretary. U.S. Treasurer F.E. Spinner devised prototypes for his small notes by affixing stamps to Treasury Department letterhead.

Notes were issued in four denominations. The five-cent note (like the one shown) depicted a single Jefferson five-cent stamp. The 10-cent note depicted a single Washington 10-cent stamp. The 25-cent note showed five Jefferson stamps, while the 50-center sported five Washington stamps. The Treasury Department contracted with the New York bank note companies to produce these small notes. That made sense, the federal government did not have a security printing division as yet and National Bank Note Co. was printing the five- and ten-cent stamps which would appear on the small notes. Thus the NBNCo printed the face side of these notes. For security and political reasons, the American Bank Note Co. printed the backs. Notes were small. Five- and ten-cent notes are only 65 by 45 mm. The two higher values are 78 by 48 mm. The fist notes issued were in large sheets perforated like postage stamps. Five cent notes were printed on buff colored paper.

However creation and introduction of the new Postage Currency was too slow for the trouble of the times. On July 31, 1862, Postmaster General Montgomery Blair and Internal Revenue Commissioner George S. Boutwell approved Postage Currency designs.

Treasury Secretary Chase first saw printed notes on Aug. 16th. He directed that note sheets should be accepted as furnished by the P.O. Department -- i.e. perforated instead of clipped. Chase considered the perforations as a partial safeguard against counterfeiting. Aug. 21, 1862, was the nominal first day of issue of Postage Currency with a small supply being furnished to Army paymasters.

However, additional weeks went by before supplies were generally forthcoming. Even New York City had to wait until Sept. 8th to get its first supply of the new small change bills. Through the fall supplies of these notes lagged. By the end of September the Treasury could only muster $787,000 of the currency.

Newspaper editors were in an uproar over the tardiness of the hoped for small change. On Oct. 4th the Treasury Secretary instructed his assistant secretary George Harrington to hop a train to New York to speed up production to $100,000 per day. In November a riot developed in Cincinnati when supplies ran low. In New York City, the assistant U.S. Treasurer issued permits limiting purchases to two days a week. Eventually the perforations were abandoned to speed up delivery of the notes. But real relief did not come until Spring 1863.

Ultimately 124 million of these Postal Currency notes were issued, totalling $20.2 million in revenues. This included nearly 45 million of the five-cent Jefferson “nickels” in four varieties. Fr. 1228 has perforations and the American Bank Note Co. monogram on the back at lower right. Fr. 1229 like the one shown is perforated without the monogram. Fr. 1230 has no perforations, but has the monogram. Fr. 1231 has no perforations and no monogram.

Collecting
Circulated notes of all types are available in the $30-$50 range. Uncs. start at about $100. The most common variety is straight edges with monogram. The scarcest variety, especially in high grades, is the one shown: perforated without monogram. An example in New Condition is valued about $500.