Fractional Currency and Civil War Currency Trivia
The recent St Louis Civil War Roundtable Trivia Quiz by Edward W. Rataj was entitled Paper Money. Ed included several items I had gathered as a result of a presentation made by a speaker Robert J. Kravitz at the Roundtable in 2012 which I particularly enjoyed as I had some specimens of fractional currency that my dad gave me when I was a boy. I never understood what I had until that presentation.
I wrote the “Fractional Currency” summary as a possible inclusion of a second trivia book which I contemplate publishing during moments of delusion. I include it here for your enjoyment as well as a few of Ed’s trivia items that are just too good to let go of. Like much of my postings I enjoy gathering Civil War information of similar content. Of course this material is available on-line and in various references and sources…but who has the time to pursue it? I do and I enjoy it. I hope you do to.
Fractional Currency and the Civil War
Fractional currency is a paper note of less than one dollar face value that was issued by both sides in order to alleviate the shortage of coinage. Early in the Civil War populations on both sides began to recognize the value of hard coins. Gold, silver and copper coins, in denominations of 3, 5, 10, 15, 25 and 50 cent denominations, began to be hoarded and quickly disappeared from the market place. Merchants had difficulty making change. Prices in the 1860’s for common foods and other necessities were sold for a few cents and a small amount of change was a necessity of commerce.
Several individuals minted private tokens between 1862 and 1864 to overcome the problem of the shortage of coins. These tokens contained patriotic and commercial images. One and two-cent token coins became illegal 22 April 1864 by Federal law. In August 1864 a law was passed prohibiting all private coinage. One of the best known tokens was the 1-cent of New York barkeep Gustavus Lindenmueller, who minted over one million tokens. These tokens have become very collectible.
Paper currency was available but was not centralized under the Federal government. Any entity could issue specie for commerce and cities, banks and states printed paper notes. However, bank notes from one area may be difficult to exchange in a distant city. As coinage disappeared, the need for fractional currency in denominations of 3, 5, 10, 25 and 50-cents became apparent. The 3-cent fractional note is the smallest denomination of currency ever issued in the Civil War. The United States Government printed and issued the smaller denomination notes through the National Currency Bureau under the first superintendent Spencer Morton Clark (1862-68). These smaller value notes were redeemable by the Post Office for postage stamps and at banks for coin. $368 million in notes was issued from August 21, 1862 to February 15, 1876.
Salmon P. Chase, Secretary of Treasury, and President Lincoln’s close advisor on financial matters, proposed to authorize the use of postage stamps as a currency substitute. Much of the public were using stamps in lieu of change due to the severe shortage of coins. Postmaster General Montgomery C. Blair did not like selling stamps for currency and would not provide refunds for soiled stamps. The Postage Currency Act on July 17, 1862, authorized an issue of 5, 10, 25, and 50 cent notes. The first issues became known as Postage Stamp Currency because they bore facsimiles of the then current 5 and 10 cent postage stamps. Postage Currency (1st Issue) were never legal tender but could be exchanged for United States Notes in $5 lots and could be used in payment of all dues to the United States, up to $5. Early postage currency sheets were perforated like stamps. These sheets were sold to banks and the public in sheets so you could tear off the notes needed in the denominations desired. The perforating machine could not keep up with the heavy demand so the banknote company started producing plain sheets that were cut with scissors. 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. They were more colorful with printing on the reverse.
Postmaster General Blair also took an interesting and aggressive stand to protect US interests regarding the use of valid postage in the hands of the Confederacy. Fearing that Confederates would sell their stocks at a discount in order to raise funds for armament purchases, Blair declared all stamps issued before 1861 invalid. The 1861-62 issues are the oldest stamps in the world valid for postage today.
Paper for the fractional notes was provided by the Crane Paper Company of Dalton, Massachusetts which still provides paper for all US currency, now called Federal Reserve notes. The original fractionals were legal tender which meant that they could be redeemed for hard coin. The use of identifying parallel silk fibers in the paper was invented by Crane & Co during the Civil War and continues in use today. Other anti-counterfitting processes and techniques have been devloped by Crane & Co in order to thwart the ever ending efforts of illegal counterfitting operations.
During the Civil War the first US Comptroller of Currency, then called the Superintendent of the National Currency Bureau, was appointed in 1863. Hugh McCullock served from 1863 to 1865. He was succeeded by Freeman Clarke from 1865-1866. The 6th Comptroller was William L Trenholm, son of George Alfred Trenholm a founding partner of Fraser, Trenholm & Co of Liverpool, England. Trenholm was the firm that operated a fleet of sixty blockade runner packet ships in service between Liverpool and Charleston, SC. They were the financial agents for the Confederacy in Europe shipping out cotton, tobacco and turpentine to Europe in exchange for coal, iron, salt, weapons and ammunition. William Trenholm was the first southerner appointed to such a post after the war and had served as a Confederate cavalry officer from South Carolina from 1861 to 1865.
The Confederate government also issued fractional currency for the same reasons as the United States. The Confederate government only made 50 cent notes but southern states also printed fractional notes. They imported paper with Confederate watermarks from Europe. One shipment was seized 27 April 1862 when the blockade runner Bermuda was taken off Charleston by the USS Mercedita. Watermarked paper was made by Hodgkinson & Co at the Wooley Hole Mill located near Wells, Somerset, England. The confiscated paper was used by the Union for proof notes and some US notes bear the CSA watermark.
Fractional currency was succeeded by postal notes that were issued from Monday, September 3, 1883 to Saturday, June 30, 1894.
On the third series of 10-cent notes, Comptroller Spencer M. Clark placed his own image on the face and this caused a major issue. A policy was instituted in 1866 that prohibits the image of a living person being placed on any postage stamp, or piece of currency. The image of Jefferson Davis on the 1861 5-cent Confederate postage stamp was the first time a living person’s picture was printed on a stamp
Here is some trivia from Ed Rataj’s February quiz.
The Union government in Missouri printed in 1864, $20 bills with the picture of Major General John Pope, an unusual selection, it seems, from this point in time.
Missouri printed currency entitled Defense Bonds in denominations of $1, $3, $4.50,$20, $50, and $100. Why no 2’s and 5’s?
In 1862, the US treasury issued legal tender notes as follows: $1 with face of Secretary Salmon P. Chase; $2, $5 and $50 notes with Alexander Hamilton, and $10 with Abraham Lincoln.
Only one Confederate general’s image in on Confederate States of America currency that being Stonewall Jackson on the 1864 $500 bill. Robert E. Lee is not depicted on any currency issued by the US, CSA or any Confederate state.
Andrew Jackson was a favorite of both US and CS currency engravers. His face is on the 1861 Confederate $1000 note and the February 3, 1861 US interest bearing note-from the same portrait!!
Thanks to Ed Rataj for his interesting trivia.