John and Nancy Wilson write:

Why Fractional Notes?

Imagine yourself a proprietor of a business in the early 1860's and a customer wants to pay for their purchases. What do you do when you don't have adequate change available? There is a shortage of coins at the bank due to the Civil War. People are hoarding the few coins that they have and others were sending them to Canada to sell for their scrap value which had risen to more than the coins were worth. These are the major reasons why you can't give proper change to your valued customers. What do you do? Do you print your own currency that is only good at your establishment? Do you accept script from another business that may not be good? This was a real problem back in the early 1860's. People and businesses did not have adequate supply of coins to keep the economy running smoothly so they reverted to creating their own form of private currency. In 1862, the federal government stepped in by issuing postage currency and later fractional currency that was widely accepted by the populace.

Encased Stamps

Postage stamps were being used to make change by different proprietors. The problem with using the stamps was that they would easily become discolored, damaged and torn. If they got wet, they would stick together and become useless. Next, stamps were placed in postage envelopes with a specified amount on the outside of the envelope. These envelopes were then passed as a form of currency. Unfortunately, some people tried to deceive others by sealing lesser amounts or plain paper inside these postage envelopes. John Gault, an entrepreneur of the times, decided to make a profit from the shortage of coins that was occuring in the summer of 1862. He decided that there must be a better way of using postage stamps and felt that encased postage stamps would be the answer. He decided that a brass container the size of a regular coin with its front open to show the denomination could be used as coins.

A stamp with its corners folded was placed within the brass frame and a thin sheet of mica was placed over the stamp. The tabs of the brass container were then folded to keep everything in place. John Gault hoped that advertising placed on the reverse would generate his profits. He sold the copper frames to the merchants for a 1-2 cent profit. Merchants warmed to his idea of putting their advertising on the reverse and 31 different vendors decided to advertise on these colorful tokens. The denomination of the stamps used were the 1, 3, 5, 10, 12, 24, 30 and 90 cents.

His patent was issued on August 2, 1862. It was the same time that the use of postage stamps that were used as money was banned in January 1863 by the Federal Government. The idea of encased postage did not last much longer. With the advent of postage currency and fractional notes, the encased postage stamps no longer filled a need. They lasted for several years and most show extensive wear with dents and broken mica.

First issue

The first issue notes, better know as Postage Currency, was authorized in the summer of 1862 and signed into law by the President on July 17, 1862. It was called Postage Currency since these notes resembled stamps. They were issued in 5, 10, 25 and 50 cent denominations. All four denominations came in the following order: straight edge with no monogram, perforated with no monogram, perforated with the ABNCO monogram (American Bank Note Company), and straight edge with monogram. A problem occured with the perforated sheets. The notes came apart and were sometimes damaged during shipping. Because of this, the straight edge notes became the favorite and the production of the perforated notes was short lived. This accounts for the rarity of the perforated notes.

First Issue CFT's

All four denominations of the first issue postage currency were counterfeited. The paper used for the counterfeit notes appears to be thinner than the genuine notes. They had problems duplicating the reverse of these notes. The oval border surrounding the inscriptions in the genuine notes should have a series of distinct white dots in the center of the band. It should be so obvious to catch your eye. In the counterfeit, the band is dark and does not show the series of white dots. The portraits on the obverse of the spurious notes only crudely resemble their intended President. To help cover up the poor engravings of the portraits of some of the 25C notes, wax paper was placed over the obverse of the freshly inked paper to mute the engravings. The notes were also wrinkled and washed to make the note to appear to have been in circulation. Shown to the left are counterfeit examples of each of the denominations in the first issue. Please note the crude faces on each of the notes.

There has been only one variety for the 5C first issue counterfeit identified. It is extremely rare type with only three known examples.

The 10C note has at least five different varieties. Look at the crude engraving of Washington.

For the 25C notes, there are at least nine different types of counterfeits. With the note shown, you can see the result of using wax paper to mute the facial engravings.

The most copied note was the fifty cent denomination with at least twenty different counterfeit varieties. The counterfeiters were going to make more by counterfeiting the higher value note.

To read the complete website, see:
WELCOME TO MY FRACTIONAL NOTES(http://uns0uled.com/home.html)
COUNTERFEIT FRACTIONAL CURRENCY(http://uns0uled.com/cft.html)