FRACTIONAL CURRENCY
Fractional Currency notes were issued by the United States Federal Government during and after the U.S. Civil War due to the hoarding and shortage of coins in gold, silver and copper. Their denominations consisted of 3, 5, 10, 15, 25 and 50 Cents.
These notes were used until 1876 and were redeemable by the U.S. Postal Office at face value in postage stamps.
A controversy arose concerning the third issue of the 5-Cent Notes, when Spencer M. Clark, the first superintendent of the National Currency Bureau now known as the U.S. Bureau of Engraving and Printing, had his portrait printed on the fractional note, a practice subsequently barred by law. In the U.S., currency can portray notable U.S. citizens only after at least two years have followed the subject's death.
Fractional currency notes were issued from August 21, 1862, through February 15, 1876. The U.S. Secretary of the Treasury Salmon P. Chase proposed to authorize postage stamps of some type as a new currency.
Most of the public was using stamps instead of coins because of the severe shortage due to hoarding. The post office did not like selling stamps for currency and they did not provide refunds for soiled stamps.
Congress and President Lincoln approved the Postage Currency Act on July 17, 1862, which authorized an issue of 5, 10, 25, and 50 cent notes. The 1st Issues became known as Postage Stamp Currency because they duplicated the then current 5 and 10 Cent postage stamps faces. The more popular title now is known as Fractional Currency.
Postage Currency (1st Issue) were never legal tender but could be exchanged for United States Notes in $5 lots.
In the first few months of production, the sheets were perforated like stamps. These sheets were sold to banks and the public in sheets and you could tear off the notes needed with ease. 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.
There was total of five separate issues of Fractional Currency. Three were during the civil war and two afterwards. Ultimately there was a total of six denominations with 23 different designs and more than a hundred varieties.
Because there were so small and not very aesthetic Fractional Currency was looked over by a lot of collectors. Recently though collectors have started to take notice of these tiny gems because a good deal that was left from the total of the $360,000,000 worth ever produced are badly preserved.
First Issue--August 21, 1862 .5/.10/.25/.50 CENTS
Second Issue--October 10, 1863 .5/.10/.25/.50 CENTS
Third Issue-- December 5, 1864 .3/.5/.10/.15/.25/.50 CENTS
Fourth Issue--July 14, 1869 .10/.15/.25/.50 CENTS
Fifth Issue--February 26, 1874 .10/.25/.50 CENTS