Fractional Currency (1862–1876)
Small-denomination paper money issued during the Civil War when coins disappeared from circulation — and the only time the U.S. issued paper money worth less than a dollar.
Fractional Currency (also called "Postage Currency" in its earliest form) was paper money issued by the U.S. Treasury in denominations of less than one dollar — specifically 3¢, 5¢, 10¢, 15¢, 25¢, and 50¢. It was issued from 1862 to 1876 to address a severe coin shortage caused by the Civil War.
The Coin Shortage of 1862
When the Civil War broke out in 1861, hoarding of metal coins became widespread. Gold and silver coins disappeared almost immediately as people stashed them away. Even copper and nickel coins — pennies and three-cent pieces — became scarce. By mid-1862, there were virtually no coins in circulation in the Northern states.
Commerce was paralyzed: people could not make change. Shopkeepers began using homemade tokens, postage stamps, and various IOUs as makeshift small change. The use of actual postage stamps as currency became so common that stamp envelopes (encased stamps with a transparent mica window, invented by J. Gault in 1862) were widely used.
To address the crisis, Congress authorized the Treasury to issue small-denomination paper notes. The first issues (August 1862) were literally printed on the same designs as postage stamps — hence the name "Postage Currency." Later issues had unique Treasury designs and were called "Fractional Currency."
Five Issues
Fractional Currency was issued in five series, each with distinct designs and denominations:
- First Issue (1862–1863): "Postage Currency," featuring stamp designs of Washington (5¢) and Jefferson (10¢, 25¢, 50¢)
- Second Issue (1863–1865): New oval borders, "Authorized by Act of Congress" inscriptions, Washington (5¢), Jefferson (25¢)
- Third Issue (1864–1869): Added the 3¢ denomination; portraits of Clark (5¢), Washington (10¢, 25¢, 50¢), Spinner (50¢)
- Fourth Issue (1869–1875): Larger notes, "Allison & Spinner" signatures, Lincoln (5¢), Grant (50¢), plus Stanton and Dexter portraits
- Fifth Issue (1874–1876): Final series; all denominations, Crawford (10¢), Walker (25¢), Crawford & Meredith (50¢)
End and Legacy
Fractional Currency was phased out after the Resumption Act of 1875 restored coin-based commerce. The last Fractional Currency notes were issued in 1876. They are still legal tender for face value but are worth far more to collectors.
Fractional Currency is popular with collectors because it is relatively affordable (most notes in circulated condition cost $5–$75), historically important, and comes in an interesting range of designs. Error notes and proof specimens command significant premiums.
Source: Friedberg, Robert. Paper Money of the United States. 21st ed. Coin and Currency Institute, 2017.
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