Fractional currency refers to a type of U.S. currency valued at less than one dollar, which was introduced during the Civil War to address severe coin shortages caused by widespread hoarding. Fractional currency helped facilitate daily transactions and introduced important design innovations that influenced future U.S. currency.
Historical Context
Pre-Civil War Economy and Coin Reliance
Before the Civil War, small transactions relied on U.S. Mint coins like cents, nickels, dimes, and dollars. Economic instability led much of the public to hoard coins as the Civil War progressed. This resulted in a severe shortage of small change, which stifled commerce.
Further, the suspension of specie payments by banks meant that paper money could no longer be redeemed for gold or silver, exacerbating the shortage. In response to the coin shortage, Congress authorized the issuance of postage currency in 1862, which was later known as fractional currency.
Public Reception
Initially, the public was skeptical of using paper money for small change, but widespread necessity drove quick acceptance. Complaints about the fragility of the notes were common, but practicality won over public sentiment.
Design and Features of Fractional Currency by Series
Postage currency notes were smaller than today’s Federal Reserve Notes, at 2.5 x 1.5 inches. Early issues were printed on thin, fragile paper that earned fractional currency the nickname “shinplasters.” Later issues improved durability by using fiber paper and embedding security features like silk fibers and watermarks.
The five cent denomination offers a clear view into design evolution across issues.
First Issue (Postage Currency) (1862–1863)
The five cent note from the first issue featured a brown postage stamp image of Thomas Jefferson, which closely resembled actual stamps. The notes had either straight or perforated edges. The back was typically blank or simple, and security measures were minimal.
Second Issue (1863–1867)
The second issue of five cent notes depicted George Washington’s portrait framed by a bronze oval to thwart counterfeiting. The reverse featured large bronze skeletal numbers and colored backgrounds to complicate replication. Paper variations included embedded fibers.
Third Issue (1864–1869)
Spencer M. Clark’s portrait appeared on the five-cent notes from the third issue, which led to political controversy. Notes came with either a red or green back and sometimes included a small letter “a” as a position indicator. This issue was notable for introducing fiber paper, making notes more durable and harder to counterfeit.
Fourth Issue (1869–1875)
No five cent notes were issued during this period. The 10 cent note featuring Liberty was the lowest denomination available. Red seals and silk fibers were interwoven with these notes, which also began to feature blue end paper.
Fifth Issue (1874–1876)
Ten cent notes from the fifth issue featured William Meredith. Advancements such as complex background tints, silk fibers, and watermarked paper enhanced security across the issued denominations.
Denominations and Availability
| Denomination | First Issue | Second Issue | Third Issue | Fourth Issue | Fifth Issue |
| 3 cents | Not Issued | Not Issued | Issued | Not Issued | Not Issued |
| 5 cents | Issued | Issued | Issued | Not Issued | Not Issued |
| 10 cents | Issued | Issued | Issued | Issued | Issued |
| 15 cents | Not Issued | Not Issued | Specimen Only | Issued | Not Issued |
| 25 cents | Issued | Issued | Issued | Issued | Issued |
| 50 cents | Issued | Issued | Issued | Issued | Issued |
The 3-cent and 15-cent notes were the least common, while the 5-cent and 10-cent notes were widely circulated in the early issues.
Challenges and Counterfeiting
Counterfeiting was rampant during the fractional currency era. Samuel Upham was one infamous counterfeiter whose techniques highlighted the vulnerabilities of early notes. An estimated one-third of currency notes in circulation during the 1860s were counterfeit. Anti-counterfeiting measures shaped American currency with advanced methods like intricate engravings, overprints, watermarks, colored inks, and specialized paper. Lessons from fractional currency, especially regarding the need for robust anti-counterfeiting features, continue to inform modern U.S. currency design strategies.
Fractional currency’s brief but critical existence highlights the resilience and adaptability of the American spirit during financial crises, whose innovations paved the way for the sophisticated currency designs we rely on today.
