Civil War Alternative Money

During the Civil War, the United States faced a severe shortage of coins and reliable paper money. This led to the creation of several types of emergency currency, both federal and private, between 1861 and 1865. These creative innovations filled the gap in everyday commerce when gold, silver, and even copper coins disappeared from circulation due to hoarding, wartime uncertainty, and monetary laws passed by the U.S. government.

As George and Melvin Fuld noted in their benchmark Patriotic Civil War Tokens reference, "No other short period in our history has produced such wide changes in our monetary system." By late 1862, all coins - gold, silver, and even copper-nickel cents - disappeared from circulation. Suddenly there was no way to make change for everyday transactions. An alternative had to be introduced immediately. The largest impact of the coin shortage was felt in the larger metropolitan areas such as New York City, Philadelphia, Baltimore, and Chicago, and eventually every area in the North.

During the Civil War, a variety of different emergency money was introduced into commerce, and the first was the standard United States postage stamp. Stamps did not handle circulation well due to their flimsy nature. As a quick remedy, merchants issued small advertising envelopes marked with the face value of the stamp that was placed within the envelope. This solution may have provided extra protection and longer circulation life in the interim. However, less-ethical people quickly caught on to the obvious workaround of this new system and simply removed some or all of the stamps from the envelope.

John Gault entered the scene with one of the more fascinating and innovative contributions to the circulating money crisis. Inadequate circulation life and unscrupulous individuals rendered the plain postage stamp a poor solution. Gault patented a novel brass encasement with a mica (transparent, hard plastic-like material) so the postage stamp was easily viewable. These cases were created in denominations from one to 90 cents by the Scovill Company of Waterbury, Connecticut, and generally included a merchant's advertisement on the reverse. These were popular and effective for a short time with hundreds of thousands produced, and they circulated well into 1863. The United States Post Office Department ordered local post offices to stop selling stamps for use as currency and to stop using them as currency. Both stamp envelopes and encased postages are intriguing, popular niches in the collecting world.

Stamps were not the only paper products used to fill the void of circulating coinage. Both federal and private fractional currency instruments were manufactured in large quantities. Continuing with the postage stamp innovation, the Union government issued fractional postage currency in different denominations that were backed by U.S. postage stamps. Private fractional issues, with no intrinsic value, were created in vast quantities with highly variable quality, creativity, and durability. Many of these fiat fractional currencies were accepted and circulated for some time after the Civil War ended. However, because of their huge quantity and lack of any intrinsic value, they were nicknamed "Shinplasters" by the skeptics. Small cardboard pieces with an affixed value known as a scrip had merchants stamped onto them and were commonplace for aiding everyday transactions.

These initial innovations were accepted and used. Yet, the most popular and pragmatic of these emergency currencies were the copper-nickel cent lookalike tokens that popped up in small quantities as early as 1860. These tokens were abundant by late 1862. These Civil War tokens broadly belong in two categories: patriotics and store cards.

Store cards carried the merchant's name, noted what type of business they were conducting, and their location. Patriotic tokens do not advertise any specific merchant information but instead feature patriotic, political, and other themes not directly related to a business. The tokens frequently had motifs that mimicked the design of the copper-nickel Indian Cents that were struck from 1859 through 1864, other Liberty Head designs, busts of popular generals, presidents, and various political hopefuls.

These tokens were enthusiastically adopted by the public and became the most effective form of emergency currency. They also added a sense of normalcy to everyday transactions. Incredibly popular, these pieces also sparked a wave of collector interest with many people starting collections from the beginning. Many interesting mules, varieties, and off-metal restrikes were made to order by collectors.

Some of the most fascinating and desirable tokens are overstruck circulating federal coinage such as Flying Eagle Cents and Liberty Seated Dimes. Some of these dies were used as late as 1940 by enterprising collectors who were able to procure and resurrect the old dies! It is estimated that over 25 million patriotic and store card Civil War tokens were created. However, the often-spurious production and lack of redeemable value caused the federal government to intervene. In April and June of 1864, acts of Congress forbade private firms or individuals to issue any form of currency. These Congressional acts and the end of the Civil War quickly closed the chapter on the fascinating creative emergency money that effectively aided commerce and fueled collector interest during a tumultuous time in U.S. history.