Fractional currency notes were issued by the United States Federal Government during and after the U.S. Civil War in denominations of 3, 5, 10, 15, 25 and 50 cents. Irredeemable federal issues of United States Notes had devalued paper money relative to specie causing the public to remove coins made of gold, silver and even copper from circulation. The paper fractional currency notes were introduced to fill the need for making small change in the absence of the coinage. These notes were in use 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 the U.S. Bureau of Engraving and Printing) had his portrait printed on the fractional note,in response from a directive to honor "Clark", of Lewis and Clark fame. Provisional notes portraying Grant and Sherman were subsequently canceled, and only exist as specimen notes. a practice subsequently barred by law. (the currency can portray notable U.S. citizens only after at least two years have followed the subject's death). Fractional currency became a common way for the Union soldiers during the Civil War to receive their pay.
Fractional currency notes were issued from August 21, 1862, through February 15, 1876. U.S. Secretary of the Treasury Salmon P. Chase proposed to authorize postage stamps of some type as a new currency. Much of the public were using stamps in lieu of change due to a severe shortage of coins. 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 bore facsimiles of the then current 5 and 10 cent postage stamps. Postage Currency (1st Issue) were never legal tender but could be exchanged for United States Notes in $5 lots and receivable in payment of all dues to the United States, up to $5. 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.
Fractional currency was succeeded by postal notes that were issued from Monday, September 3, 1883 to Saturday, June 30, 1894.
Examples by Issue and Denomination 
First Issue 
See also 
- Postal currency
- Postal notes
- Treasury note
- Federal Reserve System
- United States Department of the Treasury
- Gordon, Armistead Churchill (1895). Congressional currency: an outline of the federal money system. New York: G.P. Putnam's sons. pp. 148–149.
- "Act of April 7, 1866"
- Spaulding, Elbridge Gerry (1869). History of the Legal Tender Paper Money issued during the Great Rebellion. Buffalo NY: Express Printing Co. pp. 165–166.
- Richardson, William A. (1873). Annual report of the Secretary of the Treasury on the state of the finances. Washington DC: Government Printing Office. pp. 325–329.