During the Civil War, the United States was faced with a severe shortage of coinage. Precious metals prices spiked dramatically, leading to the disappearance of all gold and silver coins. Even the price of copper surged and pennies were beginning to vanish from circulation. The lack of currency had become a major issue that needed to be resolved immediately.

In July 1862, Congress declared that postage stamps could be used to pay off debts to the government so long as the amount did not exceed $5. This emergency legislation turned postage into a unit of exchange, but stamps lacked the durability of metal coins. Americans were willing to trade postage stamps for everyday transactions, but they were worried about the durability of thin paper stamps.

An American entrepreneur by the name of John Gault proposed a solution. He devised a small metal frame to house a postage stamp, thus protecting the paper from tears, damage and wear. The frame was round and provided the familiar look and feel of a coin. Gault sold these encased postage stamps for 20% over face value, but later began to sell advertising on the coins. One prominent advertiser was J.C. Ayer, which famously advertised its medical products on encased postage.

Encased postage was popular in 1862 and 1863, but later faded from view as other forms of currency took its place. Eventually the United States government began issuing fractional paper money; this became a more popular option than trading postage. For those who insisted on using actual metallic coins, private merchants began striking bronze tokens. Furthermore, the use of encased postage actually led to a shortage of postage for actual mailing purposes!

The final solution to the coin shortage came in the mid-late 1860s, when the United States Mint began releasing coins struck in base metals. New issues like the bronze cent, the bronze two-cent piece, the nickel three cent piece and the nickel five cent piece helped fill the coinage void. With actual postage having become scarce, most encased stamps were removed from their metal frames.

Today, it’s estimated that just 5-10% of the original encased postage stamps have survived. Perhaps just 5,000-7,500 pieces remain in existence. Mint condition specimens are extremely scarce and trade for thousands of dollars each. This unusual form of wartime money represents a fascinating branch of United States numismatics—and an example of how Americans coped ingeniously with wartime shortages.