Coins and Currency Weekly
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Coins and Currency Weekly(c) is Published by Alan Cohen 
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November 22, 1998

Issue #8

Fractional Currency

Have you ever heard of a three cent bill? If the answer is no, you 
may be surprised to find out that the US Government has issued 
fractional currency in the past: paper money with a value of 
less than $1. In the past, bills with a value of 3,5,10,15,25 
and 50 cents has been issued. States and banks have issued 
this type of paper money, but unlike those types of notes, 
the US issue currency is still legal tender. Someone could 
actually pay for a newspaper with a 25 cent bill. If you 
thought people gave you strange looks for giving them a $2 
bill, think about the reaction to this.

Fractional currency came about because of a monetary crisis 
in the US during the Civil War period. Coins very quickly 
left circulation, leaving a crisis of what to use to transact 
business. Paper money was the answer. It was not a popular 
one, memories of paper money during the War for American 
Independence was still in the national collective, this is 
where we get the phrase "Not worth a Continental" - That 
money quickly became worth less and less. Gold and silver, 
and to a lesser extent copper, were the favored means of 
transacting business.

The first issue of fractional currency lasted from August 
1862 until May of 1863. This was known as postage currency. 
Some of the currency even has perforations. Four other issues 
followed, from 1863 until 1876. By that time, coins were 
circulating, thus there was no further need for "paper 
coins." Larger bills were a different story though. The 
U.S. government began issuing legal tender notes in March, 
1862. Before that, most paper notes were issued by banks 
themselves, and this was very chaotic. There was even a 
guidebook for merchants and bankers to show which banks 
were no longer in business, or "broken." Unlike the 
fractional notes, currency with denominations of $1 or 
higher proved popular, and even preferred.  

There are many web sites that showcase fractional notes. 
One such site is located at:
http://happy.frbsf.org/currency/civilwar/fractional/index.html

Fractional currency is actually quite affordable, considering 
how old they are. A quick search of Ebay (http://www.ebay.com) 
shows 45 current auctions, with prices varying from $5 to $50 
depending on condition. 

Another good place to learn more about fractionals is the 
Paper Money Collecting FAQ located at: 

http://www.cis.ohio-state.edu/text/faq/usenet-faqs/html/coin-collecting/paper-money-faq/faq.html


Until Next Time,

Alan Cohen

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Coins and Currency Weekly(c) (CCW) is published by Alan Cohen. 
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