?Postage stamps, already bearing denominational markings, became a go-to alternative, to the point that the Post Office could not meet the demand. However, the public still had to turn to several alternative forms of money as government coinage disappeared: The Philadelphia Mint, the only facility striking cents, devoted most of its production to that denomination, nearly tripling its output compared to 1861 (10,100,000 cents in 1861, and 28,075,000 cents in 1862).
Five cents would buy a glass of beer and a lunch.” As Reed explains in his book Civil War Encased Stamps, “A quarter was a good deal of money,” adding, “Three cents would buy a newspaper or a stage ride. Lack of small change in commerce in 1862 was no minor hardship. By the summer of 1862, the North was in the midst of a coinage shortage as an estimated $25 million in small change had disappeared, according to numismatist Fred L. Gold and silver coinage, bearing an intrinsic value not found in paper notes, quickly developed a premium over paper money and what coinage was in circulation quickly disappeared, hoarded by a fearful populace seeking to preserve their wealth.Įven copper-nickel Flying Eagle and Indian Head cents, each with an intrinsic value of less than their face value, were pulled from circulation.
The banks’ decision meant they would no longer redeem paper money - those notes issued by state-chartered banks and the first issues of the federal government - with silver or gold coin. In December 1861, the banks had suspended specie payments for paper money. While the Union forces were experiencing some success in the western theater, in the East the Army of the Northern Virginia was proving to be more than a match for the Army of the Potomac.Ĭitizens on both sides of the conflict, seeing no quick end to the bloodshed, were worried, and their concerns were felt in the economy. Americans were killing Americans on the battlefield in increasing numbers in one bloody battle after another. The southern half of the nation was in armed rebellion. In the summer of 1862 a grim mood gripped the northern portion of the United States.
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