Sticky Money

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In uncertain times, it’s natural for people to hoard resources. At the start of the Civil War, Americans stocked up on salt, flour, coffee, clothing, shoes, and coins.

The hoarding of specie began as early as April 1861. Buying cheap necessities like milk and bread became nearly impossible without small change. To address the economic crisis, the Legal Tender Act of 1862 was signed into law on February 25, and by March 10, greenbacks began to circulate in the North. The introduction of official paper money to the United States created a dual-currency economy where paper money traded at a steep discount. Because people feared the government might fail and render this unfamiliar paper money worthless, the frantic hoarding of gold, silver, and copper coins only intensified.

Postage Stamps as Money

Without coins, daily commerce froze. Desperate for change, people in the North began using government-issued postage stamps as money. However, raw postage stamps were ill-suited for the task. Newspapers complained about this new “mucilage currency,” featuring tales of gummed-up masses of stamps being forced on unwilling merchants and consumers alike. To regulate this chaos, Congress passed a law on July 17, 1862, legalizing the use of stamps to pay any government debt of up to $5. Still, for postage to function cleanly in commerce, a structural innovation was necessary.

An Innovative Solution

Enter John Gault, a sewing machine merchant and salesman, who realized that the machinery used to manufacture buttons could be used to press brass cases around fragile paper stamps. One side of what he dubbed his “New Metallic Currency” featured a mica window, showing the front of the stamp, while the other side of his brass enclosure could be die struck like a token.

In a stroke of genius, Gault realized that the token side of his encased postage could be used for advertisements. Instead of promoting his invention to bankers or the government, he marketed the concept directly to private merchants, offsetting his production costs by transforming the brass reverse into a pocket-size billboard. For a brief window in 1862, you could buy a newspaper or a loaf of bread using a piece of metal that urged you to buy Sands’ Ale or use Ayer’s Cathartic Pills to cure whatever ailed you.

An Early End

Encased postage seemed like an idea whose time had finally come, but sadly, things didn’t work out the way Gault had planned. On August 21, 1862—just 9 days after Gault officially received his patent—the U.S. Treasury authorized the issuance of postage currency. These small notes, printed in denominations of 5-, 10-, 25-, and 50-cents, were a cheaper, easier solution to the small-change problem in the United States. At the same time, there was a severe shortage of postage stamps, depriving the entrepreneur of his product’s most essential ingredient.

By mid-1863, the government’s rollout of postal (and later fractional) currency effectively ended the small-denomination crisis in the North. Encased postage quickly fell out of favor. Once the public realized that loose, unused stamps could still be redeemed at face value at the post office, people began prying open the brass cases to retrieve the stamps inside. After producing roughly 750,000 pieces of encased postage, Gault permanently halted operations. Today, it is estimated that fewer than 5,000 pieces of Gault’s “New Metallic Currency”—or “Button Money,” as contemporary news-papers called it—survive.