U.S. ENCASED POSTAGE STAMPS

It wasn't until the Civil War that stamps became an important currency medium. Hoarding of hard currency (i.e., coinage) was one of the first symptoms of commercial economic problems at the beginning of the Civil War. The Treasury and the Mint were not ready for the crisis of a severe coin shortage. The Treasury suspended all specie payments in December 1861, creating even more speculation and hoarding. This caused a panic among those responsible for the economy. Silver coins started to be hoarded in 1862 and eventually the smallest copper denominations were removed from circulation. Add to this the uncertainty at that time of which side would prevail in the war, the coin shortage became dire. By July 1862, coins were worth 20% more than paper money. The government's inability to provide enough coins for trade to be facilitated caused the public to seek out alternatives, including copper tokens, cardboard "good fors," and government-issued stamps (Hodder and Bowers).

Soon, improvements were devised, such as pasting stamps onto boards for transactions under $100, which started to appear in July 1862. Notes with affixed stamps were produced by some merchants in various denominations under $1. The Department of the Treasury began issuing stamps pasted to their letterhead which were cut to a uniform size. Stamps could be exchanged for greenbacks by an act of July 17, 1862. This authorized the Secretary of the Treasury to supply postage and other stamps for use as currency in payments to the United States less than $5. Another proposal was the use of small envelopes (now referred to as Postage Stamp Envelopes), some with an advertising message, to keep the stamps clean, but that had the disadvantage of needing to open the envelope to confirm the stamp value.

During all this confusion, John Gault submitted his idea of postage stamp encasements to the U.S. Patent Office, and on August 12, 1862, a patent was granted. Gault called his product "The New Metallic Currency" in his advertising. Encased postage stamps (sometimes written shorthand as the acronym EPS) proved to be very popular as a circulating medium and are one of the most important private coinage issues in American history. Gault's first issues were primarily blank on the obverse, showing only his name and the patent date in small letters. He soon realized that he could sell advertising in this unused space. By providing a place for advertising on the obverses, encased postage not only contributed to easing a coinage emergency but also created an advertising medium. The idea was a popular one, as he was able to get 31 different merchants (advertising 34 different products) to participate, including his own pieces and those with his later partner, Kirkpatrick. Gault must have used salesmen, particularly in the Midwest, to gain more advertisers.

Gault made money in two ways: he sold the encased stamps to firms that needed coinage for 20% over face value (the same premium silver coinage was bringing at the time) and he charged advertisers a two-cent premium for putting their messages on the back.

The components of a U.S. encased postage stamp are simply a round piece of mica, a stamp, a piece of cardboard, a brass frame, and a brass back. The cardboard was cut into rounds, and the stamp corners were folded over the edges. The protective mica was then placed on top, and the assembly was inserted into the brass back, then the brass frame was fitted over the combination, with button-making machinery used to form the brass enclosure.

Arlie Slabaugh has estimated that the smaller firms ordered 500-2000 pieces. He interpolates from that that the larger issuers such as Ayer ordered many thousands (200,000 by one account, mostly 1- and 3-cent denominations). James Ruddy studied the rarity of merchants carefully and based on offerings over a long period of time, came up with the following rarest merchants, beginning with Arthur M. Claflin, the rarest, and followed by B.F. Miles, Sands' Ale, N. & G. Taylor & Co., Pearce, Tolle & Holton, and Dougan.

The encased stamps were made by the Scovill Manufacturing Company of Waterbury, Connecticut, a major producer of buttons for the military. The cases were made from a brass disc (the advertising side) and the "wraparound" stamp frame with the tabs. The surface of the wraparound comes in two different types, those with a ribbed surface and those with smooth. The ribbing has been the topic of much speculation, but according to Fred Reed, the ribbed pieces were simply those pieces made using leftover button stock. Once Gault ramped up to full production, smooth brass stock was used. The ribbed type is generally rarer than the smooth. The ribbed type only exists for some of the advertisers.

It was Postage Currency that was the ultimate replacement for Gault's encased postage, along with the inability of Gault to purchase enough stamps for his product, the influx of official copper-nickel cents and privately issued Civil War Tokens, and not having enough companies interested in advertising. The alternatives to encased postage were much cheaper to produce and became more attractive economically. It is uncertain how long he was able to continue production, but Summer 1863 seems to be the latest he could have continued.

Arnold Perl once estimated that Gault operated his venture for about eight months. The alternative approaches began to take hold and by the summer of 1863, the coin shortage had begun to fade. In all, Gault's output of all types reliably totals over 750,000 pieces, according to the Smithsonian Institution. Only $50,000 or a bit more in encased postage ever circulated. For a short period, the U.S. government was actually considering using Gault's invention but ultimately decided on Fractional Currency as the better solution. Encased postage continued to circulate throughout the war and was occasionally seen in circulation as late as the 1870's.

For more information, or to order, see:
THE ENCYCLOPEDIA OF ENCASED POSTAGE (https://www.numislit.com/pages/books/7855/paul-montz/encyclopedia-of-encased-postage)

To read the earlier E-Sylum articles, see:
WAYNE'S NUMISMATIC DIARY: MAY 31, 2026 : Education (https://www.coinbooks.org/v29/esylum_v29n22a20.html)
NEW BOOK: ENCYCLOPEDIA OF ENCASED POSTAGE (https://www.coinbooks.org/v29/esylum_v29n25a03.html)

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