U.S. Postage and Fractional Currency.

According to Numismaster.com. miniature pieces of paper money replaced small change during the Civil War.

When inflation drove hard money from the marketplace, the U.S. Congress monetized postage stamps to replace coins, which had been withdrawn from circulation.

In July 17, 1862, a law directed the Treasury secretary to "furnish to the assistant treasurers, and such designated depositaries of the United States as may be by him selected postage and other stamps of the United States, to be exchanged by them, on application for United States Notes." It became effective Aug. 1, 1862.

However, the Post Office Department was not keen on the plan. Runs on post offices depleted stamp supplies, and Postmaster General Montgomery Blair shut the stamp windows on July 22, 1863.

He wired his postmasters: "This department is not to furnish postage stamps for currency."

To placate the irate Blair an accommodation was reached by issuing small notes in lieu of stamps. The first issues became known as Postage Stamp Currency because they bore facsimiles of the then current 5 and 10 cent postage stamps.

Shown above is Postmaster Blair on a 1963 U.S. airmail stamp.

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