Postal Currency, or Postage Currency, was a form of US Post Office paper money printed in 5¢, 10¢, 25¢, and 50¢ denominations and issued from August 21, 1862 through May 27, 1863. They were valid for redemption of postage stamps and, while not actually valid as legal tender, they could be exchanged for United States Notes in $5 lots and were receivable in payment of all dues to the United States, up to $5. Essentially, they were postage stamps printed on Treasury paper.
After the American Civil War broke out the Union stopped redeeming its Demand Notes in specie at the end of 1861 and many people started hoarding coins. There was a near universal fear that paper currency would become worthless, especially to the losing side. Deprived of coins with which to make change, many businesses issued their own notes, tokens, or similar printed matter as a way of making change. Some resorted to encasing postage stamps in transparent holders which inspired the government to authorize the Postage Currency later in 1862. The 5¢ and 10¢ notes depicted the same pictures as the postage stamps that were current at the time with Thomas Jefferson and George Washington. The 25¢ and 50¢ denominations simply had 5 images of the smaller denomination stamps pictured on one note.[1]
The Postal Currency notes were followed by four additional issues of Fractional currency which remained in use until 1876 when Congress authorized the minting of fractional silver coins to redeem the outstanding fractional currency. Today, the original Postage Currency of 1862 is often collected alongside postage stamps of that era.