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Author: Steve Swain

Marbled Edge Continental Currency Challenged British Counterfeiting

Early American paper money is separated into two categories: colonial currency, issued by the individual colonies as early as 1690 and continental currency, issued from 1775 until 1779 by the newly formed Continental Congress. The paper bills issued by the colonies were known as “bills of credit”. Figure 1 presents examples of the Pennsylvania twenty shillings bill and the twelve shillings New Jersey bill.

Figure 1. Pennsylvania and New Jersey Colonial Currency

After the American Revolutionary War began in 1775, the Continental Congress began issuing paper money known as continental currency, or Continentals. Continental currency was denominated in dollars from 1/6 of a dollar to $80, including many odd denominations in between. The bills were signed with red and brown ink and numbered in dark red ink. The obverse and reverse of the $3 currency are shown in Figure 2.

Figure 2. Obverse and Reverse of $3 Continental Currency

Most colonial and continental currency are not especially valuable. The exception is the unique $20 denomination from the May 10, 1775 series which was printed on paper made by Benjamin Franklin that was thin white with the left side polychromed by marbling. This bill is also a different size from the other denominations. Figure 3 shows the obverse and reverse of a $20 specimen, numbered 1418, as seen in the upper left of the bill.

Figure 3. Obverse and Reverse of $20 Continental Currency

But why were the $20 bills printed in such a unique fashion? With the issuance of continental currency in 1775, the British immediately attempted to weaken the public trust in the currency with propaganda and penalties for using the new currency. But more significantly, in an effort to devalue and destabilize the currency of the Colonies, the British also engaged in economic warfare by means of extensive counterfeiting.

Kenneth Scott’s Counterfeiting in Colonial America includes a quote from Benjamin Franklin regarding the British-sponsored counterfeits:

“Paper money was in those times our universal currency. But, it being the instrument with which we combated our enemies, they resolved to deprive us of its use by depreciating it; and the most effectual means they could contrive was to counterfeit it.

The artists they employed performed so well, that immense quantities of these counterfeits, which issued from the British government in New York, were circulated among the inhabitants of all the States before the fraud was detected.

This operated considerably in depreciating the whole mass, first, by the vast additional quantity, and next by the uncertainty in distinguishing the true from the false; and the depreciation was a loss to all and the ruin of many.”

Among the solutions utilized to respond to the circulation of British counterfeits was the distribution of counterfeit detector sheets, a means by which to compare similar-looking bills in an attempt to determine the true authenticity of the continental bills. In Figure 4 are two such counterfeit detector sheets.

Figure 4. British Counterfeit Detector Sheets

However, an additional response to the British counterfeiting was needed, one that would hopefully deter counterfeiting by making the bills difficult to replicate. The adopted strategy was for the continental bills to be printed on paper containing mica flakes and blue fibers. Special type fonts, complex vignettes, elaborate border designs, and specially designed emblems were used. Also, two-color printing, as well as subtle alterations in the alignment of text, capitalization, and italicization, were used in the constant battle against counterfeiting.

Moreover, in the single instance of the May 10, 1775, $20 bill, marbled edge paper was used as another anticipated deterrent to counterfeiting. These gems of American history have commanded prices as high as $26,000 at auctions. Granted, such prices depend on the quality of the specimen, such as all of the outer margins are fully upon the paper, both the face and back; the rich colors on the marbled portion at the far left edge are bright and fresh; the note has strong black printed text and designs and the reverse side print is as intense and vivid black. Figure 5 shows quality specimens of the marbled edge of $20 Continental.

Figure 5. The $20 Marbled Edge Currency

In the final analysis, was using marbled edge paper a deterrent to British counterfeiting? Possibly, at some level, but not completely satisfactory. But it should be noted that the lack of public confidence in the continental currency was not primarily a result of massive amounts of counterfeit bills printed by the British. The Continental Congress also printed huge quantities of the bills without any solid backing, such as gold or silver. By the end of 1778, Continentals could command only 1/5 to 1/7 of their face value. By 1780, the bills were barely worth 1/40th of their face value. Congress attempted to reform the currency by removing the old bills from circulation and issuing new ones, without success. By May 1781, Continentals had become so worthless that they ceased to circulate as money.



Encased Postage Stamps: The “New Metallic Currency”

Of the many shortages of goods and services in the early years of the U.S. Civil War, none was more interesting than the shortage of coins and the enterprising and creative solutions to remedy that shortage using postage stamps.

In 1862, paper money was not backed by gold or silver and, therefore, it was only a very tenuous faith in the Government that gave people any assurance that paper money had true value. Most people didn’t want to embrace that faith. Combine that feeling with the uncertainty associated with the ultimate outcome of the civil war and, hence, the hoarding of common gold, silver, and copper coinage, the time-tested, universally accepted exchange medium.

$5 Demand Note. People had very little faith in paper money in 1862.

This hoarding situation was worsened by clever financial traders who would buy U.S. silver coins using paper money. These coins would then be sold to foreign markets in exchange for gold, a much more valuable commodity. By mid-1862, it was estimated that $25 million in coinage had disappeared from circulation in the United States.

But people still needed to purchase a 3¢ loaf of bread, a 1¢ newspaper, a 5¢ quart of milk and countless other goods that required coins. And vendors had to make change when an item’s price was less than a nickel, a dime or a quarter. How was this to be done?

In some cities, businesses gave customers I.O.Us, private companies created “Civil War tokens” and paper money was cut into several pieces to represent a fraction of a dollar. Clever remedies for sure, but none that were widely used or accepted.

All of this radically changed on July 17, 1862, when Congress decided to address the coinage shortage and passed a law that allowed postage stamps to satisfy debts of less than $5, but only debts to the government. As probably the first case of an “urban myth”, the public grossly misinterpreted this to mean that postage stamps could be universally used in lieu of coins for any type of debt or purchase. Through various newspaper announcements and other mediums, the government attempted to educate the populace as to their misunderstanding, but to no avail.

People began to carry stamps in their purses and pockets and used them repeatedly for daily purchases. Vendors gladly accepted the stamps as payment. But all of this hand-to-hand usage quickly resulted in damaged stamps with denominations sometimes unrecognizable. The local post offices would not exchange damaged stamps for new ones, so a remedy was needed. John Gault, a New York entrepreneur, decided he had the best solution.

On August 12, 1862, Gault obtained a patent for a “postage stamp case”, or as he named the item in a newspaper advertisement, the “New Metallic Currency.”

Machines used to make buttons was the fundamental component in Gault’s idea. Starting with a round piece of brass (about the size of a quarter) as the backing, and then layering on a piece of cardboard, a stamp, a piece of mica (as a clear covering for the stamp) and finally another piece of brass with a hole in it, the button machine would press all of the pieces together to create the encased stamp. The final step in the process was for the machine to bend over the edges of the frame to keep all of the pieces inside the case.

Gault didn’t sell the encased stamps to the public. Instead, he sold them to stores and businesses that needed “coinage” to make change for customers’ purchases. Gault’s profit came from the 20% markup over the face value of the stamp.

To increase his potential profit, Gault’s second idea was to inscribe advertising on the back of the encased stamp. He would charge companies who purchased the metallic currency an additional 2¢ for each item. In time, 31 merchants signed up with Gault including Joseph L. Bates (fancy goods), Drake’s Plantation Bitters (a “medicine” mainly consisting of rum), the Tremont House, North America Life Insurance and Aerated Bread.

A 3¢ encased stamp (Scott 65) with “Ayer’s Sarsaparilla To Purify Blood” advertisement on the reverse.

Gault’s most significant client was J.C. Ayer, a manufacturer of “medicines” and medical remedies. Ayer was well versed in the advantages of keeping a product’s name in front of the public as he had done with newspaper advertising and almanacs. So, many of the existing encased stamps today are the Ayer varieties since a large number were produced.

Encased stamps were widely accepted in the general commerce realm until later in 1862 when the government issued “fractional currency”, i.e., bills with values of less than one dollar. This legitimate, government-sanctioned currency quickly eliminated the coin shortage. Having no other value than the stamp, people tore apart the encasements of their metallic currency to remove the stamp to use as postage. Thus the scarcity of the 1862 encased stamps today.

Colonial America Lotteries

In the United States today, lotteries are run by 46 jurisdictions: 43 states plus the District of Columbia, Puerto Rico, and (US) Virgin Islands. Hot Lotto. Decades of Dollars. Wild Card 2. 2by2. MegaHits. Tri-State. Mega Millions. Powerball . Win for Life. Pick 10. Mid-day Numbers. MatchPlay. The list is almost endless.

More Americans than ever before are playing lotteries, bringing in $56 billion in 2011 alone. Funds from these lotteries are earmarked to pay for education, environmental protection, senior citizen programs, juvenile detention facilities, and various public services. This is much-needed revenue that is not available from the multitude of income, property, estate and use taxes.

But U.S. lotteries are by no means recent phenomena. Lotteries in Colonial America were plentiful and an exceptionally effective method for the colonies to raise funds required for military payrolls, schools, bridges, street repairs, etc.

Massachusetts – The First Colonial Lottery

The first authorized lottery in Colonial America took place in Boston Massachusetts in 1745. Colonists had already been subjected to unusually high poll and estate taxes, but significant military debt, among other obligations, was still outstanding. On January 9, 1745, the General Court passed an act that provided for the payment of debt, “in a manner the least burdensome to the inhabitants,” that is, by a lottery.

Ticket #1889 From the First Lottery in Massachusetts

Illustrated here is a ticket from the first Massachusetts lottery. Notice that the year on the ticket is 1744, not 1745. The new year did not officially begin in Britain until the Incarnation of Christ which was celebrated on March 25th. Most individuals, institutions and even the newspapers had long recognized and used January 1st as the date on which the new year started, but legally it was not until 1752 that England officially adopted January 1st as the first day of the new year. As such, even though the lottery act was passed on January 9, 1745, tickets that were printed and sold over the next months had a date of “1744.”

Sheets of 25,000 tickets were printed in three segments. The left segment was called the “benefit” segment, that is, the piece of the ticket that was to be pooled with all possible winning segments and hopefully chosen as the winning (“benefit”) piece at the eventual lottery drawing.

The center segment was the piece retained by the lottery official as a match to the purchased ticket. The right, larger segment was the actual ticket with the words “Massachusetts Government Lottery.” The tickets were numbered consecutively 1-25,000 with the left and center segments, or stubs, given the same number as the attached ticket. Of the 25,000 tickets, 5,422 were designated as “benefit” or winning tickets, a better than 1 out of five odds.

When a ticket was sold, one of the lottery directors signed the ticket and then cut it out along the left side of the design area and gave the ticket to the purchaser. This cut was purposefully curved and was called an “indent”, as seen in the below examples.

Left-side “Indents” on Massachusetts Lottery Tickets

The idea was that each ticket would have a unique curve that would perfectly join the indent on the center segment of the ticket, the “stub” that the lottery director kept. The intent was to prevent counterfeiters from making false tickets or altering the number of a losing ticket.

Several days before the drawing, the left-side benefit segments were separated from the indented center stub pieces and placed into a strong box with five locks and seals. Benefit stubs from unsold tickets would also be placed in the box, thus accounting for all possible numbers between 1 and 25,000.

On the appointed day, the directors and administrators of the lottery would gather in a predetermined public meeting place and draw the winning numbers.

The process was to continue all day. If the lottery could not be completed in one day, the box was relocked and sealed and the drawings would continue on a succeeding day (except Sunday) until all the tickets had been announced.

Once the winners had presented their tickets, they were to be paid within 40 days. Interestingly, 20% of the winnings was collected as a tax “for the use and service of this government.” Thus, the winners were only were given 80% of their winnings.

If for some reason, the colony needed to delay payment for a winning ticket, the winner would receive a “promise to pay” certificate, such as the one illustrated here, which could be redeemed at a later time with the addition of interest earned on the original winning amount.

“Promise to Pay” Certificate

By all accounts, the first colonial lottery in Massachusetts was a success. Thus, shortly thereafter, Rhode Island initiated their first lottery for the purpose of acquiring funds to build a bridge across the Weybosset River in Providence. Many other colonies followed suit and eventually 164 authorized colonial lotteries existed up to the outbreak of the Revolutionary War.

Rhode Island Lotteries

Rhode Island had the most lotteries with 82. Each lottery could have several “classes.” For example, on February 23, 1761, a petition to the Rhode Island General Assembly was received from several of the inhabitants of Providence requesting a lottery so that the profits could be used to pave the streets of that city.

Ticket from Second Class, Providence Street Lottery

The repair work was to be accomplished in three steps and, thus, three “classes” of lotteries. The proceeds of the first-class lottery would be used to pave from the bridge towards uptown as far as the money would allow. Proceeds from the second class lottery would be used to pave from the bridge downtown. Finally, there would be a third-class lottery to subsidize the paving from the bridge westward over Weybosset.

The lottery ticket illustrated here is from the second class of the Providence Street Lottery, No. II, February 1761.

A scarce Rhode Island lottery ticket is the one below from the Providence Meeting House Lottery. The lottery’s stated purpose was “For Repairing etc. the Presbyterian or Congregational Meeting-House in Said Town.” It is a $2 1/2 Winning ticket, with the prize award amount and endorsement noted on its blank reverse.

Ticket from Providence Meeting House Lottery

Pennsylvania Lotteries

Some of the more ornately designed lottery tickets were produced by the various cities in the Pennsylvania colony. This is a January 1, 1796, “Canal Lottery, No. Two” ticket from Philadelphia.

Pennsylvania “Canal Lottery” Ticket

It is not signed in the lower right-hand corner by “Secretary”, but rather states “Company” and is notated “100 Ds” (dollars), in the upper left-hand corner. This “company” tag and the $100 amount clearly indicates this was a winning ticket in the drawing to be paid to the agreed-upon “company” that purchased the ticket.

Continental Congress Lotteries – A Failure

The lottery trend continued quite actively throughout the Revolutionary War and the Confederation period. One of the most significant developments was the creation of “national” lotteries organized by the Continental Congress.

However, in stark contrast to the success lotteries found on the state and the local levels, the national lottery was a dismal failure. On November 18, 1776, the Continental Congress enacted a national lottery in four classes, consisting of 100,000 tickets in each class. From this seemingly well designed, elaborate lottery, It was calculated the Congress would obtain $1,500,000 from the four classes, a considerable amount of money in 1776.

A ticket from the First Class lottery is illustrated below.

Continental Congress, First Class Lottery Ticket

Sales of tickets for the first-class lottery were far slower than expected, forcing the lottery officials to postpone the drawing several times. Distribution problems in selling and publicizing the lottery was a significant issue throughout the country.

Finally, on May 1, 1778, the drawing was begun with only 20,433 of the 100,000 tickets sold. When the final tickets were drawn on May 27th, about 36,500 of the $10 tickets had been sold. Of course, the government-owned the remaining tickets and is estimated to have ended up with a net loss of more than $72,000!

These losses continued with the other classes of the lotteries for a host of mismanagement reasons. But most importantly, the problem was compounded by the greatly depreciated value of the continental dollar during these years.

At the completion of the first class lottery in May of 1778, it took 2-5 Continental dollars to equal one dollar in actual exchange value. By the completion of the second class lottery in June of 1779, it took from 13-20 Continental dollars. By the completion of the drawing a year later, the rate of exchange was over $1,000 in Continental bills to $1 in actual exchange value.

The final calculation for the government’s winnings from the entire lottery was less than $100,000, a small fraction of the anticipated proceeds of $1,500,000.

For additional insight into the Colonial America lotteries and the failure of the Continental Congress lottery, see: John Samuel Ezell, Fortune’s Merry Wheel: The Lottery in America, Cambridge, MA: Harvard, 1960; and specifically on the Continental Congress lotteries, Lucius Wilmarding, “The United States Lottery,” The New York Historical Society Quarterly, 47 (1963) 5-39.

Civil War “Dog Tags”: Sutlers Solve the ID Dilemma

During the American Civil War, soldiers were concerned that their bodies would not be identified in the aftermath of a battle because neither the Union nor Confederate government-issued identification tags, commonly called “dog tags” today. Consequently, many soldiers would write their name on a piece of paper and pin it to their clothing or scratch their name into the soft lead of their belt buckle.

On May 3, 1862, a New Yorker named John Kennedy wrote to U.S. Secretary of War Edwin Stanton offering to manufacture and supply all Federal army soldiers a “name disc.” Kennedy’s letter and the disc design (what looks very similar to what the War Department eventually adopted forty-four years later) can be seen in the National Archives along with the Army’s reply: an abrupt rejection of the idea, no explanation. (See Journal of the American Military Institute, v. 3, 1939, pp. 61-63.)

Not long after this exchange, various manufacturers began to advertise in periodicals items called “Soldier’s Pins”. Shaped to suggest a branch of the service, these pins were engraved with the soldier’s name, unit and sometimes the battles in which the soldier had participated.

Drowne & Moore Jewelers, located in New York City, carried one of those advertisements in Harper’s Weekly: “Attention Soldiers! Every soldier should have a badge with his name marked distinctly upon it……a solid silver badge…..can be fastened to any garment.”

But soldiers in the field rarely, if ever, had possession of such periodicals and, therefore, would not be aware of the availability of these identification pins.

A common fixture near the Civil War battlefields were mobile tent stores operated by sutlers – itinerant, civilian merchants who followed the armies selling tobacco, coffee, sugar, and other goods directly to the soldiers. It was these sutlers who satisfied the soldiers’ desire for identification tags.

Using a small machine that would stamp designs into metal discs made of brass or lead, the sutlers created the first “dog tags” used by soldiers fighting on American soil. Very few of these identification tags for Confederate soldiers have been found. The sutlers’ primary market were Union soldiers who typically possessed the resources to purchase such ID devices.

One side of the identification tag would be stamped with a likeness of Abraham Lincoln, George Washington, an eagle, and shield or other designs. The other side of the disc was engraved with at least the soldier’s name and many times his unit and home town name. A hole would be punched into the tag allowing for a piece of string or cord to be passed through, thus finishing the piece that would be worn around the soldier’s neck.

This dog tag was inscribed for and worn by “ROBERT LUCAS / CO. K. / 1st. VET. CAV. / N.Y.S.V. / WATERLOO . N. Y.”, pictured here. “N.Y.S.V.” is an abbreviation for “New York State Volunteers.” The reverse of the tag bears the image of Union Major General GEO. B. MCCLELLAN with a notation of the “WAR OF 1861”, as opposed to the “Civil War”.

Again supporting that the majority of the dog tags were designed for Union soldiers, shown here are discs portraying a “UNION” shield and inscribed with “1861 / AGAINST REBELLION” and “The UNITED STATES / WAR OF 1861” with the likeness of an American eagle.

The similarities of the lettering and the positioning on the discs most certainly imply that these tags were made by the same sutler.

These dog tags were created for “A. Boyce, Co. E, 76th Reg. N.Y.S.V., Richford” and “Geo. Moore, Co. A, 76th Reg. N.Y.S.V., Virgil”.

Sadly, even though many Union soldiers purchased, and presumably wore, the sutler’s dog tags, of the 325,230 federal soldiers who are buried in National cemeteries, 148,883 are marked unknown. It is estimated that 5% of the combined Civil War Union and Confederate dead remain unidentified.