During the Civil War, the United States issued 5-cent paper bills because people were hoarding coins made of precious metals.
When America Printed 5-Cent Paper Money
Imagine paying for something with a bill worth less than a dime. For Americans during and after the Civil War, this wasn't imagination—it was everyday life.
When war broke out in 1861, people panicked. They started hoarding coins, especially those made from gold, silver, and even copper. Within months, coins virtually disappeared from circulation, creating a bizarre problem: how do you make change?
Stamps as Money (Yes, Really)
The first solution was almost comical. In 1862, the government authorized postage stamps as legal tender. Shopkeepers and customers fumbled with tiny, sticky stamps that tore easily and turned into illegible blobs when wet.
This was clearly unsustainable. So Treasury Secretary Salmon P. Chase came up with something better: fractional currency—paper money in denominations of 3, 5, 10, 15, 25, and 50 cents.
Tiny Bills, Big Production
Between 1862 and 1876, the US printed over $368 million in fractional currency across five different series. The 5-cent notes were among the smallest, measuring just 2.5 by 1.75 inches—roughly the size of a modern business card.
These weren't just plain slips of paper. They featured:
- Intricate engravings designed to prevent counterfeiting
- Portraits of historical figures like Spencer Clark and William Meredith
- Complex geometric patterns called lathe work
The 5-cent note's most famous design featured a portrait of Spencer Clark, who was the Superintendent of the National Currency Bureau. This caused a scandal—Clark had put his own face on money. Congress was so annoyed they passed a law prohibiting living persons from appearing on US currency, a rule still in effect today.
The End of Paper Nickels
By the mid-1870s, the coin shortage had eased. The government began withdrawing fractional currency from circulation in 1876, replacing these tiny bills with the coins we know today. The nickel five-cent piece (with its distinctive shield design) took over.
Today, these miniature bills are prized by collectors. A well-preserved 5-cent fractional note can fetch anywhere from $20 to several hundred dollars, depending on the series and condition.
Next time you casually toss a nickel into a tip jar, remember: there was a time when that five cents came on a piece of paper that Americans treated as carefully as we treat a $20 bill today.