The contract with Toppan Carpenter for printing stamps was due to run out on the 10th June, 1861 a new contract needed to be made. The Postmaster-General, Montgomery Blair, had several challenges to deal with at the time, two of the most serious were that the Post Office Dept. was losing money and the other was the South. The two were connected. The new contract was to address both these challenges. The efficiency problem was partially addressed by the fact that the National Bank Note Company agreed to produce stamps at a cost that was 30% less than the old Toppan Carpenter contract.
In 1860 the Post Office Department’s revenue from all sources was $9,049,296, with a tiny profit. However $820,546 was from the South, with fixed costs that were hard to change, the Post Office anticipated that once they lost the revenue from the ‘disloyal’ states it would make a loss. A further problem is that during the course of 1861 letters to the South were not being delivered, the year of 1861 ended with 103,680 domestic dead letters, and dead letters were costly. Montgomery Blair, suggested that valuable dead letters, when returned to their owners, should be charged with treble the ordinary rate of postage, comprising one rate for return transportation to the dead letter office, one rate for registration there, and one rate for return transportation to the writers or owners.
With Blair being the member of the Lincoln cabinet taking the firmest stance against the south, it did not take much to force Montgomery Blair’s hands, his office was unable to collect the debt’s from the Southern States Post Offices and $270,000 worth of stamps were still in the Southern States hands. Faced with the prospect of losing another $270,000, plus the mounting cost of dead letters, he simply cut the rebel states off from deliveries and changed the stamps. In changing the stamps he demonetized all the current issue and requested that in the new contract that the National Bank Note Co. produce the new stamps with new designs. This had the side effect of depriving the rebel states of an alternative method of currency.
It was decided to keep the current denominations and for a while it was proposed to change the colors as well as the designs. However the colors were only changed slightly. The Post Office Dept. wanted the new designs to be issued as soon as possible and so the designs were based on the previous issue. Few issues have been put into production with greater speed and with fewer changes than the 1861 issue.
In August 1861, the NBNC submitted to the Post Office, gummed and perforated copies of their designs. These are known as the “August Issue”. The 24¢ and 30¢ denominations were approved, with the remainder requiring small changes to their design before final approval, as seen by the illustration below.
Because of a shortage of the 10¢ denomination the August plate was put into use after the issued stamp was issued, this stamp is classified by Scott as #62B. The remaining denominations were never issued although a few did fall in the hands of philatelists and one of the 5¢ premier gravures did actually go through the mail and was cancelled.
Metal was needed for the military and this drove up it’s price, this resulted in the price of coinage being worth 20% more than paper money. Because of this coinage became scarce, as the smallest bill at the time was the $5 bill. Before the first $1 bill, or greenback, was printed in 1862 stamps were used frequently in lieu of coins, Congress made this official and they were widely used for this purpose. Stamps are ill suited to the purpose, being fragile by comparison and gummed. In July 1862 John Gault patented the “postage stamp case” or as stated in Gault’s newspaper ads, “New Metallic Currency.” The original encasement was silvered to give it the appearance of coins, however this was soon abandoned as the silver easily wore off and was expensive to produce. His idea was to sell the encased stamps at the cost of the stamp plus 20% to merchants. And for an extra 2¢ the merchant could place their advertisement on the reverse. 50% of the production being devoted to the 1¢ and 3¢ varieties.
The Post Office Dept. took a dim view of stamps being used as currency, as they were being diverted from their true purpose. They never gained real popularity as the 1¢ and 3¢ had little profit associated with them and there was a paucity of merchants willing to spend money on advertising during the Civil War. The encased stamps were circulated through to the middle of 1863 when the Government’s fractional currency (U.S. bills with values less than one dollar) started to become common enough to eliminate the coin shortage. Eventually, the encasements were plundered for the valuable stamps, making surviving examples quite rare, of the 750,000 issued barely 7,000 survive.
The NBNC printed two more valued during the life of their 1861-69 printing contract, the 2¢ and 15¢ stamps. In March 1863 Congress abolished carriers’ fees and approved a pre-paid rate for drop-letters of 2¢. This necessitated a new stamp and thus in July of the same year the 2¢ Jackson was issued. There was no good reason to issue the 15¢ stamp in 1866 as there was no change in the postal rates, it was considered to be a mourning stamp for President Lincoln. Both stamps designs are very close to the edge of the stamp making well centered copies difficult to find.
The Post Office was becoming obsessed with the thought that its stamps were being removed after use, cleaned of their cancel and reused, resulting in what they believed to be a significant loss of income. In 1867 a tender was put out to the public for a tamper proof design. This came up with some interesting and bazaar submissions. Some of which are shown below.
Charles F. Steel, a supervisor at the National Bank Note Co., patented a machine that embossed a grill onto a stamp, making it difficult to remove from an envelope.
The purpose of grilling stamps was to break the fiber of the stamp paper so that when a cancel was applied the ink would soak into the paper and make washing the cancel off much more difficult. A grill is essentially an embossment of the stamp paper, in the form of a very small “waffle” pattern. The first grill employed, was the A grill, an grill that covered the whole of the stamp, it was soon discovered that this destroyed the structural integrity of the stamp, with Postal Clerks complaining that when separating stamps they would tear through the stamp itself.
Types of Grills:
A Grill – overall (first experimental grill)
C Grill – points up, 16-17 x 18-21 points (second experimental)
Z Grill – points down, points with horizontal ridges, 13-14 x 17-18 points
D Grill – points down, vertical ridges, 15 x 17-18 points
E Grill – points down, vertical or “X” ridges, 14 x 15-17 points
F Grill – points down, vertical or “X” ridges, 11-12 x 15-17 points
B Grill – points up, “X” ridges, 22 x 18 points
G Grill – points down, vertical ridges, 12 x 11-11.5 points, 1869 Pictorial Issue
H Grill – points down, vertical ridges, 11-13 x 14-16 points, 1870 issue
I Grill – points down, vertical ridges, 10-11 x 10-13 points, 1870 issue
J Grill – points down, vertical ridges, 9-10 x 12 points, 1870 issue
Perhaps the rarest of these is the Z grill. It was the grill to be put into regular production after the experimental A and C grills, and is distinguished by being the only grill with horizontal ridges. These horizontal ridges did not help with the stamps integrity and two weeks later vertical ridges were used, starting with the D grill. Being as the Z grill was only in production for two weeks it makes it scarce.
The first grills were used in 1868 and their use was carried through to the 1870’s with the H, I and J grills. Grills carry a premium in value and thus they are often faked, care should be taken to measure the grill, examine the pattern and points to ensure the grill on a stamp is genuine.
