THE POSTAGE CURRENCY RIOT OF 1862

The 300th issue of Harper’s Weekly, “A Journal of Civilization,” appeared Sept. 27, 1862. On the front page of the six-cent tabloid was an artistic rendering of the Ohio River’s big bend as seen from the hillsides opposite Cincinnati in Kentucky. Ohio’s Queen City was a metropolis, the largest west of the Allegheny Mountains.

The broad, bustling Ohio River swept off to the artist’s right, to the north and east. The watery highway was full of the river traffic that made the City of Cincinnati thrive.

The community itself appears idyllic, majestic church spires climbing the rolling hills stepped back from the river’s banks. But this placid view of the Queen City atmosphere as depicted in the artist’s drawing belied the truth of the difficulties and turmoil being experienced by the majority of Cincinnati’s citizens.

Just a few, short weeks later Cincinnati would experience a major mob scene as frustration gave vent to wrath. It took the United States Army to quell the disturbance.

The cause of this riot?… Something as simple as a shortage of small change. Engulfed by major economic turmoil, the masses had been circulating postage stamps for months before Congress belatedly sanctioned this expedient July 17, 1862, with an authorization to issue Postage Currency.

The premium on Postage Currency led to its hoarding and speculation. Both activities kept large amounts of this currency out of circulation. So the provisions of the unwitting and hastily framed legislation under which Postage Currency was emitted precluded Postage Currency from doing the job it was created to do: circulate and remedy the small change crisis.

This is but one example of bureaucratic bungling in which the central government “solution” exacerbated the problem. In the exigency of the times, there were others. Today we know this phenomenon as the “theory of unintended consequences.” People in Cincinnati and elsewhere in 1862 knew it intimately in the hardships experienced in their daily lives. The sum of these effects were that things were not going very well commercially in Cincinnati in the summer of l862, despite the fact that business was booming with wartime activity.

Adding to the problem of the central government’s bungling in monetizing stamps, which led directly to the Postage Currency, private printing contractors were slow to ramp up supplies of the emergency paper currency. Most Bank Note Reporter readers know that at the time the U.S. government did not have its own security engraving and printing capacity. It relied on outside firms. Manufacturing of the small Federal bills proceeded inexorably slowly. Both U.S. Treasury officers and those officials at the National Bank Note Co., which was contracted to supply the Postage Currency, deserve concurrent shares of this blame.

Because of the tardiness of the promised Postage Currency relief, the public continued to buy excessive amounts of regular postage stamps to pass as change. Postal officials were disconcerted as daily sales continued at unprecedented levels. Sales in Cincinnati directly attributable to stamp purchases for change were reliably estimated at $50,000 for the months of July, August and September 1862. Postal officials sought to curtail this run on their postage stamp stocks, but with little success.

So scarce were these notes that Postage Currency was being sold at 5 to 10 percent premium by the city’s bankers. “To exchange a dollar bill,” one of the local newspapers complained, “you must lay it nearly all out.” Large firms brought in large quantities of the Postage Currency from the East, but even they paid it out at 12.5 to 15 percent advances. These notes were no help to the public.

A frustrated customs collector, Enoch Carson, who was charged with distributing the small quantities to be officially released in that city, put up a large sign: “NO MORE Postal Currency At Present. Until more comes, no use making Inquiry.”

The change-starved public in Cincinnati, as in other cities in the Northeast and Midwest, reacted like dehydrated race horses smelling water when the opportunity to acquire some of the small fractional notes presented itself. On Oct. 7 rumors circulated that another $8,000 in Postage Currency would be available for distribution. People bolted from the starting gate.

Under the headline, “The Rush for Postal Change,” the Enquirer reported that the small notes “created an excitement with the retail dealers, who have been suffering for the lack of small change, and the rush at the commencement of business at the Customs House was overwhelming.”

Supplies were rationed to $5 per person. Think of that, only 1,600 individuals could be accommodated in a city of 160,000 people. Even then one greedy soul boasted he had obtained five times the specified amount. The Enquirer said that the industrious fellow must have spent the entire day standing in line to amass his small treasure.

Alas, by nightfall the entire amount was gone, but not before the small change furor had erased from memory the woes of the coal famine of the previous winter. The Postage Currency supply had failed to meet even one-tenth of the demand, the paper said. This rush for postage notes was only a prelude of what was to come.

Heavens opened and the storm broke on Nov. 4. It was a day that few who experienced it would soon forget. The electricity that had been generated by want and built up by three months of privation broke loose all at once in a savage fury.

What had happened simply put is that the crowd, numbering 5,000 to 8,000 (estimates vary), had descended on poor Carson en masse in a virtual carnival atmosphere. Expectations were high; deliverance was nigh.

To control such a vast crowd, a special chute had been constructed to funnel people single file past teller’s cage. The early birds must have been jubilant to finally get the promised Postage Currency into their clutches.

But after hours and hours of paying out $5 sums, apprehension overtook those still standing in line waiting their turn at the cashier’s cage. Tension mounted. The day wore long; the crowd’s mood turned ripe, then ugly.

Collector Carson rationed out the aforementioned $15,000 in small amounts by late afternoon, and yet much less than half of the crowd had been supplied. Although three thousand applicants had received their $5 each, disappointment loomed on the horizon for many still standing in the line.

Most of the crowd had been standing in the street all day long patiently awaiting their opportunity to acquire the precious slips of paper specie. Now fears that the Postage Currency would all be gone before they got to the tellers’ cages started to sink in.

The crowd’s mood turned ugly. They crushed forward and mobbed the Customs House. Collector Carson, who had started out the day as the public’s savior, had suddenly once again resumed the position as the object of their scorn. The din in the street grew louder and more demanding.

Carson terminated his disbursement, closed his doors, and drew his shades. Then the mob actually turned violent, their expectations having been crushed with cruel disappointment once again. The mob shouted and railed against Carson. Then they turned upon the Customs House itself and laid siege to the federal government installation.

To read the complete article, see: Postage Currency Woes Led to Riot (www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=26049)

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