Fractional currency was issued from 1862-1876 in response to the scarcity of coins. During the Civil War time period people began hoarding their gold and silver coins, even copper pennies. President Lincoln signed the Postage Currency Act on July 17, 1862. “Paper coins” were issued in 5¢, 10¢, 25¢, and 50¢ denominations. The first series was known as “Postage Currency.” Series 2-5 were known as “Fractional Currency.” This sample is from the fifth and final series.
The back of the note reads, “This note is Exchangeable for United States Notes by the Assistant Treasurers and designated Depositaries of the United States in sums not less than THREE DOLLARS. Receivable in payment of all dues to the Unites States less than FIVE DOLLARS. EXCEPT CUSTOMS.”