Postage stamps have served as money in areas as diverse as America, Europe, and the Far East. During the American Civil War merchants, struggling with a shortage of small coins, began the practice of making small change with postage stamps. Daily purchases of stamps increased fivefold in New York City alone, and individual stamps circulated until they became too dirty and tattered for recognition. John Gault, a Boston sewing-machine salesman, proposed the encasement of stamps in circular metal discs with transparent mica on one side showing the face of the stamp. Soon the metal side of the discs was bearing inscriptions of advertisements; one series of encased stamps bore the slogan, “Ayer’s Sarsaparilla to Purify the Blood.” Denominations of encased stamp money ranged from 1 cent to 90 cents, and one rectangular encasement had three 3-cent stamps, making a 9-cent coin.

The government took up the idea of postage money and begin issuing postage currency in denominations of 5-, 10-, 15-, and 50-cent stamps, and some of the postage currency was even perforated around the edges to resemble stamps. The postage currency soon dropped any association with postage stamps and became simple fractional currency in denominations of 3 cents to 50 cents and bearing the inscription “Receivable for all U.S. stamps.”

The British South Africa Company issued stamps affixed to cards bearing the statement, “Please pay in cash to the person producing this card the face value of the stamp affixed thereto, if presented on or after the 1st August 1900. This card must be produced for redemption not later than 1st October 1900.”

Either during or immediately after World War I postage stamps circulated as money in Germany, Austria, France, Russia, Italy, Norway, Denmark, Belgium, Greece, and Argentina. Germany and Austria imitated the American practice of encasing the stamps in a circular metal disc with a transparent face, and a reverse side bearing an advertisement. France issued similar discs, but put a numeral on one side indicating the value of the encased stamp. Russia issued stamps on stout cards that bore the inscription “On par with silver currency.” The Russian stamps were intended to circulate as money, but could also be used as postage stamps.

During World War II Ceylon and the Indian state of Bundi issued small change in the form of cards printed with contemporary stamps. In 1942 Filipino guerrillas fighting the Japanese issued 5-peso notes to which stamps of the appropriate amount were affixed.

In both World War I and World War II the British government declared postage stamps legal tender, but the stamps were never encased for special protection, or affixed to a special card.

Postage stamp money has usually emerged as money for domestic circulation when wartime finance has mobilized hard currency for purchasing military goods abroad.