Post office stamps as currency (1862) | Hacker News Reader

Post office stamps as currency (1862)

nytimes.com

58 pointsarmenarmen28 comments

In Federal prison it is common to use books of stamps as currency. When I was there (95-99) it was around $5 per book of stamps. But it was more common to just give someone a commissary list (for the prison store) of items totaling the amount that they owe you.

For larger amounts, you'd have to have someone on the outside send money to the other person's people on the outside. These days, I suspect Bitcoin makes this much more efficient (for transfers happening outside the prison).

According to Planet Money, an in person block chain is used in at least one prison. http://www.npr.org/sections/money/2017/02/10/514577243/episo...

The novels Going Postal and Making Money by Terry Pratchett actually use this as a plot device; they're comic Fantasy books that roughly parallel the invention of fiat currency.

It goes from people starting to use stamps instead of coins because they were lightweight and "backed by the government" for postage, to people slowly accepting notes of credit which are backed by gold in a vault, to people realizing that the notes aren't really backed by the gold, so much as they are by the city-state's entire economy and potential to do useful work.

"What is the value of a coin compared to that of the hand that holds it?"

One of my favorite quotes from Making Money, discussing the true power of gold:

"It’s in the city itself. The city says: In exchange for that gold, you will have all these things. The city is the magician, the alchemist in reverse. It turns worthless gold into…everything."

I like the sentiment, but the actual thing used to cut people into the value of that economy has utility that can be priced in terms of that actual thing.

Imagine you lived in an economy where all you had to do was pay robots in the required electricity to gather the requisite resources (from somehow politically uncontested, infinite stores), assemble them, and deliver the product to you (or you to your destination, etc). The cost of storing that electricity, and transferring it to them would be accountable in electricity (the purchase of the manufacture of batteries in electricity, the electricity losses due to transformation and heat loss on the wires, etc).

Humans have thus far been really bad at amortizing the costs of the actual things they're transacting with. It may be impossible, but Bitcoin is the first system that seems to have attempted a solution.

You might like The Just City, by Jo Walton. I was kind of ambivalent about it, but it was a reasonably fun speculative fiction about Athena gathering people from throughout time to recreate the city that Plato laid out in Republic.

To make that possible, she provides robots which can understand basic instructions and act semi-autonomously to build things, farm, etc, but fall well short of actual sapience. And after awhile, she introduces a gadfly named Socrates into the fledgling city.

One of my favorite authors, an part of the reason I found the article!

Welp, when I saw the title of the article my thought was "Wait what ?! Terry Pratchett Going Postal was actually based on real facts ?"

Those two books are among my favourites, but I was really not expecting that part to be true

"But there is no safety to anybody in taking these stamps any longer as money. They have not the slightest intrinsic value. They are not a legal tender. They will not be redeemed by anybody. They will not even pay postage. The public might just as well make wooden buttons or pebble stones a substitute for change as these stamps. They would have just as much value, and would answer precisely the same purpose, so long as the community chose to take them. But somebody must eventually lose very largely on these postage stamps, -- and the sooner their circulation is stopped the smaller the loss will be."

One wonders what the author would think of fiat currency, which is what the world uses to-day.

He would probably think much the same thing. "Greenbacks" (which is was what the currency printed by the US at the time was called) traded at a significant discount to gold when redemption of demand notes in gold was suspended. [0]

https://en.wikipedia.org/wiki/Greenback_(1860s_money)

> "It must either be of intrinsic worth, like metal coins, or represent somebody's credit, -- that of the Government, of a corporation, or of private individuals."

Fiat currency doesn't match any of those, though. It is of no value, not even credit.

Great! IF you have any, I'll gladly take the worthless trash off your hands.

I think there might be a subtext here that's not explicitly mentioned (it would have been understood at the time): the emergence of the electric telegraph.

> When people took them, they thought that they could convert them into this use at least, and that so long as letters had to go by mail they would have some value, and might therefore be safely regarded as currency.

The 1860s were right around the time that the electric telegraph was reaching worldwide popularity. So here in midst of the Civil War they have a fiat currency based on a commodity that is vulnerable to collapse in value, due to a disruptive technology.

The immediate threat to the currency is the USPS discontinuing acceptance of non-pristine stamps. And I think that's all the Times was intentionally referencing here. But I wonder if there was some understanding that stamps would make a terrible currency for this reason as well.

> It must either be of intrinsic worth, like metal coins, or represent somebody's credit, -- that of the Government, of a corporation, or of private individuals. The only intrinsic value of these stamps consisted in the fact that they might be used to pay postage.

This seems to be a contradiction. The stamp is a demand upon the credit of the US Postal Service to perform an act of value. What is the difference between that and a piece of paper which is a demand upon the credit of a bank to perform the act of handing you silver?

I think the original authors point is, that the US Postal Service's performance of letter delivery, is not a denominated currency like ounces of gold or cents and dollars. But the real value of a stamp would be ounces of mail, and not only the act of delivery

It's not. They explain that a stamp DID have intrinsic value, UNTIL (if you read on they explain) the credit of the USPS had been taken away by policy that a smudged/circulated stamp is invalid

Note: article is from 1862 :)

We need this in the title! ;)

From the article: "The rebel Congress has passed a law, authorizing the issue of five millions of dollars in copper coins, of the denominations of five, ten and twenty-five cents. "

The REBEL congress!! :D

I have to admit, I got all the way to "hitherto" before I figured it out.

I clicked the link thinking "WTF? Didn't Congress do this during the Civil War in an attempt to prevent people from using postage as currency when the CS Dollar began to inflate?

A random bit of trivia - the CSA never issued coins. There were two attempts - a cent and a half dollar - but neither made it past the "proof" stage: https://www.pcgs.com/News/Confederate-States-Of-America-Coin...

Can you give more information? The style doesn't seem even close to the style anyone would write in today - did you think they were like kind of pretending to write in this old-fashioned way, like making fun of old-fashioned writing? did you think it's humor/satire?

Took me a while to notice this. If it were Portuguese, I would immediately notice it. It seems to me that English hasn't changed as much as Portuguese has.

This is what sounded old to me: "very gross wrong upon the people, in thus repudiating its own stamps".

The biggest change here might be "gross" which is mostly used today in the sense of 'disgusting' (and in a somewhat technical and formal sense of 'complete', 'entire', or 'coarse') but used to mean "large, great" (strangely it looks like "great" is cognate with German "groß", yet English "gross" isn't).

Also "wrong upon" has become rarer than "wrong against" or "wrong to", "the people" has become rarer in this context than "the public" or has different connotations, and "thus" has become somewhat archaic in senses other than 'hence, consequently'.

Maybe there are even other things here that I've overlooked.

Notably, Portuguese had multiple spelling reforms since 1862, while English has never had any (which is not to say that English spelling has never changed, but there have never been effective government decisions to change it abruptly). That probably makes Portuguese from that era look more visually distinct from contemporary Portuguese. For example, the enacting clause of the Lei Áurea, 26 years later than this text, says

A Princeza Imperial Regente em Nome de Sua Magestade o Imperador o Senhor D. Pedro II, Faz saber a todos os subditos do Imperio que a Assembléa Geral Decretou e Ella sanccionou a Lei seguinte

(differences from current Portuguese orthography italicized)

By contrast, there are approximately no differences in spelling between this article and present-day standard English, but that doesn't mean that all of the vocabulary is used the same way. For the Portuguese, it's easy to be struck right away by the fact that words are no longer spelled the same way...

The always fantastic NPR-produced podcast Planet Money had a recent episode on how the founder of a Bitcoin company dreamed up a new currency system based around the blockchain while he was locked up in prison. Pretty fascinating and a great way to be introduced to the concept of electronic currency.

Podcast link: http://www.npr.org/sections/money/2017/02/10/514577243/episo...

I've always wondered whether you could buy and hold permanent stamps as an inflation-tracking alternative to treasury bonds. It'd be like using "IOUs for loaves of bread" directly as a currency: no matter what the monetary policy of the country issuing it, as long as it's still legal tender, inflation can't devalue it. Price of bread goes up, core CPI goes up, inflation goes up—but the IOU still gets you 1 bread.

Isn't that what TIPS[0] and I bonds[1] are?

[0] https://www.bogleheads.org/wiki/Treasury_Inflation_Protected...

[1] https://www.bogleheads.org/wiki/I_savings_bonds

From The Office https://www.youtube.com/watch?v=nAcdV019oMQ :)

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