Colonial America also saw coins with the denominations of a half-cent, two-cent, half-dime, and twenty-cent pieces. My favorite is the three-cent nickel. No, this was not a devaluation of the nickel to make it worth three cents. Actually, it was called a nickel because of it being made of nickel.
In 1862, day-to-day commerce became strained by a shortage of coins. At the time, American currency was not backed by the government with gold or silver. During the middle of 1862, $25 million in coinage disappeared from circulation. By July of 1862, coins, due to their metallic content, were worth 20% more than paper money.
On July 17, 1862, Congress stepped into the fray and passed a law which stated that postage stamps could pay debts of less than $5 to the government. The public took this to mean that postage stamps could be officially used as currency. The stamps were ill-suited for this task. They were thin (destroyed easily with handling) and the glue on their backs encouraged them to stick to hands, wallets, and anything else with which they came in contact. The mess created by loose stamps quickly deflated the elation generated by the misconception of the new law. People began looking for a way to package the stamps to keep from creating a lump in their pocket. Initially, people kept the stamps in envelops or stuck them on cards. Nevertheless, generally these methods failed to provide a workable solution.
In August 1862, a man named Gault patented a process to encapsulate stamps. A thin token was made of brass with advertising on one side. He then used a button maker to compress a thin sheet of clear mica on top, the stamp in the middle and the token on the bottom. The idea caught on quickly.