Shinplaster was a common name for paper money of low denomination, less than one dollar, circulating widely in the economies of the 19th century where there was a shortage of circulating coinage.[clarification needed] The shortage of circulating money was caused by two things. The first was usually caused by banks refusing to exchange paper money for coinage. In 1937 US banks were prohibited from exchanging paper notes for hard currency or coins (Specie). The second was caused by the intrinsic value of the metal rising above the value of the coin. If the amount of silver in a dime rose above 10 cents in value, the coins would be taken out of circulation and melted for the true intrinsic value of the metal. This caused the shortage of circulating coins. People no longer had the simple medium to purchase a bottle of milk or a newspaper, etc., because there were very few circulating coins of the denomination necessary to complete this transaction. Paper money, in general, was bought and sold at a discount because merchants and consumers thought that the value of hard currency, Gold, silver and Copper, had more value than paper notes. With fractional or low denomination notes, people felt that they were almost valueless.
The term shinplaster came into use during the Revolutionary War. Shinplaster was a piece of paper soldiers put in front of their boots to cushion their shins against chafing and rash (see plaster). Common, low-demonination notes came to be known by this term.
Private issues from stores, bank issues and tokens as well circulated as a method of accomplishing commercial transactions from 1837 to 1861. The breath of these private systems and the lack of integrity and security caused Francis Skinner, Secretary of the Treasury to produce a new idea. He pasted a few postage stamps on a Treasury sheet and passed it as a note. The process started where people used private notes tokens and Postal currencies as legal tender to accomplish their household and business purchasing. It became so Popular that Spinner proposed to President Lincoln and Lincoln passed a bill in April of 1861 enacting the postal Currency Act. This made postal currency legal and prohibited private, non-Governmental entities from producing notes, coins or currency. Thus, what we know as Fractional Currencies were born.Shinplasters circulated in the United States from 1861 to 1869, during the Civil War and the years of reconstruction. Since much of the coins were sold to Canada by brokers and melted or sent to England for melt, Canada was overloaded with American coinage that began to be preferred as a circulation currency. The Minister of Finance decided to buy the American currencies at a very favorable rate, as they struck their replacement coinage in England, and they shipped these coins to New York to solve their problems. At the same time, the government fixed the exchange rate from American to Canadian coinage at 80% to discourage the import of more coinage. It worked. To help with the shortages, the Canadian Government issued in 1870 notes in the value of $.25 as a single note value. The initial notes were labeled as series A and an A was printed on the left side of the note toward the center. They printed 2,000,000 of these notes. In 1871, they Printed another 3,000,000 $.25 notes of Series B to continue to fill this void and prevent American coins from coming back. From 1869 until the 1890s they printed 300,000 $.25 notes with no plate number on it. They used the old A and B plates and honed off the A and B letters. On some of these notes, you can still see the remnants of the A and B. The Government of the Dominion was able to fix the problem caused by the importation and commerce created by American coinage imported into Canada. they printed additional $.25 notes with no plate number. This ended the importation and Canadians used Canadian notes to fuel their economy.
In Canada, the term shinplaster was widely used for 25-cent paper monetary notes which circulated in the late 19th and early 20th centuries. The first design was printed on March 1, 1870 and the final design was first printed on July 2, 1923[1]
The term likely arose from the previously issued 5 shilling note (1/4 Pound) which also bore the french term "Cinq Piastre" on the face. (Bank of Montreal museum)
Shinplasters or calabashes (as they were known in southern Queensland) were a feature of the Squatters' vast pastoral enterprises, and often circulated in the towns of the bush alongside and in place of legal tender. These private IOUs circulated widely, at times making up the bulk of cash in circulation, especially in the 1840s and 50s.[2]
In some places they formed the core of a company shop economy (Truck system), circulating as private currencies. They were often of such low quality that they could not be hoarded, and shopkeepers off the property would not take them, as they would deteriorate into illegibility before they could be redeemed.
There are tales of unscrupulous shopkeepers and others baking or otherwise artificially aging their calabashes given as change to travelers so that they crumbled to uselessness before they could be redeemed.[2]
