Mahler californiajudgesnotes2015

California’s Gold Rush Revenues, Aristocrats of American Fiscal Philately: A Fiscal HistoryCalifornia’s Gold Rush set in motion another sort of rush — to grant statehood to this province of such immense mineral wealth. In September 1850, just thirty-three

months after James Marshall spied gold in the American River, Congress took the unprecedented step of granting California statehood even though it had never had a Territorial government. Indeed, during its preceding Spanish, Mexican, and American Military and Republic periods, California had never had more than a minimal form of government. It is not surprising that the early state legislatures, while quite willing to spend money, had little experience or expertise in raising it. From its inception, the new state operated at a deficit. By 1857, cumulative expenditures had reached $7 million, but revenues totaled just $4 million. According to popular accounts, the State was in danger of defaulting on its salary warrants. With this sort of motivation, the legislature was inspired to create a documentary stamp tax.

The Act of April 29, 1857, imposed a schedule of stamp taxes on attorneys’ licenses, bills of exchange, insurance policies, and passenger tickets, to take effect the following July 1; and Attorney at Law, Exchange, Insurance, and Passenger stamps were created, the first adhesive revenue stamps in the United States, predating by five years the U.S Civil War issues of 1862.

On April 26, 1858, the tax on bills of exchange was abruptly replaced by one on bills of lading for shipments of gold or silver, and Bill of Lading stamps were created to pay it. Some three years later, the tax on bills of lading was declared unconstitutional by no less an authority than the U.S. Supreme Court, and was in turn replaced by the original slate of Exchange taxes. After this the stamp taxes remained essentially unchanged until they were rescinded effective December 31, 1872.

The purpose of this exhibit is to illustrate these California stamp taxes via stamped documents (and a single off-document stamp) by showing as many tax rates as possible, and within this framework, as many users and stamps as ten frames will allow.

• Thisisthefirsttimeallfivetypesofdocuments—AttorneyatLaw,BillofLading,Exchange,InsuranceandPassenger—havebeenassembledinasinglecollectionorexhibit.

TheStampsTo the delight of later generations of philatelists, specific stamps were created, not only for the five types of documents taxed, but for each tax rate within a given type.

To borrow a modern phrase, they were completely “user friendly”: they stated, not only the type of document on which they were to be used, and the tax, but also the basis for the tax. For example, the Exchange stamp illustrated below has the wording “EXCHANGE SECOND Above $500 to $750 $1.40,” making it clear that it was intended for use on a second bill of exchange for more than $500 but not more than $750. With such stamps, users had no need of a tax schedule; the schedule was reproduced on the stamps themselves! While conceptually advanced, these early stamps were aesthetically unappealing, printed by crude woodcuts, a situation somewhat redeemed by the fact that they are among the very few — and certainly the first — circular stamps in all of philately. In 1866 these “Circulars” were replaced by a series of engraved general revenue stamps, in all necessary denominations from 4¢ to $175, elegantly engraved by Britton & Rey of San Francisco and printed in a rainbow of colors.

Examples have survived of more than 90% of the California revenue stamps originally issued, but virtually all are more or less rare, and it seems safe to say that most philatelists, in 2015, are scarcely aware these stamps exist. It was not always so. A

hundred years ago listings of California’s documentary revenues (as well as the classic issues of Alabama, Louisiana, Nevada, and Oregon) were readily available, and they were enthusiastically pursued by 1857 Attorney, Exchange, Insurance, Passenger stamps; 1858 Bill of Lading stamp; 1866 general issue stamp

a wide range of collectors, not only in this country and especially in California, but in Europe as well. An extensive listing of all classic State revenues, compiled by New York dealer Julius Adenaw, appeared in the American Journal of Philately as early as 1892–3, and was published separately the following year. Forbin’s widely circulated catalogs of world revenues, first published in 1905, also included U.S. State documentary issues. However, the Scott U.S. Specialized catalog, which first appeared in 1923 and added Federal revenues in 1928, has always excluded even the classic state revenues (although their postal analogs, the local post issues of 1842-82, have long been included). This virtually ensured the eventual obscurity of these fascinating stamps.

SignificanceofUsersUnlike postage stamps, California’s revenues were generally not sold to the populace by a network of post offices, but by the banks and companies generating the

documents to be stamped. By analogy with postal history, these banks and companies companies (“users”) were roughly analogous to post offices. Just as individuals who mailed letters took them to post offices where postage stamps were affixed and canceled, so too citizens who executed, say, bills of exchange did so at offices like those of Wells, Fargo & Co., where the requisite tax stamps were sold, affixed and (after April 1862) canceled. Moreover, the distinctive documents of the various companies can be considered the fiscal analogs of postmarks. On a cover, the postmark shows where and when a stamp was used; on, say, a bill of exchange, it is the bill itself that furnishes this information. Revenue cancels do not provide it. Cancellation of California stamps was not even required until April 1862, and thereafter was required only to specify the date. Cancels were often omitted, incomplete, or indistinct. The only reliable way to tell how (or even if!) a California stamp was used is to observe its intact document. Along with the rates and stamps, these users constitute the third fundamental aspect of California stamp usage. New users are sought as avidly as postal historians search for previously unrecorded postmarks.

OnPhilatelicImportanceCalifornia is “only” a state, but then as now, its booming economy exceeded that of many countries. Moreover, events there during the period in question played a

critical role in the development of the American West. Documents from this era have an inherent significance quite apart from any philatelic considerations, and are sought by collectors of Western Americana. When one adds to this underlying general importance the fact that surviving documents of the late 1850s and early 1860s bearing California stamps are the earliest known with adhesive revenues, not only from the United States (and with the exception of the relatively little-used 1856 issues of Spain for its colonies Cuba and Puerto Rico, from the entire Western Hemisphere), it becomes clear that the philatelic importance of this field is of the highest order. Some one hundred documents dating from the 1850s bearing California stamps have been recorded, bearing stamps from each of the five types, Attorney at Law, Bill of Lading, Exchange, Insurance, and Passenger. These rare and precious survivors have aptly been dubbed “the Aristocrats of American Fiscal History.”

DifficultyofAcquisitionTwo factors combine to make it

extremely difficulty to acquire a broad range of material in this field. First, California’s documentary tax rates were extraordinarily detailed; the number of stamps produced to pay them was vast; and the number of users was large. As tabulated at left, nearly 200 rates were created, of which examples have been recorded of 89; more than 450 stamps were created; and some 150 users have been recorded. Second, surviving stamped documents are inherently scarce. Even though nearly 1.5 million stamps were

Stamps Type Rates Rates Recorded Circular Rectangular Recorded UsersAttorney 1 1 3 1Exchange I (1857–8) 22 15 100 20Insurance I (1857–8) 22 1 13 2Passenger 3 3 5 3 5Bill of Lading (1858–61) 2 1 43 1Insurance II (1858–61) 8 3 72 17Exchange II (1861–6) 22 20 189 44Insurance III (1861–72) 88 31 44 (65) 38Exchange III (1866–72) 22 14 (65) 31Totals 190 89 469 158

sold, and nearly that number of documents must have been generated, the recorded survivors number fewer than 800. Many thousands must have been destroyed in the 1906 San Francisco earthquake and fire.

These two factors combine to guarantee that representatives of the great majority of rates, stamps or users will be high-level rarities — existing in quantities of five or fewer. [To illustrate, for the most common of the five taxed document types, bills of exchange, a longtime census now lists some 570 items, taxed at 49 different rates. The most common of these, bills taxed at 8¢ or 20¢ per set, account for some 200 items; eight other rates count between 16 and 30 examples, accounting for another 170; the remaining 200 or so bills are divided among 37 rates! For Insurance the situation is similar. Some 140 documents have been recorded, taxed at 34 different rates. For 16 rates no more than four examples have been recorded, and for five of these just one is known. For the other three document types, any example is a first class rarity: only 33 stamped bills of lading have been recorded, eight attorney’s licenses, and six passenger tickets. For stamps and users a similar analysis applies.]

To obtain even a decent showing of rates — say, half of those recorded — would entail acquiring dozens for which at most a handful exist. This would probably be the work of a decade or so; except for the most common bills of exchange, there is virtually no material in this field available in the marketplace.

• Thisexhibitincludes80ofthe89recordedCaliforniastamptaxrates,nearlyallstampsrecordedondocument,andthelion’sshareofusers.• Itincludesvirtuallyallofthekeypiecesofthefield.

• Ithasbeenpainstakinglyassembledovernearlyfourdecades,incorporatingcollectionsthatwerealsodecadesinthemaking.• ItisanIshikawa-likespead-eaglingofavastandimportantfield:theusageofAmerica’sfirstadhesiverevenues,fromthe1850stothe1870s.

• Duplicatingitorevenmateriallyimprovingonitwouldbeimpossible,evenwithunlimitedfunds.

AttorneyatLawThe $10 tax on attorneys’ licenses was so seldom applied that during the nine

years the Attorney at Law stamps were in use, a grand total of only 454 were sold. Shown here is the Attorney’s License of Robert McGarvey, Stanislaus County, October 13, 1857, stamped with $10 Attorney at Law blue. The handstamped script initials “GWW” on the stamp are not a cancel, but the initials of State Controller George W. Whitman, required as a security measure. The blue Attorney at Law stamp is so rare that its existence was not known to philatelists until 1902. That summer Wells, Fargo & Co. unceremoniously dumped on the streets of San Francisco dozens of boxes filled with a half-century’s accumulation of letters and packages that had proved undeliverable and unreturnable. From this hoard George W. Hackett, a young Wells Fargo employee, retrieved the fabled “Four Boxes of Trash” (Stern, 1957) which yielded hundreds of treasures of postal and fiscal history, the most famous the cover bearing the unique strip of four of the Wells Fargo “Garter Stamp.” This same find also yielded another item scarcely less rare, but nowhere near as well known: an 1858 attorney’s license stamped with the

discovery copy of the California $10 Attorney at Law in blue. News of this discovery evidently traveled rather slowly; as late as 1915 Forbin still listed this stamp only in red. The blue Attorney at Law remains one of the rarest American revenues; seven copies are now known to exist. The copy shown here is only other one, besides Hackett’s find, known on document (Mahler, 1993a). According to the Annual Report of Controller Whitman for 1857, a mere ten Attorney at Law stamps were sold from July 1, 1857, to December 15, 1857; the survival of one of these ten on an intact license certainly qualifies as at least a minor miracle. The color of the $10 Attorney at Law stamp was changed early on from blue to red, probably in early 1859. Even in red, this stamp is a major rarity. Only three are known on intact documents.

ExchangeIA bill of exchange was an instrument essentially equivalent to a modern-day cashier’s check, by

which one party could send funds to another at a distant location, through a local banking house with a branch or partner near the intended destination. For example, a California miner with gold dust to send to his wife in the East could buy a bill of exchange in the desired amount from, say, a nearby office of Wells, Fargo & Co., payable at the Wells Fargo head office in New York, and mail it home. His wife would not have to take the bill to New York for payment; it functioned as a type of commercial currency. A bill of exchange of Wells, Fargo & Co., properly endorsed, would be paid almost anywhere in the U.S., and might change hands several more times before finally reaching their New York office.

Bills of exchange were typically made in sets of two or more, essentially identical except for being designated “First,” “Second,” “Third,” or similar terms, so made to allow for the possibility that one or more might be lost in transit. By the late 1850s in California, usually only the First was mailed to the destination, and the other bill(s) of the set held in reserve. Shown above is a second of exchange of San Francisco bankers Tallant & Wilde, dated July 15, 1857, drawn on Robb Hallert & Co. in New York for $200, stamped with Second Exchange 40¢ blue on white wove paper. The taxes had gone into effect July 1, 1857, but July 15 was the first day stamps were available in San Francisco.

The tax on bills of exchange can be divided into four periods. The first lasted less than ten months, ending abruptly on April 26, 1858, when the legislature replaced the tax on bills of exchange with one on bills of lading, effective immediately. Any First Period bill is rare; a census (Mahler, 1994), together with subsequent additions, accounts for just 72 First Period bills. 15 rates are represented (of a possible 22), and for ten of these,

no more than four examples have been recorded.Exchange stamps exist that were separated using “cookie-cutter” style devices,

either circular, producing the so-called “die-cut” stamps, or star-shaped, resulting in “star-cut” stamps. These command a premium, especially the latter. Only six star-cuts have been recorded on intact bills; shown above is a beautiful engraved bill of D.O. Mills & Co., Sacramento, bearing a 24-point star-cut blue 60¢ Second.

With the exception of Wells, Fargo & Co., which issued ten times as many bills of exchange as any other establishment, the bills of the various banking houses and merchants range from scarce to extremely rare, and are highly prized by collectors of Western Americana. For example, shown at left is the only recorded stamped bill of Reynolds Bros., pioneer bankers of Marysville.

Insurance IThe tax on insurance was originally defined to be half that on exchange. After less than ten months

the exchange tax was replaced by one on bills of lading, and the insurance tax was redefined to be half that on bills of lading (see Insurance II below). During the 1857–8 First Period, a total of only 3321 Insurance stamps were sold, all in blue, spread over 20 denominations (no 4¢ or $100 stamps were ever sold, only one $87.50, and four each of the $28 and $45; Mahler, 1997a, 2010). Any example is a first-class rarity. None were known on document until a matched pair of policies surfaced in 2008 insuring sewing machines of the Wheeler and Wilson Manufacturing Co. in San Francisco, each bearing a $1 blue Insurance (Mahler, 2008). One is illustrated at left.

BillofLadingThe aforementioned Act of April 26, 1858, abruptly replaced the stamp tax on bills of exchange with

one on bills of lading for transportation of gold or silver out of the state. The tax was 30¢ for amounts to $300, and for larger amounts, 0.2% on the entire amount. First, Second, Third, and Fourth Bill of Lading stamps were produced in 11 denominations from 30¢ to $400.

The bill of lading tax was challenged and upheld in the San Francisco Court of Sessions in 1860, then appealed to the U.S. Supreme Court, where on January 28, 1861, it was declared unconstitutional on the grounds that it violated the stipulation that “No state shall, without the consent of Congress, levy any imposts or duties on imports or exports ... .” This was the end of the tax on bills of lading. The California Legislature implicitly rescinded it in its Act of May 9, 1861, and in its place reinstated the original schedule of taxes on bills of exchange.

Any stamped bill of lading is a rare item; just 33 have been recorded, all printed forms of the Pacific Mail Steamship Co. Shown at right is a bill for shipment of $4,200 in gold bars by William T. Coleman & Co. on the P.M.S.S.Co.’s Sonora in June 1859, stamped with Bill of Lading Third $4 (x2) and 40¢. Coleman is known to history as Chairman of the San Francisco

Vigilance Committee of 1855, which rose up against widespread criminal activity and corruption in the justice system.

Insurance IIThe original Insurance tax was tied to that on Exchange. When the latter was rescinded in 1858,

the tax on Insurance was not; it was merely reformulated, tied instead to the new Bill of Lading tax. For policies with the usual one year term, the tax was half that on bills of lading, i.e., 15¢ on amounts to $100, and for larger amounts, 0.1% on the entire amount. A new feature of the 1858 schedule is that the tax on policies of duration less than a year was pro-rated: for policies of three to six months, the tax was one fourth that on a one year policy; for six to nine months, one half; and for nine to twelve months, three fourths. These short-term rates applied chiefly to marine insurance, which typically lasted only the duration of a voyage.

To accommodate this rather unwieldy schedule, 36 large circular Insurance stamps were created, printed in red, providing coverage in nine convenient amounts from $100 to $50,000, for each of the four time brackets. Again, the stamps were completely user-friendly in that they stated, not only the tax, but the time of the policy and the upper limit of its coverage. Illustrated at left is a policy of the Humboldt Fire Insurance Co. of New York, executed in San Francisco in May 1859, amount $10,000 on merchandise, for one year; the $10 tax was correctly paid with a 12 Mo./$10 stamp, the only recorded example on document, and the highest-denomination large Insurance stamp recorded on document.

ExchangeIIBills of exchange were untaxed from April 1858 until the California tax on bills of lading was

declared unconstitutional and, effective May 1, 1861, replaced by the original slate of Exchange taxes. This tax period lasted until 1866, and shows the Exchange tax in its fullest flowering: 230 examples have been recorded, taxed at all but three of the 22 possible rates.Shown below is a Duplicate of exchange of the Bank of California, San Francisco, amount $50,000, with the $90 rate for bills above $30,000 up to $50,000 paid by stamps of $30, $20, $14, $10 (x2) and $6. The only higher brackets were $175 for

bills up to $100,000, and $200 for those over that amount; no examples of either rate are known.

ExchangeIIIThe Act of March 31, 1866, effective immediately, made

an important change in the letter of the law, necessitated by the creation of the new series of general revenue stamps,

which replaced the old Exchange stamps. I consider this date as demarcating a new tax period. The previous taxes had applied not to each bill of a set, but to the entire set, and accordingly, the denomination of an Exchange stamp represented, not the cost of the individual stamp, but that of the First, Second, and (if necessary) Third Exchange stamps needed to stamp all bills of the set. For example, a set of bills for $50 was taxed at 8¢, and for 8¢ a user received the necessary 8c First, Second, and Third stamps. The denominations of the new general revenue stamps, however, represented their actual cost. Affixing the new 8¢ stamps to each of a set of two bills would cost 16¢. The new law changed the rates so that the total tax on a set of two bills, paid with the new stamps, would remain the same as before. It did this by stipulating that if made in the customary sets of two, each bill of a set was to be taxed at half the previous rate. This necessitated stamps in new denominations half those of the old Exchange stamps. For example, 4¢ stamps were created for use on bills of $50, so the tax on a set of two would remain at 8¢.

Shown at right is an 1868 second of Tallant & Co., San Francisco, amount $625, stamped with the beautiful 70¢ orange rectangular and a U.S. 2¢ Bank Check blue imperforate. Before the change in rates and stamps, a bill in this amount would have required a $1.40 Second Exchange stamp.

Insurance IIIThe Act of May 9, 1861, replaced the Bill of Lading tax with the slate

of Exchange taxes originally set in 1857, and redefined the Insurance tax to be half that on Exchange. A new set of Insurance stamps was created (the third in four years), the same 22 small circular Insurance stamps earlier printed in blue, now printed in red. These taxes continued in effect until 1872, with one modification; the 1861 Act failed to pro-rate the Insurance taxes for short-term policies, but this was remedied by the Act of April 10, 1862, after which the rates remained unchanged until the repeal of all stamp taxes effective December 31, 1872. In 1866 the Insurance stamps were replaced by the rectangular general state revenue stamps. 65 Third Period usages have been recorded. Illustrated at left is an 1869 policy renewal of the Hamburg-Bremen Fire Insurance Co., California Agency, amount $20,000, tax $19, stamped with $4 green (x3), $7 puce and U.S. 50¢ Original Process. This is the only recorded example of the 1861–72 $19 rate, one of two recorded documents bearing the $4 green, and one of three with the $7 puce.

The schedule of Insurance rates re-established in 1861 did not provide for short-term policies, but the Act of April 10, 1862, stipulated that the 1861 rates applied only to policies for nine months or more; and that those for six to nine

months, three to six months, and up to three months, respectively, would be taxed at three quarters, one half, and one quarter of the 1861 rates. Unlike the 1858–61 Second Period, when 9 Mo., 6 Mo., and 3 Mo. stamps were created, this time no new stamps were issued for short-term rates, and until now these rates have been virtually unknown to philatelists. Only ten such documents have been recorded. Shown at right is a spectacular marine open policy of the Union Insurance Co. covering 21 different voyages between San Francisco and Mexican ports in the Gulf of California made between 1867 and 1870, with California tax paid for each voyage, the periods implicitly less than three months and taxes 25% of the one-year rates, amounts $100 to $4,000, taxed at nine different rates: 2½¢, 10¢, 12½¢, 17½¢, 25¢, 37½¢, 50¢, 75¢ and $1, all but the last recorded on no other policies, paid by a total of 35 state stamps. The 12½¢, 17½¢ and 37½¢ rates were paid with 15¢, 20¢ and 40¢ stamps, as exact payment was impossible; the single 2½¢ tax was combined with that for another voyage made the same day. The fifth stamp from the bottom is a rouletted 10¢ used November 22, 1869, one of only seven recorded roulettes on document, and the earliest recorded.

PassengerTicketThe original schedule of 1857 imposed a tax on any purchase of passage

out of the State on any vessel, the stamp(s) to be placed on the “receipt … contract, certificate or memorandum” of sale. The rates were $6 for first class passage, $4 for second class, and $2 for steerage, and Passenger stamps were created in these three denominations. The stamps remained in use for nearly a decade, and some 118,000 were sold, nearly all to the Pacific Mail Steamship Co. (Kenyon, 1920), but today any Passenger stamp is a first class rarity, as virtually all stamped tickets were surrendered to the shipping line, and systematically destroyed.

Shown at left is a Passenger $6 1st Class stamp in blue on blue horizontally laid paper. For over a century, philatelists were unaware of any Passenger stamps in blue. Smith (1903) stated “Neither the Attorney-at-Law nor [any] of the three Passenger Ticket stamps have yet to be found in blue, but there can be little doubt that they were printed in that color.” As described above, unbeknownst to Smith,

a blue Attorney stamp had in fact been discovered in 1902, but blue Passenger stamps remained elusive. In his monumental state revenue catalog Cabot (1940) did not list them, nor did Hubbard’s 1960 update of Cabot. Thus it came as a colossal surprise that the 1991 auction of the Elbert Hubbard California revenues contained two $6 Passenger stamps in blue. They were described in the auction catalog as unlisted color errors, and their significance was not realized immediately (Mahler, 1993b). One is illustrated at left.

For years, Western collectors believed no intact tickets bearing California Passenger stamps had survived. However, the holdings of the legendary, reclusive Morton Dean Joyce of New York, dispersed in 1990, contained two such treasures. One is shown here, a ticket of the Linea de Paquetes for Second Class passage on the Goleta Clipper “Giulietta,” San Francisco to Guatemala, October 19, 1859, stamped with Passenger $4 2d Class on thin bluish paper.

ReferencesCabot, George. Priced Catalogue of the State and City Revenue and Tax Stamps of the United States. Weehawken NJ, 1940.Hubbard, E.S.A. State Revenue Catalog. Portland ME: Severn-Wylie-Jewett, 1960.Kenyon, Brewster G. Documentary State Revenue Stamps of the United States. Long Beach CA, 1920.Mahler, Michael. California State Revenues. A Second Blue Attorney Stamp Surfaces on Document. The American Revenuer, 1993a October; 47:238-239.Mahler, Michael. California State Revenues. Yes, Virginia, There is a Blue Passenger Stamp, The American Revenuer, 1993b November-December; 47:274-5.Mahler, Michael. A Preliminary Census of Bills of Exchange Bearing California Revenue Stamps, State Revenue Newsletter 1994 March-April:6-15.Mahler, Michael. California Stamp Taxes, First Period July 1, 1857, to April 26, 1858. Quantities of Exchange and Insurance Stamps Issued and Sold. The American

Revenuer 1997 September; 51:190–204. Mahler, Michael. The Wheeler and Wilson Find: California Blue Insurance Stamps Surface on Document. The American Revenuer 2008 November-December; 62:152–

163. Smith, Ed. California State Tax Stamp. Mekeel’s Weekly Stamp News, 1903 March 21:129-130.Stern, D. K. Four Boxes of Trash. Westways, 1957 May:16-17.Wrisley, Dave. The State Revenue Catalog. State Revenue Society, 2013.