At the start of the civil war Federal authorities calculated that there were $260,000 (todays value = $8.2M) of stamps in possession of the Confederate states. To prevent these from being used as contraband by Confederate postmasters the design of the 1857 issue, printed by Toppan & Carpenter, was replaced by the new designs of the 1861 issue printed by the National Bank Company. Furthermore mail originating in Confederate states was not accepted or able to transit Union territory. The National Bank Note company stamps were not issued to the Confederacy.

On August 22nd 1861 the Toppan & Carpenter stamps were demonitized, they were no longer valid for postage. Look at the cover on the right, dated August 22nd you will see that Boston PO added a 'Due 3 cents' on the envelope as the old 3¢ stamp on the envelope had been demonitized. Now look at the cover on the left, envelopes from the Confederacy were accepted for transit through to the Union for three days only, from August 22nd to August 25th. And this cover got through to New York for transatlantic transit without penalty, The envelopes were carried across Union lines at Louisville, KY, by Adams Express Company and the American Letter Express Company, the latter's cancel can be seen on the cover on the right.

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