SET XIII - The Shanghai Overprints with Surcharge · 1919-1922 A Brief History Before We Begin From 1839 to1842 Great Britain and China engaged in a series of skirmishes over the right to sell opium grown in the British colony of India. Britain had developed something of a trade imbalance with China due to the Brit's unquenchable thirst for Chinese tea. The British viewed opium as medicinal, while many Chinese officials viewed it as a dangerous drug.  In the end, Britain’s superior naval power and technology prevailed; the aftermath of these "Opium Wars" was a treaty favorable to Great Britain, assigning parcels of five port cities as British enclaves, most notable among these Hong Kong and Shanghai. Other countries requested and were granted somewhat similar arrangements. In 1861 the U.S. was granted the right to build a Consulate at the down-river edge of the city, meaning any boats entering Shanghai from inland China need first pass the settlement that grew up around this "American Concession", greatly increasing America's presence in China. The American Concession, as did each of the foreign concessions, maintained a sovereign identity including its own army, police force and post office. Established in 1867 at the U.S. Consulate, and run by the American Consul General himself, the postal agency in Shanghai countered the high cost of sending mail through the foreign  postal agencies. The cost of sending a letter to San Francisco via British, French or German mails ranged from 30¢ to 72¢, while U.S. domestic rates were only 3¢ for the first half-ounce. In 1869, after the trans-continental railroad was completed, mail could be shipped much more quickly from China to Europe by crossing the U.S. by rail than by sea routes; there was no Panama Canal at this time. Time-sensitive documents from many nations found their way to the U.S. mails making Shanghai America's busiest foreign office. In fact, mail from Japan and other Asian ports often made its way to Shanghai before being sent on its way to San Francisco. By 1907, the volume of mail had outgrown the American Consulate and an independent post office was established with John Darrah as Postal Agent. The First Overprints - Local Pre-Cancels It may come as a surprise to some, but the Shanghai surcharged overprints were not the first Shanghai overprints. All of the other foreign post offices in Shanghai added an identifying overprint to their postage stamps. In fact the U.S. had previously added identifying overprints to the first and second bureau issues at the turn of the century in Cuba, the Philippines and Puerto Rico. Postal Agent Darrah was quite zealous in his efforts to get the U.S. to conform and to place these identifying overprints on the U.S. stamps sold in Shanghai.  The following excerpt appeared in Sloane’s Column and is deemed reliable: "Spencer Anderson, New York, recently showed me a set of 27 unused U. S. stamps, each of which was overprinted, in two lines, in black, by a handstamp as follows: S'HAI, CHINA A notation accompanied the stamps, ‘Issued by U. S. Consul General at Shanghai in 1912. Withdrawn some three months later when news of the issue reached Washington." Sloane does not mention whether Darrah had a hand in the overprinting of these items, but it is documented that well before 1913 Darrah had petitioned Washington to approve identifying overprints on U.S. postage to conform with the other postal agencies in Shanghai. In 1913 Darrah finally mustered the courage to challenge Washington’s authority and sold sheets of each stamp to confederates who then had them overprinted at the French Newspaper office. The stamp at the left is one of these stamps, an overprint on a perf 12, double-line watermarked stamp, Scott 422, courtesy of Robert A. Siegel Auction Galleries, Sale 833, December 2000.  This generated some excitement among collectors who thought a new overprint had been issued. When news of the unauthorized overprint reached Washington, Darrah was reprimanded and told not to sell the overprints at the Postal Agency. It is not clear whether Darrah had second thoughts about the overprints or whether it was orders from Washington, but a statement was issued that the stamps were to be considered local pre-cancels, and are so classified by Scott. One could easily surmise that the friction between the head-strong Darrah and postal officials in Washington stymied any further attempts to add overprints to the Shanghai Agency stamps. The Shanghai, China Overprints with Surcharge It wasn’t until two years after Darrah had left the agency that the matter was taken up again, but for reasons other than the conformity Darrah had sought. At the time, the U.S. Dollar was worth about twice the value of the standard currency of the time in Shanghai, the Maria Theresa Thaler silver dollar. The Shanghai agency would accept payment in U.S. currency only, making it difficult for non-American patrons. By placing a surcharge on a portion of its stamps, the U.S. Post Office in Shanghai could still offer the non-surcharged stamps at face value when payment was made in dollars and at the same time offer surcharged stamps, collecting double the face value when payment was made in thalers. By May of 1919, the Bureau of Engraving and Printing had printed the overprints on some of the normal stamps of the day, the perf 11 un-watermarked Scott 498 through 518, and shipped the overprinted stamps to Shanghai. The overprints were not issued publicly until the beginning of the 1920 fiscal year, July 1, 1919.  The following values were issued: 1¢, 2¢, 3¢, 4¢, 5¢, 6¢, 7¢, 8¢, 9¢, 10¢, 12¢, 15¢, 20¢, 30¢, 50¢, and $1, all over-printed with a surcharge that doubled the amount. All stamps were sold in Shanghai, China only and were not available in U.S. post offices or at the U.S. Philatelic Agency, explaining the low production numbers. The surcharges were printed in black ink on all stamps other than the 7¢ and $1, since black showed well against all of the lighter inks, but poorly against the black of the 7¢ and the dark violet brown of the $1 stamp. The 7¢ and $1 were overprinted with red ink. The surcharge concept was fine in principle, but since the Theresa Thaler fluctuated in value as compared to the U.S. dollar, a window of opportunity opened for speculators who purchased the overprints with the devalued thaler and subsequently resold the stamps for the stronger dollar. For this reason the overprinted stamps were removed from sale when the value of the Theresa Thaler was less than half the value of the U.S. dollar, at one point for nearly a year, from October 1920 to October 1921, nearly a third of the short life of the overprints. The "Cts." Overprints - K17 and K18 In 1922 the supply of 1¢ and 2¢ stamps was running short and to meet demand the Shanghai Postal Agency printed their own surcharge on some of the existing non-surcharged stock. These stamps, listed in Scott as K17 and K18 respectively, were placed on sale July 3rd, 1922. The surcharge read "1 Cts." and "2 Cts." rather than "1¢" and "2¢". Additionally, the 2 cent surcharge, K18, was printed on the offset issue Type VII stamp, Scott 528B, rather than the flat plate Scott 499 of the earlier overprint, K2. The newly surcharged 1 and 2 cent stamps were to be on sale for less than six months, something the postal agent was well aware of when the overprints were made. In February of 1922, at the Washington Conference on Limitation of Armament, in a gesture of good will toward China, a resolution was adopted calling for the closure of the Postal Agency in Shanghai, China no later than the end of that year. In compliance, the agency closed its doors on December 31, 1922. The remaining stock of both surcharged and non-surcharged stamps was returned to the Philatelic Agency in Washington and was sold to collectors until the supply ran out. Used is Rarer Than New It is interesting to note that postally used examples of the Shanghai overprints bring a premium over their unused counterparts, particularly on cover and for non-philatelic usage. Of course the usage must be contemporaneous, that is from 1919-1922. The premium the used copies bring over their unused counterparts simply does not reflect the relative rarity of the used examples. It has been estimated that the number of unused examples on average is nearly twenty times the number of known used examples. Amazingly Rare - Amazingly Cheap To this author, it is simply amazing that this philatelically important issue may be purchased at such reasonable cost when one looks at the quantities issued and the limited time frame the overprints were actually sold on U.S. soil. According to Armstrong, production figures of the Bureau and Engraving show that only 4003 of the 50¢ and $1 stamps, only 8003 of the 12¢ through 30¢ stamps, and only 13003 of the 3¢ through 10¢ stamps were issued. Even the 1¢ and 2¢ stamps were issued in quantities of only 105,003 and this presumably includes the latter overprints Scott K17 and K18. Compare these numbers with production figures for the $5 Columbian (27,350) and the $2 Trans-Mississippi (56,200) and it is easy to see the rarity of the Shanghai overprints. The 2000 Scott U.S. Specialized Catalogue lists the $5 Columbian in NH condition at $7,500.00 while the 3¢ Shanghai overprint, of which only half as many were produced, is listed at a mere $80.00 in never hinged condition! More Overprints Printed to Meet Collector Demand The reasons for this disparity are many, not the least of which that Scott has deemed to put this important issue in a relatively obscure back of the book section under the heading "K". Had Scott given the Shanghai stamps the same importance as the Kansas Nebraska overprints with a position in the front of the book, the overprints would skyrocket in value.  It may also be true that the figures quoted by Armstrong are slightly misleading. After the Philatelic Agency exhausted the supply of returned stamps, more overprints were made to meet collector demand. Armstrong does not make it clear if the figures he obtained from the Bureau take the re-issued overprints into account. But in any event the Shanghai overprints are much scarcer than their price suggests. These stamps can usually be separated from their earlier counterparts by color shade, and plate blocks can be separated by the presence of a 5-digit number on the re-issues rather then the 4-digit plate number on the original overprints. Since the early runs were so small, it may be assumed that the ink used in the production of each denomination in May of 1919 was fairly consistent in shade. When the new overprints were made three years later to satisfy collector demand, it is again safe to assume that the color of the inks did not exactly match the inks of 1919. The author is unable to determine just how many copies of each denomination were overprinted to satisfy collector demand, but it most certainly is the case that collectors of that era picked up far more of the lower denomination stamps than of the higher denomination stamps, accounting for some of the discrepancy in the rarity to value ratios in the lower denominations. Further reading: United States Postal Agency, Shanghai, China by Harvey Bounds - The Stamp Specialist: Mahogany Book 1947 - pp. 50-59 - This article contains illustrations of many of the Shanghai cancellations. Sloane's Column  published by the Bureau Issues Association - p.446 Robert A. Siegel Auction Galleries, Inc. Sale 833 - p.233 December 14 and 15, 2000 Stamps of the Shanghai Postal Agency by Gary Griffith - Stamp Collector February 2001 U.S. Stamps for Twice the Price? Why? by Henry Stollnitz - Opinions I, published by the Philatelic Foundation 1983 - pp.96-98 "Shanghai" Offices in China Overprints by Martin A. Armstrong - Washington Franklins 1908-1921 published 1977 - pp.110-112 This article was written by Bob Allen. Unless noted otherwise, all images and text are sole property of 1847usa and may not be reprinted or copied without the permission of the author. A Guide to the Washington Franklins 1908 · 1909 · 1910 · 1910 Perf 8.5 · 1912 · 1914 · 1915 · 1916 · 1916 Coils · 1917 · 1918 · 1919

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