Seigniorage is the profit that governments make on securities that they issue, on which they don’t pay interest, and that are retained unused by the public. Cash in mattresses represents a form of seigniorage, and, more than anything else, old face value postage stamps held by collectors do as well. The money that collectors have tied up in mint stamps represents an interest free loan to our post office. And because most mint stamps held by collectors will never be used, the profit to the post office is the value of those stamps held by collectors (Private companies issue gift cards, and they are required by accounting rules to bring the unused portion of these cards into income—this is a sort of private seigniorage).
For many years, philatelic commentators have speculated that seigniorage was the reason that our Post Office pushed philately so hard and the reason that so many new issues had esoteric themes (designed to entice non-collectors into buying them and putting them in a drawer). But we never could put a number on the amount of mint new issue stamps held in private hands. Well, now we know, and the numbers are enormous! In 2009, the estimate of the Post Office Inspector General was that there were slightly over $2 billion of unused postage stamps in collectors’ hands (Linn’s Jan 31, 2011 pg. 14). That is the profit the postal service has accrued over the years selling stamps to collectors. It explains two things. First, now we understand the eagerness with which the Post Office issues new stamps. And second, with such enormous quantities being held by collectors (probably on the order of ten billion mint stamps), can there be any reason for believing that any of them can ever become scarce and sell at a premium?