To lower production costs and increase output, the U.S. Postal Service experimented with this "midget" stamp. The smaller image area, which was about 1/3 smaller than usual, provided for 150 stamps per pane instead of the usual 100. This unique issue pictures the 1877 Indian Head Penny, a prized collector coin. America’s Smallest Postage Stamp On January 11, 1978, the USPS issued its smallest postage stamp, featuring the famed Indian Head Penny. In the late 1970s, the USPS began looking into new ways to lower their production costs and increase their output. Eventually, they decided one possible way to achieve both of these goals was to make stamps smaller. So in 1978, the USPS decided to test the idea. They chose as the design for the stamp the 1877 Indian Head Penny. The penny itself measured .75 inches, while the new “midget” stamp would be .54 x .66 inches. This smaller size meant a pane of stamps could hold 150 stamps, rather than the standard 100.