A tiny square of very old red paper with cut corners - a one-cent postage stamp from the 19th century - sold for $9.5 million (€7 million) last night, the most ever paid for a stamp at auction.

The buyer, bidding by telephone at Sotheby’s on the Upper East Side, was not identified.

Auctioneer David N Redden opened the bidding at $4.5 million - $5.4 million once a 20 per cent buyer’s premium was added.

The bids climbed in $500,000 increments to $7.5 million.

After three more offers a bid hit $7.9 million, closing the auction at $9.5 million with the buyer’s premium.

The sale price was $500,000 short of the auction house’s $10 million to $20 million presale estimate.

Mr Redden said he was anything but disappointed.

“When you compare it to the record for stamps in recent history,” he said, “this is a real leap beyond prior levels.”

The last stamp to draw such attention at auction was the Treskilling Yellow, a Swedish stamp that sold for about $2.2 million in 1996.

A crowd of stamp dealers and collectors filled the auction room, with a row of television cameras in the back.

"I don't think they'd get that coverage for a van Gogh," said Frank J Buono, a stamp dealer from Binghamton, New York.

“And by weight and volume and size, it’s the most valuable item in the world. Diamonds might fetch more, but they weigh more.”

The stamp is known as the One-Cent Magenta from British Guiana. It was printed by a local newspaper - the scheduled shipment of thousands of stamps from Britain did not arrive, and the local postmaster did not want to run out - and issued in 1856.

It carries the image of a schooner and several Latin words that are often translated as, “We give and expect in return.”

It had not been seen in public since the mid-1980s until Sotheby’s sent it on a recent tour of museums and libraries.

It is, as far as stamp collectors know, unique. British experts concluded that one that surfaced in the 1990s was, in fact, an altered four-cent stamp, printed around the same time.

The one sold last night was authenticated by the Royal Philatelic Society in London this year.

Originally, it was apparently affixed to a newspaper wrapper or an envelope. One-cent stamps were commonly used for newspapers in British Guiana, according to stamp collectors.

No one knows why that particular wrapper or envelope, and that particular stamp, did not go the way of ordinary household trash, the way most newspaper wrappers did. But the stamp survived to be discovered by Louis Vernon Vaughan, a 12-year-old boy, in 1873.

According to the catalogue Sotheby’s prepared for the auction, the boy was the nephew of the person to whom the original wrapper or envelope had been addressed.

By then stamp collecting had caught on as a hobby, and the boy apparently believed that there were better stamps to be had.

“As it was a poor copy with cut corners,” the Sotheby’s catalogue explained, “he decided to sell it in order to buy some of the newer and more attractive issues that he had been sent on approval” by a British stamp dealer.

That decision started the One-Cent Magenta on an improbable journey that carried it from British Guiana to Sotheby's via the vaults of several prominent stamp collectors, including Philippe la Renotiere von Ferrary of Paris and Arthur Hind of Utica, New York, a textile magnate who paid $35,250 for it in 1922, then a record price.

“Arthur Hind had never intended to even bid on the British Guiana,” the Sotheby’s catalogue said.

But an encounter with a stamp dealer in London changed his mind, and owning the stamp changed his life.

Mr Hind later acknowledged that the stamp “had caused him to be ridiculed,” the Sotheby’s catalogue said.

“A London journalist described the 1856 British Guiana as ‘cut square and magenta in colour’ and himself as ‘cut round and rather paler magenta.’”

It set another record in 1980, the last time it was sold.

John E. du Pont, an heir to the du Pont chemical fortune, paid $935,000 to add it to his collection.

The stamp was sold by his estate after his death.

du Pont’s property in Pennsylvania. The stamp was sold by his estate.

Agencies