They are intentionally mixed into the paper pulp when making the paper for currency and it served as an early security feature to defend against counterfeiting. The paper itself is 100% cotton rag, the threads are silk. from Wikipedia: Banknote Looks like you have a specimen note there? Can you post the whole note. Would be great to see the full design, front and back if you can get both sides.
That close up was taken from the reverse of this bill. I have high resolution images of both sides of this bill and five others in a Flickr PhotoSet. Each photopage in the set has an 'all sizes' link. Click there to see this at 2400 px wide. There's also a link to see them as a slideshow. Enjoy. Thanks again for all the information everyone.
Rainbow silk fibers Some currency paper stock seems to have more silk in the note then others almost making a rainbow.
The 4th. issue 50 cent Edward M.Stanton (Sectary of War to President Lincoln )was issued during the 4th issue,with this issue the Treasury Seal appears for the first time on a Fractional Currency. Date of issue was between ,July 14 to February 16.1875. Some silk thread can be seen in close up of stanton to the right