The proprietary stamp was, in essence, a "war tax" and was attached to medicines and perfumes back in the day to prove the required taxes were paid.
The overprint "Richard Hudnut" was one of many overprints used by various companies to identify their stamps, and sometimes was intended as a means of advertising, too. According to this schedule, the stamp denomination shown at 1-7/8 cents represented the stamp attached to a product sold at 50 to 75 cents on the retail market:

If you don't know, Richard Alexander Hudnut (1855-1928) was a relatively colorful perfume manufacturer back in the day. Here's some information on him and his products:
http://www.perfumeprojects.com/muse...Hudnut.shtmlhttp://en.wikipedia.org/wiki/Richard_HudnutAlthough this has nothing to do with stamps, here's a "model" that was used to advertise Richard Hudnut's rouges and compacts back in the day:
