US Banknotes

What is a US silver certificate?

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2015-04-14 07:25:49

A silver certificate is a note (bill) that could be redeemed for

an equivalent amount of silver.

Prior to 1964, the USA was "on the silver standard." The

government controlled the price of silver, and silver certificates

were bills that could be exchanged for a specific amount of the

metal. The government was allowed to print only as many bills as

there was silver in the Treasury to redeem them, which helped to

control the money supply. Silver certificates in fact were little

more than a receipt or deed for a certain number of ounces of

silver.

During the 19th century silver certificates were at one point or

another issued in every denomination from $1 to $1000. In the 20th

century that range was limited to $1, $5, and $10.

There were also bills called Federal Reserve Notes (the same

kind we use today) and US Notes, similar to Federal Reserve Notes

but issued directly by the Treasury rather than via the central

bank. These bills weren't backed by precious metal, but by the

faith of the public in the stability of the government.

Bill designs were standardized in the 1920s. Silver certificates

looked similar to the other Federal Reserve and US Notes except

that they had blue seals instead of green or red, and did not carry

a Federal Reserve District seal or code letter.

In the 1960s the demand for silver increased sharply and the

government was forced to let the price be determined by market

forces. The value shot up from the controlled price of $1.29/oz to

over $40 for a while, and it was no longer economical to use silver

in coins or to redeem bills. The production of silver certificates

was stopped in 1963 and silver was removed from coins at the start

of 1965. Silver certificates were allowed to stay in circulation

but they could no longer be redeemed for metal. By 1966 US Notes

were also discontinued. Some consider today's Federal Reserve Notes

as portions of our government's indebtedness. The pro's and con's

of that are hotly debated, and are beyond the scope of the

question.

Many late-date silver certificates were saved by collectors, and

are still so common in collections that they are not worth much

more than face value despite being almost 50 years old.

Before 1933, US banks also issued gold certificates for gold

deposits. They were similar to silver certificates in that they

were backed by a specific amount of gold on deposit with the

Treasury.

Today silver and gold certificates cannot be redeemed for real

silver or gold through the Federal Reserve.


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