What does a silver certificate mean?

Answer 1

A silver certificate is a US banknote (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. Denominations used in the 20th century were $1, $5, and $10; in the 1800s other denominations from $2 to $1000 were also sometimes printed as silver certificates. The government was allowed to issue 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.

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.

Silver certificates were similar in design to the other Federal Reserve and U.S. Notes except that they generally 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.