Silver certificates are a type of representative money issued between 1878
and 1964 in the United States as part of its circulation of paper currency. They
were produced in response to silver agitation by citizens who were angered
by the Fourth Coinage Act, which had effectively placed the United States on
a gold standard. The certificates were initially redeemable for their face
value of silver dollar coins and later in raw silver bullion. Since 1968 they
have been redeemable only in Federal Reserve Notes and are thus obsolete, but
still valid legal tender and thus are still an accepted form of currency.
Large-size silver certificates were issued initially in denominations from
$10 to $1,000 and in 1886 the $1, $2, and $5 were authorized. In 1928, all
United States bank notes were re-designed and the size reduced. The
small-size silver certificate was only issued in denominations of $1, $5, and
$10. The complete type set below is part of the National Numismatic Collection at
the Smithsonian's National Museum of American History.
History The Coinage Act of 1873 intentionally
omitted language authorizing the coinage of “standard” silver dollars and ended
the bimetallic standard that had been created by Alexander Hamilton. While the
Coinage Act of 1873 stopped production of silver dollars, it was the 1874
adoption of Section 3568 of the Revised Statutes that actually removed legal
tender status from silver certificates in the payment of debts exceeding five
dollars. By 1875 business interests invested in silver wanted the bimetallic
standard restored. People began to refer to the passage of the Act as the Crime
of '73. Prompted by a sharp decline in the value of silver in 1876,
Congressional representatives from Nevada and Colorado, states responsible
for over 40% of the world’s silver yield in the 1870s and 1880s, began lobbying
for change. Further public agitation for silver use was driven by fear that there
was not enough money in the community. Members of Congress claimed ignorance
that the 1873 law would lead to the demonetization of silver, despite having
had three years to review the bill prior to enacting it to law. Some blamed the
passage of the Act on a number of external factors including a conspiracy
involving foreign investors and government conspirators. In response,
the Bland–Allison Act, as it came to be known, was passed by Congress on 28
February 1878. It did not provide for the "free and unlimited coinage of
silver" demanded by Western miners, but it did require the United States
Treasury to purchase between $2 million and $4 million of silver bullion per
month from mining companies in the West, to be minted into coins.
= Large-size silver certificates= The first silver certificates were
issued in denominations of $10 through $1,000. Reception by financial
institutions was cautious. While more convenient and less bulky than dollar
coins, the silver certificate was not accepted for all transactions. The
Bland–Allison Act established that they were “receivable for customs, taxes, and
all public dues,” and could be included in bank reserves, but silver
certificates were not explicitly considered legal tender for private
interactions. Congress used the National Banking Act of 12 July 1882 to clarify
the legal tender status of silver certificates by clearly authorizing them
to be included in the lawful reserves of national banks. A general appropriations
act of 4 August 1886 authorized the issue of $1, $2, and $5 silver
certificates. The introduction of low-denomination currency greatly
increased circulation. Over the 12-year lifespan of the Bland–Allison Act, the
United States government would receive a seigniorage amounting to roughly $68
million, while absorbing over 60% of U.S. silver production.
= Small-size silver certificates= Treasury Secretary Franklin MacVeagh
appointed a committee to investigate possible advantages to issuing smaller
sized United States banknotes. Due in part to the outbreak of World War I and
the end of his appointed term, any recommendations may have stalled. On 20
August 1925, Treasury Secretary Andrew W. Mellon appointed a similar committee
and in May 1927 accepted their recommendations for the size reduction
and redesign of U.S. banknotes. On 10 July 1929 the new small-size currency
was issued. In keeping with the verbage on
large-size silver certificates, all the small-size Series 1928 certificates
carried the obligation "This certifies that there has been deposited in the
Treasury of the United States of America X silver dollar(s) payable to the bearer
on demand." This required that the Treasury maintain stocks of silver
dollars to back and redeem the silver certificates in circulation. Beginning
with the Series 1934 silver certificates the wording was changed to "This
certifies that there is on deposit in the Treasury of the United States of
America X dollars in silver payable to the bearer on demand." This freed the
Treasury from storing bags of silver dollars in its vaults, and allowed it to
redeem silver certificates with bullion or silver granules, rather than silver
dollars. Years after the government stopped the redemption of silver
certificates for silver, large quantities of silver dollars intended
specifically to satisfy the earlier obligation for redemption in silver
dollars were found in Treasury vaults. As was usual with currency during this
period, the year date on the bill did not reflect when it was printed, but
rather a major design change. Additional changes, particularly when either of the
two signatures was altered, led to a letter being added below the date. Thus
1935 dated one dollar certificates lasted through the letter "H", after
which new printing processes began the 1957 series. In some cases printing
plates were used until they wore out, even though newer ones were also
producing notes, so the sequencing of signatures may not always be
chronological. Thus some of the 1935 dated one dollar certificates were
issued as late as 1963. = World War II Issues=
In response to the Japanese attack on Pearl Harbor, the Hawaii overprint note
was ordered from the Bureau of Engraving and Printing on 8 June 1942. Issued in
denominations of $1, $5, $10, and $20, only the $1 was a silver certificate,
the others were Federal Reserve Notes. Stamped “HAWAII”, with the Treasury seal
and serial numbers in brown instead of the usual blue, these notes could be
demonetized in the event of a Japanese invasion. Additional World War II
emergency currency was issued in November 1942 for circulation in Europe
and Northern Africa. Printed with a bright yellow seal, these notes could be
demonetized should the United States lose its position in the European or
North African campaigns. = "Star notes"=
When a bill is damaged in printing it is normally replaced by another one. To
keep the amounts issued consistent, these replacement banknotes are normally
indicated by a star in the separately sequenced serial number. For silver
certificates this asterisk appears at the beginning of the series.
= End of the silver certificates= In the nearly three decades since
passage of the Silver Purchase Act of 1934, the annual demand for silver
bullion rose steadily from roughly 11 million ounces to 110 million ounces.
The Acts of 1939 and 1946 established floor prices for silver of 71 cents and
90.5 cents per ounce. Predicated by an anticipated shortage of silver bullion,
Public Law 88-36 was enacted on 4 June 1963 which repealed the Silver Purchase
Act of 1934, and the Acts of 6 July 1939 and 31 July 1946, while providing
specific instruction regarding the disposition of silver held as reserves
against issued certificates and the price at which silver may be sold. It
also amended the Federal Reserve Act to authorize the issue of lower
denomination notes, allowing for the gradual retirement of $1 silver
certificates and releasing silver bullion from reserve. In repealing the
earlier laws, PL88-36 also repealed the authority of the Secretary of the
Treasury to control the issue of silver certificates. By issuing Executive Order
11110, President John F. Kennedy was able to continue the Secretary’s
authority. While retaining their status as legal tender, the silver certificate
had effectively been retired from use. In March 1964, Secretary of the Treasury
C. Douglas Dillon halted redemption of silver certificates for silver dollar
coins; during the following four years, silver certificates were redeemable in
uncoined silver "granules." All redemption in silver ceased on 24 June
1968. While there are some exceptions the vast majority of small sized silver
certificates, especially non-star or worn bills of the 1935 and 1957 series,
are worth little to nothing above their face values.
Issue = Series and varieties=
= Large-size United States silver certificates=
= Small-size United States silver certificates=
See also Gold certificate
Silver standard Silver as an investment
Representative money Silver certificate
Footnotes Notes
References Agger, Eugene E.. "The Denominations of
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JSTOR 4469657. Barnett, Paul. "The Crime of 1873
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Blake, George Herbert. United States paper money. George H. Blake. Retrieved
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Cuhaj, George S.. Standard Catalog of United States Paper Money. Krause
Publications. ISBN 978-1-4402-3087-5. Retrieved 14 February 2014.
Dillon, C. Douglas. Annual Report of the Secretary of the Treasury on the State
of the Finances. United States Government Printing Office. pp. 400–403.
Retrieved 16 October 2014. Friedberg, Arthur L.; Friedberg, Ira S..
Paper Money of the United States: A Complete Illustrated Guide With
Valuations. Coin & Currency Institute. ISBN 978-0-87184-520-7. Retrieved 14
February 2014. Friedman, Milton. "The Crime of 1873".
Journal of Political Economy 98: 1159–1194. doi:10.1086/261730. JSTOR
2937754. Grey, George B.. Federal Reserve System:
Background, Analyses and Bibliography. Nova Science Publishers, Inc. ISBN
1-59033-053-6. Retrieved 14 February 2014.
Knox, John Jay. United States Notes: A history of the various issues of paper
money by the government of the United States. Charles Scribner’s Sons.
Leavens, Dickson H.. Silver Money. Principia Press, Inc. Retrieved 13
February 2014. Lee, Alfred E.. "Bimetalism in the
United States". Political Science Quarterly 1: 386–399. JSTOR 2139359.
McVey, Frank L.. "The Reclassification of the Paper Currency". Journal of
Political Economy 10: 437–442. doi:10.1086/250857. JSTOR 1819565.
O’Leary, Paul M.. "The Scene of the Crime of 1873 Revisited: A Note".
Journal of Political Economy 68: 388–392. doi:10.1086/258345. JSTOR
1830011. Schwartz, John; Lindquist, Scott.
Standard Guide to Small-Size U.S. Paper Money – 1928 to Date. Krause
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Taussig, F.W.. "The Silver Situation in the United States". The Quarterly
Journal of Economics 4: 291–315. doi:10.2307/1881888. JSTOR 1881888.
Taussig, F.W.. "The Silver Situation in the United States". Publication of the
American Economic Association 7: 7–118. JSTOR 2485709.
Further reading Hessler, Gene; Chambliss, Carlson. The
Comprehensive Catalog of U.S. Paper Money: All United States Federal Paper
Money Since 1812. BNR Press. ISBN 9780931960666.
National Monetary Commission. Laws of the United States concerning money,
banking, and loans, 1778-1909. Government Printing Office. Retrieved 14
February 2014. External links
Bureau of Engraving and Printing U.S. Department of the Treasury
USPaperMoney.Info