Need help on the official backings of Gold Certs, Silver Certs and Fed. Res. Notes in 1920-1923
CaptHenway
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Could somebody please point me to a reference that can give me the OFFICIAL rates by which Gold Certificates and Silver Certificates and Federal Reserve Notes (if applicable) were backed by actual gold and silver coins sitting in a vault somewhere?,
For example, for each $1,000,000 in Gold Certificates outstanding, was there $1,000,000 in gold coins in the vaults, or $600,000, or $400,000, or what?
Likewise Silver Certificates backed by silver dollars. For each $1,000,000 in SC's, was there $1,000,000 in standard silver dollars, or $600,000, or $400,000, or what?
What about Federal Reserve Notes? I know that it Uncle Fred walked into his friendly neighborhood bank and asked to buy a $20 gold piece as a birthday present for Aunt Minnie and tendered a $20 FRN, he would probably get it. However, if the Bank of England presented $1,000,000 in FRN's to the U.S. Treasury for payment in gold, was there a stash of gold coins sitting in a vault somewhere backing those FRN's? If so, what percentage of the outstanding face value?
THanks,
TD
Comments
TD:-
You can find that information in the originating acts for those classes of notes, as well as in the annual reports of the secretary of the treasury.
Gold certificates and silver certificates in circulation were always backed by a treasury reserve of 100 percent of gold coins or silver dollars (prior to 1933 for silver certs). Federal reserve notes in circulation were required to be backed by a reserve of 40 percent in gold bullion.
I would reach out to Pete Huntoon.
For instance, reference p. 647 of the 1923 Annual SoT Report. The data in that table shows the amounts of gold and silver held in reserve for gold certificates, silver certificates, and FRNs.
Thank you. That is what I was looking for.
As I read that, the Silver Certificates were backed one for one with actual standard silver dollar coins. Coined money.
The gold was backed 100% by real physical gold, though it did not have to be coined money. Might be bars.
Each Federal Reserve Bank was required to keep a reserve of physical gold equal to 40% of the face value of the FRN's issued by that particular bank, though I do not see that the FRNs were exchangable upon demand in gold.
I have received some excellent information from Roger W. Burdette. The Gold Certificates were backed 100% by gold, but the law of 1900 allowed that gold to be two-thirds in U.S. gold coins and up to one-third in gold bars or foreign gold coins. The law of 1916 reversed those ratios, allowing it to be one-third in U.S. gold and up to two-thirds in bars or foreign gold coins.
Thanks for the information. I knew that GCs weren't always backed 100% by gold coin, but I'm unfamiliar with how the reserve composition changed from the 1860s-1930s.