Was there a practical difference between silver and gold certificates?
airplanenut
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I've handled a lot of paper money recently, including many silver certificates, and, newer to me, gold certificates. As their names imply, each one states that it can be redeemed by the bearer for coin in the specified metal. The lower denominations are silver certificates, and higher ones are gold. Was there any real difference at the time, other than it being easier to redeem a $20 bill for one gold coin, rather than 20 silver dollars? In the same light, was there perhaps a reason that 10 silver certificates couldn't be redeemed for a gold eagle (this being a coin question--were gold and silver as easily exchanged as their denominations would imply)?
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In general, however, here's a brief summary: prior to 1879, greenbacks were not convertible into either silver or gold at their face value, so there was a big difference between silver and gold certificates. After that, during periods of financial panic (1893, 1907, etc.) there was probably a big difference, but during periods of financial calm, there was less of a difference.
When silver was essentially demonetized by the rest of the world (the 1870s, roughly), there was a difference outside of the US, as foreigners who wanted gold would want gold certificates, not silver certificates (or greenbacks).
After 1933, of course, gold certs were called in, but you could still get silver from the government for silver certs.
If you look at the Friedberg book on US currency, it shows the obligations of the various issues of currency (you know, the part that says: "this note is legal tender for . . ."). The obligations were different for different types of currency - some were acceptable for import duties and some weren't; some were acceptable as payment on federal debt and some weren't.
Check out the Southern Gold Society
Your local bank would almost certainly take your silver for their gold if you were a customer as a simple matter of customer relations. Most banks kept a small stash of gold coins that people could buy for birthday and Christmas presents.
Series of 1928 and prior silver certificates were redeemable for silver dollars, whereas Series of 1934 silver certificates were redeemable for silver coin or even bullion. Gold certificates were redeemable for gold coin. Until 1933, neither were officialy convertible into each other, but only for coin.
John
ZeroHedge makes debut at White House press corps briefing
"Gold Standard Act- March 14, 1900
An Act To define and fix the standard of value, to maintain the panty of all forms of money issued or coined by the United States, to refund the public debt, and for other purposes.
Be it enacted . ., That the dollar consisting of twenty-five and eight-tenths grains of gold nine-tenths fine, as established by section thirty-five hundred and eleven of the Revised Statutes of the United States, shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard, and it shall be the duty of the Secretary of the Treasury to maintain such parity. "
As of 1900 all currency had to be maintained at par in gold at the US Treasury. So I would expect to get a ten dollar gold piece for 10 $1 silver certificates.
Only series 1933 silver certificates were redeemable in light weight "silver coin." All other silver certificates were redeemable in silver dollars until about 1963 when full weight silver bullion was used. I would say gold and silver certificates were convertable into each other by the Act of 1900.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Eventually most small denomination bills became silver certificates. If you needed a dollar bill, you had to take a silver certificate.
Dollarwise, gold certificates were backed by much more uncoined bullion than actual gold coins.
<< <i>And let those all be a lesson - the government failed to deliver what was promised on those notes - indeed it reneged. And it will renege on whatever fiat value the dollar currently has in time. >>
The only promise being made with current Federal Reserve Notes is that they are "legal tender." Even that does not mean someone, other than the US government, is required to accept them as payment for a debt. They are only pieces of paper that our government says we can use to trade for goods and services, nothing more. Thanks to reckless federal printing, budgeting and spending they are worth less in trade each day. Best to convert as many of them as you can into something that cannot be destroyed in value by Washington. See the PM forum for some good alternatives.
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You trust that people elsewhere will value gold and silver at the same price. Once you do, then you can trade it with confidence.
You trust that the notes that say they can be redeemed in gold and silver (1879-1932) can if fact be redeemed. Once you do, then you don't want to carry around the coins, you carry the notes.
You trust that the Federal Reserve notes you now carry will be accepted by others at the stated value. It makes little difference what the monetary policy is or what news you chose to believe. If everyone will accepts the notes then it is good funds. Buy gold with it or stuff it in your mattress.
It was pointed out to me here at the seminar that every new credit card issued that carries a balance is in effect "creating" new money, just as if it were printed out of thin air. Should we abolish credit cards because of this?
Edited to add: I'll take DerryB's notes too.