Silver Certificates
sharkyrex
Posts: 23 ✭
Hello, another question,
Back when silver certificates were in use, could one take a $10 silver certificate to the bank (Or the treasury), and ask for a $10 Eagle, and receive one? Was it not the same value as a $10 gold certificate? If they instead gave you $10 in silver coins, couldn't you just give them back and ask for a $10 Eagle? Or could you give them a $10 silver certificate and ask for a $10 gold certificate? Please explain to me.
Thank You.
Buying all low end varieties of the $1 bill.
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Comments
Maybe, yes, maybe and maybe.
A $10 silver certificate was redeemable for 10 silver dollars but not gold. Ten silver dollars, a ten dollar note or $10 eagle all have the same legal tender value-$10. The willingness of a bank to exchange one form of legal tender for another probably depended on either your relationship with the bank or teller or what forms of currency were most preferable for the bank to hold at the time.
Great question
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It depends on the time period. While all the forms of money you mention are nominally of the same face value, changes in metal prices, and varying legal tender laws for the different types of paper money, could make one type more desirable than another, depending on the specific circumstances. When silver certificates were first issued, they weren't explicitly legal tender, while gold was acceptable to just about everyone (William Jennings Bryan being a possible exception). In that time, someone with gold, or its paper equivalent, might be reluctant to exchange it for your silver certificate backed by silver dollars of declining intrinsic value.
In 1900, when the US officially adopted a gold standard, any dollar, regardless of its form, was redeemable for gold. During that time, there would probably have been little trouble exchanging a $10 silver certificate for $10 in gold. In the 1930s, the Gold Reserve Act required all gold certificates, and most privately held gold, to be turned in to the Treasury. This left silver certificates as the only paper money backed by a physical asset. During the Depression and WWII, the American public became accustomed to using fiat currency, so there was no difficulty having silver certificates circulate alongside Federal Reserve Notes. The rising price of silver in the mid-to-late 1960s finally forced their discontinuation. Speculators began to hoard silver certificates, in preference to Federal Reserve Notes, because they could be redeemed for silver, which appeared to be a better store of value than paper dollars at the time.
In 1900, when the US officially adopted a gold standard, any dollar, regardless of its form, was redeemable for gold.
I don't believe that this is correct. Silver Certificates and Legal Tender notes were in circulation in 1900 and their payment clauses specifies payment in money other than gold. Nobody, including the issuer (US Govt.), was required by law to give you gold for your silver certificate or legal tender notes.
D
+1. The situation changed over time, but at most points after the late 1890s, as a practical matter you probably would have been able to "change" (not technically a redemption) your SC for specie, but as you say, only the issuer of a given type of note was obliged to redeem it for whatever was stated in the security clause. A very different situation than what existed before resumption in 1873 when the $ was traded at a discount to gold. And during the panic of 1907 and the financial crisis at the end of 1914 related to WWI, banks, investors, etc hoarded specie and related currency.
Yes, the payment clause stated the legal obligation of the issuer (US Govt) for redeeming the note but the actual ability to exchange a $10 silver certificate for gold varied greatly between the 1870s and 1930s depending on the time period as well as with whom one was trying to make the exchange.
Interesting question, thank for your post and others for their responses !!!
I had to refresh my memory of the Gold Standard Act, and now agree that no provision was made for the redemption of silver certificates in gold. $150,000,000 of gold coin and bullion was set aside for the redemption of legal tender notes by the act. The act did also require the Secretary of the Treasury to maintain the parity of all forms of money issued by the United States with the gold standard, although except for the fund set aside for the legal tender notes, no other mechanisms specifically for redeeming other forms of money in gold were enacted.
My use of the word "redeemable" was imprecise in the instance I used it, and I appreciate the correction.