© Copyright 1995-2022, Clay Irving <clay@panix.com>

Silver Certificate

In 1873, the Fourth Coinage Act was enacted by the United States Congress to embrace the gold standard [1] and de-monetized silver. This act caused a public outcry — Western mining interests and others who wanted silver in circulation years later labeled this measure the "Crime of '73".

The government finally caved to the pressure and the Bland-Allison Act was passed by Congress on February 28, 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 at double the market value from mining companies in the West, to be minted into coins that would be legal tender for all debts, like gold. These coins, however, were quite heavy, so the government applied their gold certificate strategy to the silver. Suppose that there were five silver dollars in the treasury. The government would print a $5 Silver Certificate against the dollars, providing a somewhat easier medium of exchange. The idea was kept, and Series 1878 was printed in denominations of $10 to $1000.

For many years silver certificates were the major type of currency in circulation. However, in the early 1960s when the price of silver jumped to over $1.29 an ounce it was evident that further increases would make it profitable for holders of silver coins to sell them in the open market. To avert this crisis, Congress abolished Silver Certificates on June 4, 1963 and all redemption in silver ceased on June 24, 1968.

In March 1964, Secretary of the Treasury C. Douglas Dillon halted redemption of Silver Certificates for Silver Dollars.

In the 1970s, large numbers of the remaining silver dollars in the mint vaults were sold to the collecting public for collector value.

Footnotes

[1] The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold.