Silver certificate – What is it, definition and concept | 2022

A silver certificate was paper money that could be exchanged for an amount equal to its face value in silver coins or bullion. After being withdrawn from circulation in 1964, they could only be exchanged for paper money issued by the Federal Reserve.

Silver certificates began to be issued in 1878, being legal tender money. This paper money had a certain value expressed in coins or silver ingots and allowed to possess said precious metal without the need to buy it.

How did silver certificates work?

Thanks to these certificates, it was possible to acquire silver without having to physically possess it. These bills, which were equivalent to a certain amount of coins or silver bars, were payable to the bearer.

The certificates issued were similar in size to legal tender dollar bills in use today. Thus, there were silver certificates for values ​​ranging from 1 dollar to 1,000 dollars. As was the case with many banknotes, they included the representation of various presidents of the United States.

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The specific amount they represented was stated on the silver certificate bill itself, in addition to having a serial number and stamp.

History and evolution of silver certificates

Although the United States abandoned the production of silver coins around 1806, these coins remained in circulation until 1861. Thus, Americans could only accumulate their wealth by owning precious metal coins such as silver and gold. These silver and gold coins were considered legal tender.

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The Coinage Act of 1873 prohibited Americans from minting their own gold and silver coins. All this generated discontent among banks and mining companies, who wanted to return to gold and silver coins as a means of payment.

There was great mistrust of the paper money issued by the State and there was a fear that an excessive issue of banknotes would cause a situation of runaway inflation.

A great debate ensued between using the gold or silver standard as a backing for the dollar. Finally, a bet was made on a dollar backed by gold. This meant the withdrawal from circulation of the silver monetary circuit. All this gave way to the creation of the first silver certificates in 1878 under the Bland-Allison Act.

Thanks to this law, it was possible to own silver with a certificate that worked as a supporting document, while allowing Americans to deposit silver in the US Treasury.

The certificates were printed in shades of brown, blue and red. However, the color scheme changed with the outbreak of World War II. Thus, the certificates for Africa were provided with yellow seals and the certificates sent to Hawaii were decorated with brown seals.

In the event of an invasion of the United States, the United States federal government, through the cancellation of the colors of the series, had the power to demonetize the silver certificates. All this meant nullifying the value of the certificates for the enemy.

Fearing a possible silver shortage, in 1963, the Silver Purchase Act was repealed in the United States. The exchange of silver certificates was also cancelled, giving until June 1968 for their redemption.

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Silver certificates today

As of today, it is not possible to exchange certificates for silver dollars, but it is possible to exchange the certificates for bonds issued by the United States Federal Reserve.

Beyond the value indicated by the silver certificate, they have become highly valued items for collectors. In view of this, there are numerous collectors who acquire the certificates for a value much higher than the face value.

Thus, when purchasing a silver certificate as a collector’s item, aspects such as series, scarcity and nostalgic value are taken into account.

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