Tag Archives: Gold certificates

The Banknote MVP: Gold Certificates

Gold Certificates are considered by many collectors to be the MVP (Most Valuable Paper) of banknote collecting. Especially since the gold recall of 1933, most notes were taken out of circulation and destroyed, making the notes highly valuable, especially if found in uncirculated condition. But, we’ll get to that in a minute, first we need to introduce the notes and when they first began.

A Hazy Beginning

The early history of US gold certificates is particularly unclear. They were first authorized for production and circulation with the Currency Act of 1863, but unlike the United States Notes (which were representations of the national debt, which we talked about in an earlier blog post), gold certificates weren’t printed until 1865. The first notes had a very small amount of information on them. They weren’t issued with series dates, and were hand-dated upon issue. At that time, issue meant that the government had the equivalent value in gold that they were issuing the note on. Additionally, they were basically promissory notes to pay the amount in gold only to the depositor, who was identified in great detail on the actual certificate itself. The only art featured on these first notes was an eagle vignette which was used across all denominations.

$500 USD Gold Certificate 1865

Gold Certificates Become Legal Tender

From 1862 to 1879, US notes were considered legal tender but were not convertible to their value in gold due to being direct representations of the national debt at the time. However, some transactions, such as dealing with interest on the national debt had to be made in gold, which meant that the early gold certificates were usable in transactions that US notes were not. However, they still were not used in general circulation due to the extremely high value of the notes at the time. In 1879, the government became willing to redeem US notes at face value in gold, making gold certificates able to be used in general circulation. However, it wasn’t until the 1882 series of notes that made them payable to bearer and not just depositor.

$1000 Gold Certificate 1882

Gold Certificates Large and Small

Gold certificates, like all US banknotes were made in two different sizes. From 1865 to 1928, the notes were a larger size and a smaller size from 1928 to their end in 1934. These notes eventually became known as “goldbacks” like their “greenback” cousins due to the reverse of the gold certificates being orange. Also, it was during this time that gold certificates began having identical denominations to the other banknotes in circulation.

$20 Gold Certificat 1922 Series

The Gold Recall of 1933 and Gold Certificates Today

In 1933, to keep the public from hoarding precious metals, FDR and Congress instituted the Gold Recall of 1933, making it illegal for the public to own or trade in gold coins or certificates. Most of the currency from this period was returned to US banks and was redeemed and destroyed. However, in 1934, the US issued a new series of gold certificates to be used in intrabank transactions. Today, the US Treasury has issued gold certificates to the Federal Reserve Banks. However, these are merely to denote the collateral for any issue of Federal Reserve notes (our currency today).

Curious about adding a piece of our currency’s history to your collection? Great American Coin is proud to offer $20 gold certificates from the 1922 series.

Gary Dyner is the owner of Great American Coin Company. Connect with him on Google+.

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Red Seal, Blue Seal, Gold Note, Silver Note

When you look down at that $5 bill in your pocket. Have you ever wondered why that seal is green? Or why even include a seal? Well, once upon a time, there were actually different styles of notes. The notes that we have today are actually called Federal Reserve notes, but at one time, there were silver certificates and gold certificates as well, where banks were obligated to give you the same amount as dictated by the bill in that amount of silver or gold. Let’s take a look back at the different styles of bills and what the secrets of those seals actually are.

Yellow Seal US Dollars (Gold Certificates)

Introduced in 1863, the yellow seal US bank notes were actually gold certificates. Meaning, that the denomination of bank note was backed by the same amount in gold in the US treasury, and that you could exchange that certificate for the gold at a bank in the US. Which meant that US money was at one time backed by the Gold Standard. There were several times that this standard was suspended though. It was suspended twice during World War I and made it a free floating currency, similar to the fiat currency that it is today. The gold standard US dollar came to a close in 1933 with the Gold Reserve Acts, which made it illegal for the public to be in possession of gold coins or certificates. In 1964, the act was lifted and the notes could be traded again, however, like the silver certificates, they could no longer be redeemed for their value in gold, and became a collectible for numismatists.

Blue Seal US Dollars (Silver Certificates)

Similar to their gold standard cousins, the blue seal US bank notes were in fact silver certificates. These notes first began circulating in 1878 and were backed by the US stockpile of silver bullion. These certificates could be redeemed for their value in silver. At first, it was through an exchange of the certificate for silver dollar coins and later became an exchange for raw bullion. These notes were mainly done in the 1, 5, and 10 dollar denominations. In 1963, the notes were discontinued with a deadline of 1968 placed on any remaining silver certificates to be redeemed for their value in silver. These notes are still considered legal tender today but are valued at their face value and not at the current price of silver.

Red Seal US Dollars (US Notes)

The red seal dollars are an interesting fare. They were started during the Civil War and were in production for about one hundred years, making them one of the longest produced notes next to the dollar produced by the Federal Reserve. These notes were actual pieces on national debt. Which means they were direct obligations by the US government and that the individual who had them owned a piece of the national debt. These notes went out of circulation in the 1960s and were removed as legal tender in the mid 90s.

Green Seal US Dollars (Federal Reserve Notes)

The bills that we all use today are actually known as Federal Reserve notes. These are the only notes still being actively produced and are also the youngest. First introduced in 1914, these notes are backed by the US government but aren’t actually produced by the US. Instead, the 12 Federal Reserve banks within the US prints this money and, by law, must maintain enough assets to balance the notes issued. This currency is actually a fiat currency and is not based on any gold or silver standard.

Gary Dyner is the owner of Great American Coin Company. Connect with him on Google+.

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