SILVER CERTIFICATES

In 1928, the United States Treasury decided to reduce the size of its currency in order to speed up transactions, and also to cut costs. By this time, the Federal Reserve had taken over much of the currency market, and the prices of gold and silver had risen greatly. For Series 1928, only $1 Silver Certificates were produced. Fives and tens of this time were mainly Federal Reserve Notes, which were backed by and redeemable in gold. All this would change, however, with the beginning of the Great Depression in October 1929. The United States was plunged into an economic disaster of profound proportions. Many citizens blamed the fluctuating price of gold, which directly affected the U.S. dollar because it was pegged to the value of gold.

President-elect Franklin Roosevelt felt the same way. He persuaded Congress to recall all gold coins, gold bullion, and gold certificates, which circulated alongside Silver Certificates. This prompted Congress to quietly place the U.S. on the silver standard. On May 12, 1933, the Agricultural Adjustment Act was passed, which included a clause allowing for the pumping of silver into the market to replace the gold. A new Series 1933 $10 Silver Certificate was printed and released, but not many were released into circulation.

In 1934, a law was passed in Congress that changed the obligation on Silver Certificates so as to denote the current location of the silver. This law also allowed the government to exchange silver bullion for the certificates, not just silver dollars. The 1933, along with its sister, the 1933A, $10 silvers, as well as the 1928 $1 silvers were phased out and replaced with certificates of Series 1934. The small-size $5 Silver Certificate was introduced with this series, as well.

Certificates circulated, mainly in the $1 denomination, widely throughout the United States in the years following 1934. When the '34s wore out, they were replaced with a new, more modern-looking Series 1953 (1935 for the $1 silvers; see below), with the same face changes as the Series 1950 Federal Reserve Notes had experienced. However, the Silver Certificates began to disappear from circulation during the 1940s and 1950s. The amount of Silver Certificates in circulation depended directly upon the amount of silver bullion in the Treasury vaults. As people redeemed the certificates for bullion or silver dollars, the notes were shredded, because the notes had lost their backing and could not be recirculated unless there was more silver being produced. The price of silver was also rising. In 1960, it was nearing $1.29, which meant that silver dollars were worth more than $1. This meant that people would receive their silver dollars and melt them down for the bullion, thereby reducing the amount of silver in circulation, which was already falling.

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. All redemption in silver ceased on June 24, 1968. Paper currency is still valid legal tender without the Silver Certificate, instead being backed simply by the perceived strength of the U.S. economy. According to the U.S. treasury, "The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are 'backed' by all the goods and services in the economy."