Silver Certificates: A Lesson in the Disappearing Value of Paper Currency





“When I was a youngster and first began to learn my rudimentary lessons about money, I was shown a paper dollar and a silver dollar,  and I was told that the silver dollar was the real dollar, that the paper dollar was merely a promise to exchange or redeem the paper note with silver.” 

Frank Church, United States Senator (Hearings Before the Committee on Banking and Currency,  April 1 and 2, 1964)

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silver cert

If you ask the average person what a Silver Certificate bill is today, the vast majority of people have no idea.    There was a time in the not too distant U.S. history when $1, $5, and $10 silver certificate bills circulated as regular currency.   They look almost identical to a Federal Reserve Note that everyone is familiar with.  The main visual difference is the blue seal, the text “Silver Certificate” instead of “Federal Reserve Note”, and the extra text at the bottom saying “Ten Dollars in Silver Payable to the Bearer on Demand”.

What made the Silver Certificates different?   Each and every silver certificate issued had the corresponding amount of silver on deposit with the U.S. Treasury (0.7735 troy ounces of silver per dollar).  For example, for each $10 silver certificate there were 7.735 troy ounces of silver on deposit at the Treasury.   Not only that, but anyone could redeem their silver certificate for the physical silver at any time.    Compare and contrast this with the current Federal Reserve Note bills that we have.  They are not backed by any physical commodity, nor are they redeemable in anything.

Silver certificates were printed until the early 1960’s.   Originally, they could be redeemed directly for an equal number of silver dollars.  After March 1964, they were only redeemed in silver bullion rather than silver dollars.   For small redemptions, people would be given silver granules, also known as “silver dust”.   For large redemptions, bars would be issued.


Silver Granules – After March 1964 what most people received when redeeming Silver Certificates

In the mid-1960’s, silver certificates were being withdrawn and replaced with Federal Reserve Notes as they cycled through the Federal Reserve Banks.

By June of 1967, the Government wanted to free up the silver it had set aside to back outstanding silver certificates, and could no longer artificially hold the price of silver at $1.29 an ounce.  Public Law 90-29 was passed which mandated that after June 1968 the silver certificates would no longer be redeemable in silver, although they would still be honored the same as Federal Reserve Notes at their face value.

Between June of 1967 and June of 1968 the price of silver went up so that it was profitable to redeem the certificates for their silver.   Essentially you could redeem a $1 silver certificate for the 0.7735 of silver, which would be worth up to $1.90, depending on the price of silver at the time.

However, one problem was that the silver certificates could only be redeemed in person at the New York or San Francisco Assay Offices – the Government would accept no mail order redemptions.

Entrepreneurs quickly saw a opportunity to make money and started buying the silver certificates locally and by mail.  Below are a couple of example ads published at the time:

ad1 ad2

Bank Tellers also had a tremendous opportunity during this time.   The New York Times reported in 1967 that many bank tellers were making about $50 profit a day by skimming out silver certificates as they passed through the banks, and replacing them with Federal Reserve Notes.   Adjusted for inflation this would be about $350 a day in profit!

In February 1967, a news article ran about Daniel J. Lander, one of the entrepreneurs buying as many silver certificates as he could, both in person and through the mail (from as far as Liberia).   Each time he had collected $39,000 face value in silver certificates he would redeem them for around 30,000 ounces of silver.

As the June 24, 1968 deadline to redeem silver certificates approached, people raced to redeem their silver certificates before it was too late.  It was reported that the night before the deadline about a dozen people camped out at the New York Assay office,  and by 8:00 AM the day of the deadline there were about 200 people in line in New York, and 500 people in line in San Francisco.

June 24, 1968 came and went, and since then silver certificates are only worth their face value.   But what if the Government hadn’t defaulted on their promise to redeem silver certificates with physical silver?  What would these certificates be worth today if you could still redeem them?  Or if you had redeemed one in 1968 and held on to the silver, what would that silver be worth today?

A $10 silver certificate would be worth $111.00    (7.735 troy ounces)*

A $5 silver certificate would be worth $55.50  (3.8675 troy ounces)*

A $1 silver certificate would be worth $11.10   (0.7735 troy ounces)*

*$14.35 spot price, 11/11/15

As surprising as this is, if we go back a little further in the history of currency to Gold Certificates it is even more staggering.    Up until 1933 Gold Certificates were issued and circulated.   They were very similar to Silver Certificates, except backed and redeemable in gold.   If these $20 Gold Certificates were still redeemable in gold, they would each be redeemable for $1,051.38 worth of gold (*1086.70 gold spot, 11/11/15).

When looking at what Gold and Silver certificates would be worth today if they were still redeemable, it is clear how much the dollar has been devalued.   Our current Federal Reserve Notes, backed by nothing other than faith, will continue to be devalued and become worth less and less over the years.

Here is one final quote:

As this committee knows, the silver certificates are now being collected by the Treasury and, in their place, a Reserve note is being issued, thus denying what has heretofore been the case, the promise to exchange silver for paper.   If the silver dollar now also disappears, then, of course, the public will have no recourse from paper.

Frank Church, United States Senator (Hearings Before the Committee on Banking and Currency,  April 1 and 2, 1964)


To see the silver certificate in person and for some of the lowest gold and silver prices in Singapore visit our shop at Clarke Quay, The Central, #B1-33. Or visit us online at

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