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)

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In the mid-1960’s, silver certificates were being withdrawn and replaced with Federal Reserve Notes as they cycled through the Federal Reserve Banks.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


  1. Another way to look at it is the ‘minimum wage’.. In case U 4got, it was $1.25 in an hour and receive FIVE silver quarters. (gas was a quarter and a stamp was 4 cents.) IF you want to buy 5 silver quarters today…,go to a coin shop and ask the “price” & the nice man will say “give me 17 Federal Reserve Notes and I’ll give you 5 quarters from 1964”. IF you happen to HAVE 5 1964 quarters, you can trade them in at a coin shop and get about 16 FRNs and 2 clad/base metal “quarters”(the coin man will make a small profit).

    But what does this mean? It means that the “dollar” has lost value and is only worth ~1/17th of what it was[in buying power] in 1964 & also thru inflation, the banks and the gvt have s@rew&d the US taxpayers out of 50% of their wages, bks the MW is only $7.50 today.. If it was not so sad, I would LOL bks the gvt skules have quit teaching real economics.

    • You still can find some pre 64 coint in circulation if you lucky… Some times you purchase a pack of gum for 35c and your change worth more than the bill what you handed to the teller… 😉

  2. Silver and gold certificates are worth considerably more than face value as collectors items. A common large size (pre-1928) $1 goes off at $40-300 depending on condition. You can’t get any silver certificate in investor condition (XF-CU) grades for less than $14. You can sell your paper silver certificate and use the proceeds to buy a silver Eagle with some left over. So, the paper dollar has matched or exceeded the metal just on a different basis. As money, both are worth $1.

    Another comment. The notion that the government had physical silver to back up the paper silver certificates is nonsense. That ended in 1904. After, only a fraction had silver backing and that fraction diminished with time. No “runs on the bank” so to speak carried the rest of the roaring 20’s money explosion. Prior to 1928 the paper note was technically redeemable for “one silver dollar” which meant legally defined coin having 0.774 oz of silver metal. By 1928, the number of paper silver certificates was 40 times the value of silver coins backing them. Starting with the issue of 1928, the wording changed to “$1 in silver” … at market price! You can buy “$1 in silver” with the current fiat FED Reserve note.

    The only common denominator is government lies about everything no matter what the era.


      November 13, 2015 at 6:19 pm

      Sue – thanks for the comments, but I disagree with you on the points you brought up.

      Of course there is a big premium on a super-rare XF large size silver certificate. But for a average condition normal silver certificate the premium is no where near the value would be if they were still redeemable. Case in point, the $10 silver certificate in the picture at the top of this post, I purchased on eBay for $21.75 and it is in pretty good condition (you can get $1 silver certificates for less than 2x there face value very easily). If my $10 silver certificate I purchased for $21.75 was redeemable in silver still, it would be worth $111. So clearly the paper silver certificate has in NO way matched the metal. Not to mention that the big difference is that the silver certificate only has numismatic value above its face value, not intrinsic value, which is a big difference.

      You stated that “the notion that the government had physical silver to back up the paper silver certificates is nonsense”. I 100% disagree and stand by my statement that each silver certificate was backed by physical silver at a rate of 0.7735 troy ounces per $1 face value of silver certificate. It wasn’t necessarily silver dollars backing the certificates, it was silver bullion. The Treasury literally had billions of ounces of silver on hand in the early 1960’s, a big portion of it backing silver certificates.

      You are incorrect that the redeemable “$1 in silver” meant $1 at market price. $1 in silver meant 0.7735 troy ounces of silver, which was the monetary value of silver. If you don’t believe me, look up the New York Times, June 25, 1968, where it clearly states that people were redeeming $1 silver certificates for $1.70 worth of silver. Also, did you see the advertisements in my post that show entrepreneurs were buying silver certificates for $1.30; they did this so they could cash them in since the 0.7735 troy ounces of silver was worth much more than $1.

  3. President John F. Kennedy had already set in motion a plan to reissue the US silver certificate dollar. Printed by the US Treasury and therefore by-passing the private for profit Federal Reserve Banking System.

    The President was attempting to turn the US back to using “honest” money, in which the government would not owe any interest on the national debt. He was also contemplating withdrawing all troops from Vietnam and limiting US involvement and support.

    We all know what happened. He was murdered.

    Shortly after his murder, LBJ ordered the destruction of the millions in US dollar silver certificates, that had already been printed and were held at the US Treasury. We all know what happened from that point on as per Vietnam.

    War and the use of fiat currency is good for business and corporate profits. And they will go to ANY length to protect their ill-gotten gains.


      November 13, 2015 at 6:46 pm

      OutLookingIn – I don’t think Kennedy was trying to set in motion a plan for more silver certificates. Instead, Public Law 88-36 repealed the Silver Purchase Act of 1934 and granted the Federal Reserve the authority to print $1 and $2 Federal Reserve Notes.

      Here is a quote from The Southeast Missourian Newspaper, November 28, 1961, “The silver certificate, a familiar item of currency since 1878, will disappear from circulation if Congreess approves Presdent Kennedy’s new silver policy.”

  4. Faith could be enough to have a working currency as history shows. However printing money out of thin air the way, and in amounts we see these days has to be destructive as time goes by.

    It’s only a matter of time when all dollars get returned to the US, and the average Joe will suffer the most. Elites already have tons of gold. That can happen in a year, two, ten or a hundred – the only guarantee is it’s going to happen one day.

    If I had to own US dollars, I’d choose gold and silver coins minted by the US mint. Current paper dollars are only good for buying real money.

    Of course I’m hoping for the best and preparing for the worst.

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