Gold vs Silver certificates - could they be used interchangeably?

Hello everyone,

I was recently looking at my old 1934 $10 silver certificate and I’m wondering what the difference was aside from being gold & silver?

Theoretically shouldn’t a $10 gold certificate be worth exactly the same as a $10 silver certificate?

They’re both $10 right?

Does anyone know if it was possible to use them interchangeably?

Like if I was living in 1920s New York and walked into the bank with a $10 silver certificate could I exchange it for a $10 gold eagle?

Or could I exchange a $10 gold certificate for 10x Morgan Dollars?

Or better yet: What if I wanted to trade a $10 silver certificate for a $10 gold certificate? Was this possible?


If anyone could clarify the difference in terms of usage I would appreciate it.

The only thing I can think of is maybe gold had a premium making a $10 gold certificate worth more than $10 in gold bullion value or a silver certificate worth less than $10 in bullion value.

Thanks!

 

Log in or Sign up to hide this ad.

What they were worth at the bank fluctuated as gold or silver does today.

 

Wait, What !?

 

That doesn’t make sense.

They made coins with face values and those coins didn’t fluctuate with silver or gold value.

In 1878 a $1 Morgan Dollar was worth $1.

If you took a $1 silver certificate to the bank they would give you $1 Morgan Dollar regardless of silver value.

A gold Double Eagle was worth $20. If you took a $20 gold certificate into the bank they would give you 1x $20 Double Eagle or some smaller gold coins equal to $20. Like 2x $10 Gold Eagles.

So if you took in gold/silver certificates they would pay you with coins.

 

Gold and silver had fixed values and did not fluctuate.

They would be exchangeable if the bank had what you wanted in exchange and was willing to part with it. There was nothing requiring a bank to pay out a certain type of currency.

However, some contracts specified the type of payment. Gold clauses were enforceable until 1933. You can see this in certain bonds that were required to be paid in gold.

 

Oh yeah I’ve seen that! There were old WW1 Liberty Bonds that required the interest payments to be paid “IN GOLD”.

Apparently somehow the government still managed to get out of that contract and ended up paying in paper which I think is messed up.


So you’re saying the banks could choose?

But if someone had a gold certificate they could still demand gold and not silver right?

 

Hey Steve do you happen to have any knowledge on this?

It’s just something I’m curious about and I can’t really find anything online. Maybe I’m looking in the wrong places online?

 

A person with a gold certificate could demand gold from the US Treasury. Banks were not required to redeem in gold.

 

Payment in gold was fulfilled since our money was backed by gold. Let's say they owed you $100. The interest paid to you could be a $100 bill, and still be "in gold" since you had every right to go to the treasury and demand 5 double eagles in exchange for the $100 bill. In fact, most banks would do this for you if you wanted.

Now, starting in 1933 I could see your argument, since at that point I would agree the US would have abrogated the contract to be paid in gold. However, good luck suing the US government.

 

I do not think so sir. I always read they were simply bills just like US notes or Federal Reserve notes, they simply had banking of specie somewhere to allay the fears of those who were hard money people, and wanted to know there was gold or silver to back it up. They had to start striking silver dollars again only to be able to issue more silver certificates because people liked them.

At least from my readings.

 

As you said: “The interest paid to you could be a $100 bill.”

But how would they decide whether to give someone a $100 Gold Certificate or $100 Silver Certificate?

& If you got say a $100 silver certificate could you go somewhere and say “I want 5 double eagle gold coins”, or would they say “No it’s a silver certificate we will only give you silver coins. Here are 100 Morgan dollars. Have a good day!”

 

Just a bit of legal info:
https://www.law.cornell.edu/uscode/text/31/5119#

 

That was after the gold standard was cancelled though in 1933. Roosevelt wanted everyone to stop hoarding precious metals and to turn in their gold and use cash to stimulate the economy after the Great Depression.

My question was more about pre-1933 when gold & silver certificates were legally required to be redeemed in gold & silver.

 

Thanks to everyone for the history lessons.

 

Maybe if I had paid more attention to the original post I would not have gone off chasing a rabbit;
1. will have to research a bit more about deadline for gold redemption
2.
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.

 

But I’m talking about before that time.

Let’s say 1920. I was asking if someone living back in 1920 could exchange silver certificates for gold or gold certificates for silver.

Because whether it was a $10 gold certificate or a $10 silver certificate..$10 is $10 right?

Again I’m talking about in the 1920s when gold & silver certificates were regularly exchanged for gold & silver coins.

 

That is my understanding. All bills passed at face value. Some were US notes, some Fed Reserve notes, some silver cert. and some gold certs. All were $10 legal tender, just the ultimate backing of them were slightly different. US Notes were backed by full credit of US gov, Fed Reserve notes backed by the Fed, Silver Certs backed by equal face amount of silver coinage, and gold cert backed by equal amount of gold coinage. However, to the average man on the street, they were all $10. Some people cared, some people only wanted gold or silver certs, but in the end they all spent the same.

It was a long time to convince the population they could rely on printed paper. One of the things the government did was to back some of the paper by PM to convert those distrustful of paper and valued PM that they could use "this" paper. After time, everyone simply accepted paper currency and the "need" to back it with PM pretty much disappeared.

 

Do you know if they could be exchanged though?

For example: could someone go into a bank with a $10 silver certificate and ask to exchange it for a $10 gold certificate?

Would a simple bank clerk have the authority to do such a transaction?

If so, was it common?
If not, why not? $10 is $10 right?

Or were there stores that insisted on being paid in either gold or silver? Like that wouldn’t accept silver coins and insisted on gold coins? Or vice versa.

I’m just asking because of market fluctuations in the price of gold & silver. if I was living in those days I would want to convert all my silver coins & silver certificates into gold coins & gold certificates

 

Ten dollars was Ten dollars back then. There was difference in the value of a $10 note depending on whether it was an SC or a GC.

 

So by $10 was $10 it sounds like you’re saying the banks would play any game you wanted regarding giving someone gold or silver as long as the dollar amounts were the same? If someone wanted $10 gold fine. If someone wanted $10 silver fine. As long as they’re handing the bank clerk a $10 certificate of some kind it worked?