Gold vs Silver certificates - could they be used interchangeably?

Yes. $10 was $10, be it a GC, SC, fed note, an eagle, 10 Morgans, or 1000 cents. Any bank would give you change or exchange any legal tender items for another if they felt like it, since it was equal.

Remember, it was for $10 in gold or silver coin, meaning face value. Any market price fluctuations were irrelevant. Do you demand more money for your quarter today based upon daily copper or nickel prices, or is it worth 25 cents?

 

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My understanding is that sometime around the 1876-1877 timeframe, faith in US currency was fully restored. Silver and gold coins went back into circulation, and all coins and paper currency traded at par. Silver mining entered its heyday during this time which drove the price of silver below coins’ face value. It didn’t go back above face value until silver coins were phased out in the 1960’s. I’m not sure if prior to the end of the gold standard, the market price of gold ever went above the $20.67 per ounce officially set by the US government. That would have been the only thing to cause gold certificates or coins to be worth more than silver.

 

Duh, wow, okay what is it? Ask the experts at the U.S. Mint, oh forget it, they wouldn't know...

 

No I absolutely agree that it was not affected by market price fluctuations.

I was just curious if back then someone could take in say a $20 silver certificate and ask for the bank to give them a $20 gold Double Eagle.

Both have a $20 face value regardless of metals prices.

It just seems to me like if it didn’t matter if you redeemed it in gold or silver they should’ve just made 1 kind of note and put “redeemable in gold or silver”, instead of making silver certificates AND gold certificates.

 

I think you’re misunderstanding my question.

I was asking if someone in 1876-1877 could take a $20 silver certificate into the bank and ask the bank clerk to redeem it for a $20 gold Double Eagle.

Even though the certificate says “redeemable in silver” due to the fact that a $20 silver certificate has a face value of $20 just like a Double Eagle did.

Or would the bank clerk be like “Sorry mate you’ll need a $20 gold certificate if you want a $20 gold Double Eagle. All I can give you for your $20 silver certificate is 20x silver dollars or 40x silver half dollars or some combination of $20 in silver coins only.”

 

I don’t know for sure but I don’t see interchanging the different coins and bank notes as an obstacle.

 

They did, they were called coin notes I believe.

The reason they were called gold or silver certificates was due to the coins being held in vaults to back them up. The accountants had to have proof if it were a gold certificate that the correct amount of gold coinage was in a vault for the note to legally circulate.

Technically, one could not demand a double eagle holding a silver certificate. If it came down to a demand on the treasury, then a silver certificate would garner you silver coins in return. In practicality, going to a bank to exchange a $20 bill, (ANY $20), was not a formal demand. It was more akin to going to the bank today and asking for four $5 or twenty $1 coins for your $20 bill. Banks, at their discretion, do this for customers all of the time. Same would be true then.

 

It’s hard for @Gam3rBlake to wrap his head around the price of gold being $15 and ounce...

 

Legally the bank would not have been obligated to accommodate that request. Whether they would have in practice is another question. Since all forms of currency traded at par, I don’t think they would have had a reason not to unless they had limited gold in their cash inventory. For people earning a dollar or two per day, there was probably more demand for small change than for gold. Wealthier people would have used bank accounts.

 

I think you're misunderstanding the word "redeem". Only the U.S. Treasury could redeem paper currency for gold or silver (taking that piece of paper currency out of circulation). Banks didn't redeem any currency at all. If you want to trade a $20 bill for a $20 coin, or for a different $20 bill, the bank teller might be willing to help you out, or he might ask you to quit wasting his time...but none of that has anything to do with the legal status of gold, silver, and/or paper currency.

The practical answers to your questions were different at different times. In 1876, gold (and gold certificates) were still at a premium to other forms of currency, so nobody (including the U.S. Treasury!) would give you $20 in gold for $20 in silver, just like nobody today will give you $20 American for $20 Canadian -- they're both "twenty dollars", but they're different kinds of dollars.

After the resumption of specie payments in 1879, the $20 in silver and the $20 in gold were of equal value, so exchanging one for the other was sensible. At that point, it's just a matter of finding a bank teller patient enough to humor your weird preference for gold over silver.

As you hinted at in an earlier post, once gold dollars and silver dollars had traded at equal values for many years, it did start to look silly that some of our paper dollars were labelled "gold certificate" and others "silver certificate" (and still others several other names!); none of the distinctions had any *practical* significance by 1920 or so. But they were embedded in law, so they persisted anyway, long after they had outlived their usefulness. (And then they came back to bite the whole financial system whenever something out of the ordinary happened...see 1933, or 1964.)

At various times, the Treasury made an effort to simplify the currency system by restricting certain denominations to certain types (e.g., all $1's were silver certificates for many years), but they didn't have authority to just discontinue a type; only Congress could do that. As late as the 1990s, the Treasury was still maintaining a vault full of carefully counted red-seal United States Notes, because Congress had yet to change the law requiring them to exist....

 

Not really. It’s just that back then Gold was not $15 an ounce. It was $20.67 an ounce.

 

During some of our lifetimes it was $35.00 an ounce. At least for a short while in the 1970s.

 

Here is a practical way of answering what I believe to be your conundrem. Where ever the legal redemption centers were, be it assays offices or where ever that cashiers cage was located to redeem to the bearer of a certificate of gold or silver. Imagine this. If you redeem a ten dollar silver certificate, out comes the grain scale and a bag of silver. What ever silver closed at the previous day, would detirmine how many grains of silver you were given in exchange for the certificate. An amount in silver equal to the face value of the certificate. At that time, if you were at a bank doing this transaction, you could save the teller some time by declaring you really don't want the silver shavings, so please give me ( fill in the blank here ) 2 five dollar gold pieces. Or 1000 cents. Ten dollars is ten dollars. What you will see changing is how much gold or silver shavings you walk out of the bank or assays office with ...martha

 

I’m just saying I don’t think it’s ever been $15 a troy oz in the history of America.

Even the old $10 Turban Head Gold Eagles are 0.5 troy oz and no more.

 

But is it really that weird of a preference to prefer gold over silver?

If a man saved $1 a week for 5 months he might want that “savings” to be easy to move around such as with a single $20 Double Eagle than it would be to carry around 20x Morgan Dollars.

So even if he took in 20x $1 Silver Certificates to the bank he might want gold.

Gold is a much easier and portable way to store & transport wealth.

 

I was using the mid-1870s price of gold.

 

Paper is even easier, and a bank account is safer. However, there were probably gold bugs back then just like there are now.