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<p>[QUOTE=&quot;Numbers, post: 1891172, member: 11668&quot;]That was later, with the Coin Notes in the 1890s.&nbsp; Those were sort of a weird hybrid of gold and silver certificates--they were redeemable &quot;in coin&quot; but they didn&#039;t specify *which* coin.</p><p>&nbsp;</p><p>The backstory is that the price of silver was falling, and there was political pressure to increase the size of the silver coins in order to maintain their value relative to the gold coins.&nbsp; Rather than doing that, the politicians decided to try to prop up the silver price by having the Treasury buy up lots of silver (and coin most of it into Morgan dollars).&nbsp; When that didn&#039;t keep the silver price from falling too low, the silver miners somehow convinced Congress to create the Coin Notes and order the Treasury to use them to purchase even *more* silver bullion.&nbsp; The idea was that since these notes were redeemable in gold as well as silver, they couldn&#039;t possibly fall in value no matter how low the silver price got.</p><p>&nbsp;</p><p>So the mines would sell their silver to the Treasury for Coin Notes and then redeem them for *gold* coin, turning their silver into gold at a much more favorable ratio than they could get in the market at the time.&nbsp; Basically, the silver miners had so much political power that they got Congress to give them a key to the Treasury.</p><p>&nbsp;</p><p>It took only a few years before the Treasury was in danger of running out of gold as a result of the giveaway.&nbsp; Since international payments at the time were made in gold, running out of gold would have been functionally equivalent to bankruptcy.&nbsp; So the Treasury declared that henceforth the Coin Notes would only be redeemed in *silver* coin.&nbsp; (The new administration in 1893 had a lot to do with this too--Cleveland wasn&#039;t nearly as supportive of the silver miners as Harrison had been.)</p><p>&nbsp;</p><p>That also explains why the Coin Notes weren&#039;t around for long.&nbsp; Once the Treasury quit paying them in gold, they were basically Silver Certificates by another name, and so they were soon discontinued in favor of actual Silver Certificates.</p><p>&nbsp;</p><p>Incidentally, despite the fact that silver coins finally ended up with a metal value less than half their face value by the mid-&#039;90s, both gold and silver continued to circulate pretty much uninterrupted.&nbsp; If you had a silver dollar and you wanted to trade it for a gold dollar, you could do that without too much trouble.&nbsp; By this time, the general populace had pretty much gotten used to the idea that money was worth what the government said it was worth, and didn&#039;t really care whether a silver dollar had a dollar worth of silver in it (for day-to-day payment purposes, anyway--some of them cared about it quite a lot for its political consequences).&nbsp; Such questions only became relevant if you were trying to transact business internationally (where payments in silver were often not acceptable) or to deal in bullion rather than coined money.&nbsp; Later on, in the 1930s and then the 1960s, the government took advantage of the public&#039;s relative unconcern for such matters to get away with quite a bit more than it had in the 1800s.&nbsp; And thus today we have fiat currency and nobody much minds.[/QUOTE]</p><p><br /></p>

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