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Message:: [QUOTE="pennywise, post: 779016, member: 17940"]This article should shed some light on your question...Silver Certificates The series of Silver Certificates is a latecomer to American notes, with authorization under two acts, the first on February 28, 1878 (the Bland-Allison Act, a discussion of which will be found under the pattern dollar coins of George T. Morgan, 1878), and the second on August 4, 1886. The notes themselves were first issued under the authorization of 1886. Under the greatest of all numismatically related boondoggles in the history of American legislation, the Bland-Allison Act called for Uncle Sam to buy millions of ounces of silver each year, to support the badly sagging metal market, and to coin the bullion into silver dollars. Trouble was that there was no need for so many coins in circulation. Unwanted silver dollars piled up in Treasury vaults. Years later (1930) financial historian Neil Carothers wrote of the situation: The North and East would have none of them [the silver dollars]. With the increasing annual coinage, the volume returned to the Treasury in tax payments steadily increased. In 1886 Secretary Manning, anxious to keep them out of the Treasury, devised a clever scheme to transfer their ownership to people even while they remained in Treasury vaults. This was to issue Silver Certificates, then issued in large bills, denominations small enough to insure wide circulation. At Manning's suggestion Congress passed the law of August 4, 1886, providing for the issue of $1 and $2 Silver Certificates. They were merely receipts entitling the owner to claim the dollars lying in the vaults. They were not Legal Tender, but carried with them the ownership of silver dollars that were Legal Tender. The notes were much like the familiar greenbacks and were readily accepted. Despite all good intentions, the government was literally swimming in silver dollars. The 1887 Mint Report included this poignant commentary: [Concerning the overwhelming quantities of dollars on hand] resort is still had to temporary and inefficient expedients for want of vault facilities, to which attention was called in my last two fiscal reports. There are still at the Post Office building 21,750,000 silver dollars in the charge of the superintendent of the Mint, and for which this officer is held responsible. Compartment vaults in which the coin could be sealed up are very much needed at this mint, as well as at the other mints of the United States. Such a provision would avoid the constant re-weighing of the immense amount of coin now stored at these institutions. It would especially do away with the important loss which necessarily results from handling the precious metals in such large quantities on occasions like the annual settlements or changes in fiduciary officers. Coin once weighed and sealed up in compartments would not be disturbed except when needed by some other institution, or by some other branch of the Treasury Department. Experiment has shown that the loss by abrasion in handling $1,000,000 in gold coin [such as that being held as backing for Gold Certificates, Series of 1882] is $5 for every handling, even when the utmost care is exercised, and that the loss is absolute. It is estimated that at the annual settlement and other counts the weighing of the bullion and coin requires no less than eight handlings. The problem continued, until 1918, when the Pittman Act provided for the melting down of over 350,000,000 long-stored dollars. Subsequently, The Numismatist reported this in October 1921: When all those dollars were melted the United States had to call in all the Silver Certificates-the $1, $2, and $5 bills, to speak in common lingo-representing the dollars that were deposited in the vaults of the mints. Under the law of the land the Treasury must hold a silver dollar for each dollar Silver Certificate issued. So with the melting of the silver dollars the Silver Certificates had to be recalled. To cover that loss in currency, the government issued short-term certificates of indebtedness bearing 2% interest. The silver dollars now being coined allow for the issuance of new Silver Certificates which are being used in calling in those certificates of indebtedness. This present commentary is not one about politics, or else we would go into detail concerning the inexplicable (to the present writer) situation of later in 1921, and continuing until 1935, when hundreds of millions more silver dollars were minted, and more Silver Certificates were issued. Years later, in March 1964, the government ran out of silver dollars in storage, this after a run up in the price of silver bullion caused many to be hoarded or melted. Uncle Sam repudiated his obligation, as per usual on many types of currency, and today someone with an old Silver Certificate stating that the government will pay a silver dollar in exchange for it can go whistle.[/QUOTE]

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