What Is a Silver Certificate?

Lawrence Stephens
Lawrence Stephens
Man climbing a rope
Man climbing a rope

A silver certificate is a note issued by a government or official reserve department that signifies that the bearer is owed the value of a certain amount of silver, typically either in bullion or coin form. These sorts of certificates have been issued by a number of different countries, but in almost all cases they were the most popular during the height of the time period sometimes known as the “silver boom” in the 1800s when silver was being extensively mined and processed. Initially, the notes served as substitutes for actual silver ownership, and certificates could be exchanged for the silver they represented at any time. This isn’t always true anymore. Certificates don’t usually expire, but in most places the terms have changed, and governments aren’t always obligated to surrender actual silver. In the United States, for instance, bearers can only exchange certificates for Federal Reserve Notes — basically checks issued from the national reserve and trust. The Reserve Notes are usually awarded at the current value of the silver represented on the certificate. In some places the certificates are also considered collectors’ items, and they may be worth more in these circles than on the ordinary exchange market.

Basic Concept

The main idea behind a silver certificate is that the bearer is entitled to the value of the silver represented on the face, but the government gets the actual enjoyment. Governments basically sold the rights to the silver to the general citizenry, but kept the actual silver in a treasury or other facility where it may have been used for other purposes. The certificates typically allowed for redemption at any time, but it was often the case that governments sold more certificates than there was actual silver on the knowledge that more silver would be mined at some point, and also on the assumption that not all bearers would try to redeem their certificates at once.

These certificates often provided a good way for members of the public to own a precious metal, and were also usually a good investment opportunity. In most cases the certificates were sold at the market price of silver as of the date of sale. As the metal appreciated, the certificates became increasingly valuable because they were almost always redeemable for the value of silver at the metal’s current value. Even today, when most certificates aren’t actually redeemable for the precious metal, they are cashed out in reserve notes at silver’s real-time rate — which is almost always more than the bearer initially paid.

Core Characteristics

Silver certificates often take the form of a treasury bond or other official government bank note, but there are typically a number of distinguishing features. In the U.S., the first of these is the small print on the bill itself that states that there is “X” amount in silver at the U.S. Treasury to be paid to the owner of the certificate. The "X" amount would be the face value of the certificate.

Also of note on U.S. certificates is that the serial number, number value, and seal initially were printed in blue, brown and red. This color variety was changed in 1899 to just blue, with the exception of the 1935a series of certificates that were printed during World War II. During this time, certificates sent to Hawaii had brown seals and those sent to North Africa had yellow seals. These printing differences were intended to prevent losses that could occur if enemies managed to acquire the Hawaiian or North African territories during the war — and, in this case, the U.S. government could easily cancel those two color schemes, thereby making the money worthless to the enemy.

Decline and Discontinuation

Most countries that issued silver certificates have since discontinued them. In the United States, certificates were considered active currency between 1878 and 1964. During the 1940s and 1950s, the number in circulation began to decline. As the certificates were redeemed for silver coins or bullion, they were shredded and not reprinted unless there was enough silver in the treasury to back them. By the 1960s, the silver used to make the coins was worth more than the coins’ face value and the exchange stopped making financial sense for the government.

In 1964, the US government discontinued the exchange of issued certificates for silver coins, but redemption for bullion continued for another four years. On June 24, 1968, the government ended the silver exchange completely and certificate bearers could only exchange the documents for Federal Reserve Notes. In the 1970s, most of the remaining silver dollars in the U.S. treasury were sold to the public at collector values.

As a Collector’s Item

Many of the remaining certificates in circulation are only worth face value and are spent in the same way as the modern Federal Reserve Notes. Some, however, depending on age, condition, and face value, are sought after in collectors’ markets, and can sometimes bring a price far greater than their face value.

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