What is a Silver Certificate?

A silver certificate is a version of the U.S. dollar (USD) bills that are no longer printed or circulated in the United States. It is a type of former legal tender in the form of paper currency, which was issued by the U.S. government beginning in 1878.

Today silver certificates can be redeemed for their face value in cash only, not in actual silver.

Key Takeaways

  • A silver certificate is a type of former legal tender in the form of paper currency which was issued by the U.S. government beginning in 1878.
  • Today silver certificates can be redeemed for their face value in cash only, not in actual silver

How a Silver Certificate Works

​​​​​​​The silver certificate got its name because the certificate represented a stated amount of silver bullion purchased or held by an investor. Although the U.S. stopped minting silver coins in 1806, both gold and silver coins were usable as legal tender until 1861. 

Before the release of the silver certificates, the United States was on a bimetallic standard. U.S. residents often accumulated wealth in the form of silver bullion, which they were free to change into coins considered legal tender. Residents could also have coins made from gold in their possession. 

The 1873 Coinage Act abolished the right of individuals to have silver changed into silver coins. Western mining companies and bankers wanted the return of the two metal system. By the late 1880s, there were many Americans who were against a fixed supply of paper currency, fearing the supply of money would run out.

Western interest fanned the flames of public distrust. These critics knew that an unlimited amount of currency in circulation would lead to higher prices, which they saw as a benefit and not as inflationary. Severe depression and deflation in 1863 had drawn the lines between Northeastern industrialists, who favored the limitations of currency, and the Midwestern and Southern farmers who saw the limiting as damaging their ability to charge more for their crops. Proponents argued that higher prices would allow farmers to pay off debts. The primary issue of the debate became over using gold or silver to back the U.S. currency. In the end, the gold backers won the white house and the discussion, and the USD went on the gold standard.

Silver certificates were created to allow an investor to purchase silver without having to take physical possession of the commodity. Certificates were deemed payable to the bearer upon demand. The first releases of the silver certificate notes were a larger size than their subsequent counterparts, which were similar in dimensions to the modern U.S. paper currency in circulation today. The larger certificates had denominations ranging from $1 to $1,000. The smaller-sized certificates were available mainly in lower denominations. Thee certificates featured portraits of notable Americans, including George Washington, Abraham Lincoln, and Ulysses Grant.

In March 1964, the U.S. Treasury Secretary announced that silver certificates would no longer be redeemable for silver dollars, and the government stopped printing these certificates soon after.

Collectible Silver Certificates

Some silver certificates are worth quite a bit more than their face value. The exact value of a specific silver certificate depends on several factors, including its condition and rarity. For many people, the allure of these certificates lies in their collectability and the nostalgic significance they represent.

Silver certificates continue to have strong appeal among both currency collectors and history buffs. These certificates can represent an interesting historical artifact, serving as a sort of time capsule that can transport the holder back to a period when many interesting and important events were happening in the country. It is also a tangible example of the changes occurring in the currency system at that time.