History
The late 19th century was a tumultuous time for America. As the country moved
from an agrarian-based economy into the Industrial Age, it needed currency to
fuel economic growth. The U.S. government found it necessary to increase its
reserves of precious metals. The Treasury offered certificates in exchange for
deposits of gold and silver.
The first Gold Certificates were issued in 1863. In 1933, the
nation was hit not only by a severe economic depression, but also by a banking
crisis. The public began demanding gold. Runs followed on both Federal Reserve
Banks and commercial banks. Soon, only Federal Reserve Banks were allowed to
hold gold. After passage of the Gold Reserve Act of 1933, paper money was no
longer redeemable in gold. In 1934, Federal Reserve Banks were required
to turn over all gold coin, bullion, and certificates to the U.S. Treasury.
For many years, silver certificates--first issued in 1878--were our nation's primary
currency. They were issued in denominations ranging from $1 to $1,000 and
could be exchanged for silver. The last series of silver certificates was
issued in 1957. When the price of silver began rising rapidly in the early
1960s, it became evident that those holding silver coins could profit greatly
from selling them on the open market. This would have resulted in the disappearance
of silver coins, with people hoarding the precious metal, as had happened
during the Civil War. To avoid this crisis, Congress stopped redeeming silver
certificates in 1968 and began exchanging them for Federal Reserve notes
at face value. |
