CERTIFICATES EXCHANGED FOR SILVER IN 1960S

Not everyone reads the “fine print,” but in the mid-1960s, reading and acting on the fine print found on a particular class of U.S. paper money meant big profits for thousands of individuals and businesses.

Intermediate paper money collectors have learned that certain classes of 19th century American notes have different legal redemption clauses. Advanced collectors who also happen to be lawyers may fully understand all of the fine print regarding tariffs and duties. Normal collectors — normal people — do not! And for that matter, don’t care — and never have.

But for less than half a decade, coin and paper money collectors alike were focused on the “fine print” of silver certificates, especially when profits could be made without guilt or great difficulty. It was, perhaps, the most interesting four years since the U.S. government began issuing silver-backed notes in 1878.

The silver certificates of the nineteenth century were made fully redeemable in silver dollars — and with this complete convertibility, the paper money was a perfectly acceptable substitute.

This 1886 Five Dollar Silver Certificate makes the fine print come to life

When the size of American paper currency was reduced (from “large size” to “small size”) in 1929, the federal government technically made silver certificates even more desirable, by making them payable in any silver coins — and again, no one needed to care. Redemption of paper for silver was a moot point, as long as one dollar’s face worth of silver coins contained less than a dollar’s worth of silver metal.

For that matter, the silver certificates circulated alongside Federal Reserve notes and United States notes in the 20th century, and no one cared except collectors interested in even more attractive notes. For most of the public, coins were heavy and annoying. In 1960, when I began collecting coins, I liked silver dollars, but it was because they were historic and heavy!

The price of silver was about 90 cents an ounce (and the coins were made of 90 percent silver and weighed less than an ounce), so convertibility was more a theory than a practice.

Then in 1961, everything began to change — for collectors and for the wider public. In 1961, the price of silver closed above $1 an ounce. The intrinsic value of a silver dollar was still less than $1 (as they do not contain an ounce of pure silver), but the Treasury grew concerned. Industrial and jewelry uses of silver were growing faster than mining, and the consequent production deficit forced prices higher.

Thankfully this funky serial number note was saved for collectors

In November, President John F. Kennedy issued an executive order suspending further sales of government silver, and starting the retirement of $5 and $10 silver certificates. Silver continued its record appreciation, hitting $1.28 on March 13, 1963. By summer, it reached $1.29. Coin dealers smelled blood in the water. Then collectors noticed, too, followed by the public.

The government had to do something. On June 4, 1963, the Silver Purchase Act was repealed, and the issuing of silver certificates ended. Federal Reserve notes would become the currency of America, including a new $1 denomination.

The government agreed to continue to redeem silver certificates with unspecified coins (any silver denomination), and critically, to continue to redeem them for silver dollars when presented at the cash windows of the Treasury Department. For decades, the Treasury had largely unsuccessfully tried to get rid of its silver dollars; its wish was about to come true...

To read the complete article, see:
Collector alchemy: How paper was turned into silver during four years in the 1960s (www.coinworld.com/news/paper-money/2016/10/redeeming-silver-certificates-us-paper-money-notes.html)

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