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What is a Silver Certificate? And What’s One Worth?

$1 Banknote, Payable in Silver
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A silver certificate is a term that has been commonly used to describe a kind of representative piece of paper currency that was issued in the United States between the years of 1878 and 1964.

These types of certificates were conceived to address some of the ramifications of the Fourth Coinage Act, which had the effect of placing the United States on a gold standard and changing the nature of the country’s economy.

A Little More Background

It is worth noting that a complete set of silver certificates can be viewed as part of the National Numismatic Collection at the Smithsonian’s National Museum of American History. The Coinage Act of 1873 intentionally left out language authorizing the coinage of any “standard” silver dollars.

 National Museum of American History main entrance with huge U.S. Flag

National Museum of American History collects, preserves, and displays the heritage of the United States in the areas of social, political, cultural, scientific, and military history.

This effectively ended the bimetallic standard that Alexander Hamilton introduced. Although the Coinage Act of 1873 stopped the production of silver dollars, the 1874 Section 3568 of the Revised Statutes actually removed legal tender status from silver certificates for the payment of debts in paper money of more than five dollars.

By 1875, there were a number of business interests that were highly invested in silver (like Western banks and mining companies), and they wanted to restore the bimetallic standard. The passage of this Act is sometimes called the Crime of ‘73. 

A sharp decline in the value of silver in 1876 allowed the Congressional representatives from Nevada and Colorado to call for even more change. Those states were responsible for over 40% of the world’s silver yield in the 1870s and 1880s, and so they had a lot of political clout.

This power eventually led to the creation of silver certificates. The new silver certificates were at first redeemable for their face value of silver dollar coins and later (for one year, from June 24, 1967 to June 24, 1968) in terms of raw silver bullion.

Since 1968 the certificates have been obsolete because they are fully redeemable only in terms of Federal Reserve Notes. However, they are still considered valid legal tender at their face value and they are still considered an accepted form of currency (much like a dollar bill) by some retailers.

Large-size silver certificates (released from 1878 to 1923) were first issued in denominations from $10 to $1,000 (in 1878 and in 1880) and in 1886 the $1, $2, and $5 notes were authorized. In 1928, all of the bank notes in the United States were re-designed and the size of every note was drastically reduced.

The small-size silver certificates (released from 1928 to 1964) were only regularly issued in denominations of $1, $5, or $10. The first silver certificates were more convenient and less bulky than dollar coins, but they were not accepted for all transactions.

The Bland–Allison Act noted that they were “receivable for customs, taxes, and all public dues”, and could be included in bank reserves, but they were never really considered legal tender for private interactions.

The introduction of low-denomination currency greatly increased the circulation. Over the 12-year lifespan of the Bland–Allison Act, the United States government received around $68 million by slowly absorbing over 60% of the entire scope of silver production in the United States.

Why Did They Start Producing Smaller Certificates?

There are possible advantages to issuing smaller United States banknotes, such as reducing the cost of production and increasing the speed of production. Treasury Secretary Franklin MacVeagh first appointed a committee to investigate these factors in 1913, and then on August 20, 1925, Treasury Secretary Andrew W. Mellon appointed a similar committee.

In May 1927, their recommendations were finally accepted for the size reduction and redesign of the U.S. banknotes. On July 10, 1929 the new smaller banknotes were issued.

In keeping with the verbiage on larger silver certificates, all the smaller Series 1928 certificates stated “This certifies that there has (or have) been deposited in the Treasury of the United States of America X silver dollar(s) payable to the bearer on demand” or “X dollars in silver coin payable to the bearer on demand”. 

The Treasury still had to maintain vast supplies of silver dollars to back and redeem all of the silver certificates in circulation.

This led to the wording on the Series 1934 silver certificates being changed to “This certifies that there is on deposit in the Treasury of the United States of America X dollars in silver payable to the bearer on demand.” 

This changed language allowed the Treasury to stop storing bulky bags of silver dollars in its vaults, and silver certificates could be redeemed with bullion or much lighter silver granules, rather than heavy silver dollars.

Many years after the government discontinued the redemption of silver certificates for silver, large bags of silver dollars were regularly discovered in the vaults of the Treasury. The amount of silver that still remained in the U.S. treasury was almost beyond belief.

As was the custom, the year listed on each silver certificate did not reflect when it was actually printed, but rather it referred to a major design change overall. Under the Silver Purchase Act of 1934, the authority to issue silver certificates was given to the U.S. Secretary of Treasury.

Any further changes, such as when either of the two signatures had to be altered, meant that a letter had to be added below the date. One special exception was the Series 1935G $1 silver certificate, which included notes both with and without the motto “In God We Trust” on the reverse side.

1935 dated one dollar certificates lasted through the letter “H”, but then after that, several new printing processes were used to begin the 1957 series. Sometimes the printing plates were used right up until they wore out, even though newer ones were also producing notes at the same time.

This is why the sequencing of signatures may not always be chronological. This is also why some of the 1935 dated one dollar certificates were actually only issued as late as 1963.

Certain World War II Issues

After the Japanese attack on Pearl Harbor, the Hawaii overprint note was ordered from the Bureau of Engraving and Printing on June 8, 1942. It came in denominations of $1, $5, $10, and $20, but only the $1 was a silver certificate and the others were Federal Reserve Notes.

The word “Hawaii” was written in small solid letters on the obverse and large letters on the reverse. The Treasury seal and serial numbers appeared in brown ink instead of with the usual blue seal, which meant that these notes could be demonetized if necessary.

They then released additional World War II emergency currency in November 1942 for circulation in Europe and Northern Africa. Printed with a bright yellow seal, these notes ($1, $5, and $10) could also be demonetized quickly if the United States ever lost its favorable position in their war campaigns. This changes would rapidly affect the value of a silver certificate.

The Star Notes

A replacement banknote, which is widely known as a star note, is a banknote that has been printed to replace a faulty one. These notes can be used as a way for governments or monetary authorities to know the exact number of printed banknotes existing in current circulation.

When a bill is damaged as a result of the printing process, it is normally replaced by another one (the star replaces a letter at the edge of the note). To keep the amounts issued consistent, these replacement banknotes are normally indicated by a star in the separately sequenced serial number.

For silver certificates, you can find this asterisk at the beginning of the serial number. Also, since no two serial numbers are ever the same, the bill in question can simply be reprinted with another type of symbol in the serial number, which identifies it as a replacement for an error note.

All around the world, currencies include replacement bills with a number of different symbols to mark errors, although the most popular examples are the American “star notes”.

The Gradual Demise of the Silver Certificate

In almost thirty years from the passage of the Silver Purchase Act of 1934, the annual demand for silver bullion rose steadily from about 11 million ounces (1933) to 110 million ounces (1962). The Acts of 1939 and 1946 established the base prices for silver of 71 cents and 90.5 cents (respectively) per ounce. 

For example, Public Law 88-36 was enacted on 4 June 1963 which repealed the Silver Purchase Act of 1934, and the Acts of July 6, 1939 and July 31, 1946, while providing specific instruction regarding the disposition of silver held as reserves against issued certificates and the price at which silver may be sold.

It also amended the Federal Reserve Act to authorize the issue of lower denomination notes (i.e., $1 and $2). This allowed for the gradual swapping out of $1 silver certificates and more silver bullion could be released from the reserves.

In repealing the earlier laws, the authority of the Secretary of the Treasury was also repealed in terms of controlling the issuance of silver certificates. President John F. Kennedy was able to continue the Secretary’s authority.

While retaining their status as legal tender, the silver certificate had effectively been retired from use. In March 1964, Secretary of the Treasury C. Douglas Dillon halted redemption of silver certificates for silver dollar coins; during the following four years, silver certificates were redeemable in uncoined silver “granules”.

All redemption in silver was discontinued on 24 June 1968. While there are some exceptions (particularly for some of the very early issues as well as the experimental bills), most of the smaller one dollar silver certificates, especially non-star or worn bills of the 1935 and 1957 series, are worth little or nothing above their face values.

They can still occasionally be found in circulation.

The Surprising Extra Value of Silver Certificates

With the incredible way that the silver price keeps increasing these days, some of the silver certificates you have seen might actually be more valuable than you think. Silver certificates are often in high demand because of their collectible popularity with numismatists.

US currency evolving over time, large one USD banknote on top of new dollar bills

Since 1968, silver certificates were made redeemable only in Federal Reserve Notes. However, they're still valid legal tender at their face value and thus are still an accepted form of currency.

If you are thinking about taking up the hobby of coin collecting, a simple step-by-step method can often be used to easily identify the most important varieties, dates, and condition of the certificate in question.

Step 1: Recognize the Different Types of Certificates

Silver certificates can sometimes be used to describe any old U.S. banknotes, but what you are looking for is different, rare, or high grade notes of any denomination and type. Any silver certificate from 1957 or 1935 is extremely common.

That is also the case for any combination of letters like 1957B or 1935F. These notes are all worth around $1.50 in circulated condition and about $5 in perfect condition.

Step 2: Look for Dates and Other Distinguishing Features

The silver certificates of 1891, 1896, and 1899 were printed in large numbers. 1891 notes look quite similar to earlier issues.  However, the 1896 and 1899 types are much more distinctive. The 1896 series is commonly known as the educational series.

The 1899 series offers features like a black eagle, mini-porthole, or a chief. All of these special qualities can make the silver certificate a lot more valuable to collectors.

Step 3: Assess the Grading Condition

Most silver certificates can earn a grade on the Sheldon numerical scale, ranging from one to 70, where 70 represents a certificate in perfect mint condition. As with coins, the condition of silver certificates is one of the key factors when it comes to coin collectors and their level of interest.

It is vital to assess the grading condition of your certificate by doing a close inspection.

What Are Some Other Types of Silver Certificates?

In banknotes other than U.S. currency, there are many other common foreign certificates that can be found in many countries around the world. As a budding numismatist, you might want to study these popular varieties so you can add them to your growing collection.

A good example of a foreign certificate would be one from Japan. With a promise that reads “The Nippon Ginko (Bank of Japan) promises to pay the bearer on demand one yen in silver”, the certificate can be valuable at least in terms of curiosity value if not necessarily in a monetary sense. 

Along with a picture of a one yen silver coin, you’ll find that statement on the reverse of that Japanese certificate from 1916. Printed during the rule of Yoshihito (Taisho) and featuring a portrait of Takeu Chi Sukune, those types of one yen banknotes can be bought online on sites like eBay for reasonable prices such as ten dollars each.

All foreign certificates feature similar promises and details in their designs. 

Considering Silver Certificates for Investment Purposes

The precious metal known as silver is really one of the best investments on the market. Much like gold certificates (or gold coins), silver certificates can be quickly exchanged for other goods of practical value and they are very easy to carry around.

If you happen to have any of these early-issued silver certificates, you might decide to keep them as long as you possibly can. The certificate price might be a good hedge against U.S. government policy or a quickly devaluing currency.

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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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