Gold certificate

A gold certificate in general is a certificate of ownership that gold owners hold instead of storing the actual gold. It has both a historic meaning as a U.S. paper currency (1863–1933) and a current meaning as a way to invest in gold.

Banks may issue gold certificates for gold that is allocated (non-fungible) or unallocated (fungible or pooled). Unallocated gold certificates are a form of fractional-reserve banking and do not guarantee an equal exchange for metal in the event of a run on the issuing bank's gold on deposit.[1] Allocated gold certificates should be correlated with specific numbered bars, although it is difficult to determine whether a bank is improperly allocating a single bar to more than one party.[2]

US-$10000-GC-1934-Fr.2412
A $10,000 1934 gold certificate depicting Salmon P. Chase. Image courtesy of the Smithsonian Institution.

Historic U.S. gold certificates (1863–1933)

The gold certificate was used from 1863 to 1933 (although there is the rare 1934 issue) in the United States as a form of paper currency. Each certificate gave its holder title to a corresponding amount of gold coin at the statutory rate of $20.67 per troy ounce established by the Coinage Act of 1834. Therefore, this type of paper currency was intended to represent actual gold coinage. In 1933 the practice of redeeming these notes for gold coins was ended by the U.S. government and until 1964 it was actually illegal to possess these notes. (In 1964 these restrictions were lifted, primarily to allow collectors to own examples legally; however the issue technically converted to standard legal tender with no connection to gold.)

After the gold recall in 1933, gold certificates were withdrawn from circulation. As noted above, it was illegal to own them. That fact, and public fear that the notes would be devalued and made obsolete, resulted in the majority of circulating notes being retired. In general, the notes are scarce and valuable, especially examples in "new" condition.

The early history of United States gold certificates is somewhat hazy. They were authorized under the Act of 3 March 1863, but unlike the United States Notes also authorized, they apparently were not printed until 1865. They did not have a series date, and were hand-dated upon issue. "Issue" meant that the government took in the equivalent value in gold, and the first several series of gold certificates promised to pay the amount only to the depositor, who was explicitly identified on the certificate itself. The first issue featured a vignette of an eagle uniformly across all denominations. Several later issues (series 1870, 1871, and 1875) featured various portraits of historical figures. The reverse sides were either blank or featured abstract designs. The only exception was the $20 of 1865, which had a picture of a $20 gold coin.

From 1862 to 1879, United States Notes were legal tender and the dominant paper currency but were not convertible at face value into gold and traded at a discount. However some transactions, such as customs duties and interest on the federal debt, were required to be made in gold. Thus the early gold certificates were acceptable in some transactions where United States Notes were not, but were not used in general circulation due to their premium value. After 1879, the government was willing to redeem United States Notes at face value in gold, bringing the United States Notes into parity with gold certificates, making the latter also a candidate for general circulation.

The Series of 1882 was the first series that was payable to the bearer; it was transferable and anyone could redeem it for the equivalent in gold. This was the case with all gold certificate series from that point on, with the exception of 1888, 1900, and 1934. The series of 1888 and 1900 were issued to specific depositors, as before. The series of 1882 had the same portraits as the series of 1875, but a different back design, featuring a series of eagles, as well as complex border work.

Gold certificates, along with all other U.S. currency, were made in two sizes—a larger size from 1865 to 1928, and a smaller size from 1928 to 1934. The backs of all large-sized notes and also the small-sized notes of the Series of 1934 were orange, resulting in the nickname "goldbacks". The backs of the Series of 1928 bills were green, and identical to the corresponding denomination of the more familiar Federal Reserve Notes, including the usual buildings on the $10 through $100 designs and the less-known abstract designs of denominations $500 and up. With the 1934 issue, the promise to pay was amended with the phrase "as authorized by law", as redemption was now restricted to only certain entities. The phrase "in gold coin" was changed to "in gold" as the physical amount of gold represented would vary with changes in the government price. Both large and small size gold certificates feature a gold treasury seal on the obverse, just as U.S. Notes feature a red seal, silver certificates (except World War II Hawaii and North Africa notes) a blue seal, and Federal Reserve Notes a green seal.

Another interesting note is the Series of 1900. Along with the $5,000 and $10,000 of the Series of 1888, all 1900 bills ($10,000 denomination only) have been redeemed, and no longer have legal tender status. Most were destroyed, with the exception of a number of 1900 $10,000 bills that were in a box in a post office near the U.S. Treasury in Washington, D.C. There was a fire on 13 December 1935, and employees threw burning boxes out into the street. The box of canceled high-denomination currency burst open. Much to everyone's dismay, they were worthless. There are several hundred outstanding, and their ownership is technically illegal, as they are stolen property. However, due to their lack of intrinsic value, the government has not prosecuted any owners, citing more important concerns. They carry a collector value in the numismatic market and, as noted in Bowers and Sundermans' The 100 Greatest American Currency Notes, the only United States notes that can be purchased for less than their face value. This is the only example of "circulating" U.S. currency that is not an obligation of the government, and thus not redeemable by a Federal Reserve Bank. The note bears the portrait of Andrew Jackson and has no printed design on its reverse side.

Issue

Series and varieties

Series and varieties of large-size gold certificates[3]
Series Value Features/varieties
1865

[nb 1]

$20, $100
$500, $1,000
$5,000
$10,000
Notes from this first issue are extremely rare in lower ($20 and $100) denominations. A single $1,000 and $5,000 are reported to exist in a government collection, and an issued $500 or $10,000 has never been seen.[5] In addition to the two engraved signatures customary on United States banknotes (the Register of the Treasury and Treasurer of the United States), the earlier issues of Gold certificates (i.e., 1865, 1870, 1875, and some 1882) included a third signature of one of the Assistant Treasurers of the United States (in New York or Washington, D.C.).[6] Known as a countersigned or triple-signature note, this feature existed for all Series prior to 1882 (and the first printing of the Series 1882).
1870–75 $100, $500
$1,000
$5,000
$10,000
Series 1870 notes introduced portraits to gold certificates. Both Series of 1870 and Series of 1875 are countersigned notes. Between the two series, the $100 is extremely rare, the $500, $1,000, and $10,000 are unique (in government collections), and the $5,000 is unknown.[5]
1882 $20, $50
$100, $500
$1,000
$5,000
$10,000
The Act of 12 July 1882 authorized denominations “not less than $20”.[7]
1888 $5,000
$10,000
Series 1888 notes were intended for bank use to balance accounts without having to transport large volumes of gold bullion or currency.[8] They have all been redeemed.[9]
1900 $10,000 Canceled -- Not legal tender. Several hundred notes exist and examples occasionally appear for sale. See above.
1905 $20
1906 $20
1907 $10
$1,000
1913 $50
1922 $10, $20
$50, $100
$500, $1,000

Complete United States Gold Certificate type set

Large

Large-size United States Gold Certificates
Value Issue Series Fr. Image Portrait Signature & seal varieties
$20 1st 1865 Fr.1166b Image pending Vignettes of eagle with shield 1166b – Colby and Spinner – small red
$100 1st 1865 Fr.1166c US-$100-GC-1863-FR-1166c Vignette of eagle with shield 1166c – Colby and Spinner – small red
$500 1st 1865 Fr.1166d
proof
US-$500-GC-1863-Fr-1166d (PROOF) Vignette of eagle with shield 1166d – Colby and Spinner – small red
$1,000 1st 1865 Fr.1166e
proof
US-$1000-GC-1863-Fr-1166e (PROOF) Vignettes of eagle with shield, and justice with scales. 1166e – Colby and Spinner – small red
$5,000 1st 1865 Fr.1166f
proof
US-$5000-GC-1863-Fr-1166f (PROOF) Vignettes of eagle with shield and female 1166f – Colby and Spinner – small red
$10,000 1st 1865 Fr.1166g
proof
US-$10000-GC-1863-Fr-1166g (PROOF) Vignettes of eagle with shield 1166g – Colby and Spinner – small red
$100 2nd & 3rd 1870–75 Fr.1166h US-$100-GC-1875-Fr-1166m Thomas Hart Benton 1166h – xxx and xxx – large red (1870)
1166m – Allison and New – large red (1875)
$500 2nd & 3rd 1870–75 Fr.1166i US-$500-GC-1870-Fr-1166i Abraham Lincoln 1166i – Allison and Tuttle – large red (1870)
1166n – Allison and New – large red (1875)
$1,000 2nd & 3rd 1870–75 Fr.1166j
proof
US-$1000-GC-1875-Fr-1166o PROOF Alexander Hamilton 1166j – xxx and xxx – large red (1870)
1166o – Allison and New – large red (1875)
$5,000 2nd & 3rd 1870–75 Fr.1166k
proof
US-$5000-GC-1870-Fr-1166k PROOF James Madison 1166k – Allison and Gilfillan – large red
$10,000 2nd & 3rd 1870–75 Fr.1166l
proof
US-$10000-GC-1875-Fr-1166q PROOF Andrew Jackson 1166l – xxx and xxx – large red (1870)
1166q – Allison and Wyman – large red (1875)
$10 7th 1907 Fr.1172 US-$10-GC-1907-Fr-1172 Michael Hillegas
1167 – 1172

1167 – Vernon and Treat – Gold
1168 – Vernon and McClung – Gold
1169 – Napier and McClung – Gold, Act of 1882
1169a – Napier and McClung – Gold, Act of 1907
1170 – Napier and Thompson – Gold, Act of 1882
1170a – Napier and Thompson – Gold, Act of 1907
1171 – Parker and Burke – Gold

1172 – Teehee and Burke – Gold
$10 9th 1922 Fr.1173 US-$10-GC-1922-Fr-1173 Michael Hillegas 1173 – Speelman and White – Gold

1173a – Speelman and White – Gold, small serial numbers

$20 4th 1882 Fr.1175a US-$20-GC-1882-Fr-1175a James Garfield
1174 – 1178

1174 – Bruce and Gilfillan – brown
1175* – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1175a – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1176 – Bruce and Wyman – brown
1177 – Rosecrans and Huston – large brown

1178 – Lyons and Roberts – small red
$20 4th 1882 Fr.1177 US-$20-GC-1882-Fr-1177 James Garfield
$20 7th 1905 Fr.1180 US-$20-GC-1905-Fr-1180 George Washington 1179 – Lyons and Roberts – small red

1180 – Lyons and Treat – small red

$20 7th 1906 Fr.1185 US-$20-GC-1906-Fr-1185 George Washington
1181 – 1186

1181 – Vernon and Treat – Gold
1182 – Vernon and McClung – Gold
1183 – Napier and McClung – Gold
1184 – Napier and Thompson – Gold
1185 – Parker and Burke – Gold

1186 – Teehee and Burke – Gold
$20 9th 1922 Fr.1187 US-$20-GC-1922-Fr-1187 George Washington 1187 – Speelman and White – Gold
$50 4th 1882 Fr.1189a US-$50-GC-1882-Fr-1189a Silas Wright
1188 – 1197

1188 – Bruce and Gilfillan – brown
1189* – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1189a – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1190 – Bruce and Wyman – brown
1191 – Rosecrans and Hyatt – large red
1192 – Rosecrans and Huston – large brown
1192a – Rosecrans and Huston – small red
1193 – Lyons and Roberts – small red
1194 – Lyons and Treat – small red
1195 – Vernon and Treat – small red
1196 – Vernon and McClung – small red

1197 – Napier and McClung – small red
$50 4th 1882 Fr.1195 US-$50-GC-1882-Fr-1195 Silas Wright
$50 9th 1913 Fr.1199 US-$50-GC-1913-Fr-1199 Ulysses S. Grant 1198 – Parker and Burke – Gold

1199 – Teehee and Burke – Gold

$50 9th 1922 Fr.1200a US-$50-GC-1922-Fr-1200a Ulysses S. Grant 1200 – Speelman and White – Gold

1200a – Speelman and White – Gold, small serial numbers

$100 4th 1882 Fr.1202 US-$100-GC-1882-Fr-1202 Thomas Hart Benton
1201 – 1214

1201 – Bruce and Gilfillan – brown
1202* – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1202a – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1203 – Bruce and Wyman – brown
1204 – Rosecrans and Hyatt – large red
1205 – Rosecrans and Huston – large brown
1206 – Lyons and Roberts – small red
1207 – Lyons and Treat – small red
1208 – Vernon and Treat – small red
1209 – Vernon and McClung – small red
1210 – Napier and McClung – small red
1211 – Napier and Thompson – small red
1212 – Napier and Burke – small red
1213 – Parker and Burke – small red

1214 – Teehee and Burke – small red
$100 4th 1882 Fr.1207 US-$100-GC-1882-Fr.1207 Thomas Hart Benton
$100 9th 1922 Fr.1215 US-$100-GC-1922-Fr-1215 Thomas Hart Benton 1215 – Speelman and White – small red
$500 4th 1882 Fr.1216a US-$500-GC-1882-Fr-1216a Abraham Lincoln
1215a – 1216b

1215a – Bruce and Gilfillan – brown
1215b – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1215c – Bruce and Wyman – brown
1215d – Rosecrans and Hyatt – large red
1216 – Lyons and Roberts – small red
1216a – Parker and Burke – small red

1216b – Teehee and Burke – small red
$500 9th 1922 Fr.1217 US-$500-GC-1922-Fr.1217 Abraham Lincoln 1217 – Speelman and White – small red
$1,000 4th 1882 Fr.1218a US-$1000-GC-1882-Fr-1218a Alexander Hamilton
1218 – 1218g

1218 – Bruce and Gilfillan –brown
1218a* – Bruce and Gilfillan –brown, CS by Thomas C. Acton
1218b – Bruce and Wyman – brown
1218c – Rosecrans and Hyatt –large red
1218d – Rosecrans and Huston – large brown
1218e – Rosecrans and Nebecker – small red
1218f – Lyons and Roberts – small red

1218g – Lyons and Treat – small red
$1,000 4th 1882 Fr.1218g US-$1000-GC-1882-Fr.1218g Alexander Hamilton
$1,000 8th 1907 Fr.1219 US-$1000-GC-1907-Fr-1219 Alexander Hamilton
1219 – 1219e

1219 – Vernon and Treat – Gold
1219a – Vernon and McClung – Gold
1219b – Napier and McClung – Gold
1219c – Napier and Burke – Gold
1219d – Parker and Burke – Gold

1219e – Teehee and Burke – Gold
$1,000 9th 1922 Fr.1220 US-$1000-GC-1922-FR-1220 Alexander Hamilton 1220 – Speelman and White – Gold
$5,000 4th 1882 Fr.1221a
proof
US-$5000-GC-1882-Fr-1221a James Madison
1221 – 1221j

1221 – Bruce and Gilfillan – brown
1221a* – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1221b – Bruce and Wyman – brown
1221c – Rosecrans and Hyatt – large red
1221d – Rosecrans and Nebecker – small red
1221e – Lyons and Roberts – small red
1221f – Vernon and Treat – small red
1221g – Vernon and McClung – small red
1221h – Napier and McClung – small red
1221i – Parker and Burke – small red

1221j – Teehee and Burke – small red
$5,000 5th 1888 Fr.1222a
proof
US-$5000-GC-1888-Fr-1222a (PROOF) James Madison 1222 – Rosecrans and Hyatt – large red

1222a – Rosecrans and Nebecker – small red

$10,000 4th 1882 Fr.1223a
proof
US-$10000-GC-1882-Fr-1223a Andrew Jackson
1223 – 1223g

1223 – Bruce and Gilfillan – brown
1223a – Bruce and Gilfillan – brown, CS by Thomas C. Acton
1223b – Bruce and Wyman – brown
1223c – Rosecrans and Hyatt – large red
1223d – Rosecrans and Nebecker – small red
1223e – Lyons and Roberts – small red
1223f – Vernon and Treat – small red

1223g – Teehee and Burke – small red
$10,000 5th 1888 Fr.1224a
proof
US-$10000-GC-1888-Fr-1224a (PROOF) Andrew Jackson 1224 – Rosecrans and Hyatt – large red

1224a – Rosecrans and Nebecker – small red

$10,000 6th 1900[nb 2] Fr.1225 US-$10000-GC-1900-Fr.1225 Andrew Jackson
1225a – 1225h

1225a – Lyons and Roberts – small red
1225b – Lyons and Treat – small red
1225c – Vernon and Treat – small red
1225d – Vernon and McClung – small red
1225e – Napier and McClung – small red
1225f – Napier and Burke – small red
1225g – Parker and Burke – small red

1225h – Teehee and Burke – small red

Small

Small-size United States Gold Certificates
Value Series Fr. Image Portrait Signature & seal varieties
$10 1928 Fr.2400 US-$10-GC-1928-Fr-2400 Alexander Hamilton 2400 – Woods and Mellon – gold

2401 – Woods and Mellon (1928A) – gold.

$20 1928 Fr.2402 US-$20-GC-1928-Fr-2402 Andrew Jackson 2402 – Woods and Mellon – gold

2403 – Woods and Mills (1928A) – gold.

$50 1928 Fr.2404 US-$50-GC-1928-Fr-2404 Ulysses Grant 2404 – Woods and Mellon – gold
$100 1928 Fr.2405 US-$100-GC-1928-Fr-2405 Benjamin Franklin 2405 – Woods and Mellon – gold.
$500 1928 Fr.2407 US-$500-GC-1928-Fr-2407 William McKinley 2407 – Woods and Mellon – gold.
$1,000 1928 Fr.2408 US-$1000-GC-1928-Fr-2408 Grover Cleveland 2408 – Woods and Mellon – gold.
$5,000 1928 Fr.2410 US-$5000-GC-1928-Fr-2410 James Madison 2410 – Woods and Mellon – gold.
$10,000 1928 Fr.2411 US-$10000-GC-1928-Fr-2411 Salmon P. Chase 2411 – Woods and Mellon – gold.
$100 1934 Fr.2406 US-$100-GC-1934-Fr-2406 Benjamin Franklin 2406 – Julian and Morgenthau – gold.
$1,000 1934 Fr.2409 US-$1000-GC-1934-Fr-2409 Grover Cleveland 2409 – Julian and Morgenthau – gold.
$10,000 1934 Fr.2412 US-$10000-GC-1934-Fr-2412 Salmon P. Chase 2412 – Julian and Morgenthau – gold.
$100,0000 1934 Fr.2413 US-$100000-GC-1934-Fr-2413 Woodrow Wilson 2413 – Julian and Morgenthau – gold.

Modern usage by the Federal Reserve System

Since the time of the gold recall legislation the United States Treasury has issued gold certificates to the Federal Reserve Banks. The Secretary of the Treasury is authorized to "prescribe the form and denominations of the certificates".[11] Originally, this was the purpose of the Series of 1934 Certificates which were issued only to the banks and never to the public. However, since the 1960s most of the paper certificates have been destroyed,[12] and the currently prescribed form of the "certificates" issued to the Federal Reserve is an electronic book entry account between the Federal Reserve and the Treasury.[13] The electronic book entry system also allows for the various regional Federal Reserve Banks to exchange certificate balances among themselves.[14]

As of December 2013 the Federal Reserve reported[15] holding $11.037 billion face value of these certificates. The Treasury backs these certificates by holding an equivalent amount of gold at the statutory exchange rate of $42 2/9 per troy ounce of gold, though the Federal Reserve does not have the right to exchange the certificates for gold. As the certificates are denominated in dollars rather than in a set weight of gold, any change in the statutory exchange rate towards the (much higher) market rate would result in a windfall accounting gain for the Treasury.

Series catalogue

This is a chart of some of the series of gold certificates printed. Each entry includes: series year, general description, and printing figures if available.

Small-size gold certificates

Small-size gold certificates
Series Denominations Signatures Printing Figure
1928 $10 W. O. WoodsAndrew W. Mellon 33,356,000
1928 $20 W. O. Woods – Andrew W. Mellon 67,704,000
1928 $50 W. O. Woods – Andrew W. Mellon 5,520,000
1928 $100 W. O. Woods – Andrew W. Mellon 3,240,000
1928A $100 W. O. Woods – Ogden L. Mills 120,000*
1934 $100 W. A. JulianHenry Morgenthau, Jr. 120,000*
1928 $500 W. O. Woods – Andrew W. Mellon 420,000
1928 $1,000 W. O. Woods – Andrew W. Mellon 288,000
1934 $1,000 W. A. Julian – Henry Morgenthau, Jr. 84,000*
1928 $5,000 W. O. Woods – Andrew W. Mellon 24,000
1928 $10,000 W. O. Woods – Andrew W. Mellon 48,000
1934 $10,000 W. A. Julian – Henry Morgenthau, Jr. 36,000*
1934 $100,000 W. A. Julian – Henry Morgenthau, Jr. 42,000*
  • Notes: All Series 1928A gold certificates were consigned to destruction and never released; none[16] are known to exist. All Series 1934 gold certificates were issued only to banks and were not available to the public. The Series 1934 gold certificates are also distinguished from the previous gold certificates in their gold clause, which adds the phrase "as authorized by law" to denote that these notes cannot be legally held by private individuals, and by their distinctive orange reverses. Only a few museum specimens of these Series 1934 gold certificates survive today. The $100,000 note is the largest denomination currency ever issued by the United States.

See also

Footnotes

  1. ^ Notes issued under a given Series (e.g., Series 1882, Series 1907) are, in some cases, released over a period of years, as reflected in the Friedberg number signature and seal varieties. For example, based on dates of the signature combinations,[4] the Series 1907 $10 gold certificate was first issued with the signature combination of Vernon and Treat (in office together from 1906 to 1909) and last issued with the Teehee and Burke signatures (in office together from 1915 to 1919). Therefore, a Series 1907 note could have been issued as late as 1919.
  2. ^ There was a massive fire in a new Post Office building at the corner of 12th and Pennsylvania, in Washington D.C., on Friday, December 13, 1935. At the time, part of the 6th floor was being used for Treasury Department storage. Fire Fighters threw many boxes of documents out of the windows and into the streets below. One such box contained almost every surviving piece of the series 1900 Gold Certificates. Passersby quickly grabbed them up off the street, although all of the notes had been previously redeemed and canceled. Treasury records indicate that there are no outstanding redeemable notes of this series.[10]

Notes

  1. ^ "Gold Certificate". BullionVault.
  2. ^ "Interview: Harvey Organ, Lenny Organ, Adrian Douglas". King World News. 7 April 2010. Archived from the original on 1 July 2010.
  3. ^ Friedberg & Friedberg, pp. 164–173.
  4. ^ Friedberg & Friedberg, p. 303.
  5. ^ a b Friedberg & Friedberg, 2013, p. 165.
  6. ^ Blake, p. 19.
  7. ^ Waldron, George B. (1896). A Handbook on Currency and Wealth: With Numerous Table and Diagrams. Funk & Wagnallis Company. p. 20. Retrieved 6 July 2014.
  8. ^ The Bankers’ Magazine. 43. 1888. p. 813. Missing or empty |title= (help); |access-date= requires |url= (help)
  9. ^ Friedberg & Friedberg, 2013, pp. 172-173.
  10. ^ Friedberg & Friedberg, 2013, p. 173.
  11. ^ "Chapter 31, United States Code". Retrieved 31 March 2013.
  12. ^ "CUSTODY OF GOLD CERTIFICATES, SERIES OF 1934, as specified by the United States Treasury,". Retrieved 22 February 2014.
  13. ^ "ISSUE AND REDEMPTION OF GOLD CERTIFICATES, as specified by the United States Treasury,". Retrieved 21 February 2014.
  14. ^ "GOLD CERTIFICATE ACCOUNT, as Specified by Federal Reserve System,". Retrieved 21 February 2014.
  15. ^ "Federal Reserve H.4.1 Release". Retrieved 28 December 2013.
  16. ^ "USPaperMoney.Info". Retrieved 9 December 2011.

References

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