Gold certificate

File:US-$10000-GC-1934-Fr.2412.jpg

A $10,000 1934 gold certificate depicting Salmon P. Chase, Smithsonian Institution

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.<ref>Template:Cite web</ref> 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.<ref>Template:Cite web</ref>

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After the gold recall in 1933, gold certificates were withdrawn from circulation.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<ref>Friedberg & Friedberg, pp. 164–173.</ref>

Series	Value	Features/varieties
1865 <ref group="nb">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,<ref>Friedberg & Friedberg, p. 303.</ref> 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. </ref>	$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.<ref name="Friedberg165">Friedberg & Friedberg, 2013, p. 165.</ref> 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.).<ref>Blake, p. 19.</ref> 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.<ref name="Friedberg165"/>
1882	$20, $50 $100, $500 $1,000 $5,000 $10,000	The Act of 12 July 1882 authorized denominations “not less than $20”.<ref>Template:Cite book</ref>
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.<ref>Template:Cite journal</ref> They have all been redeemed.<ref>Friedberg & Friedberg, 2013, pp. 172-173.</ref>
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$20	1st	1865	Fr.1166b	Image pending	Vignettes of eagle with shield	1166b – Colby and Spinner – small red
100$100	1st	1865	Fr.1166c	200px	Vignette of eagle with shield	1166c – Colby and Spinner – small red
500$500	1st	1865	Fr.1166d proof	200px	Vignette of eagle with shield	1166d – Colby and Spinner – small red
1000$1,000	1st	1865	Fr.1166e proof	200px	Vignettes of eagle with shield, and justice with scales.	1166e – Colby and Spinner – small red
5000$5,000	1st	1865	Fr.1166f proof	200px	Vignettes of eagle with shield and female	1166f – Colby and Spinner – small red
10000$10,000	1st	1865	Fr.1166g proof	200px	Vignettes of eagle with shield	1166g – Colby and Spinner – small red
100$100	2nd & 3rd	1870–75	Fr.1166h	200px	Thomas Hart Benton	1166h – xxx and xxx – large red (1870) 1166m – Allison and New – large red (1875)
500$500	2nd & 3rd	1870–75	Fr.1166i	200px	Abraham Lincoln	1166i – Allison and Tuttle – large red (1870) 1166n – Allison and New – large red (1875)
1000$1,000	2nd & 3rd	1870–75	Fr.1166j proof	200px	Alexander Hamilton	1166j – xxx and xxx – large red (1870) 1166o – Allison and New – large red (1875)
5000$5,000	2nd & 3rd	1870–75	Fr.1166k proof	200px	James Madison	1166k – Allison and Gilfillan – large red
10000$10,000	2nd & 3rd	1870–75	Fr.1166l proof	200px	Andrew Jackson	1166l – xxx and xxx – large red (1870) 1166q – Allison and Wyman – large red (1875)
10$10	7th	1907	Fr.1172	200px	Michael Hillegas	Template:Hidden
10$10	9th	1922	Fr.1173	200px	Michael Hillegas	1173 – Speelman and White – Gold 1173a – Speelman and White – Gold, small serial numbers
20$20	4th	1882	Fr.1175a	200px	James Garfield	Template:Hidden
20$20	4th	1882	Fr.1177	200px	James Garfield
20$20	7th	1905	Fr.1180	200px	George Washington	1179 – Lyons and Roberts – small red 1180 – Lyons and Treat – small red
20$20	7th	1906	Fr.1185	200px	George Washington	Template:Hidden
20$20	9th	1922	Fr.1187	200px	George Washington	1187 – Speelman and White – Gold
50$50	4th	1882	Fr.1189a	200px	Silas Wright	Template:Hidden
50$50	4th	1882	Fr.1195	200px	Silas Wright
50$50	9th	1913	Fr.1199	200px	Ulysses S. Grant	1198 – Parker and Burke – Gold 1199 – Teehee and Burke – Gold
50$50	9th	1922	Fr.1200a	200px	Ulysses S. Grant	1200 – Speelman and White – Gold 1200a – Speelman and White – Gold, small serial numbers
100$100	4th	1882	Fr.1202	200px	Thomas Hart Benton	Template:Hidden
100$100	4th	1882	Fr.1207	200px	Thomas Hart Benton
100$100	9th	1922	Fr.1215	200px	Thomas Hart Benton	1215 – Speelman and White – small red
500$500	4th	1882	Fr.1216a	200px	Abraham Lincoln	Template:Hidden
500$500	9th	1922	Fr.1217	200px	Abraham Lincoln	1217 – Speelman and White – small red
1000$1,000	4th	1882	Fr.1218a	200px	Alexander Hamilton	Template:Hidden
1000$1,000	4th	1882	Fr.1218g	200px	Alexander Hamilton
1000$1,000	8th	1907	Fr.1219	200px	Alexander Hamilton	Template:Hidden
1000$1,000	9th	1922	Fr.1220	200px	Alexander Hamilton	1220 – Speelman and White – Gold
5000$5,000	4th	1882	Fr.1221a proof	200px	James Madison	Template:Hidden
5000$5,000	5th	1888	Fr.1222a proof	200px	James Madison	1222 – Rosecrans and Hyatt – large red 1222a – Rosecrans and Nebecker – small red
10000$10,000	4th	1882	Fr.1223a proof	200px	Andrew Jackson	Template:Hidden
10000$10,000	5th	1888	Fr.1224a proof	200px	Andrew Jackson	1224 – Rosecrans and Hyatt – large red 1224a – Rosecrans and Nebecker – small red
10000$10,000	6th	1900<ref group="nb">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.<ref>Friedberg & Friedberg, 2013, p. 173.</ref></ref>	Fr.1225	200px	Andrew Jackson	Template:Hidden

Small

Small-size United States Gold Certificates

Value	Series	Fr.	Image	Portrait	Signature & seal varieties
10$10	19281928	Fr.2400	200px	Alexander Hamilton	2400 – Woods and Mellon – gold 2401 – Woods and Mellon (1928A) – gold.
20$20	19281928	Fr.2402	200px	Andrew Jackson	2402 – Woods and Mellon – gold 2403 – Woods and Mills (1928A) – gold.
50$50	19281928	Fr.2404	200px	Ulysses Grant	2404 – Woods and Mellon – gold
100$100	19281928	Fr.2405	200px	Benjamin Franklin	2405 – Woods and Mellon – gold.
500$500	19281928	Fr.2407	200px	William McKinley	2407 – Woods and Mellon – gold.
1000$1,000	19281928	Fr.2408	200px	Grover Cleveland	2408 – Woods and Mellon – gold.
5000$5,000	19281928	Fr.2410	200px	James Madison	2410 – Woods and Mellon – gold.
10000$10,000	19281928	Fr.2411	200px	Salmon P. Chase	2411 – Woods and Mellon – gold.
100$100	19341934	Fr.2406	200px	Benjamin Franklin	2406 – Julian and Morgenthau – gold.
1000$1,000	19341934	Fr.2409	200px	Grover Cleveland	2409 – Julian and Morgenthau – gold.
10000$10,000	19341934	Fr.2412	200px	Salmon P. Chase	2412 – Julian and Morgenthau – gold.
100000$100,000	19341934	Fr.2413	200px	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".<ref>Template:Cite web</ref> 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,<ref>Template:Cite web</ref> 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.<ref>Template:Cite web</ref> The electronic book entry system also allows for the various regional Federal Reserve Banks to exchange certificate balances among themselves.<ref>Template:Cite web</ref>

As of December 2013 the Federal Reserve reported<ref>Template:Cite web</ref> 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. Woods – Andrew 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. Julian – Henry 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<ref>Template:Cite web</ref> 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

• Silver certificate (United States)
• National gold bank note
• Digital gold currency

References

• Template:Cite book