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Certificates worth more than gold

Under terms of the Resumption Act, Jan. 1, 1879, was to be an historic day. For the first time since the beginning of the Civil War, Americans were told that gold and silver coins were trading at parity with paper money and the U.S. Treasury would issue the full value of the note in gold or silver coins. All you had to do was present your paper money and ask for coins.

How unlike the dark days of 1863 just before the Battle of Gettysburg when it took $250 in federal paper money to buy $100 in gold coins.

As in other cases when people are told they can have all they want of a previously difficult to obtain commodity, the public decided they did not like bulky coins all that much and since the paper was at long last equal in value to gold and silver coins, they would opt to hold and use federal paper money.

Large quantities of coins were returned to the banking system as a result and mintages of many coin denominations plummeted for roughly a decade.

The irony, of course, is that after the inflationary binge that financed the Civil War, the opposite problem occurred: the price of silver started to fall dramatically as ever increasing supplies from the Comstock Lode defied all attempts by the government to buy it up and strike silver dollars out of it.

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The government in 1879 was actually trying to get its finances in order and to make all of its obligations as good as gold, though this would not become law until the gold standard was formally adopted in 1900.

Gold Certificates were one of many forms federal paper money of the times took. These were notes that were supposed to have 100 percent gold backing.

The idea for Gold Certificates was a natural one. The Civil War had seen the use of gold and silver coins virtually disappear in most of the country. With the suspension of official specie payments it was uncertain when coins would return in any numbers. The North became a paper economy as did the South, but that did not mean the idea of a gold dollar disappeared. Instead, parallel accounts were often used quoting values of goods in paper and gold.

Also, anything that was purchased abroad had to be paid for in gold and the country’s merchants needed always to be aware of that.

Federal bank notes were a wartime necessity, extending down the denominational ladder at one point to as low as three cents.

People were uncertain based on past experiences with wildcat banks and the lore about the Revolutionary Continental Currency. But to live day to day, there were few if any other choices to using paper. Gaining the people’s confidence in bank notes was a major long-term challenge, but in light of the ebb and flow of news from the battlefields, there was also a strong short-term need to pay certain bills with gold.

It did not take long to put together a concept for bank notes backed by gold. The first authorization by Congress would come on March 3, 1863, adding Gold Certificates to the notes already approved. That was early as the outcome of the Civil War was still clearly in doubt and no one could even imagine how soon the conflict could be resolved. Despite the concerns, Gold Certificates were nearly an instant success.

It took until 1865 for the wishes of the act regarding Gold Certificates to become reality. The first three issues were issued 1865-1875 and were of upper denominations starting at $20 and including $100, $500, $1,000, $5,000 and $10,000. Realistically the notes were not expected to circulate with a face design using an eagle and shield while the backs were a bright orange giving them a distinctive appearance.

The second and third issues changed dramatically from the first in that they were uniface and carried portraits instead of the eagle and shield. The $100 featured Thomas Hart Benton, the distinguished senator from Missouri and well known hard money advocate. The $500 featured Abraham Lincoln while Alexander Hamilton was on the $1,000 with James Madison on the $5,000 and Andrew Jackson on the $10,000.

The problem with the first three issues of Gold Certificates is that almost none exists today. At present there is a small number known of all the issues combined as well as a few proofs and canceled notes. It is frustrating for collectors. The one known Series 1863 $20 for example is actually a nice note grading AU, making it close to a miracle note, although it did have small but well done restorations at the outer edge of the margins.

The first three issues are historic and rare, but the average or even wealthy collector with limited patience must really move on to the more available issues starting with the Series 1882 and running through the Series 1922. These issues are actually available, interesting and in some cases surprisingly inexpensive.

These notes were larger than current paper money, measuring 7 inches by 3 inches. Not surprisingly, after small-sze paper money was introduced in 1929, these older notes were called large-size notes in collector shorthand.

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What must be remembered with large-size Gold Certificates is that their face values starting at $10 represented a large investment at the time. There was very little if any collecting of $10 and $20 gold coins at the time and even less of bank notes and those were the two lowest denominations of Gold Certificates.
There was an additional factor and that was survival as even if a note was saved originally, it still had to survive and the temptation to spend it would have been high at certain times, such as when an owner was injured, or lost his job or fell into some other hard times. Then there are the kids, who would likely be eager to spend Dad’s stash of paper money when they inherited it.

In addition, there was the Gold Recall Order of 1933 and it called in all Gold Certificates, including large-size. The federal government was intent on not honoring its obligations in gold and what better way to do that than to recall the paper promises to pay in gold?

We know that some did not turn in their notes as they are the collectible supply today, but it was not legal to own these notes again until the Kennedy administration.

The confusion in 1933 was such that holding Gold Certificates would have seemed to some like taking a gamble that you could not spend the note in an emergency and that in the worst case scenario the government might actually seize it and prosecute you for breaking the law, leaving you with nothing except a criminal record. At the height of the Great Depression this was a very serious risk.

Amazingly despite all the challenges, a number of Gold Certificates did survive. The large-size $10 as the lowest denomination would be expected to be the most available, although it was only produced for the Series 1907 and 1922. Both featured a face design of Michael Hillegas, the first Treasurer of the United States. There were seven different signature combinations on large-size $10 and the Series 1922 comes with large or small serial numbers while the Series 1907 had only small serial numbers.

Some Series 1907 notes are inscribed “Act of 1882” on their faces while others are inscribed “Act of 1907,” reflecting a change in authorizing authority that otherwise might go unnoticed because the Series 1907 date did not change.

Paper money dating is peculiar and often requires collectors to refer to tables showing when the terms of office of the Treasurer of the United States and the Register of the Treasury were. The signers of the last Series 1907 signature combination were in office together until November 1919.

If you want a type example today a Series 1907 $10 Gold Certificate is slightly less expensive at about $100 in fine while the Series 1922 would be a little more at $140. In Choice Uncirculated 63 both are much tougher at about $1,050 and $1,000, respectively. When you consider their history, or the current cost of a $10 gold piece, the prices are excellent.

The $20 Gold Certificate is more diverse having been issued in the Series 1882, 1905, 1906 and 1922. The Series 1882 featured the recently assassinated President James A. Garfield on the face. With a Lyons-Roberts signature combination and a small red seal a Series 1882 is available at prices around $575 in fine and going to $6,750 in CH CU 63.

Notes with a brown or large brown seal are much more expensive with even an example in fine likely to start above $2,500 while CH CU examples are virtually unknown.

The Series 1905 is also difficult and popular as its face has a yellow and orange background sometimes called “Technicolor.” Even an example in fine it is $1,000 but the really hot notes are examples in higher grades where you can really appreciate the coloration. That helps to explain why a CH CU 63 would be $25,000 and up.
These are a good illustration of paper money actually doing better than the gold coin it promised to pay.

The Series 1906 and 1922 are similar in price as for under $250 you can obtain either in fine. In Ch CU 63 the Series 1906 is slightly more at around $1,750 while the Series 1922 is roughly $1,400. All the $20s after the Series 1882 would feature a face design of George Washington and brilliant orange colored backs that would be the classic design feature for Gold Certificates as no other type of note of the United States would feature a color scheme that had obviously designed to suggest their special connection to gold.

The Series 1882 $50 Gold Certificate featured Silas Wright on the face while the Series 1913 and 1922 would feature Ulysses S. Grant. The face value was too much for many at the time and that explains why with the possible exception of well-worn National Bank Notes or blue seal Federal Reserve Notes there are not many readily available.

The Series 1882 is certainly tough with the most available having small red seals and a Lyons-Roberts signature combination. Even in fine an example is likely to run close to $1,000 while a CH CU 63 would be about $10,000 for the Vernon-Treat signatures. Any Series 1882 $50 with a brown or large red seal is scarce.

In the case of the Series 1913 which comes with two signature combinations or the Series 1922, which had both large and small serial numbers, the chances of finding the note you want are definitely improved. The Series 1913 is slightly more expensive at about $450 in fine and $7,500 in CH CU 63 while the Series 1922 is virtually the same.

The $100 is even tougher. The $100 features Thomas Hart Benton on its face and the Series 1882 is a real problem. Only the Series 1882 with a small red seal is seen in the market on a regular basis and examples come with an assortment of signature combinations. The most available Series 1882 with a small red seal is $675 in fine while a CH CU 63 would be around $8,750 and up. Most existing examples are found with the Tehee-Burke signature combination.

All Series 1922 $100 Gold Certificates will have a Speelman-White signature combination. They start at around $700 in fine and rise to just over $6,500 in CH CU 63 and while certainly not cheap when compared to other large-size notes of the denomination they are reasonable.

Certainly when you get beyond $100 it is frankly surprising that the notes exist at all. The Gold Recall Order of 1933 alone should have seen virtually all higher denomination notes turned in, but remarkably there are still some available. There are approximately 100 examples of the $500 reported and another 75 examples of the $1,000. Certainly those are not large numbers and demand is constant.

The $500 Gold Certificates feature Abraham Lincoln on the face and are known from the Series 1882 or 1922. The Series 1882 exists with small red seals and signature combinations of Lyons-Roberts, Parker-Burke and Tehee-Burke. A Lyons-Treat has also been reported but if it exists it is probably unique. Each of the 1882 signature combinations appear to be similar in availability to an example from the Series 1922 with none being common. In fine condition for the most available 1882 the cost is $10,400.

The $1,000 is a little more complicated. All $1,000 large-size Gold Certificates feature an Alexander Hamilton face design although the Series 1882 design is different from the Series 1907 or 1922. That makes for two possible types although with its overall scarcity most are content to simply have any example. There are also signature combinations which raise the number of potential notes. In the case of the Series 1882, it is nearly an impossible situation as only about 20 examples of all the combinations combined are known to exist. In the case of the Series 1907 it is generally found with a Tehee-Burke combination, but four others are possible.
The Series 1907 and 1922 are about equally available with roughly 25 examples known for each and many more collectors than that total can accommodate wanting examples keeping competition and prices high whenever any is offered. A check for $15,000 might get you the most common in fine.

In the higher denominations there are surprises simply in the fact that notes are known. The Series 1882 $5,000 and $10,000 do exist with the $5,000 featuring James Madison and the $10,000 featuring Andrew Jackson on the face. They were issued with different signature combination, but at present only one example of each is reported and even if a couple more were to surface, they are not notes anyone can realistically hope to acquire for their collection.

The fifth issue of Gold Certificates like the sixth consisted of high denominations not intended for circulation, but rather for bank transfers. The $5,000 and $10,000 denominations exist only as proofs and they resemble checks being uniface and canceled in various ways once the transfer was completed.

In fact we would know little about the fifth and sixth issues were it not for a fire in Washington, D.C., back in 1935. The fire on Dec. 13, 1935, was in the old Post Office building, which at the time was where Series 1900 $10,000 Gold Certificates that had been cancelled were being stored. During the course of fighting the blaze some of these canceled Gold Certificates were apparently thrown out into the street where a crowd had gathered to watch.

The situation had to have been fascinating. Here during the Great Depression the onlookers while watching a fire being fought were suddenly showered with very official looking paper that had $10,000 as a denomination. It would create a stir today, but back in 1935 it must have had an even greater impact on possibly financially desperate people.

Even though the notes were canceled they quickly found their way into pockets of the crowd. Of course those who grabbed the notes at the time would be disappointed as they were canceled and after all it was after the Gold Recall of 1933, but collectors today certainly are not disappointed as those usually water stained notes represent a small supply of a fascinating item that otherwise would be literally impossible to have in a collection.

Naturally, being canceled they are well below their face value today with prices usually in the $1,750 range for well circulated examples. Although they are in theory not legal to own, no one has ever attempted to seize them or prevent their trading. They are popular as they are the only Gold Certificate with a face value of over $1,000 that anyone can ever hope to find or afford. Moreover, they have a fascinating history, making them all the more interesting.

Certainly a large-size Gold Certificate collection is a challenge and one most cannot expect to complete. Even so, Acquiring one or two notes for a collection is possible for most collectors. They make for great additions to any collection and realistically when you consider their past, you have to come to the conclusion that they are great values today.

With denominations starting at $10 and going to $10,000, even if they were not Gold Certificates and there had been no Gold Recall Order, these notes would be in short supply simply because they were beyond the financial means of most to keep them. The supply we have today is better than could have been expected, but the feeling has to be that the prices only reflect limited demand.

If Gold Certificates and especially large-size Gold Certificates ever have a significant increase in popularity, the strong feeling has to be that prices will rise significantly and availability will drop. That makes today a great time to consider acquiring a Gold Certificate or two as they may not always be so available and inexpensive.

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