The Rise and Fall of the American Silver Dollar and Standard

By
Colton De Los Santos
on
May 2, 2021
Category:
Economic Policy

Within our nation, through economic hardship and strife, one thing stood firm. We would have a small piece of paper with George Washington staring back at us, or so most Americans thought. Throughout history, our nation's paper money has been populated with different designs on the dollar bill ranging from ornate to downright strange and somewhat disturbing. The root of this occurrence can be traced back to the beginning of our nation. 

Our first attempt at paper money could be considered as a well intentioned failure at best. After the ratification of the Declaration of Independence, individual states and disorganized banks began printing official Continental Currency. However, as expected with disorganized currencies, the notes fell into rapid hyperinflation. This eventually inspired the passage in the Constitution stating, “No State shall… make anything but Silver and Gold coin…” which ushered the U.S. into the Golden Age of American Money.


The Golden Age: The Age of Decentralized Banking

The age of state banks was over, however, more and more people still needed to use sums of money without hauling around bags of gold and silver coins. As a result, local banks began the practice of issuing obsolete currency. These bills were known as obsolete currency for the reason that the further away the note was from the issuing bank, the less it was worth. This is due to the fact that for the bill to be redeemed for its full silver value, it would require someone to go to the issuing bank and return with the silver in hand. This system of banking resulted in the creation of thousands of different varieties of bill designs as each bank had their own design of bank note ranging from the Founding Fathers to Santa Claus. Eventually, when the Civil War broke out, circumstances had changed.

The Green and the Gray: The Birth of the US Dollar Bill

So far, throughout U.S history, our notes have been issued from Austin, Texas to South Carolina, but not once by the federal government itself. But, now that half of the United States have left the union along with millions of dollars worth of silver and gold from the southern mints, the Union had to find a solution. They found their answer in stealing an idea from the Confederates. The Confederate States of America issued bills known as graybacks. All notes were adorned with the message that they can be redeemed in silver for the full value 2 years after the ratification of a treaty with the North. These glorified War Bonds. The union began producing the first United States issued notes called Greenbacks (our first fiat currency) due to their distinctive green intaglio prints. They were originally only used on small denominations such as on 25 and 50 cent bills, however, they eventually moved all the way up to the higher denominations and were replaced by the United States note.

The Birth of the Silver Certificate 

As the war subsided, the United States Government began the issuing of silver and gold certificates in 1878 as the treasury began to replenish after the momentous loss of the Civil War between the states. The notes had a simple enough premise as for every note issued, there was value in the Treasury. This system continued until 1971 when the Gold/Silver standard was eventually abolished.

The Death of Silver the Birth of the Reserve

 With the death of the Silver Dollar issued in the age of Fiat Currency, the US dollar is completely based on trust and nothing else. So what does this mean for our nation and what does this mean for the past? Considering the constitutional limits on printing of money, is our money legitimate? I leave this for America to decide.



Sources:

The Numismatist by the American Numismatic Assoc.

Money in Colonial Times by Philadelphia Federal Reserve Bank

A House Divided: Money in the Civil War by the American Numismatic Assoc.

Silver Certificate by Lucas Downey

CoinHelpU by Daniel Malone


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Colton De Los Santos

Colton De Los Santos is currently a Staff Analyst at the Institute for Youth in Policy. He has previously has been a Teachers Assistant at Preston Middle School for Beginning Band for one and a half years. He is currently enrolled in at Dripping Springs High School along with Certificate Courses from HarvardX. He has also served as School President, 5th Grade Representative, and News Paper Writer and Editor at St. Paul's Christian Day School. He also is a active member of the American Numismatic Association and as well as a member of his school Marching and Symphonic Bands.