By Eric Brothers
The monetary history of the United States is complex, with a seemingly overwhelming variety of paper currencies in circulation, particularly in the 19th and early 20th centuries. In 1878, the Bland silver dollar( now called the Morgan dollar) and the silver certificate both made their debut. The certificates remained in circulation until 1964. However, in 1878 there were also greenbacks in circulation, a legal tender form of fiat money that was not backed by gold or silver reserves; it was introduced in 1861 during the Civil War. There were two types of greenbacks: demand notes issued from 1861 to 1862, and United States notes, first issued in 1862 to 1865. They remained in circulation until 1971.
There were also gold certificates in circulation from 1865 to 1933, which were backed by the gold reserve in the US Treasury. The circulation of national bank notes began in 1863. They were issued by banks with a federal charter that deposited bonds with the US Treasury. Those banks could then issue notes worth up to 90 % of the value of those bonds. The federal government backed the value of the national bank notes— the issuance of which created a demand for the government bonds needed to back them. They remained in circulation until the establishment of the Federal Reserve in 1913. Additionally, there were also national bank gold notes issued by nine national gold banks in California from 1871 – 1883. So, then, why were Bland silver dollars and silver certificates issued in addition to greenbacks, gold certificates, national bank notes and national bank gold notes?
Newspaper illustration from Harper’ s Weekly, depicting Wall Street during the morning of May 14, 1884. Even though the economy was in a tailspin, Treasury was compelled to purchase $ 2 million worth of silver every month because of Bland-Allison.
An uncirculated 1881 Bland dollar( now called the Morgan dollar) that was produced at the Philadelphia Mint. Relatively few silver dollars circulated. Silver mostly circulated in the form of silver certificates.
The Bland-Allison Act
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In 1878, Congress passed the Bland-Allison Act( see“ Return of the Silver Dollar: Free Silver and the Bland-Allison Act.” Financial History, Fall 2024). That legislation was the result of two years of agitation by the Free Silver Movement, which worked for free silver( the ability to bring silver bullion to a US Mint and have it turned into unlimited coinage with no seigniorage charge), full bimetallism and the return of the silver dollar— dubbed the“ Dollar of the
Daddies”— which had been demonetized and scrapped via the Coinage Act of 1873.
However, Bland-Allison did not legalize free silver and the gold standard remained in place— but the standard silver dollar did return in 1878. The paper money component in Bland- Allison was the silver certificate.
The Provision for Silver Certificates
An important section of the legislation added by Iowa Senator William Allison was the provision for silver certificates:
That any holder of the coin authorized by this act may deposit the same with the Treasurer or any assistant treasurer of the United States, in sums not less than $ 10, and receive therefor certificates of not less than $ 10 each, corresponding with the denominations of the United States notes. The coin deposited for, or representing, the certificates shall be retained in the Treasury for the payment of the same on demand. Said certificates shall be receivable for customs, taxes, and all public dues, and, when so received, may be reissued.
Silver Dollars for the Masses?
From 1876 to 1878, there was a mass movement clamoring for free silver and the return of the silver dollar. Economist F. W. Taussig wrote in 1890,“ When the act of 1878 was passed, it seems to have been expected that the actual silver dollar would go into circulation without difficulty. This, at least, may be inferred from the provision of the act of 1878 which authorized the issue of silver certificates in denominations only of $ 10 and more.”
But was that indeed the case? Did silver dollars circulate beginning in 1878? Passage of Bland-Allison forced— yes, forced— the Treasury to purchase a minimum of $ 2 million and a maximum of $ 4 million worth of silver bullion every month— and mint silver dollars from that enormous amount of bullion as fast as humanly possible. With that level of production, it might seem that there were millions of Americans ready to take possession of an
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