Americans began to move out west in the first half of the 19th century. Banks started printing their own money to fund land purchases, and that quickly led to two problems: loose money-printing had a volatile effect on prices, and it became increasingly hard to tell what was counterfeit from what wasn't.
To tackle these problems, the government decreed in the 1830s that it would only accept transactions in gold and silver. But of course, lugging metals around is nobody's idea of fun. So in 1863, Congress paved the way for the first “gold certificates” to be printed two years later, in November 1865.
A gold certificate was, in effect, a form of paper currency backed by gold – although not entirely. The Treasury was allowed to issue $120 in gold certificates for every $100-worth of gold it held in its vaults.
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The first gold certificates featured an American eagle, while later issues displayed portraits of presidents. The design on the reverse of the notes was yellow and orange, and so the certificates became known as “goldbacks”. There were nine issues in total, with denominations ranging from $10 to $10,000. However, in 1934, there was an additional issue.
During the Great Depression of the early 1930s, the economy was in a rut. President Franklin D Roosevelt believed that ordinary people stashing gold away was holding back the recovery. So, in 1933, he made the "hoarding of gold coin, gold bullion and gold certificates" illegal. But not for the government. The following year, the highest-ever denomination gold certificate was printed, with a value of $100,000.
Today, gold certificates from the early years are much sought after by collectors, who can rest easy it's no longer illegal to own them. But future collectors will be disappointed. While the US Treasury still issues gold certificates for "government-owned gold", these now take the form of electronic book-entries.
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