Bland–Allison Act

The Bland–Allison Act, also referred to as the Grand Bland Plan of 1878, was an act of United States Congress requiring the U.S. Treasury to buy a certain amount of silver and put it into circulation as silver dollars. Though the bill was vetoed by President Rutherford B. Hayes, the Congress overrode Hayes's veto on February 28, 1878 to enact the law.[1]

Bland–Allison Act
Great Seal of the United States (obverse)
Long titleAn Act to authorize the coinage of the standard silver dollar, and to restore its legal-tender character.
Enacted bythe 45th United States Congress
EffectiveFebruary 28, 1878
Citations
Public law45–20
Statutes at Large20 Stat. 25
Legislative history
  • Introduced in the House as H.R. 1093
  • Passed the House on November 5, 1877 (163—34)
  • Passed the Senate on February 15, 1878 (48—21) with amendment
  • House agreed to Senate amendment on February 21, 1878 (passed)
  • Vetoed by President Rutherford B. Hayes on February 28, 1878
  • Overridden by the House on February 28, 1878 (196—73)
  • Overridden by the Senate and became law on February 28, 1878 (46—19)

Background

The five-year depression following the Panic of 1873 caused cheap-money advocates (led by Representative Richard P. Bland, a Democrat of Missouri), to join with silver-producing interests in urging a return to bimetallism, the use of both silver and gold as a standard.[2] Coupled with Senator William B. Allison of Iowa, they agreed to a proposal that allowed silver to be purchased at market rates, metals to be minted into silver dollars, and required the US Treasury to purchase between $2 million to $4 million silver each month from western mines.[3] President Rutherford B. Hayes, who held interests in industrials and banking, vetoed the measure, which was overturned by Congress. As a result, the Hayes administration purchased the limited amount of silver each month. This act helped restore bimetallism with gold and silver both supporting the currency. However, gold remained heavily favored over silver, paving way for the gold standard.

Free Silver Movement

William allison
Portrait of Senator Allison which hangs in the U.S. Capitol.

The free-silver movement of the late 19th century advocated the unlimited coinage of silver, which would have resulted in inflationary monetary policy. In 1873, Congress had removed the usage of silver dollar from the list of authorized coins under the Coinage Act of 1873 (referred to by opponents as 'the Crime of '73'"). Although the Bland–Allison Act of 1878 directed the Treasury to purchase silver from the "best-western" miners, President Grover Cleveland repealed the act in 1893.[4] Advocates of free silver included owners of silver mines in the West, farmers who believed an inclusion of silver would increase crop prices, and debtors who believed would alleviate their debts. Although the free silver movement ended, the debate of inflation and monetary policy continues to this day.

Coinage Act of 1873

The Fourth Coinage Act acknowledged the gold standard over silver. Those who advocated for silver labeled this act as the Crime of '73. As a result of demonetized silver, gold became the only metallic standard in the United States and became the default standard. The price of gold was more stable than that of silver, largely due to silver discoveries in Nevada and other places in the West, and the price of silver to gold declined from 16-to-1 in 1873 to nearly 30-to-1 by 1893.[5] The term limping bimetallism describes this problem. The U.S. government finally ceded to pressure from the western mining states and the Bland–Allison Act went into effect in 1878, which was replaced by the Sherman Silver Purchase Act of 1890.[4] The law was replaced in 1890 by the similar Sherman Silver Purchase Act, which in turn was repealed by Congress in 1893.[6] These were two instances where the United States attempted to establish bimetallic standards in the long run.

Reactions and economic impact

Western miners and debtors regarded the Bland–Allison Act as an insufficient measure to enforce unlimited coinage of silver, but opponents repealed the act and advocated for the gold standard. The effect of the Bland–Allison act was also blunted by the minimal purchase of silver required by the Hayes administration. Although the act was a near turning point for bimetallism, gold continued to be favored over the bimetallism standard.

Throughout 1860 to 1871, several attempts were made by the Treasury to establish the bimetallic standard by having gold and silver franc. However, the discovery of silver led to an influx of supply, lowering the price of silver.[3] The eventual removal of the bimetallic standard, including the Bland–Allison Act and the acceptance of the gold standard formed the monetary stability in the late 19th century.[3]

The limitation placed on the supply of new notes and the Treasury control over the issue of new notes allowed for economic stability. Prior to the acceptance, the devaluation of silver forced local governments into a financial turmoil.[3] In addition, there was a need for money supply to increase as the credit system expanded and large banks established themselves across states.

See also

Notes

  1. ^ Ari Arthur Hoogenboom, Rutherford B. Hayes: Warrior and President (1995) pp. 96–98
  2. ^ Irwin Unger, The Greenback Era: A Social and Political History of American Finance, 1865-1879 (1964) pp. 356–65
  3. ^ a b c d Acts, Bills, and Laws, 1878.U.S. History. March 14th <http://www.u-s-history.com/pages/h718.html>
  4. ^ a b Our large change: The Denominations of the Currency. Quarterly Journal of Economics. 1918. Oxford University Press. JSTOR. March 14th 2011<https://www.jstor.org/pss/1885428>
  5. ^ Walton, Gary M. and Rockoff, Hugh, History of the American Economy (2010), p. 350.
  6. ^ Paul Studenski and Herman Edward Krooss, Financial History of the United States (2003) – Page 216

Further reading

  • Cynthia Northrup, ed. The American economy: a historical encyclopedia (2003) p. 28
1878 in the United States

Events from the year 1878 in the United States.

45th United States Congress

The Forty-fifth United States Congress was a meeting of the legislative branch of the United States federal government, consisting of the United States Senate and the United States House of Representatives. It met in Washington, D.C. from March 4, 1877, to March 4, 1879, during the first two years of Rutherford Hayes's presidency. The apportionment of seats in the House of Representatives was based on the Ninth Census of the United States in 1870. The Senate had a Republican majority, and the House had a Democratic majority.

The 45th Congress remained politically divided between a Democratic House and Republican Senate. President Hayes vetoed an Army appropriations bill from the House which would have ended Reconstruction and prohibited the use of federal troops to protect polling stations in the former Confederacy. Striking back, Congress overrode another of Hayes’s vetoes and enacted the Bland-Allison Act that required the purchase and coining of silver. Congress also approved a generous increase in pension eligibility for Northern Civil War veterans.

Colorado Silver Boom

The Colorado Silver Boom was a dramatic expansionist period of silver mining activity in the U.S. state of Colorado in the late 19th century. The boom started in 1879 with the discovery of silver at Leadville. Over 82 million dollars worth of silver was mined during the period, making it the second great mineral boom in the state, and coming twenty years after the earlier and shorter Colorado Gold Rush of 1859. The boom was largely the consequence of large-scale purchases of silver by the United States Government authorized by Congress in 1878. The boom endured throughout the 1880s, resulting in an intense increase in both the population and wealth of Colorado, especially in the mountains. It came to an end in 1893 in the wake of the collapse of silver prices caused by the repeal of Sherman Silver Purchase Act.Silver had been discovered in Colorado in the 1860s, with early mining in Clear Creek Canyon at Georgetown in 1864. In the early days, the mineral was overshadowed by gold, however, and the low price of mineral meant that most mines were not profitable enough to operate. In 1878, responding to pressure from western interests, the United States Congress passed the Bland–Allison Act authorizing the free coinage of silver. The government demand raised the price of the metal to the point where many additional mines were profitable. The discovery of the Leadville district the following year resulted in a flood of new emigrant prospectors to many of the same mountain gullies that had been the site of the gold rush. The resulting opulence was most lavish in Leadville itself. The repeal of the Sherman Act in 1893 conversely led to a collapse of silver prices, bringing out an end to the boom as well.

Beginning in 1889, Creede, Colorado was the site of another big silver boom.

The first discovery was made at the Alpha mine in 1869, but the silver could not be extracted at a profit from the complex ores. The great “Boom Days” started with the discovery of rich minerals in Willow Creek Canyon. The town leapt from a population of 600 in 1889 to more than 10,000 people in December 1891. The mines operated continuously until 1995. Creede was the last silver boom town in Colorado in the 19th century.The boom continued unabated throughout the 1880s and early 90s, years that gave the state many of the historic structures in its cities and towns. The boom also drove many extensions of the railway network in the mountains, including such lines as the Denver, South Park and Pacific, which built an early narrow-gauge line to Leadville. Likewise the extension of the railroad network up the Roaring Fork Valley to the previously failed mining town of Aspen in the late 1880s made the extraction of silver ore there economically feasible, and saved the town from near extinction.

The government purchases of silver were subsequently nearly doubled by the 1890 Sherman Silver Purchase Act, further extending the boom into the early 1890s. The repeal of the act in 1893 resulted in a collapse of silver prices, bringing about an end to the boom. After 1893, many mining camps became ghost towns. The accompanying collapse in statewide economic activity was ameliorated somewhat by the simultaneous emergence of agriculture, previously derided as not feasible, as a large component of the state economy.

The working conditions inside the mines were often very dangerous. Silicosis which, at the time, was incurable, ruined miners' lungs quickly. Many other hazards existed. Apart from the lanterns or tallow candles the miners carried, the mines were otherwise completely dark. Miners at the time were also subject to the threat of tunnel collapse, flooding and the lack of oxygen in the deeper areas of the mines. Often the miners brought caged canaries down with them; when the bird passed out, it indicated that the oxygen levels were dangerously low in the area. Mines were commonly very small and tightly spaced to save on the cost, effort and time it would take to expand the tunnels, and so resulted in the use of people of smaller stature and even children.

Gold Standard Act

The Gold Standard Act of the United States was passed in 1900 (approved on March 14) and established gold as the only standard for redeeming paper money, stopping bimetallism (which had allowed silver in exchange for gold). It was signed by President William McKinley.

The Act made the de facto gold standard in place since the Coinage Act of 1873 (whereby debt holders could demand reimbursement in whatever metal was preferred—usually gold) a de jure gold standard alongside other major European powers at the time.

The Act fixed the value of the dollar at ​25 8⁄10 grains of gold at "nine-tenths fine" (90% purity), equivalent to 23.22 grains (1.5046 grams) of pure gold.

The Gold Standard Act confirmed the United States' commitment to the gold standard by assigning gold a specific dollar value (just over $20.67 per Troy ounce). This took place after McKinley sent a team to Europe to try to make a silver agreement with France and Great Britain.

On April 19, 1933, the United States domestically abandoned the gold standard, whereafter independent states would remain assured of their US dollar holdings by an implied guarantee on their convertibility on demand: the Bretton Woods system formalized this international arrangement at the conclusion of World War II, before the Nixon shock unilaterally cancelled direct international convertibility of the US dollar to gold in 1971.

John Sherman

John Sherman (May 10, 1823 – October 22, 1900) was a politician from the U.S. state of Ohio during the American Civil War and into the late nineteenth century. A member of the Republican Party, he served in both houses of the U.S. Congress. He also served as Secretary of the Treasury and Secretary of State. Sherman sought the Republican presidential nomination three times, coming closest in 1888, but was never chosen by the party. His brothers included General William Tecumseh Sherman; Charles Taylor Sherman, a federal judge in Ohio; and Hoyt Sherman, an Iowa banker.

Born in Lancaster, Ohio, Sherman later moved to Mansfield, where he began a law career before entering politics. Initially a Whig, Sherman was among those anti-slavery activists who formed what became the Republican Party. He served three terms in the House of Representatives. As a member of the House, Sherman traveled to Kansas to investigate the unrest between pro- and anti-slavery partisans there. He rose in party leadership and was nearly elected Speaker in 1859. Sherman was elevated to the Senate in 1861. As a senator, he was a leader in financial matters, helping to redesign the United States' monetary system to meet the needs of a nation torn apart by civil war. After the war, he worked to produce legislation that would restore the nation's credit abroad and produce a stable, gold-backed currency at home.

Serving as Secretary of the Treasury in the administration of Rutherford B. Hayes, Sherman continued his efforts for financial stability and solvency, overseeing an end to wartime inflationary measures and a return to gold-backed money. He returned to the Senate after his term expired, serving there for a further sixteen years. During that time he continued his work on financial legislation, as well as writing and debating laws on immigration, business competition law, and the regulation of interstate commerce. Sherman was the principal author of the Sherman Antitrust Act of 1890, which was signed into law by President Benjamin Harrison. In 1897, President William McKinley appointed him Secretary of State. Failing health and declining faculties made him unable to handle the burdens of the job, and he retired in 1898 at the start of the Spanish–American War. Sherman died at his home in Washington, D.C. in 1900.

Limping bimetallism

Limping bimetallism was a monetary system in the United States that was partially dependent on silver but primarily dependent on gold. It was developed after the abandonment of bimetallism and the adoption of the gold standard in 1873. The Bland–Allison Act of 1878 allowed the coining of new silver dollars, thus creating this system. Contrary to popular belief, the limping standard was not abandoned upon enactment of the Gold Standard Act of 1900.

List of legislation named for a person

This is a list of legislation with popular names (of people), often the member of Parliament/Congress responsible for it or a law named for a person of notoriety that prompted enactment of the legislation. Some of these Acts acquired their names because short titles were not used, and some now have different short titles. Popular names are generally informal (such as Megan's law) but may reflect the official short title of the legislation.

Luman Hamlin Weller

Luman Hamlin Weller (August 24, 1833 – March 2, 1914) was a United States Greenback Party member. In the 1880s, he served a single term in the United States House of Representatives as a representative of Iowa's 4th congressional district, then in rural northeastern Iowa. Once elected, he became nationally known as "Calamity" Weller, and did not survive his next election. He later went on to become one of the leading Populists in Iowa.

Morgan dollar

The Morgan dollar was a United States dollar coin minted from 1878 to 1904, and again in 1921. It was the first standard silver dollar minted since production of the previous design, the Seated Liberty dollar, ceased due to the passage of the Coinage Act of 1873, which also ended the free coining of silver. The coin is named after its designer, United States Mint Assistant Engraver George T. Morgan. The obverse depicts a profile portrait representing Liberty, while the reverse depicts an eagle with wings outstretched.

The dollar was authorized by the Bland–Allison Act. Following the passage of the 1873 act, mining interests lobbied to restore free silver, which would require the Mint to accept all silver presented to it and return it, struck into coin. Instead, the Bland–Allison Act was passed, which required the Treasury to purchase between two and four million dollars' worth of silver at market value to be coined into dollars each month. In 1890, the Bland–Allison Act was repealed by the Sherman Silver Purchase Act, which required the Treasury to purchase 4,500,000 troy ounces (140,000 kg) of silver each month, but only required further silver dollar production for one year. This act, once again, was repealed in 1893.

In 1898, Congress approved a bill that required all remaining bullion purchased under the Sherman Silver Purchase Act to be coined into silver dollars. When those silver reserves were depleted in 1904, the Mint ceased to strike the Morgan dollar. The Pittman Act, passed in 1918, authorized the melting and recoining of millions of silver dollars. Pursuant to the act, Morgan dollars resumed mintage for one year in 1921. The design was replaced by the Peace dollar later the same year.

In the early 1960s, a large quantity of uncirculated Morgan dollars in their original bags were discovered in the Treasury vaults, including issues once thought rare. Individuals began purchasing large quantities of the pieces at face value, and eventually the Treasury ceased exchanging silver certificates for silver coin. Beginning in the 1970s, the Treasury conducted a sale of silver dollars minted at the Carson City Mint through the General Services Administration. In 2006, Morgan's reverse design was used on a silver dollar issued to commemorate the old San Francisco Mint building.

Presidencies of Grover Cleveland

The presidencies of Grover Cleveland lasted from March 4, 1885 to March 4, 1889, and from March 4, 1893 to March 4, 1897. The first Democrat elected after the Civil War, Grover Cleveland is the only President of the United States to leave office after one term and later return for a second term. His presidencies were the nation's 22nd and 24th. Cleveland defeated James G. Blaine of Maine in 1884, lost to Benjamin Harrison of Indiana in 1888, and then defeated President Harrison in 1892.

Cleveland won the 1884 election with the support of a reform-minded group of Republicans known as Mugwumps, and he expanded the number of government positions that were protected by the Pendleton Civil Service Reform Act. He also vetoed several bills designed to provide pensions and other benefits to various regions and individuals. In response to anti-competitive practices by railroads, Cleveland signed the Interstate Commerce Act of 1887, which established the first independent federal agency. During his first term, he unsuccessfully sought the repeal of the Bland–Allison Act and a lowering of the tariff. The Samoan crisis was the major foreign policy event of Cleveland's first term, and that crisis ended with a tripartite protectorate in the Samoan Islands.

As his second presidency began, disaster hit the nation when the Panic of 1893 produced a severe national depression. Cleveland presided over the repeal of portions of the Sherman Silver Purchase Act, striking a blow against the Free Silver movement, and also lowered tariff rates by allowing the Wilson–Gorman Tariff Act to become law . He also ordered federal soldiers to crush the Pullman Strike and promoted efforts to roll back federal civil rights protections for African-Americans. In foreign policy, Cleveland resisted the annexation of Hawaii and an American intervention in Cuba. He also sought to uphold the Monroe Doctrine and forced the British to agree to arbitrate a border dispute with Venezuela. In the midterm elections of 1894, Cleveland's Democratic Party suffered a massive defeat that opened the way for the agrarian and silverite seizure of the Democratic Party.

The 1896 Democratic National Convention repudiated Cleveland and nominated silverite William Jennings Bryan, but Bryan was defeated by Republican William McKinley in the 1896 presidential election. Cleveland left office extremely unpopular, but his reputation was quickly rehabilitated by scholars like Allan Nevins. More recent historians and biographers have taken a more ambivalent view of Cleveland, but many note Cleveland's role in re-asserting the power of the presidency. In rankings of American presidents by historians and political scientists, Cleveland is generally ranked as an average president.

Presidency of Rutherford B. Hayes

The presidency of Rutherford B. Hayes began on March 4, 1877, when Rutherford B. Hayes was inaugurated as President of the United States, and ended on March 4, 1881. Hayes, the 19th United States president, took office after winning the closely contested 1876 presidential election. He declined to seek re-election and was succeeded by James A. Garfield, a fellow Republican and ally.

Taking office after an intensely disputed election, Hayes withdrew the last federal troops from the South, ending the Reconstruction Era. He attempted to reconcile the divisions left over from the Civil War and Reconstruction while protecting the civil rights of African-Americans, but largely failed in the latter pursuit. A strong proponent of civil service reform, he challenged his own party in making appointments. Though he was largely unsuccessful in enacting long-term reform, he helped provide a significant impetus for the eventual passage of the Pendleton Civil Service Reform Act in 1883.

Insisting that maintenance of the gold standard was essential to economic recovery, he vetoed the Bland–Allison Act. Congress overrode his veto, but Hayes's monetary policy forged a compromise between inflationists and advocates of hard money. He helped put down the Great Railroad Strike of 1877, one of the largest labor strikes in U.S. history, by sending in federal soldiers. His policy toward Western Native Americans anticipated the assimilationist program of the Dawes Act of 1887. In foreign policy, Hayes asserted U.S. influence in Latin America and the continuing primacy of the Monroe Doctrine. Polls of historians and political scientists generally rank Hayes as an average president.

Richard P. Bland

Richard Parks Bland (August 19, 1835 – June 15, 1899) was an American politician, lawyer, and educator from Missouri. A Democrat, Bland served in the United States House of Representatives from 1873 to 1895 and from 1897 to 1899,

representing at various times the Missouri 5th, 8th and 11th congressional districts. Nicknamed "Silver Dick" for his efforts to promote bimetallism, Bland is best known for the Bland–Allison Act.

Born in Kentucky, he established a legal practice in Utah Territory after working as a miner and schoolteacher. He served as the treasurer of Carson County from 1860 to 1864 during the peak years of the Comstock Lode mining rush. He settled in Missouri in 1865 and established a legal practice in Lebanon, Missouri. He was elected to the House of Representatives in 1872 and quickly established himself as a leading advocate of the free silver movement. He sponsored the Bland-Allison Act, which required the United States Department of the Treasury to buy a certain amount of silver and put it into circulation as silver dollars. He also established himself as an anti-imperialist. Bland lost re-election in the 1894 election but won his seat back in 1896.

Bland was a leading candidate for the Democratic presidential nomination in 1896, though he expressed reluctance about running for president. His marriage to a Catholic woman engendered opposition from the anti-Catholic elements of the party. Bland received the most votes on the first three ballots of the 1896 Democratic National Convention, but not enough to win the necessary majority. William Jennings Bryan, who also favored bimetallism, won the Democratic nomination on the fifth ballot and went on to lose to Republican William McKinley in the 1896 presidential election. After the convention, Bland served in the House from 1897 to his death in 1899.

Rutherford B. Hayes

Rutherford Birchard Hayes (October 4, 1822 – January 17, 1893) was the 19th president of the United States from 1877 to 1881, having served also as an American representative and governor of Ohio. Hayes was a lawyer and staunch abolitionist who defended refugee slaves in court proceedings in the antebellum years. During the American Civil War, he was seriously wounded fighting in the Union Army.

He was nominated as the Republican candidate for the presidency in 1876 and elected through the Compromise of 1877 that officially ended the Reconstruction Era by leaving the South to govern itself. In office he withdrew military troops from the South, ending Army support for Republican state governments in the South and the efforts of African-American freedmen to establish their families as free citizens. He promoted civil service reform, and attempted to reconcile the divisions left over from the Civil War and Reconstruction.

Hayes, an attorney in Ohio, served as city solicitor of Cincinnati from 1858 to 1861. When the Civil War began, he left a fledgling political career to join the Union Army as an officer. Hayes was wounded five times, most seriously at the Battle of South Mountain. He earned a reputation for bravery in combat and was promoted to the rank of brevet major general. After the war, he served in the Congress from 1865 to 1867 as a Republican. Hayes left Congress to run for governor of Ohio and was elected to two consecutive terms, from 1868 to 1872. Later he served a third two-year term, from 1876 to 1877.

In 1876, Hayes was elected president in one of the most contentious elections in national history. He lost the popular vote to Democrat Samuel J. Tilden but he won an intensely disputed electoral college vote after a Congressional commission awarded him twenty contested electoral votes. The result was the Compromise of 1877, in which the Democrats acquiesced to Hayes's election on the condition that he withdraw remaining U.S. troops protecting Republican office holders in the South, thus officially ending the Reconstruction era.

Hayes believed in meritocratic government and equal treatment without regard to race. He ordered federal troops to guard federal buildings and in so doing restore order from the Great Railroad Strike of 1877. He implemented modest civil service reforms that laid the groundwork for further reform in the 1880s and 1890s. He vetoed the Bland–Allison Act, which would have put silver money into circulation and raised nominal prices, insisting that maintenance of the gold standard was essential to economic recovery. His policy toward Western Indians anticipated the assimilationist program of the Dawes Act of 1887.

Hayes kept his pledge not to run for re-election, retired to his home in Ohio, and became an advocate of social and educational reform. Biographer Ari Hoogenboom said his greatest achievement was to restore popular faith in the presidency and to reverse the deterioration of executive power that had set in after the assassination of Abraham Lincoln. Although supporters have praised his commitment to civil service reform and defense of civil rights, Hayes is generally ranked as average or slightly below average by historians and scholars.

Seated Liberty dollar

The Seated Liberty dollar was a dollar coin struck by the United States Mint from 1840 to 1873 and designed by its chief engraver, Christian Gobrecht. It was the last silver coin of that denomination to be struck before passage of the Coinage Act of 1873, which temporarily ended production of the silver dollar for American commerce. The coin's obverse is based on that of the Gobrecht dollar, which had been minted experimentally from 1836 to 1839. However, the soaring eagle used on the reverse of the Gobrecht dollar was not used; instead, the United States Mint (Mint) used a heraldic eagle, based on a design by late Mint Chief Engraver John Reich first utilized on coins in 1807.

Seated Liberty dollars were initially struck only at the Philadelphia Mint; in 1846, production began at the New Orleans facility. In the late 1840s, the price of silver increased relative to gold because of an increase in supply of the latter caused by the California Gold Rush; this led to the hoarding, export, and melting of American silver coins. The Coinage Act of 1853 decreased the weight of all silver coins of five cents or higher, except for the dollar, but also required a supplemental payment from those wishing their bullion struck into dollar coins. As little silver was being presented to the US Mint at the time, production remained low. In the final years of the series, there was more silver produced in the US, and mintages increased.

In 1866, "In God We Trust" was added to the dollar following its introduction to United States coinage earlier in the decade. Seated Liberty dollar production was halted by the Coinage Act of 1873, which authorized the trade dollar for use in foreign commerce. Representatives of silver interests were unhappy when the metal's price dropped again in the mid-1870s; they advocated the resumption of the free coinage of silver into legal tender, and after the passage of the Bland–Allison Act in 1878, production resumed with the Morgan dollar.

Sherman Silver Purchase Act

The Sherman Silver Purchase Act was a United States federal law

enacted on July 14, 1890.The measure did not authorize the free and unlimited coinage of silver that the Free Silver supporters wanted; however, it increased the amount of silver the government was required to purchase on a recurrent monthly basis to 4.5 million ounces. The Sherman Silver Purchase Act had been passed in response to the growing complaints of farmers' and miners' interests. Farmers had immense debts that could not be paid off due to deflation, and they urged the government to pass the Sherman Silver Purchase Act in order to boost the economy and cause inflation, allowing them to pay their debts with cheaper dollars. Mining companies, meanwhile, had extracted vast quantities of silver from western mines; the resulting oversupply drove down the price of their product, often to below the point at which the silver could be profitably extracted. They hoped to enlist the government to increase the demand for silver.Originally, the bill was simply known as the Silver Purchase Act of 1890. Only after the bill was signed into law, did it become the "Sherman Silver Purchase Act." Senator John Sherman, an Ohio Republican and chairman of the Senate Finance Committee was not the author of the bill, but once both houses of Congress had passed the Act and the Act had been sent to a Senate/House conference committee to iron out differences between the Senate and House versions of the Act, Senator John Sherman was instrumental in getting the conference committee to reach agreement on a final draft of the Act. Nonetheless, once agreement on the final version was reached in the conference committee, Sherman found that he disagreed with many sections of the act. So tepid was Sherman's support that when he was asked his opinion of the act by President Benjamin Harrison, Sherman ventured only that the bill was "safe" and would cause no harm if the President signed it.The act was enacted in tandem with the McKinley Tariff of 1890. William McKinley, an Ohio Republican and chairman of the House Ways and Means Committee worked with John Sherman to create a package that could both pass the Senate and receive the President's approval.

Under the Act, the federal government purchased millions of ounces of silver, with issues of paper currency. It became the second-largest buyer in the world, after the British Crown in India, where the Indian rupee was backed by silver rather than gold. In addition to the $2 million to $4 million that had been required by the Bland–Allison Act of 1878, the US government was now required to purchase an additional 4.5 million ounces of silver bullion every month. The law required the Treasury to buy the silver with a special issue of Treasury (Coin) Notes that could be redeemed for either silver or gold. Gresham's law then took over. The artificially overvalued currency (silver) drove the artificially undervalued currency (gold) out of circulation. In the metals markets, silver was worth less than the government's legal exchange rate for silver vs. gold. So, investors bought silver, exchanged it at the Treasury for gold dollars, and then sold these gold dollars in the metals market for more than they had paid for the silver. They took the profits on this transaction and bought more silver. They did this over and over. This would continue until the Treasury ran out of gold. After the Panic of 1893 broke, President Grover Cleveland oversaw the repeal of the act to prevent the depletion of the government's gold reserves.

In 1890, the price of silver dipped to $1.16 per ounce. By the end of the year, it had fallen to $0.69. By December 1894, the price had dropped to $0.60. On November 1, 1895, US mints halted production of silver coins, and the government closed the Carson City Mint. Banks discouraged the use of silver dollars. In fact, the years 1893-95 had the lowest productions of Morgan dollars for the entire series, creating several scarce coins.

Silver certificate (United States)

Silver certificates are a type of representative money issued between 1878 and 1964 in the United States as part of its circulation of paper currency. They were produced in response to silver agitation by citizens who were angered by the Fourth Coinage Act, which had effectively placed the United States on a gold standard. The certificates were initially redeemable for their face value of silver dollar coins and later (for one year – June 24, 1967 to June 24, 1968) in raw silver bullion. Since 1968 they have been redeemable only in Federal Reserve Notes and are thus obsolete, but still valid legal tender and thus are still an accepted form of currency.Large-size silver certificates (1878 to 1923) were issued initially in denominations from $10 to $1,000 (in 1878 and 1880) and in 1886 the $1, $2, and $5 were authorized. In 1928, all United States bank notes were re-designed and the size reduced. The small-size silver certificate (1928–1964) was only regularly issued in denominations of $1, $5, and $10. The complete type set below is part of the National Numismatic Collection at the Smithsonian's National Museum of American History.

Timeline of United States history (1860–1899)

This section of the Timeline of United States history concerns events from 1860 to 1899.

Trade dollar (United States coin)

The United States trade dollar was a dollar coin minted by the United States Mint to compete with other large silver trade coins that were already popular in East Asia. The idea first came about in the 1860s, when the price of silver began to decline due to increased mining efforts in the western United States. A bill providing in part for the issuance of the trade dollar was eventually put before Congress, where it was approved and later signed into law as the Coinage Act of 1873. The act made trade dollars legal tender up to five dollars. A number of designs were considered for the trade dollar, and an obverse and reverse created by William Barber were selected.

The first trade dollars were struck in 1873, and the majority of the coins were sent to China. Eventually, bullion producers began converting large amounts of silver into trade dollars, causing the coins to make their way into American commercial channels. This caused frustration among those to whom they were given in payment, as the coins were largely maligned and traded for less than one dollar each. In response to their wide distribution in American commerce, the coins were officially demonetized in 1876, but continued to circulate. Production of business strikes ended in 1878, though the mintage of proof coins officially continued until 1883. The trade dollar was re-monetized when the Coinage Act of 1965 was signed into law.

William B. Allison

William Boyd Allison (March 2, 1829 – August 4, 1908) was an early leader of the Iowa Republican Party, who represented northeastern Iowa in the United States House of Representatives before representing his state in the United States Senate. By the 1890s, Allison had become one of the "big four" key Republicans who largely controlled the Senate, along with Orville H. Platt of Connecticut, John Coit Spooner of Wisconsin and Nelson W. Aldrich of Rhode Island.

Born in Perry, Ohio, Allison established a legal practice in Dubuque, Iowa and became a prominent member of the nascent Iowa Republican Party. He was a delegate to the 1860 Republican National Convention and won election to the House of Representatives in 1862. He served four terms in the House and won election to the Senate in 1872. He became chairman of the powerful Senate Appropriations Committee, serving for all but two years between 1881 and 1908. Three different Republican presidents asked Allison to join their Cabinet, but Allison declined each offer. A significant number of delegates supported his presidential nomination at the 1888 and 1896 Republican National Conventions.

Allison emerged as a centrist and pragmatic leader in the Senate, and he helped pass several important bills. The Bland–Allison Act of 1878 restored bimetallism, but in a less inflationary manner than had been sought by Congressman Richard P. Bland. A prominent advocate of higher tariffs, Allison played a major role in the passage of the McKinley Tariff and the Dingley Act. He also helped pass the Hepburn Act by offering the Allison amendment, which granted courts the power to review the Interstate Commerce Commission's railroad rate-setting. Allison sought a record seventh term in the 1908, but died shortly after winning the Republican primary against progressive leader Albert B. Cummins.

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