Sherman Silver Purchase Act
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The Sherman Silver Purchase Act was a
United States federal law The law of the United States comprises many levels of Codification (law), codified and uncodified forms of law, of which the supreme law is the nation's Constitution of the United States, Constitution, which prescribes the foundation of the ...
enacted on July 14, 1890, which increased the amount of silver the government was required to purchase on a recurrent monthly basis to 4.5 million ounces, roughly the entirety of the American output.Charles Ramsdell Lingley, ''Since the Civil War'', first edition: New York, The Century Co., 1920, ix–635 p., . Re-issued: Plain Label Books, unknown date, under a new title: ''The United States Since the Civil War'', 310 p. See: page 173(Google Books).. The act did not authorize the free and unlimited coinage of
silver Silver is a chemical element; it has Symbol (chemistry), symbol Ag () and atomic number 47. A soft, whitish-gray, lustrous transition metal, it exhibits the highest electrical conductivity, thermal conductivity, and reflectivity of any metal. ...
that the Free Silver supporters wanted. Instead, it had been passed in response to the growing complaints of farmers' and miners' interests. Farmers are usually debtors, with mortgages on their farms and loans on their crops;
deflation In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% and becomes negative. While inflation reduces the value of currency over time, deflation increases i ...
meant that they had to pay back these loans in more expensive dollars, and this act promotes
inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...
. 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 A committee or commission is a body of one or more persons subordinate to a deliberative assembly or other form of organization. A committee may not itself be considered to be a form of assembly or a decision-making body. Usually, an assembly o ...
to settle differences between the Senate and House versions of the Act, 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 William McKinley (January 29, 1843September 14, 1901) was the 25th president of the United States, serving from 1897 until Assassination of William McKinley, his assassination in 1901. A member of the Republican Party (United States), Repub ...
, 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. Instead of the million to million that had been required by the Bland–Allison Act of 1878, the US government was now required to purchase 4.5 million ounces of silver
bullion Bullion is non-ferrous metal that has been refined to a high standard of elemental purity. The term is ordinarily applied to bulk metal used in the production of coins and especially to precious metals such as gold and silver. It comes from ...
every month. The law required the
Treasury A treasury is either *A government department related to finance and taxation, a finance ministry; in a business context, corporate treasury. *A place or location where treasure, such as currency or precious items are kept. These can be ...
to buy the silver with a special issue of Treasury (Coin) Notes that could be redeemed for either silver or gold. The result was the substantial expansion in the volume of circulating dollars without a proportionate growth in the gold stock. The crash in the silver dollar's bullion value in the 1890s from 80 cents to approximately 50 cents increased public anxiety on their continued ability to convert silver dollars and banknotes into gold. The result was a run on the Treasury's gold stock and the onset of the Panic of 1893. President
Grover Cleveland Stephen Grover Cleveland (March 18, 1837June 24, 1908) was the 22nd and 24th president of the United States, serving from 1885 to 1889 and from 1893 to 1897. He was the first U.S. president to serve nonconsecutive terms and the first Hist ...
summoned an emergency session of Congress on August 7, 1893, for the repeal of the act to prevent the further depletion of the government's gold reserves. In 1890, the price of silver dipped to per ounce. By the end of the year, it had fallen to . By December 1894, the price had dropped to . 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. The years 1893–95 had the lowest productions of Morgan dollars for the entire series, creating several scarce coins.Morgan Silver Dollars (1878–1921)
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* {{Authority control 1890 in American law July 1890 United States federal currency legislation People's Party (United States) Metallism 1890 in economic history 51st United States Congress