The Sherman Silver Purchase Act was a
United States federal law
The law of the United States comprises many levels of codified and uncodified forms of law, of which the most important is the nation's Constitution, which prescribes the foundation of the federal government of the United States, as well as va ...
enacted on July 14, 1890.
[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 measure did not authorize the free and unlimited coinage of
silver
Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, whi ...
that the
Free Silver
Free silver was a major economic policy issue in the United States in the late 19th-century. Its advocates were in favor of an expansionary monetary policy featuring the unlimited coinage of silver into money on-demand, as opposed to strict adhe ...
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.
[Homer E. Socolofsky and Allen B. Spetter, ''The Presidency of Benjamin Harrison'', p. 59.] 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
In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but sudden deflation ...
, and they urged the government to pass the Sherman Silver Purchase Act in order to boost the economy and cause
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
, allowing them to pay their debts with cheaper dollars.
[Answers.com]
Sherman Silver Purchase Act
accessed 2009.04.08. 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.
[Laura King Van Dusen, "Sherman Silver Purchase Act", ''Historic Tales from Park County: Parked in the Past'' ( Charleston, ]South Carolina
)''Animis opibusque parati'' ( for, , Latin, Prepared in mind and resources, links=no)
, anthem = " Carolina";" South Carolina On My Mind"
, Former = Province of South Carolina
, seat = Columbia
, LargestCity = Charleston
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: The History Press, 2013), , pp. 141–142
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
John Sherman (May 10, 1823October 22, 1900) was an American politician from Ohio throughout the 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 ...
, 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.
[Homer E. Socolofsky and Allen B. Spetter, ''The Presidency of Benjamin Harrison'', p. 58.] 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
Benjamin Harrison (August 20, 1833March 13, 1901) was an American lawyer and politician who served as the 23rd president of the United States from 1889 to 1893. He was a member of the Harrison family of Virginia–a grandson of the ninth pr ...
, 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
The Tariff Act of 1890, commonly called the McKinley Tariff, was an act of the United States Congress, framed by then Representative William McKinley, that became law on October 1, 1890. The tariff raised the average duty on imports to almost fift ...
of 1890.
William McKinley
William McKinley (January 29, 1843September 14, 1901) was the 25th president of the United States, serving from 1897 until his assassination in 1901. As a politician he led a realignment that made his Republican Party largely dominant in ...
, 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
The Indian rupee ( symbol: ₹; code: INR) is the official currency in the republic of India. The rupee is subdivided into 100 ''paise'' (singular: ''paisa''), though as of 2022, coins of denomination of 1 rupee are the lowest value in use wh ...
was backed by silver rather than gold. In addition to the million to million that had been required by the
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 vetoe ...
of 1878, the US government was now required to purchase an additional 4.5 million
ounces
The ounce () is any of several different units of mass, weight or volume and is derived almost unchanged from the , an Ancient Roman unit of measurement.
The avoirdupois ounce (exactly ) is avoirdupois pound; this is the United States customa ...
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 t ...
every month. The law required the
Treasury
A treasury is either
*A government department related to finance and taxation, a finance ministry.
*A place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church treasure or in p ...
to buy the silver with a special issue of
Treasury (Coin) Note
A treasury is either
*A government department related to finance and taxation, a finance ministry.
*A place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church treasure or in ...
s 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
The Panic of 1893 was an economic depression in the United States that began in 1893 and ended in 1897. It deeply affected every sector of the economy, and produced political upheaval that led to the political realignment of 1896 and the pres ...
. President
Grover Cleveland
Stephen Grover Cleveland (March 18, 1837June 24, 1908) was an American lawyer and politician who served as the 22nd and 24th president of the United States from 1885 to 1889 and from 1893 to 1897. Cleveland is the only president in American ...
then oversaw 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
The Carson City Mint was a branch of the United States Mint in Carson City, Nevada. It primarily minted silver coins; however, it also minted gold coins, with a total face value in dollars nearly equal to that of its silver coins. The mint minted ...
. Banks discouraged the use of silver dollars.
[ In fact, the years 1893–95 had the lowest productions of ]Morgan dollar
The Morgan dollar is a United States dollar coin minted from 1878 to 1904, in 1921, and beginning again in 2021. It was the first standard silver dollar minted since the passage of the Coinage Act of 1873, which ended the free coining of silve ...
s for the entire series, creating several scarce coins.Morgan Silver Dollars (1878–1921)
/ref>
References
Further reading
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External links
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{{Authority control
1890 in American law
United States federal currency legislation
People's Party (United States)
Metallism
1890 in economics