The Sherman Silver Purchase Act was a United States federal law enacted on July

14, 1890.[1]
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 go
vernment was required to purchase on a recurrent monthly basis to 4.5 million ou
nces.[2] The Sherman Silver Purchase Act had been passed in response to the grow
ing complaints of farmers' and miners' interests. Farmers had immense debts that
could not be paid off due to deflation caused by overproduction, and they urged
the government to pass the Sherman Silver Purchase Act in order to boost the ec
onomy and cause inflation, allowing them to pay their debts with cheaper dollars
.[3] Mining companies, meanwhile, had extracted vast quantities of silver from w
estern mines; the resulting oversupply drove down the price of their product, of
ten to below the point at which the silver could be profitably extracted. They h
oped to enlist the government to increase the demand for silver.[4]
Originally, the bill was simply known as the Silver Purchase Act of 1890. Only a
fter the bill was signed into law, did it become the "Sherman Silver Purchase Ac
t."[5] Senator John Sherman, an Ohio Republican and chairman of the Senate Finan
ce Committee was not the author of the bill, but once both houses of Congress ha
d passed the Act and the Act had been sent to a Senate/House conference committe
e to iron out differences between the Senate and House versions of the Act, Sena
tor John Sherman was instrumental in getting the conference committee to reach a
greement on a final draft of the Act.[6] Nonetheless, once agreement on the fina
l version was reached in the conference committee, Sherman found that he disagre
ed with many sections of the act.[7] So tepid was Sherman's support that when he
was asked his opinion of the act by President Benjamin Harrison, Sherman ventur
ed only that the bill was "safe" and would cause no harm if the President signed
it.[8]
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 w
ith 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, wi
th issues of paper currency. It became the second-largest buyer in the world, af
ter the British Crown in India, where the Indian Rupee was backed by silver rath
er 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 purchas
e an additional 4.5 million ounces of silver bullion every month.[9] The law req
uired the Treasury to buy the silver with a special issue of Treasury (Coin) Not
es that could be redeemed for either silver or gold. That plan backfired, as peo
ple (mostly investors) redeemed the new coin notes for gold dollars, thus deplet
ing the government's gold reserves. After the Panic of 1893 broke, President Gro
ver Cleveland oversaw the repeal of the act to prevent the depletion of the gold
reserves.
In 1890, the price of silver dipped to $1.16 per ounce. By the end
it had fallen to $0.69. By December 1894, the price had dropped to
ember 1, 1895, US mints halted production of silver coins, and the
osed the mint in New Orleans, Louisiana. Banks discouraged the use
lars[4]

of the year,
$0.60. On Nov
government cl
of silver dol