Bland-Allison Act

Bland-Allison Act 1878, passed by the U.S. Congress to provide for freer coinage of silver. The original bill offered by Representative Richard P. Bland incorporated the demands of the Western radicals for free and unlimited coinage of silver. This was passed by the House but was unacceptable to the conservative Senate. Senator William B. Allison then offered an amended version. The act as adopted required the U.S. Treasury to purchase between $2 million and $4 million worth of silver bullion each month at market prices; this was to be coined into silver dollars, which were made legal tender for all debts. Attempts of the free-silver forces to replace the act with provision for unlimited coinage were defeated, as were attempts of the gold-standard forces to repeal it altogether. President Hayes and his successors weakened the act's effect by purchasing only the minimum amount of bullion. It remained law until replaced by the Sherman Silver Purchase Act of 1890.

Free Silver Movement. Traditionally the United States had a bimetallic monetary system in which sixteen ounces of silver equaled one ounce of gold. As the world supply of silver became scarce by the 1850s, the value of silver rose and it was rarely used to coin money. In the 1860s, western miners discovered new supplies of silver, which decreased the commodity's value. By then more nations were adopting the gold standard. To maintain a stable currency, Congress passed a Coinage Act in 1873 that demonetized silver. At first there was little reaction, but as the price of silver fell, demands for the free and unlimited coinage of silver increased. To pacify the silver forces, Congress passed the Bland‐Allison Act (1878) authorizing the Treasury to coin $2–$4 million in silver each month, and the Sherman Silver Purchase Act (1890), providing for the monthly coinage of 4.5 million ounces of silver.

To this point, the silver issue had not been deeply divisive. In 1893, however, in response to the Depression of 1893–1896, President Grover Cleveland persuaded Congress to repeal the Sherman Silver Purchase Act, thereby again demonetizing silver. Many people then exchanged silver money for gold and the Treasury's gold reserve became seriously depleted. To bolster the reserve, the Cleveland administration sold bonds to New York bankers in return for gold bullion.

These developments revitalized the free silver movement. Within the Democratic party, William Jennings Bryan assumed leadership of the silver forces, and in 1896 the Democrats nominated Bryan for president on a free‐silver platform, as did the Populist party. The Republican party, rallying behind William McKinley, endorsed the gold standard. In the ensuing campaign, the two sides offered competing visions. Silverites argued that instead of rigidly adhering to the gold standard, the government should devise a more flexible monetary system; Republicans insisted that gold be the sole basis for money. Silverites desired price inflation to combat depression; Republicans feared that inflation would worsen the economy. Silverites charged that eastern bankers used the gold standard to exploit farmers and the working class; Republicans responded that only the gold standard could ensure prosperity for all.

McKinley won the election, and the silver issue soon faded. Free silver appealed mostly to indebted farmers and mine owners and the movement failed to bridge the division separating agriculturists and wage laborers. After 1897, however, new discoveries of gold enabled the nation to enjoy economic expansion and moderate inflation while maintaining the gold standard.
See also Agriculture: 1770s to 1890; Agriculture: The “Golden Age” (1890s–1920); Depressions, Economic; Farmers’ Alliance Movement; Gilded Age; Gold Rushes; Mining; Monetary Policy, Federal; Morgan, J.P.; Populist Era.

Bibliography

Walter T.K. Nugent , The Money Question during Reconstruction, 1967.
Gretchen Ritter , Goldbugs and Greenbacks: The Antimonopoly Tradition and the Politics of Finance in America, 1997.

William F. Holmes