Sherman Silver Purchase Act, Panic of 1893

Mintage of the Morgan dollar remained relatively steady until the passage of the Sherman Silver Purchase Act on July 14, 1890.The act, authored by Ohio senator and former Treasury secretary John Sherman, forced the Treasury to increase the amount of silver purchased to 4,500,000 troy ounces (140,000 kg) each month.Supporters of the act believed that an increase in the amount of silver purchased would result in inflation, helping to relieve the nation’s farmers.The act also received support from mining interests because such large purchases would cause the price of silver to rise and increase their profits. Despite the fact that the purchase of silver was required by the act, it stated that the Mint must coin 2,000,000 silver dollars each month only until 1891. Since the Treasury already had a surplus of silver dollars, mintages dropped sharply beginning in 1892. The silver that remained after mintage of the dollars was used to mint dimes, quarters and half dollars.

Beginning early in 1893, a number of industrial firms, including the Philadelphia and Reading Railroad and the National Cordage Company went bankrupt.The resulting bank runs and failures became known as the Panic of 1893. In June of that year, President Grover Cleveland, who believed that the Panic was caused by the inflation generated by the Sherman Silver Purchase Act, called a special session of Congress in order to repeal it.The act was repealed on November 1, 1893.On June 13, 1898, Congress ordered the coining of all the remaining bullion purchased under the Sherman Silver Purchase Act into silver dollars. Silver dollar production rose again,until the bullion was exhausted in 1904, when it ceased.