The Sherman Silver Purchase Act 1873 and the Cross of Gold

It was a national policy, the Gold Standard vs The Silver and it was/is complicated. Historically the U.S had used both gold and silver as a basis for currency but in 1873 Congress passed a law “demonetizing” silver, making gold the only standard for American currency. It was supposed to promote international trade.

Gold Standard supporters, mainly Easterner capitalists wanted to prevent new silver discoveries in the West from expanding the money supply. Silver production boomed, was flooding the market and dropping the value of the metal. Eastern Conservatives in both parties denounced silver while Southerners and Westerners demanded the unlimited coinage of silver.

Hard times hit and Congress passed the Sherman Silver Purchase Act in 1890 where the Treasury would buy more silver. This brought about a boom in silver mining. Again gold standard advocates made plans to repeal the law. President Cleveland persuaded Congress to repeal the Act in 1893, thus enraging the Southerners and Westerners as the Treasury quit buying silver and this caused western mines to shut down. This was when Sen. William Jennings Bryan made his “Cross of Gold” Speech. Like most Westerners, he saw the silver issue in the context of a struggle between the “corporate interests, aggregated wealth and capital, arrogant, compassionless” against “an unnumbered throng….of work-worn and dust-begrimed.” In other words, a fight between the wealthy class and the working class.

Most Americans today don’t realize how close this country came to a second Civil War in the 1890s.

Economics can be complicated.