Q. David Bowers
Silver Coinage of the 1870s
During the 1870s there were some interesting attempts by some western representatives and senators in Congress to increase the use of silver in coinage. One of the most bizarre was the successful bill introduced by Senator John P. Jones of Nevada creating the 20-cent piece. He claimed that this coin would, in some obscure fashion, stop the short-changing of customers in stores. No one really believed this nonsense, but he was owed enough political favors to get the measure adopted. After all, what harm could a 20-cent piece really do?
Another, more serious, challenge to the monetary system was the measure introduced in December 1876 by Missouri Representative Richard P. Bland to allow free and unlimited coinage of silver dollars, the same situation, with minor differences, that had been in effect from 1853 to 1873. Bland's proposal was defeated for several reasons, the principal one being such that a radical measure required strong support, which he did not have. The silver forces were powerful in the House, where the measure passed, but not in the Senate.
Further complicating the political situation was the growing strength of the Greenback party, which advocated government funding by means of the printing press. In short they wanted more, not less, paper money in circulation, and many debtors strongly agreed with the party platform. The bottom line of the Greenbacker position was an end to the controlled deflation. It was only a matter of time until Greenbackers and Silverites joined forces for a change in the currency.
In the summer of 1877 there was an uneasy truce between the government and the populist elements of society (in this case, primarily the Greenback party and the Silverites) when disaster struck, in the form of minor silver coins!
Old Silver Coins Reappear
In 1862 American silver coins had been taken from circulation by citizens growing increasingly nervous over the outcome of the Civil War. Victories by Confederate commanders created a state of near panic in some sectors of northern society, and gold had left circulation by the end of December 1861 The mass hoarding of silver began in May 1862 and by the end of the next month little silver coinage, except for a few stray trimes, was to be seen in the marketplace. Even the trimes were soon gone.
Much of this silver, for reasons not entirely clear, was shipped to Canada, Central America (especially Guatemala), and Chile. There it was both hoarded and used. In 1877 this same silver, which had gone abroad during the war, suddenly returned in massive quantities. About $20 million worth came back, much to everybody's surprise. The newly-arrived coinage, much of which was dated 1853-1857, soon overwhelmed the arteries of commerce, and it seemed that silver coins were everywhere.
In 1873 Dr, Linderman had ordered mass mintage of silver minor coins, and this policy had been pursued very strongly since that time. Now, however, the influx of old silver coins flooded bank and Sub-Treasury vaults. Treasury Secretary John Sherman, under provisions of the 1873 Mint Act, ordered in early 1878 that minor silver coinage be halted and efforts be devoted to producing Morgan silver dollars. (See excerpt from the 1878 Annual Report of the Director of the Mint, quoted by Bowers under Additional Information following the section for the 1878 8 Tailfeathers dollar, beginning with: "[The] coinage of fractional silver was temporarily suspended .... " )
Sherman's order also is the reason for the low coinage of minor silver, especially of the quarter and half dollar denominations, from 1879 through the summer of 1891, and dimes of 1879-1881. It must have been an odd sensation for a bank to order half dollars from the Treasury and receive coins nearly 40 years old. In the 1890s the idea arose that the heavy Morgan dollar coinage of 1878 and later was the reason for this non-coinage of lesser denominations, an argument still seen on occasion. The rumors seem to have been deliberately started as part of the political disputes in the 1896 election campaigns.
The sudden arrival of the old coinage sent visions of doom through the ranks of the silver men. The October 1877 order ending trade dollar coinage (temporarily rescinded from December 1877 to February 1878), coupled with the anticipated suspension of minor silver coinage at the mints, meant that silver purchases by the government would stop.
New Legislation
In November 1877 Representative Bland reintroduced his bill for the free and unlimited coinage of silver and, once more, it passed the House by an overwhelming margin. The margin was 163 to 34, although 93 abstained or were conveniently absent. There was now enormous pressure on the Senate to do likewise. Senator William Allison of Iowa realized that the Senate would almost certainly pass the Bland bill as written unless there was a serious diversion. Most senators still opposed this legislation, but there was too much populist pressure for some to resist.
Senator Allison hit upon the idea of requiring the government to purchase between two and four million dollars worth of silver, at the prevailing market price, each month for coining into silver dollars. Government vaults and private banks were choked with the minor silver coinage and the only coin left to be minted was the dollar. Silver dollars did not circulate to any significant extent, but this did not matter to the panic-stricken silver forces.
Other populist forces now combined with the Silverites, but Allison's amendment drew off just enough support in Congress that Bland and his allies realized that the Senate version was the best that could be accomplished. Some of the Greenbackers defected to the Allison side because of a realization that the silver would be paid for with greenbacks, thus getting their controlled inflation rather than something that might easily get out of hand, as Bland's original bill seemed to threaten.
After considerable debate, especially in the conference committee set up to deal with the two different versions, Congress at last passed the BlandAllison Act, as it was to become known, on February 28, 1878. President Rutherford B. Hayes, an implacable foe of both unlimited silver coinage and inflation of any kind, vetoed the bill on the same day. Two hours later Congress overrode the veto and the bill became law. The old silver dollar had returned and the Silverites rejoiced.