Bland-Allison Act
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The Bland-Allison Act was an 1878 act of Congress requiring the U.S. Treasury to buy a certain amount of silver and put it into circulation as silver dollars. Vetoed by President Rutherford B. Hayes, the Congress overrode Hayes' veto on February 28, 1878 to enact the law.
[edit] Background and terms
The five-year depression following the Panic of 1873 caused cheap-money advocates (led by U.S. Representative Richard P. Bland, a Democrat of Missouri, to join with silver-producing interests in urging a return to bimetallism, the use of both silver and gold as a monetary standard. The controversial Coinage Act of 1873 (also called the Fourth Coinage Act or Mint Act) embraced the gold standard and de-monetized silver. Silver advocates, decrying the so-called "Crime of '73," demanded restoration of free coinage of silver at a ratio to gold of 16 to 1, approximately $1.29 an ounce.
Free coinage, as the symbol of justice for the poor, was seized upon by others determined to prevent resumption of specie payments (the redemption, in metallic coin, of U.S. paper money by banks or the Treasury) and desirous of plentiful inflationary currency. Bland's bill for free coinage, passed by the House on 5 November 1877, jeopardized Secretary of the Treasury John Sherman's plans for resuming specie payments. Sherman, through a Senate amendment sponsored by Senator W. B. Allison of Iowa, was able to substitute less inflationary limited purchases for free coinage. Silver producers accepted the arrangement as likely to restore silver to $1.29.
The 1878 Bland-Allison Act, named for Representatives Bland and William B. Allison, a Republican of Iowa, was intended to subsidize the silver industry in the Mountain States and inflate prices. Under the law, the Treasury would purchase quantities of bullion valued between $2 million and $4 million per month. The silver would be purchased at market price (not at a predetermined ratio tied to the value of gold). The silver would be used to make legal tender coins at ratio of 16:1 to golds, exchangeable for $10 silver certificates. In other words, 16 ounces (one pound) of silver would be equivalent to one ounce of gold, regardless of the metals' respective market values. The president was also directed to arrange an international bimetallic conference to meet within six months.
However, the Hayes administration blunted the Act's impact: The Treasury never actually bought more than the $2 million minimum amount[citation needed] and never circulated the silver dollars. The law was replaced in 1890 by the similar Sherman Silver Purchase Act, which in turn was repealed by Congress in 1893. Gold remained the larger feature between both pieces of legislation. The term "limping bimetallism" has been used to describe this program.
