The Sherman Silver Purchase Act, enacted in 1890, was a United States federal law that aimed to address the growing concerns of farmers and silver miners who sought to increase the money supply and inflate crop prices. The legislation mandated the U.S. Treasury to purchase 4.5 million ounces of silver each month, paying for it with treasury notes that could be redeemed for either gold or silver. This effectively placed the government in the position of being the primary buyer of silver on the market.
This law sought to appease both proponents of bimetallism (the use of both gold and silver to back the currency) and those who favored the gold standard. Supporters believed the increased silver purchases would raise silver prices, benefiting miners and farmers burdened by debt. However, the Act ultimately failed to achieve its objectives. It led to a depletion of the nation’s gold reserves as people redeemed their treasury notes for gold, fearing the devaluation of currency due to the increased silver content. The increased silver purchases did not significantly inflate crop prices, and the economic instability contributed to the Panic of 1893.
