Silver dollars made legal on February 16, 1878
Silver dollars made legal: Strongly supported by western mining interests and farmers, the Bland-Allison Act—which provided for a return to the minting of silver coins—becomes the law of the land.
The strife and controversy surrounding the coinage of silver is difficult for most modern Americans to understand, but in the late 19th century it was a topic of keen political and economic interest. Today, the value of American money is essentially secured by faith in the stability of the government, but during the 19th century, money was generally backed by actual deposits of silver and gold, the so-called “bimetallic standard”. The U.S. also minted both gold and silver coins.
In 1873, Congress decided to follow the lead of many European nations and cease buying silver and minting silver coins, because silver was relatively scarce and to simplify the monetary system. Exacerbated by a variety of other factors, this led to a financial panic. When the government stopped buying silver, prices naturally dropped, and many owners of primarily western silver mines were hurt. Likewise, farmers and others who carried substantial debt loads attacked the so-called “Crime of ’73”. They believed, somewhat simplistically, that it caused a tighter supply of money, which in turn made it more difficult for them to pay off their debts.
A nationwide drive to return to the bimetallic standard gripped the nation, and many Americans came to place a near mystical faith in the ability of silver to solve their economic difficulties. The leader of the fight to remonetize silver was the Missouri Congressman Richard Bland. Having worked in mining and having witnessed the struggles of small farmers, Bland became a fervent believer in the silver cause, earning him the nickname “Silver Dick”.
With the backing of powerful western mining interests, Bland secured passage of the Bland-Allison Act, which became law on this day in 1878. Although the act did not provide for a return to the old policy of unlimited silver coinage, it did require the U.S. Treasury to resume purchasing silver and minting silver dollars as legal tender. Americans could once again use silver coins as legal tender, and this helped some struggling western mining operations. However, the act had little economic impact, and it failed to satisfy the more radical desires and dreams of the silver backers. The battle over the use of silver and gold continued to occupy Americans well into the 20th century.