During the last half of the 19th century, there was considerable debate in the U.S. among advocates of a gold standard, a silver standard, or bimetallism. Elsewhere in the world at this time, countries were switching to a gold standard and eliminating silver or bimetallic standards. This had the effect of increasing the supply of silver on world markets. Unfortunately, this was happening at the same time new silver deposits were being found.
After the discovery of the Comstock Lode and other silver deposits in the U.S., a clamor began for the “free coinage” of silver.
During the California Gold Rush, prospectors, assayers, and refiners where allowed to deposit their hoard at the U.S. Mint in exchange for gold coin. Those who advocated “free silver” were essentially asking for the same kind of silver exchange.
Despite the clamor for free silver, the Fourth Coinage Act was enacted in 1873. This Act embraced the gold standard and de-monetized silver. Western miners called this Act the “Crime of ’73.” Gold was the only metallic standard in the U.S. until Congress passed the Bland-Allison Act of 1878. The Sherman Silver Purchase Act replaced this Act in 1890.
Both of these new laws fell short of permitting the free and unlimited coinage of silver, but they did set up arrangements by which the U.S. government was required to purchase a certain amount of silver bullion each month. The Sherman Silver Purchase Act was repealed after the Panic of 1893. Shortly thereafter, the advocates of the gold standard won the day.
Next, learn about the California Gold Rush | Precious Metals in History.