The Bland-Allison Silver Repurchase Act of 1878 reaffirmed the status of the silver dollar as legal tender, and provided for the limited coinage of silver dollars. The Coinage Act of 1873 made no provision for the coinage of silver dollars, and dropped the silver standard from the definition of the dollar. It left preexisting silver dollars as legal tender—though none were in circulation at the time—but an amendment to coinage laws in 1874 made silver coins legal tender only for debts up to five dollars. The act failed to establish so-called free silver; that is, it did not commit the government to mint all the silver brought to the mint. Silver coinage was limited and gold coinage was unlimited. Congressman Richard P. Bland of Missouri introduced the bill in the House of Representatives, and Senator William B. Allison of Iowa guided the bill through the Senate. The act provided:
That there shall be coined, at the several mints of the United States, silver dollars of the weight of four hundred and twelve and a half grains troy of standard silver, as provided in the Act of January 18, 1837, on which shall be the devices and superscriptions provided by said act; which coins together with all silver dollars heretofore coined by the United States, of like weight and fineness, shall be legal tender at their nominal value, for all debts and dues public and private, except when otherwise provided by contract.
The bill that passed the House of Representatives provided for the free coinage of silver. It read that “any owner of silver bullion may deposit the same with any United States mint or assay office, to be coined into such dollars for his benefit upon the same terms and conditions as gold bullion is deposited for coinage under existing laws.” The Senate amended the bill, substituting the free silver provision with a limit on the coinage of silver to not less than $2 million or more than $4 million per month. An amendment making the silver dollars convertible into gold failed, as did an amendment that forbade the use of silver dollars in payment for interest on the public debt. Measures to increase the silver content of silver dollars also failed.
Also, the act directed the president of the United States to invite European nations to “join the United States in a conference to adopt a common ratio between gold and silver, for the purpose of establishing internationally the use of bimetallic money, and securing fixity of relative value between those metals.”
This provision led to the International Monetary Conference of 1878 in which the United States urged the adoption of a gold-silver bimetallic standard, but the European nations were not interested.
President Rutherford B. Hayes vetoed the Bland-Allison Act, citing the deterioration in the value of silver, and the injustice to creditors receiving payment in silver. The Senate voted 46 to 19 to override Hayes’s veto, and the House voted 196 to 73 to override the veto, making the Bland-Allison Act the law of the land.
President Hayes had vowed to veto a free silver bill, and he attached little significance in the Bland-Allison bill to the provision that limited the coinage of silver. The silver advocates were not happy, and the push for free silver took on the aura of a populist movement as the century progressed. The government apparently kept its silver purchases to the minimum allowed of $2 million per month. The coinage of silver continued until 1890, when the Sherman Silver Act required the government to almost double its silver purchases, but substituted the issuance of treasury notes for the coinage of silver. After the enactment of the Sherman Silver Act, concern over the future of America’s gold standard sparked a financial panic and Congress repealed it in 1893. The government discontinued the purchase of silver under the Bland-Allison and Sherman Acts.