Bland-Allison Act (1878)

Legislation that provided for the freer coinage of silver and placed the money supply of the United States on a bimetal standard.
Authored by Democratic Representative Richard P. Bland of Missouri and passed in 1878, the Bland-Allison Act attempted to satisfy the demands of Western interests for the free and unlimited coinage of silver. The bill passed the House of Representatives but underwent major modifications by Republican Senator William B. Allison of Iowa. The final version of the act, passed over the veto of President Rutherford B. Hayes, required the U.S. Treasury to purchase between $2 and $4 million worth of silver bullion each month at market prices. The government would use this silver to coin a limited number of silver dollars at a ratio of 16 to 1 with gold and to back the issuance of paper money called silver certificates.
Reversing the Coinage Act of 1873, which had placed the country on the gold standard, the Bland-Allison Act provided a compromise for conflicting sectional interests in monetary policy. The financial forces of the East favored the contraction of the money supply and the gold standard. The indebted agrarian classes in the South and West demanded inflation and cheap money to ease the burden of debt caused by falling prices for farm products. Also, Western silver miners favored bimetalism (the use of silver as well as gold as specie, or hard metal currency) because the price of silver had declined drastically because of overproduction, and they required a steady and reliable market.
The act did not have the effects that conservatives feared or “silverites” hoped. Its provisions proved insufficient to halt the decline of silver prices or to increase the amount of money in circulation, primarily because government officials purchased only the minimum amount of bullion required by law. The Sherman Silver Purchase Act of 1890 replaced this act.