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A Bland dollar ( now called the Morgan dollar ) dated 1878-S ( San Francisco Mint ). This example has been authenticated and certified as Specimen-65 by Professional Coin Grading Service as the earliest-known branch mint proof Morgan dollar .
representing , the certificates shall be retained in the Treasury for the payment of the same on demand . Said certificates shall be receivable for customs , taxes , and all public dues , and , when so received , may be reissued .
Radical Shift in Monetary Policy
The Bland-Allison Act was a radical departure from the monetary policy of previous years . Except for the paper money era of 1862 – 1879 , the United States had expressed prices and contracts — both actually and legally — in the gold standard since the year 1834 . The silver bullion purchases authorized by Bland-Allison were to be struck into dollars each containing 371-1 / 4 grains of pure silver ( or 412.5 grains standard silver ). These dollars were to be “ a legal tender at their nominal value for all debts and dues , public and private except where otherwise stipulated in the contract .”
The Act of 1878 brought a new currency to America . Objections to the use of silver dollars , due to their weight and bulk , were mostly removed by the provision for silver certificates . Those certificates were not a full legal tender for all debts —“ public and private ”— as silver dollars were . However , in practice they were received equally with silver dollars , for , if refunded , one could easily acquire silver dollars .
Suspicion of Silver
There was much distrust of silver in the two years after the passage of Bland- Allison . The silver dollars stockpiled in the Treasury nearly as quickly as they came from the mints . The only way to keep silver in circulation was via silver certificates . Among the first issues were denominations of $ 1,000 . They were employed to acquire bullion in San Francisco and then they were sent back to New York in 10 days , where they were used for customs payments to the US Treasury . Those certificates were held only by large firms or banks . There were also silver certificates in denominations of $ 10 and $ 20 .
Between June 1878 and mid-1880 , the vast majority of silver dollars remained in the Treasury . Few silver certificates were issued during this time . However , in September 1880 , a favorable method for getting out silver was devised . Drafts were offered on the sub-treasuries in the West and South , payable in silver certificates to those who wanted to make their payments there , in exchange for gold coin deposits at the New York subtreasury . In essence , it was a transfer of funds to far-off regions of the country free of charge .
Confidence In the Gold Standard Shaken
The overall revival of trade after the resumption of specie payments in 1879 saw great prosperity in the early 1880s . Gold was imported and gold reserves in the Treasury saw the results in a larger inflow during 1881 . There was an increase in bank circulation , and denominations of money — for example $ 10 and $ 20 — for use in the retail trade , were needed in large sums .
However , during this time the gold reserve was sensitive to increases in silver supplies in the Treasury . In 1880 , when silver went up , gold dipped ; in 1881 , when silver dipped , gold went up ; and , and the end of 1882 , as silver went up , gold dipped . Overall , as Treasury supplies of silver rose , the gold reserve fell .
Bland-Allison initiated a period in which confidence in the gold standard was shattered . That was due to the prospect of the change of standard from one metal to another . In 1885 , Laughlin wrote , “ The possible drop from a gold to a silver standard was full of startling uncertainties . This was the cause of the alarm felt by the business community , and it was a very real one . The great incubus hanging over the country since 1878 had been this fear of a change in our standard .”
The Panic of 1884
The Panic of 1884 struck in the midst of the Depression of 1882 – 1885 . Failures in May 1884 led to restricted production
42 FINANCIAL HISTORY | Fall 2024 | www . MoAF . org