of greenbacks and the withdrawn bank issues . After the end of the Depression of 1882 to 1885 — from 1886 to 1890 — payments of gold flowed into the Treasury and the gold supply was more than sufficient . However , as discussed , the “ Bland dollar ” rarely circulated and a few hundred million of them were stashed away in Treasury vaults . The extensive circulation of silver certificates was the only way to keep silver in everyday commerce .
Library of Congress
Bland dollars in 1,000-coin canvas bags in a vault of the US Treasury in 1914 . Hundreds of millions of Bland dollars did not circulate .
Eric Brothers is a regular contributor to Numismatic News . Since 2006 , he has written 46 features for The Numismatist , the publication of the American Numismatic Association ( ANA ). He also writes for FUNTopics , the publication of Florida United Numismatists , and ANS Magazine , a publication of the American Numismatic Society in New York . This is his seventh article for Financial History .
and decreased activity in all business sectors . The major supply of gold arrived at the Treasury via customs , and New York received the majority of such payments . However , gold payments started to fall off starting in September 1883 , while greater percentages of silver and greenbacks were collected . By the end of 1884 , gold receipts had dipped to 20 %, in comparison to 80 % in 1883 . On the other hand , receipts of silver rose from 15 % in 1883 to 45 % in 1884 .
Large surpluses had previously enabled the government to pay off several millions of national debt each year . However , in September 1884 the government simply stopped paying off the national debt . “ Here was another effect of the silver legislation of 1878 ,” writes Laughlin , “ It crippled the patriotic payment of our public debt . Instead of being used in reducing the interest-bearing burden , our surplus was used in purchases of silver , which not only could not be got out of the Treasury , but prevented gold from coming in .”
Forcing Silver Dollars into Circulation
In 1885 , a vacuum in currency circulation was created to force silver dollars into circulation . To that end , the issuance of bank notes under $ 5 was halted in June 1885 . Thus , silver dollars were required for change for larger purchases . This resulted in a rise in circulation of silver dollars during the second half of 1885 and in 1886 .
Laughlin describes “ the increase of silver circulation in and after 1886 …” However , that was mostly in the form of silver certificates . The circulation of silver dollars averaged around 40 million in 1884 and at the end of 1886 topped out at just over 60 million pieces . The circulation of such coins hovered around 60 million annually from then until 1892 , after which time it began to dip slightly .
Arthur B . Woodford writes , in 1893 , “ Nearly 400,000,000 were coined under [ the Bland-Allison ] act , of which 60,000,000 remain in circulation …” That figure represents about 15 % of the mintage from 1878 to 1893 . But where did most of the silver dollars circulate ? Carothers writes , “ The general public rejected it . The negligible population of the West , for partisan purposes , accepted the coin , as did the southern [ former slaves ], whose inability to read led them to reject printed bills .”
Increasing Silver Circulation Via Silver Certificates
A rider to the General Appropriations Act of June 30 , 1886 , authorized the issuance of silver certificates in denominations of $ 1 , $ 2 and $ 5 . Therefore , silver certificates replaced small denominations
Note
1 . “ Free Silver ” is when anyone could bring unlimited silver bullion to the US mints and have it coined into whatever coin they wished — without a seigniorage charge .
Sources
Carothers , Neil . “ Silver : A Senate Racket .” The North American Review . Vol . 233 , No . 1 . January 1932 .
Laughlin , J . Laurence . The History of Bimetallism in the United States . New York : D . Appleton and Company . 1898 ( 1885 ).
Lee , Alfred E . “ Bimetallism in the United States .” Political Science Quarterly . Vol . 1 , No . 3 . September 1886 .
Unger , Irwin . The Greenback Era : A Social and Political History of American Finance . Princeton , NJ : Princeton University Press . 1964 .
Weinstein , Allen . Prelude to Populism : Origins of the Silver Issue , 1867 – 1878 . New Haven , CT and London : Yale University Press . 1970 .
Woodford , Arthur B . “ On the Use of Silver as Money in the United States .” The Annals of the American Academy of Political and Social Science 4 . July 1893 .
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