The Bland-Allison Act of 1887, the brainchild of U.S. Representative Richard P. Bland and Senator William B. Allison, was passed by the U.S. Congress to provide for freer coinage of silver or to force “…the U.S. Treasury to buy a certain amount of silver and put it into circulation as silver dollars” (Wikipedia).

The U.S President at the time, Rutherford B. Hayes, vetoed the proposed legislation, but was overrode by the U.S. Congress, which led to the enactment of the Bland-Allison Act on 28 February 1878. This was a step forward for those who advocated the re-instatement of both gold and silver as a monetary standard (bimetallism). It was after all no secret that the highly controversial Coinage Act of 1873, also known as the Mint Act or Fourth Coinage Act, embraced a gold standard that de-monetized silver. This was referred to by many as the “Crime of ‘73”. The “Silverites” or advocates of bimetallism welcomed the enactment of the Bland-Allison Act of 1887 to some extent, because it cleared the way for a return to silver coinage and a bimetallic monetary policy in the States. To some extent, because the “Silverites” actually wanted to replace the Bland-Allison Act of 1887 with an act that would make room for free and unlimited silver coinage. It is said that the original bill proposed by U.S. Representative Richard P. Bland was aiming for exactly that and it passed the House, but was amended after pressure from U.S. Senator William B. Allison.

It is alleged that the Bland-Allison Act of 1887 led to an even greater disruption in the U.S. economy than the disruption of 1873. It was alleged that the root of the disruption was the fact that the gold price was more stable than that of silver. This was allegedly mainly due to silver discoveries in Nevada and other places in the West. This pushed the gold/silver ratio from 1:16 in 1873 to almost 1:30 in 1893. This is despite the fact that President Hayes and his predecessors purchased the absolute minimum amount of silver as described by the Bland-Allison Act of 1887, which in effect weakened the effect of the act. The Sherman Silver Purchase Act of 1890 replaced the Bland-Allison Act of 1887.

Bimetallism

Bimetallism, a monetary standard where a fixed rate of exchange is set between gold and silver, didn’t work, because they fixed the prices of both gold and silver, separately and in relation to each other. This caused distortions in the market, because the one pushed the other out of the market, creating unnatural and unhealthy shortages. This is not to say that gold and silver are not money or cannot be used as money successfully within the same monetary system, it is to say that the free market should set gold and silver prices (not even to mention other prices!). Yes, natural shortages can develop when honest money such as gold and/or silver is used, but it gives the incentive to mine more gold and/or silver, to expand the money supply in a more healthy and gradual way. What is after all healthy and gradual about monetary expansion when an estimated 9+ tons of ink is used daily just to print fiat dollar notes alone, not even to mention the fiat dollars they create electronically with a few strokes on a keyboard?

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