Seated Liberty Dollar - Abolition and Aftermath

Abolition and Aftermath

For further information on the question of whether silver should be a legal tender in the US in the 19th century, see Cross of Gold speech#Background.

Beginning in 1859, large quantities of silver were found in Nevada Territory and elsewhere in the American West. In 1869, Director of the Mint Henry Linderman began advocating the end of the acceptance of silver bullion deposits to be struck into dollars. Although silver dollars were not coined in large numbers, Linderman saw that mining in the West would increase after the completion of the transcontinental railroad, which it did, as US silver production increased from 10 million troy ounces in 1867 to more than 22 million five years later. Linderman foresaw that these activities would increase the supply of silver, causing its price to drop below the $1.2929 per ounce at which the precious metal in the standard silver dollar is worth $1.00. He anticipated that silver suppliers would turn to the Mint to dispose of their product by striking it into dollars. The monetization of that cheap silver, Linderman feared, would inflate the currency and drive gold from commerce because of Gresham's Law. Although silver advocates later called the resulting law the "Crime of '73" and claimed that it had been passed in a deceitful manner, the bill was discussed during five different sessions of Congress, read in full by both the House of Representatives and the Senate and printed in full on multiple occasions. Once it passed both houses of Congress, it was signed into law by President Ulysses S. Grant on February 12, 1873.

The Coinage Act of 1873 ended production of the standard silver dollar and authorized creation of the Trade dollar, thus concluding the Seated Liberty dollar series. The Trade dollar was slightly heavier than the standard dollar and was intended for use in payments in silver to merchants in China. Although not meant for use in the United States, a last-minute rider gave it legal tender status there up to $5. When silver prices plummeted in the mid-1870s, millions appeared in circulation, at first in the West and then throughout the United States, causing problems in commerce when banks insisted on the $5 legal tender limit. Other abuses followed, such as purchase by companies for bullion value (by then about $0.80) for use in pay packets. Workers had little option but to accept them as dollars. In response to complaints, Congress ended any status as legal tender in 1876, halted production of the Trade dollar (except for collectors) in 1878, and agreed to redeem any which had not been chopmarked in 1887.

The 1873 act eliminated the provisions allowing depositors of silver bullion to have their metal struck into standard silver dollars; they could now only receive Trade dollars, which were not legal tender beyond $5. As the price of silver then was about $1.30 per ounce, there was no outcry from silver producers. Beginning in 1874, however, the price dropped; silver would not again sell for $1.2929 or more on the open market in the United States until 1963. Advocates of silver both sought a market for the commodity and believed that "free silver" or bimetallism would boost the economy and make it easy for farmers to repay debts. Many in Congress agreed, and the first battle over the issue resulted in a partial victory for silver forces, as the 1878 Bland-Allison Act required the Mint to purchase large quantities of silver on the open market and strike the bullion into dollar coins. The Mint did so, using a new design by Assistant Engraver George T. Morgan, which came to be known as the Morgan dollar. The issue of what monetary standard would be used occupied the nation for the rest of the 19th century, becoming most acute in the 1896 presidential election. In that election, the unsuccessful Democratic candidate, William Jennings Bryan, campaigned on "free silver", having electrified the Democratic National Convention with his Cross of Gold speech, decrying the gold standard. The issue was settled for the time by the Gold Standard Act of 1900, making that standard the law of the land.