The Sherman Silver Purchase Act, a United…

The Sherman Silver Purchase Act, a United States federal law enacted on July 14, 1890, does not authorize the free and unlimited coinage of silver that the Free Silver supporters want; however, it increases the amount of silver the government is required to purchase on a recurrent monthly basis to four and a half million ounces.

The Sherman Silver Purchase Act is passed in response to the growing complaints of farmers' and miners' interests.

Farmers have immense debts that cannot be paid off due to deflation, and they had urged the government to pass the Sherman Silver Purchase Act in order to boost the economy and cause inflation, allowing them to pay their debts with cheaper dollars.

Mining companies, meanwhile, have extracted vast quantities of silver from western mines; the resulting oversupply has driven down the price of their product, often to below the point at which the silver can be profitably extracted.

They hope to enlist the government to increase the demand for silver.

The act is enacted in tandem with the McKinley Tariff of 1890.

William McKinley, an Ohio Republican and chairman of the House Ways and Means Committee,  had worked with John Sherman to create a package that could both pass the Senate and receive the President's approval.

Under the Act, the federal government will purchase millions of ounces of silver, with issues of paper currency.

It becomes the second-largest buyer in the world, after the British Crown in India, where the Indian rupee is backed by silver rather than gold.