Bland-Allison Act Overrides Presidential Veto, Restores Silver Coinage

Congress overrides President Rutherford B. Hayes’s veto on February 28, 1878, to enact the Bland-Allison Act, requiring the U.S. Treasury to purchase between $2 million and $4 million of silver bullion each month and mint it into legal tender silver dollars. The Act represents a partial victory for cheap-money advocates, silver-producing interests, and debtor farmers against the eastern banking and industrial establishment’s commitment to the gold standard. The legislation overturns the “Crime of 1873”—the Coinage Act that ended free coinage of silver—but Hayes’s administration immediately blunts its impact by purchasing only the minimum amount monthly, demonstrating how financial interests can neutralize reform through administrative sabotage even when losing legislative battles.

The Act emerges from the 5½-year depression following the Panic of 1873, which drives cheap-money advocates led by Representative Richard P. Bland (Democrat, Missouri) to join with western silver-mining interests in urging a return to bimetallism. The Coinage Act of 1873 had ended the free coinage of silver dollars, effectively removing silver from the standard coinage system. Miners could no longer convert their findings into cash, and farmers and debtors across the country—who frequently used silver dollars for transactions and benefited from inflation—now struggle to service their debts in an environment of monetary contraction. The elimination of silver coinage serves the interests of creditors and bondholders by increasing the real value of fixed debts and returns, transferring wealth from debtors to creditors.

President Hayes, influenced by industrial and banking interests concentrated in the Northeast, vetoes the Bland-Allison Act to preserve the gold standard and maintain a conservative monetary regime. Business and financial interests—the “monometallists”—understand that silver’s restoration would inflate the currency and reduce the real value of their bond holdings and outstanding loans. Congress’s veto override represents agrarian and western interests temporarily outweighing eastern financial power, but the Hayes administration’s decision to purchase only the minimum silver amount demonstrates that control over implementation matters as much as legislative victory. The purchased silver is minted into legal tender silver dollars carrying monetary value far exceeding the market value of the silver content—creating what opponents call “dishonest money.”

The Bland-Allison Act produces the beloved Morgan Dollar design and remains in effect until replaced by the similar Sherman Silver Purchase Act of 1890, which in turn is repealed in 1893 during another financial crisis. Concerns about gold reserve depletion lead to the firm establishment of the gold standard with the Gold Standard Act of 1900, completing the victory of financial interests over agrarian debtors. The Act demonstrates a recurring pattern in American political economy: when populist pressure forces monetary expansion that threatens creditor interests, the financial establishment uses administrative discretion, crisis manipulation, and eventual legislative reversal to restore policies favoring concentrated capital. The battle over silver versus gold represents the Gilded Age’s central class conflict—not between labor and capital per se, but between productive debtors (farmers, small manufacturers) and rentier creditors (bankers, bondholders) over who controls the monetary system and thus the distribution of wealth and economic power.