#23: Benjamin Harrison: Sherman Silver Purchase Act

Benjamin Harrison was a big supporter of the Sherman Silver Purchase act. This and his support for the McKinley Tarriff Act were the two major reasons that Grover Cleveland was able to defeat him and win a second non consecutive term.

In the later 1800's, farmers were faced with what was the sort of foreclosure crisis of our day. They owed much more on their farms than they could pay to the banks that lent them the money to buy the farms. This was due to a variety of factors, land speculation, the price of wheat and other crops, and drought all combined to make the perfect storm to hurt the farmers. It's important to realize that at this point in the country, farmers held more than the symbolic political value than they do now since the majority of people that lived outside cities farmed.

The farmers wanted some kind of relief of their debts, similar to how homeowners are now asking banks to take a write down on the mortgages they hold when the homes that secure the mortgages go down in value.

At they same time as the economic crisis was unfolding, mining interests were discovering huge caches of silver in America. So much silver in fact, that the metal had plunged in value due to all the supply that flooded the market. The farming and the mining interests jointly decided that if the U.S. Government were to be required to purchase silver and use it to back its currency, the price of silver would be artificially inflated and the value of the U.S. dollar would go down, since silver is a less valuable material than gold, which the dollar was based on at the time. The inflated value of silver would make the vast silver reserves of the mining companies more valuable and the lowering in value of the dollar would mean that it was easier for the farmers to pay the large debts they've built up.

John Sherman pushed through this legislation requiring the government to purchase massive quantities of silver with Benjamin Harrison's support. The problem came when investors overwhelmingly would exchange their silver notes for gold which they were allowed to do under the law. Many of these investors were overseas and this ultimately depleted the gold reserves of the United States.

It got so bad, that the iconic banker, J.P. Morgan stepped in and made a massive loan of gold to the U.S. Treasury to save the country from bankruptcy. Imagine that, a bank bailing out the U.S. Government instead of receiving a bail out!

These were certainly chaotic times, the nation went from debating how to use the huge surplus it built up over the years from tariffs on imported foreign goods to barely being able to pay its bills.