Agitation for action on the silver question was intense by 1890. Farmers were straining under growing debt and sharply falling prices. Western mining interests were anxious for a ready market for their silver and exerted pressure on Congress. Western voices were much stronger with the recent addition of Idaho, Montana, Washington, Wyoming and the Dakotas to the Union.
The Sherman Silver Purchase Act was part of a broader compromise. The Democrats gave their support to the highly protective McKinley Tariff in return for Republican votes for silver.
The Sherman Silver Purchase Act provided for the following:
- The Treasury would purchase 4.5 million ounces (or 281,250 pounds) of silver each month at market rates
- The Treasury would issue notes redeemable in either gold or silver.
The planned government purchases amounted to almost the total monthly output from the mines. However, the increased supply of silver drove down the price. Many mine operators in the West tried to reduce expenses by cutting the miners' wages. Labor unrest and sporadic violence followed.
As the price of silver continued to decline, holders of the government notes understandably redeemed them for gold rather than silver. The result of the growing disparity between the two metals was the depletion of the U.S. gold reserves, an event that played prominently during the Panic of 1893, following which Congress repealed the Sherman Silver Purchase Act.