The Sherman Silver Purchase Act was a United States federal law enacted on July 14, 1890, which increased the amount of silver the government was required to purchase on a recurrent monthly basis to 4.5 million ounces, roughly the entirety of the American output.
The act did not authorize the free and unlimited coinage of silver that the Free Silver supporters wanted. Instead, it had been passed in response to the growing complaints of farmers' and miners' interests. Farmers are usually debtors, with mortgages on their farms and loans on their crops; deflation meant that they had to pay back these loans in more
expensive dollars, and this act promotes inflation. Mining companies, meanwhile, had extracted vast quantities of silver from western mines. The resulting oversupply drove down the price of their product, often to below the point at which the silver could be profitably extracted. They hoped to enlist the government to increase the demand for silver.
Originally, the bill was simply known as the Silver Purchase Act of 1890. Only after the bill was signed into law did it become the "Sherman Silver Purchase Act." Senator John Sherman, an Ohio Republican and chairman of the Senate Finance Committee, was not the author of the bill, but once both houses of Congress had passed the Act and the Act had been sent to a Senate/House conference committee to settle differences between the Senate and House versions of the Act, Sherman was instrumental in getting the conference committee to reach agreement on a final draft of the Act.
In 1890, the price of silver dipped to per ounce. By the end of the year, it had fallen to . By December 1894, the price had dropped to . On November 1, 1895, US mints halted production of silver coins, and the government closed the Carson City Mint. Banks discouraged the use of silver dollars.