"Sec. 3. That the Secretary of the Treasury shall each month coin 2,000,000 ounces of the silver bullion purchased under the provisions of this act into standard silver dollars until the 1st day of July, 1891, and after that time he shall coin of the silver bullion purchased under the provisions of this act as much as may be necessary to provide for the redemption of the treasury notes herein provided for, and any gain or seigniorage arising from such coinage shall be accounted for and paid into the treasury.
"Sec. 4. That the silver bullion purchased under the provisions of this act shall be subject to the requirements of existing law and the regulations of the mint service governing the methods of determining the amount of pure silver contained, and the amount of charges or deductions, if any, to be made.
"Sec. 5. That so much of the act of February 28, 1878, entitled 'An act to authorize the coinage of the standard silver dollar and to restore its legal tender character,' as requires the monthly purchase and coinage of the same into silver dollars of not less than $2,000,000 nor more than $4,000,000 worth of silver bullion, is hereby repealed.
"Sec. 6. That upon the passage of this act the balances standing with the treasurer of the United States to the respective credits of national banks, for deposits made to redeem the circulating notes of such banks, and all deposits thereafter received for like purpose, shall be converted into the treasury as a miscellaneous receipt, and the treasurer of the United States shall redeem, from the general cash in the treasury, the circulating notes of said banks which may come into his possession subject to redemption; and upon the certificate of the comptroller of the currency that such notes have been received by him, and that they have been destroyed and that no new notes will be issued in their place, reimbursement of their amount shall be made to the treasurer, under such regulations as the Secretary of the Treasury may prescribe, from an appropriation hereby created, to be known as 'National bank notes: Redemption account,' but the provisions of this act shall not apply to the deposits received under section 3 of the act of June 20, 1874, requiring every national bank to keep in lawful money, with the treasurer of the United States, a sum equal to five per cent. of its circulation, to be held and used for the redemption of its circulating notes; and the balance remaining of the deposit so covered shall, at the close of each month, be reported on the monthly public debt statement as debt of the United States bearing no interest.
"Sec. 7. That this act shall take effect thirty days from and after its passage."
The authorship of this law has been generally credited to me, and it was commonly called the "Sherman silver law," though I took but little part in framing the legislation until the bill got into conference. The situation at that time was critical. A large majority of the Senate favored free silver, and it was feared that the small majority against it in the other House might yield and agree to it. The silence of the President on the matter gave rise to an apprehension that if a free coinage bill should pass both Houses he would not feel at liberty to veto it. Some action had to be taken to prevent a return to free silver coinage, and the measure evolved was the best obtainable. I voted for it, but the day it became a law I was ready to repeal it, if repeal could be had without substituting in its place absolute free coinage.
It will be noticed that the act varied greatly from the House bill before the free coinage amendment was attached. The amount of silver bullion to be purchased was changed from $4,500,000 worth per month to 4,500,000 ounces per month. This change, owing to the fall in price of silver, not then anticipated, greatly reduced the quantity to be purchased. The House conferees yielded reluctantly to the striking out of the section in the bill providing for the redemption of the notes in bullion, a plan that had been urged by Secretary Windom. In lieu thereof, however, a clause declaring that it was the purpose of the government to maintain the parity of the metals was inserted. This was a most important amendment and one that has been generally accepted as indicating the purpose of the country to maintain all dollars at par with each other.
The chief merit of this law was that it suspended the peremptory coinage of the silver purchased under it into silver dollars which could not be circulated, but were hoarded in the treasury at great cost and inconvenience. It required the monthly purchase of a greater amount of silver than before, but that could be held in the form of bullion, and could be paid for by treasury notes equal in amount to the cost of the bullion, the whole of which was held in the treasury as security for the payment of the notes. If silver bullion did not decline in market value it could, if necessary, be coined without loss, and thus the parity of the notes with gold could be readily maintained according to the declared policy of the law. The friends of free coinage stoutly asserted that this purchase of silver bullion would not only prevent its depreciation, but would advance its market value, and thus be a gain to the government. I did not believe this but hoped that it would not decline in value, and, in any event, it was better to stop the compulsory coinage of the bullion into dollars, as to force them into circulation would reduce the purchasing power of the dollar and bring the United States to the single standard of silver. Being compelled to choose between the measure proposed and the free coinage of silver I preferred the former, and voted for the bill and, thus, with others, became responsible for it.
Contrary to the expectation of the friends of silver it steadily declined in market value. The compulsory purchase of the enormous aggregate of fifty-four million ounces, or 2,250 tons Troy, each year, did not maintain the market value of silver, but it steadily declined so that the silver purchased each year entailed an annual loss of more than $10,000,000.
When the result became apparent I was anxious to arrest the purchase of silver, and I never could comprehend why anyone not directly interested in the mining of silver could favor a policy involving so heavy a loss to the people of the United States. Long before the second election of Mr. Cleveland I advocated the repeal of what became known as the "Sherman act," and heartily supported and voted for the repeal he recommended.