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<p>[QUOTE=&quot;Conder101, post: 3231014, member: 66&quot;]The Panic of 1893 was caused by the Sherman Silver Purchase Act not its repeal.&nbsp; The repeal was caused by the panic.</p><p><br /></p><p>The Sherman Act greatly increased the amount of silver the Mint was required to purchase each month to be made into silver dollars.&nbsp; This silver was paid for with a new currency, the Coin Notes of 1890 which were redeemable on demand in either silver or gold and the redeemers choice.&nbsp; Most of these notes were immediately redeemed for gold.&nbsp; Why?&nbsp; Because that amount of gold would purchase MORE silver bullion than was originally sold to the mint. That silver would then be sold to the Mint for more coin notes.&nbsp; It became a vicious circle resulting in more and more gold being drawn out of the government holdings.&nbsp; In 1893 the government gold holding dropped below the legal minimum level and the government was now in danger of having to default on government obligations to other countries. (Legal minimum was $100 Million, by the end of 1893 it had fallen below $60 million.) They HAD to be paid in gold and the US no longer had enough gold to do so.&nbsp; That lead to a run on the dollar.&nbsp; No one wanted to hold dollars if the government might default.&nbsp; Loans were called, prices for foreign goods greatly increased, and the economy crashed.&nbsp; The Sherman Act was repealed to stop that drain on the gold reserves.&nbsp; With the economy in a major recession/depression there was little call for coinage, hence the rarities.&nbsp; What ended the recession was when J P Morgan and his syndicate agreed to supply the gold the government needed to restore the reserves to solvency, $65 million in gold coin in exchange for $62.4 million in 30 year bonds paying 4% interest.&nbsp; (Of course the government had to agree, on that day Feb 4 1895 there were warrants due for $12 million in gold, and the Treasury only had $9 million remaining.)[/QUOTE]</p><p><br /></p>

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