Free Silver

Free Silver

Free Silver was an important political issue in the late 19th century United States. “Free coinage of silver” is a bit complex to understand for those that are not familiar with the way mints operated in the days of the gold standard. Anyone who possessed non coined gold, such as successful prospectors, or assayers or refiners to whom they had sold their holdings, could deposit it at one of the U.S. Mints, where it would be made into gold coins. The coins would then be given to the depositor, less a small deduction for processing and funding Mint operations.

In most cases the depositor would not receive coins made of the actual gold he had deposited, but would receive his due compensation in coins the mint already had ready. Free silver advocates wanted silver to be accepted by the mints in the same way; if you deposited enough silver, by weight, to manufacture a silver dollar, then the mint should pay out a silver dollar.

After the discovery of large silver reserves such as the Comstock Lode in the Western United States, American politics began to agitate for the federal government to allow it to be minted freely at the rate of $1 per troy ounce. At the time, the general price level was in a long term deflationary trend, and so inflation was seen by many as an appropriate way of maintaining wages and real interest rates.

Today still, people are divided on whether free coinage of silver would have been inflationary, but it was clear that geographically centered interests had particular views. Eastern interests, trading with an increasingly gold standard-based world, wanted gold money; interior interests, and particularly mining interests, wanted silver money. The issue was over what would back the US currency, the two options were gold and silver.