The Panic of 1893 - Part II

"What had brought America to its knees?  Congress certainly deserved a large share of the blame.  These legislators had, in their reckless wisdom, created an opportunity to buy dollars at nearly half price... Congress had a sporting attitude towards the nation's treasury.  In 1890 it passed the Sherman Silver Purchase Act, which obligated the government to buy 4.5 million ounces of silver each month - and to pay for these purchases at a set price with an equal amount of notes backed by either silver or gold.  Gold had a market value of nearly twice that of silver, so it didn't take considerable financial acumen to prefer a payout in gold dollars... As a result, the U.S. Treasury began running through its gold supplies..."