The Coinage Act of 1873 placed the U.S. on the gold standard.
Previously the United States had been on
a gold and silver bimetallic standard, created by Alexander
Hamilton. The Coinage Act discontinued coinage of the U.S.
silver dollar. This caused the world market price of silver
to fall drastically. Demand decreased as the U. S.
silver combined with a shift in European countries from a silver to a
gold standard. Supply increased as large silver deposits were
discovered in the American West. Silver mining companies
suffered with no orders coming from U.S. mints. Many citizens
saw this as a "crime," and silver agitation began. As a
reaction to this, the Bland-Allison Act was passed by
Congress on February 28, 1878. The bill restored the standard
silver dollar's full legal tender status. It required the
United States Treasury to purchase (at market price) between $2 million
$4 million of silver bullion monthly from the Western miners.
Certificates came about because silver coins are quite
heavy and an easier medium of trade was needed. The government decided
to apply their
gold certificate strategy to the silver. The idea was that when demand
called for it,
were printed against the silver dollars held in the Treasury to provide
medium of exchange. The idea was kept, and Silver Certificate
Series 1878 was printed in
denominations of $10 to $1000.