Silver Purchase Act of 1934
The Silver Act of 1934 required the U.S. Treasury Secretary to purchase silver in large quantities and allowed President Roosevelt to nationalize all private silver holdings. The act greatly disrupted the world's silver markets and ultimately was repealed in the 1960s.
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Background
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By 1934, the U.S. government had decided to increase federal holdings of gold and silver to back its currency.
Purpose
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The Silver Purchase Act of 1934 was created to increase the government's stockpiles of silver to be a quarter of the gold and silver reserves held in the national Treasury.
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Significance
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The Silver Purchase Act of 1934 allowed President Roosevelt to nationalize all silver that was owned by American citizens (with a few exceptions including silver coins, jewelry or industrial materials). Americans had to sell their silver to the government for 50 cents an ounce.
Results for Americans
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Many Americans were forced to sell their gold for less than its value once the value rose above 50 cents an ounce. Silver futures were no longer traded on the New York Stock Exchange.
Results Abroad
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Globally, the price of silver rose significantly as the American Secretary of the Treasury bought large amounts of cheap silver abroad. As a result, China was forced to abandon its silver standard in late 1934.
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References
Resources
- Photo Credit silver coins image by Olga Rumiantseva from Fotolia.com
