Previously a businessman, a Congressman (1870-1879), and Governor of Ohio (1879-1891), Charles Foster (1828-1904) was appointed Secretary of the Treasury in 1891 by President Benjamin Harrison. By 1890 the Treasury Department, with a long history of intervening in and regulating the money market, was regarded as the ultimate source of currency in times of need. However, beginning that year the Treasury surplus of the 1880s disappeared. Foster felt the effects of the Sherman Silver Purchasing Act (which obligated the Secretary to buy silver bullion and issue legal tender notes based on silver as well as gold, redeemable in gold) and the McKinley Tariff Act (which lowered tariffs), both of 1890.
As the gold in Treasury vaults was replaced by silver and customs revenues declined, it became more and more difficult for the Treasury to meet demands for redemption of notes in gold. Though Foster believed in the Sherman Silver Purchase Act and pledged to maintain parity between gold and silver, the run on Treasury gold made him nervous. In 1893 he sold legal tender notes to commercial banks in exchange for gold, in order to build up the Treasury gold supply. In spite of his efforts, the gold reserves continued to decline and this led ultimately to the Panic of 1893 during the term of his successor, Secretary John G. Carlisle. Foster had meanwhile resigned at the end of Harrison's term.
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