President Cleveland was convinced that the drain on US gold reserves was due to the Sherman Silver Act. He called Congress into special session, and was able to convince them to repeal the act. However, his action strongly divided the Democratic party between those who supported the gold standards (called "gold bugs") and the Southerners and Westerners who supported continued silver purchases.

The repeal of the Silver Act failed to stem the drain on American gold reserves. At this point, President Cleveland agreed to sell gold bonds at a discount to Wall Street bankers like J.P. Morgan, in return for their cooperation in stemming the withdrawal of gold from the Treasury.