The coining of the Morgan dollar followed the Fourth Coinage Act of 1873 which demonetized silver bullion. The “Free Silver” issue is something Americans might have a hard time understanding now, but prior to 1873, people could bring their silver (or gold) bullion to the mint and, for a small processing fee, have it made into coins which would be worth their face value and could be spent.
At that time the ratio of the value of gold to silver was 16:1, meaning that 16 ounces of silver was considered equal in value to one ounce of gold. The problem was that, with increased mining of silver in the west, the price of silver was dropping rapidly, which meant that savvy bullion owners could take their devalued silver to the mint and, by having it made into coin, make a profit.