![]() ![]() ![]() Consequently, the Treasury received authority to retire only small quantities of greenbacks. Resistance in Congress to this hard-money scheme came from a group of soft-money advocates, who opposed a return to specie but differed among themselves over the issue of inflation. When the war ended, the Treasury began urging a program of deflation leading to the eventual retirement of the greenbacks and a return to a specie standard. The use of gold became limited primarily to international trade. During the war, the Treasury circulated more than $450 million in greenbacks, which inflated precipitously by 1864. (1861-1865) Union monetary policy great pressure to raise money during the Civil War, the government abandoned the specie standard and passed the Legal Tender Legal Tender Act of 1862 Acts of 1862, which authorized the printing of fiat money (greenbacks), unsupported by specie but acceptable legal tender for all debts except interest on government bonds and excise taxes. John Jay Knox, the controller of the currency. Silver remained scarce and undervalued as coin until the 1870’s. After having been out of circulation for years, silver was reduced by Congress in 1853 to a subsidiary metal. In other words, silver producers needed sixteen ounces of silver to exchange for an ounce of gold at the mint, but only 15.4 ounces on the bullion market. By 1853, the market ratio of silver to gold was 15.4-1. disappeared from circulation, because silver producers preferred to sell their bullion on the world market, where the price was higher than at the mint. As predicted by Gresham’s law-that cheaper currency drives higher-valued currency out of circulation-silver coins Coinage, U.S. Therefore, silver was undervalued if priced at the mint ratio of sixteen to one. ![]() New supplies of gold from Russia, Australia, and California during the 1840’s, for example, caused gold gradually to decline in value. 12, 1873: “Crime of 1873" Knox, John Jay Linderman, Henry Richard Stewart, William Morris Weston, George M.īimetallism presented a problem, in that the values of silver and gold fluctuated on the world market in response to changes in supply. 12, 1873: ”Crime of 1873" Laws, acts, and legal history Feb. 12, 1873: “Crime of 1873" Crime and scandals Feb. 12, 1873: “Crime of 1873" Banking and finance Feb. "Crime of 1873" Coinage Act of 1873 Congress, U.S. Under this so-called mint ratio, the Treasury was obligated to purchase both metals at the established prices. The Currency Act of 1834 Currency Act of 1834 established a legal ratio between the two metals of sixteen ounces of silver to one ounce of gold. Under bimetallism, both silver and gold were acceptable for the payment of debts at rates fixed by the government. The use of the two kinds of specie as money was deemed desirable because there were insufficient quantities of precious metals for the requirements of trade, commerce, and exchange. Until the Civil War, the United States functioned under bimetallism Bimetallism-a monetary system based on silver and gold, supplemented by the notes of its banks. money controversy that the shibboleth “Crime of 1873” dramatized raged between 18 and can best be understood in the context of the nation’s antebellum and Civil War monetary policies. The debate over silver coinage would continue into the twentieth century. The so-called Crime of 1873 was an emotion-laden slogan used by proponents of the free coinage of silver to express their hostility toward the federal Coinage Act that made gold the sole monetary standard, with no provision for the coining of silver dollars. ![]()
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