The greenback Question
- Panic of 1873: It began with the failure of a leading investment banking firm Jay Cooke and company which had invested too heavily in postwar railroad building. The depression lasted four years.
- Debtors now pressured the government to redeem federal war bonds with green backs, paper currency of the sort printed during the Civil War, which would increase the amount of money in circulation.
- Grant and most Republicans anted a "sound" currency based solidly on gold reserves which would favor the interests of banks and other creditors.
- The Treasury issued more money in response to the panic.
- republican leaders passed the specie Resumption Act which provided that after January 1, 1879, the greenback dollars would be redeemed by the government and replaced with certificates firmly pegged to the price of gold.
- the "resumption" made things more difficult for debtors as gold-based money supply couldn't be easily expanded
- In 1875, the "greenbackers" formed their own political organization, the National greenback Party. This was active in the next thee presidential elections but failed to gain widespread support. It did, however keep the money issue alive.