Crime of 1873

Definition

The Crime of 1873 refers to the U.S. Congress's decision to eliminate the silver dollar as a standard unit of currency and move toward a gold standard, effectively demonetizing silver. This legislative action sparked significant controversy regarding the role of government in regulating currency and its impact on the economy, particularly among farmers and laborers who favored inflationary policies to alleviate debt burdens.

5 Must Know Facts For Your Next Test

1. The Crime of 1873 was enacted through the Coinage Act, which discontinued the minting of silver dollars and focused on a gold-based currency.
2. This decision was viewed as a betrayal by many farmers and working-class individuals, who believed that having silver as part of the currency would help combat deflation and make debts easier to pay off.
3. The demonetization of silver led to widespread discontent, contributing to the rise of populist movements that demanded changes in monetary policy.
4. Critics labeled it the 'Crime' because they believed it favored wealthy industrialists and bankers over ordinary citizens, exacerbating economic inequalities.
5. The debate over currency standards would continue into the next decades, influencing major political platforms, including those of William Jennings Bryan in the 1890s.

Review Questions

• How did the Crime of 1873 impact different socioeconomic groups in America?
  • The Crime of 1873 significantly affected various socioeconomic groups differently, particularly farmers and laborers who supported bimetallism. With the shift to a gold standard, these groups faced deflation, which made repaying debts more challenging. Wealthier industrialists and bankers generally benefited from this transition since it limited the money supply, keeping interest rates high. This disparity in impact led to increased tensions and calls for reform among those economically disadvantaged.
• Evaluate the motivations behind Congress's decision to eliminate silver from the currency system in 1873.
  • Congress's decision to remove silver from the currency system was primarily motivated by a desire to stabilize the economy following the Civil War and ensure financial security. Influential industrialists and bankers pushed for a gold standard, believing it would attract foreign investment and strengthen the U.S. dollar internationally. However, this move also reflected a growing divide in American society regarding monetary policy, with urban elites favoring deflation while rural populations sought relief from debt through inflationary measures.
• Assess how the legacy of the Crime of 1873 influenced later monetary debates and political movements in the United States.
  • The legacy of the Crime of 1873 had profound implications for future monetary debates in the United States, shaping political movements well into the late 19th century. The dissatisfaction among farmers and workers spurred advocacy for bimetallism, notably seen in William Jennings Bryan's famous 'Cross of Gold' speech in 1896. The resulting populist sentiment highlighted ongoing tensions between urban industrial interests and rural agrarian communities. Furthermore, this controversy set a precedent for future discussions on monetary policy that continued to reverberate through American politics during times of economic crisis.

Related terms

Gold Standard: A monetary system where the value of a country's currency is directly linked to gold, limiting the amount of money that can be issued based on gold reserves.

Bimetallism: The monetary system that uses both gold and silver as legal tender at a fixed ratio, aimed at stabilizing currency and addressing economic disparities.

Greenback Movement: A political movement in the late 19th century advocating for the issuance of paper currency not backed by gold or silver, aiming to increase money supply and promote inflation.