Resumption Act of 1875

Definition

The Resumption Act of 1875 was legislation passed by the U.S. Congress that aimed to restore the gold standard by allowing the federal government to resume the payment of certain debts in gold rather than greenbacks. This act reflected the economic tensions following the Civil War, as it sought to stabilize the currency and address inflationary pressures that had arisen from wartime financing and the issuance of paper money.

5 Must Know Facts For Your Next Test

1. The Resumption Act of 1875 marked a significant shift in U.S. monetary policy, as it officially set a timeline for redeeming greenbacks for gold starting in 1879.
2. This act was part of broader efforts to stabilize the economy after the Civil War, which had seen rampant inflation due to excessive issuance of greenbacks.
3. The act faced opposition from farmers and debtors who preferred maintaining a flexible currency system to support their financial interests.
4. The successful implementation of the act helped restore confidence in U.S. currency and contributed to economic recovery during the late 19th century.
5. The Resumption Act is often viewed as a key moment in the long-term transition towards a more stable monetary system in the United States.

Review Questions

• How did the Resumption Act of 1875 attempt to address the economic challenges faced by the United States after the Civil War?
  • The Resumption Act of 1875 aimed to tackle economic instability by restoring confidence in U.S. currency through a return to the gold standard. By allowing for the redemption of greenbacks for gold, it sought to control inflation and stabilize prices that had been affected by excessive wartime spending. This act was essential in laying the groundwork for a more stable monetary policy that would help support economic growth in the years following the Civil War.
• Discuss the social and political ramifications of the Resumption Act of 1875 on different groups within American society.
  • The Resumption Act of 1875 had significant social and political implications, particularly for farmers and debtors who opposed returning to a gold standard. These groups feared that strict monetary policies would limit their access to credit and worsen their financial situations during a period of economic recovery. The act heightened tensions between those advocating for a stable currency backed by gold and those who favored more flexible monetary policies, illustrating broader divisions within American society regarding economic strategies and priorities.
• Evaluate how the Resumption Act of 1875 influenced subsequent monetary policy decisions in the United States.
  • The Resumption Act of 1875 set a precedent for future monetary policy decisions by establishing a commitment to maintaining a stable currency based on gold. Its successful implementation strengthened public confidence in U.S. financial systems and laid the foundation for ongoing debates about monetary policy throughout American history. The act also signaled a shift towards fiscal conservatism that would influence later economic policies, including responses to financial crises, suggesting a lasting legacy on how monetary issues were approached in both political discourse and legislative actions.

Related terms

Greenbacks: Paper currency issued by the U.S. during the Civil War that was not backed by gold or silver, leading to debates about its value and stability.

Gold Standard: A monetary system in which a country's currency or paper money has a value directly linked to gold, requiring that the currency be convertible into a specified amount of gold.

Inflation:

The general increase in prices and fall in the purchasing value of money, often caused by an increase in the supply of money relative to the supply of goods.