What Was the Crime of 1873?
The "Crime of 1873" was the notable omission of the standard silver dollar from the coinage law passed by Congress on February 12, 1873, and signed into law by President Ulysses S. Grant. This omission subsequently paved the way for the United States' adoption of the gold standard, which was highly controversial at the time, especially for those no longer able to turn their silver into legal tender.
Key Takeaways
- The Crime of 1873 refers to dropping silver dollars from official coinage by act of Congress in that year, setting the stage for the adoption of the gold standard in the U.S.
- The gold standard is a fixed monetary regime under which the government's currency is fixed and may be freely converted into gold, but this law notably left out the conversion of silver coins.
- The law was labeled a "crime" by those who were left holding relatively worthless silver coins, as well as those who opposed the gold standard as monetary rule.
History of Coinage Law and Reasons for Abandoning Silver
Coinage law oversees the coinage and legal tender that circulates in the United States and sets the standard for the relative worth of each form of tender in use. The first Coinage Act, passed in 1792, established the U.S. Mint and set the dollar as the official standard unit of money in America and legal tender.
The Coinage Act of 1873 revised the laws of its predecessor to pivot the country toward the gold standard and away from silver. Section fifteen of the Act specified the exact silver coins to be minted in the future and their respective weights, but the standard silver dollar was not included.Section seventeen stated that "no coins, either of gold, silver, or minor coinage, shall hereafter be issued from the mint other than those of the denominations, standards, and weights herein set forth." This meant that only the coins explicitly included in the Coinage Act would be legal tender from that point forward.
Earlier in the century,the United States hadessentially adhered to a silver standard, but gold rushes such as the infamous California Gold Rush brought gold back into the equation. Subsequent silver rushes in places such as South Africa increased silver production in the 1860s and threatened to push gold out of circulation. The United States saw the gold standard as the only rational economic approach and pushed through the Coinage Act in 1873. The gold standard was officially adopted in 1900.
Criticism of the Coinage Law and Reasons for Calling It a Crime
Until 1873, the United States used a system of bimetallism, which used both gold and silver as comparison points for the relative value of legal tender and set a fixed exchange rate between the two. When the Coinage Act of 1873 removed silver from the equation, people who owned large amounts of silver were no longer able to turn that silver into money.
Many critics argued that this monometallism would have negative consequences for the economy, including unstable prices and a lower amount of money circulating in the economy. They also claimed that the law was pushed through corruptly, although no evidence confirms this. However, industrial advances and a few gold rushes, including the South African and the Klondike rushes, pumped more gold into circulation and provided economic reassurance.
The Modern Economic World
The gold standard was officially abolished in 1971. Since then, most modern economies are based on fiat money— or money whose value and theinflation rate is assigned by a government rather than an inherent worth — instead of relying on gold or silver.One example of fiat moneyis the U.S. dollar.
FAQs
The Crime of 1873 refers to dropping silver dollars from official coinage by act of Congress in that year, setting the stage for the adoption of the gold standard in the U.S.
What did the Crime of 1873 do? ›
"Crime of '73"
It noted the abolition of the two-cent piece and the authorization of the Trade dollar, but did not mention the ending of the standard silver dollar. There was no widespread objection to the 1873 act until 1876.
What was the demonetization act of 1873? ›
The act of 1873, however, dropped the dollar piece out of the list of silver coins. In discontinuing the coinage of the silver dollar, the act of 1873 thereby simply recognized a fact which had been obvious to everybody since 1849. It did not introduce anything new, or begin a new policy.
What does the Crime of 1873 refer to quizlet? ›
Coinage Act enacted by the US Congress in 1873 and embraced the gold standard and de-monetized silver. Western mining interests and others who wanted silver in circulation years later labeled this measure the "Crime of '73". Gold became the only metallic standard in the United States.
What is the Crime of 73 panic of 1873? ›
Crime of '73 (Coinage Act of 1873) The Crime of '73 was the demonetization of silver by the 1873 Coinage Act, which played an important role in shaping politics and monetary policy in the United States during the Gilded Age.
What was the Federal Act of 1873? ›
The Comstock Act – an 1873 anti-vice law banning the mailing of obscene matter and articles used to produce abortion – could be used by a future presidential administration opposed to abortion rights to sharply restrict abortion nationwide.
Why did the Coinage Act of 1873 cause protests? ›
Free Silver Movement, in late 19th-century American history, advocacy of unlimited coinage of silver. The movement was precipitated by an act of Congress in 1873 that omitted the silver dollar from the list of authorized coins (the “Crime of '73”).
Why was the Coinage Act of 1873 called a crime by miners? ›
The Coinage Act of 1873 (also called the "Crime of 1873" by silver miners) demonetized silver, effectively causing a slump in silver demand and prices.
What was a central cause of the Panic of 1873 *? ›
The panic started with a problem in Europe, when the stock market crashed. Investors began to sell off the investments they had in American projects, particularly railroads. Back in those days, railroads were a new invention, and companies had been borrowing money to get the cash they needed to build new lines.
What did the Comstock Act of 1873 prohibit quizlet? ›
The Comstock Act of 1873: Barred the mailing of obscene publications.
The Panic of 1873 triggered the first 'Great Depression' in the United States and abroad. Lasting from September 1873 until 1878/9, the economic downturn then became known as the Long Depression after the stock market crash of 1929. Currency in the nineteenth century was based on specie.
Who was blamed for the Panic of 1873? ›
So when the banking firm of Jay Cooke and Company, a firm heavily invested in railroad construction, closed its doors on September 18, 1873, a major economic panic swept the nation. Jay Cooke's firm had been the government's chief financier of the Union military effort during the Civil War.
What was the difference between the Panic of 1873 and the Panic of 1893? ›
They both ended up with unemployment, and failed businesses, railroads, and banks. Differences between the two are that the Panic of 1893 was worse than the one in 1873 in terms of the damage done and that the Panic of 1873 only affected Americans whereas the Panic of 1893 did have a slight impact on Europe.
What was the Coinage Act of 1873 simplified? ›
The Coinage Act of 1873 revised the laws of its predecessor to pivot the country toward the gold standard and away from silver. Section fifteen of the Act specified the exact silver coins to be minted in the future and their respective weights, but the standard silver dollar was not included.
What act demonetized silver after the Panic of 1873? ›
The Panic of 1873 and Economic Depression
Grant signed the Coinage Act of 1873, which advised replacing bimetallism in the United States with the gold standard. Later called the "Crime of 1873," this act resulted in the demonetization of silver, which had economic repercussions that were felt throughout the nation.
Which form of currency was demonetized by the Coinage Act of 1873? ›
The Coinage Act of 1873, signed into law by President Ulysses S. Grant, marked a significant shift in US monetary policy. It demonetized silver, meaning that silver coins were no longer minted as legal tender for most transactions.
How did the Coinage Act of 1873 affect the economy? ›
Overall, the Coinage Act of 1873 had significant impacts on the American economy and political landscape. It stopped the use of silver as money, undermined support for the gold standard, and made it harder for American farmers to sell their goods abroad.
