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Tuesday, September 19, 2023

September 19, 2023: AmericanStudying the Panic of 1873: The Coinage Act

[On September 20th, 1873, the New York Stock Exchange closed for ten days, a key moment in the developing economic crisis that came to be known as the Panic of 1873. So for the 150th anniversary of that moment this week I’ll AmericanStudy a handful of Panic contexts, leading up to a weekend post on 2023 echoes of those histories!]

On complex financial realities, simpler ones, and causes and contingencies.

This might mean I have to give back my Gilded Age Historian membership card (and I’d like to think I’ve thoroughly earned it, between the diss/first book and the many-times-taught class), but I’ve never entirely gotten the whole silver/gold debate. I do know that the Populists were entirely opposed to the late 19th century move to a gold standard, as exemplified by perennial presidential loser William Jennings Bryan’s famous 1896 “Cross of Gold” speech. And apparently a key stage in that shift was the April 1873 Coinage Act (also known as the Mint Act), a federal law which made it illegal for silver bullion to be converted into dollars while allowing for the conversion for gold. That law was caused at least in part by the German Empire’s ending the minting of silver coins in 1871, which put more pressure on the US silver supply and pushed the federal government to hasten this shift toward a gold standard. But the law also significantly reduced the overall domestic money supply, which contributed to the runs on banks that I discussed yesterday and that blossomed into the Panic of 1873.

Okay, I think that has about exhausted my take on the silver and gold debate (and as with literally everything I write about in this space, I welcome additions, corrections, impassioned rebuttals, and what have you). But one thing I do get on a broader level is the narratives and realities alike that came to define the Gilded Age, and it’s important to note that while Mark Twain and Charles Dudley Warner didn’t coin that phrase until their 1874 novel of the same name, the period’s trends were of course well underway by 1873. For example, it seems clear to me that the Coinage Act came to be colloquially known as the Crime of 1873 not because of specific details about silver and gold so much as due to a broader understanding that this was a law that benefitted the wealthy (who were able to obtain and stockpile gold much more easily) at the expense of poorer Americans. While that doesn’t seem to have been a main impetus for or purpose of the act, it’s fair to say that President Grant’s corrupt corporate buddies weren’t sorry when he signed it into law.

So the Coinage Act was unquestionably controversial, and reflects developing divisions that would only deepen alongside the Gilded Age over the next few decades (perhaps culminating in Bryan’s 1896 speech). But was there really enough time between its April passage and the September start of the Panic for the Act to have played a key role in causing that financial crisis? Given the earlier contributing factors like the 1871 and 1872 fires on which I focused in yesterday’s post (among other long-term factors like the collapsing railroad boom), was the writing already on the wall for the Panic long before Grant put pen to paper? The relationship between causes and contingencies when it comes to historical events always makes for compelling (if ultimately unanswerable) questions, and that’s certainly the case for this pair of 1873 events. And wherever we come down on those questions, putting the Act and the Panic in conversation helps us see both as stages in the evolving and deepening Gilded Age, an example of historical interconnection with a lot to tell us about late 19th century America.

Next 1873 contexts tomorrow,


PS. What do you think?

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