Demonetization of Silver:
On February 12, Congress enacted the Fourth Coinage Act, which demonetized
silver—i.e., the federal government no longer accepted silver as legal tender
for public and private debts. That left gold and greenbacks (paper currency not
redeemable in gold or silver) as the circulating media of exchange. Opponents
who advocated inflationary expansion of the money supply in order to help
credit-burdened farmers labeled the act the “Crime of ’73.”
Credit Mobilier Scandal:
The New York Sun first reported the Credit Mobilier scandal in September
1872. Managers of Credit Mobilier, the holding company for the federally
subsidized Union Pacific Railroad, were accused of siphoning off huge amounts of
public money for personal gain. Trying to cover up their misdeeds and gain
leniency in Congress, the corporation’s officers gave key congressmen bribes in
the form of discounted stock and bonds. The story did not seem to have much
impact on the presidential and congressional elections of 1872. However, when
Congress reconvened in 1873, an official House investigation was headed by
Congressman Luke Poland of Vermont. Congressmen Oakes Ames, Republican of
Massachusetts, and James Brooks, Democrat of New York, were formally censured by
the House for their part in the scandal. Several other elected officials were
implicated, including House Speaker James Blaine, but not punished. Most argued
that they had merely accepted a gift, not a bribe.
Economic Depression Begins:
Although the economic depression of 1873-1878 had several underlying causes, it
was the failure of the financial firm Jay Cooke and Company on September 18,
1873, which sparked the initial
panic on Wall Street.
“Redeemer” Government in Texas:
Beginning in 1869, Southern states began to replaced biracial Republican
governments elected under Congressional Reconstruction with white-only
Democratic ones. Such a “Redeemer” government was elected in Texas in 1873.
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Inflation Bill Veto:
Many congressmen thought the answer to the economic depression was to expand the
money supply with more greenbacks. In the winter of 1873-1874, 60 inflation
bills were introduced into Congress. On April 14, 1874, Congress passed an
inflation bill that would have increased the nation’s money supply by $100
million. President Ulysses S. Grant vetoed the bill on April 21, believing that
any short-term benefit would be far outweighed by the long-term damage done to
the national economy by the inflation the policy would generate. Grant’s veto of
the inflation bill helped swing the pendulum back toward “hard-money”
politicians, who in 1875 passed the Specie Resumption Act (see below).
Sanborn Contracts Scandal:
In the spring of 1874, the Sanborn Contracts scandal broke in the press,
provoking an investigation by the House Ways and Means Committee. The committee
found that when Treasury Secretary William Richardson appointed John Sanborn to
collect delinquent taxes, he allowed the agent to keep half of the collected
revenue as his fee. In less than two years, Sanborn earned at least $200,000
($21 million in 2002 dollars). Secretary Richardson denied all knowledge of the
scheme, and insisted that he had considered the contracts and related documents
to be routine office materials that he could safely ignore. Richardson was
forced to resign.
Whiskey Ring Scandal:
Soon after his appointment as treasury secretary in June 1874, Benjamin Bristow
learned that a Whiskey Ring was defrauding the government out of millions of
dollars in annual revenue. He ordered an immediate and thorough investigation,
which eventually resulted in 238 indictments and 110 convictions. Originally
supportive of the investigation, President Ulysses S. Grant became displeased
when his personal secretary, Orville Babcock, was implicated. In late February
1876, Babcock was found not guilty, a verdict helped in part by the president’s
favorable testimony. Both Babcock and Bristow soon resigned from their
respective positions. Bristow became an unsuccessful candidate for the
Republican presidential nomination in 1876.
Democrats won control of the U.S. House of Representatives for the first time
since before the Civil War. Democratic, white-only “Redeemer” state governments
were elected in Arkansas and Alabama.
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Specie Resumption Act:
The capture of the House of Representatives by the Democrats in the 1874
elections provoked the Republican majority in the outgoing Congress to pass the
Specie Resumption Act on January 14, 1875. The law stipulated that beginning in
January 1879 the federal government would redeem (legally exchange) greenbacks
with gold. That meant the United States would return to the gold standard. The
four-year span before implementation was to allow time for the U.S. Treasury to
build up an adequate reserve of gold and for the public to adjust to the policy.
Civil Rights Act of 1875:
On March 1, the outgoing Republican Congress also enacted the Civil Rights Acts
of 1875, long advocated by Senator Charles Sumner of Massachusetts, who died
shortly before its passage. The law banned racial segregation in all public
accommodations regulated by law, such as hotels, theaters, steamships, and
railroads. The U.S. Supreme Court ruled the law unconstitutional in 1883.
“Redeemer” Government in Mississippi:
A white-only, Democratic state government was elected in Mississippi.
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In March, Congress began an
investigation into allegations that merchants were bribing War Department
officials in order to gain preferential access to Indian trading posts. It was
revealed that one of the merchants had been sending cash payments to the wife of
Secretary of War William Belknap. He offered his resignation, which President
Grant accepted. The House voted to impeach Belknap, even though he had already
left office. On August 1, 1876, a majority of senators voted for conviction, but
the tally was short of the necessary two-thirds.
Republican National Convention:
On June 14-16, the Republican National Convention met in Cincinnati, Ohio. The
frontrunner for the presidential nomination was Congressman James G. Blaine of
Maine, the House minority leader. Other leading contenders were former treasury
secretary Benjamin Bristow of Kentucky, Senator Oliver Morton of Indiana, and
Senator Roscoe Conkling of New York, along with favorite-son candidates Governor
Rutherford B. Hayes of Ohio and Governor John Hartranft of Pennsylvania.
Anti-Blaine delegates began shifting on the fifth ballot to Hayes, who won the
presidential nomination on the seventh ballot. Delegates then chose Congressman
William Wheeler of New York as the vice-presidential nominee.
Democratic National Convention:
On June 27-29, the Democratic National Convention met in St. Louis. Governor
Samuel J. Tilden of New York won the presidential nomination easily on the first
ballot. The second-place vote getter, Governor Thomas Hendricks of Indiana, was
selected as the vice-presidential nominee. The Democratic platform demanded
repeal of the Specie Resumption Act (see above); condemned Grant administration
scandals; reaffirmed 13th, 14th, and 15th Amendments, while denouncing
Congressional Reconstruction as unjustly coercive and corrupt; and supported a
tariff for revenue only, conservation of public lands, and civil service reform.
On November 7, 1876, Democrat Samuel J. Tilden edged out Republican Rutherford
B. Hayes in the popular vote, 51%-48%. However, both sides claimed victory in
the Electoral College when the 19 electoral votes of three states—South Carolina
(7), Florida (4), and Louisiana (8)—and one electoral vote in Oregon were in
dispute. Tilden’s 184 electoral votes were one short of the majority needed to
win the presidential election, while Hayes needed all 20 to capture the White
House. In January 1877, Congress established an Electoral Commission consisting
of five senators, five representatives, and five Supreme Court justices to
decide the matter. In February, the Electoral Commission, in an 8-7 partisan
split, awarded Hayes all 20 votes. On March 5, 1877, Republican Rutherford B.
Hayes was sworn in as president.
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