Coinage Act of 1873
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The Fourth Coinage Act was enacted by the United States Congress in 1873 and embraced the gold standard and de-monetized silver. Western mining interests and others who wanted silver in circulation labeled this measure the "Crime of '73". For about five years, gold was the only metallic standard in the United States. This measure was a contributing factor to the subsequent depression that ravaged America from 1873-78[citation needed].
The act (H. R. 2934) also placed the United States Mint within the United States Department of the Treasury, and specified four United States mints at Philadelphia, San Francisco, Carson City, and Denver, and two assay-offices at New York and Boise City, Idaho.
H. R. 2934 was a very lengthy bill written in 67 sections which filled 35 pages in the House Journal on May 27, 1872. When presented to President Grant, he promptly signed it into law on February 12, 1873.
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[edit] Reactions
Western miners and others such as farmers called this act the "Crime of '73".
As countries go off the silver standard (or bimetallic standard) there becomes an increased supply of silver, this coupled with the fact that more silver is being found, the world silver-to-gold supply-demand ratio was rising (it would reach 40:1 by 1908). The U.S. Government was being hurt economically to help out the silver miners.
Those who didn’t switch to gold before the change were left with devalued money. The top bankers in New York and elsewhere, many who were business associates with the Bank of England, knew that the policy change was coming, and switched.
The U.S. Government finally caved to the pressure from the western states (anything west of the Appalachian Mountains was a western state in 1878) and agreed to the Bland-Allison Act of 1878 (this would eventually be replaced by the Sherman Silver Purchase Act of 1890). The Bland-Allison Act (Richard P. Bland (Democrat of Missouri) and William Allison (Republican of Iowa)) set the new free coinage ratio at 16 : 1, and allowed the U.S. Treasury to purchase between $2 and 4 million of silver per month.
[edit] alleged Bank of England conspiracy
Free Silver supporters often claimed that there was involvement by the Bank of England, at the time the world's most powerful private central bank, in the passage of the Coinage Act of 1873. Most often they claimed it was Economist Ernest Seyd of London who was a "distinguished writer and bullionist" who came to the United States to secure passage of the measure through means of bribe.[citation needed] In February of 1874, Seyd divulged his involvement to his friend Frederick A. Luckenbach at a dinner, and he was sworn to secrecy until after Seyd's death. Upon Seyd's death, the man signed a sworn affidavit of what Seyd told him:
| “ | I went to America in the winter of 1872-73, authorized to secure, if I could, the passage of a bill demonetizing silver. It was in the interest of those I represented- the governors of the Bank of England- to have it done. By 1873, gold coins were the only form of coin money…I saw the committees of the House and Senate and paid the money and stayed in America until I knew the [Coinage Act] was safe.[citation needed] | ” |
In addition, Bankers' Magazine of August 1878 reports:
| “ | In 1872, silver being demonetized in France, England and Holland, a capita of $500,000.00 was raised and Ernest Seyd of London was sent to this country (the United States) with this fund, as the agent of foreign bond-holders and capitalists, to effect the same object here, which was accomplished.[citation needed] | ” |
