Today, the value of our money is determined by our collective faith in the stability of the United States government. But, back in the 1800's it was backed by silver and gold. This week we'll learn about what happened when the change first took place.
Prior to 1873, in addition to silver and gold coins, those two metals backed paper money printed by the government. A person could actually exchange a dollar bill for a dollar’s worth of silver or gold. But in 1873, following the lead of many European countries, Congress passed a law for the United States to stop producing silver coins, or using silver to back paper money.
When this happened a financial panic took place. Obviously the bottom fell out of the silver market. A man who was a wealthy owner of a silver mine one day, found himself the owner of a worthless hole in the ground the next day. In addition… farmers or anyone who carried a heavy debt load felt this bill made for a tighter supply of money, and therefore harder to pay off their debt. Congress’ bill became known as the “Crime of ’73.”
With the United States going through widespread financial difficulties, it was mystically thought that going back to both silver and gold would solve all problems.
The leader of the fight to go back to silver again was Congressman Richard Bland, an ex-miner and farmer. He was so tireless in his efforts that he received the nickname “Silver Dick.”
Finally, five years after the Crime of ’73, on February 16, 1878, the Bland-Allison Act was passed. Although it didn’t return the usage of silver to the level prior to 1873, it did require the government to resume purchasing and minting silver money.
Unfortunately, those who found it difficult to pay off their debt prior to the Bland-Allison Act found it just as difficult afterward.
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