Currency Deflation During the Grant Administration
During the Grant administration, currency deflation had become a serious problem for the U.S. There were two opposing views on how to solve this. Some believed that the government should issue 26 million dollars in greenbacks, or paper money, to stimulate the economy, while others believed that a gold standard of currency was necessary. To make a compromise for the two sides, the government initiated the Specie Resumption Act of 1875, which increased the number of national banks, who were allowed to offer as many notes as they wanted up to $300 million, in the South and West and stated that there would be a “day of redemption” in which citizens could exchange their paper money for gold coins. However, due to the rise in the economy after this act was passed, this “day of redemption” was never necessary as people now viewed the paper money as a valuable, comparable currency.
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Last updated: 12/29/2017