U. S. Grant Liberal Republicans Crédit Mobilier One dreary episode followed another in Grant’s second term. Benjamin H. Bristow, Grant’s third Treasury secretary, discovered that some of his offi cials and a group of distillers operating as a “whiskey ring” were cheating the government out of taxes by fi ling false reports. Then a House investigation revealed that Wil- liam W. Belknap, secretary of war, had accepted bribes to retain an Indian-post trader in office (the so-called Indian ring). Other, lesser scandals added to the growing impres- sion that “Grantism” had brought rampant corruption to government. The Greenback Question Compounding Grant’s, and the nation’s, problems was a financial crisis, known as the Panic of 1873. It began with GRANT THE TRAPEZE ARTISTS This cartoon by the eminent cartoonist Joseph Keppler shows President Ulysses S. Grant swinging on a trapeze holding on to the “whiskey ring” and the “navy ring” (references to two of the many scandals that plagued his presidency). Using a strap labeled “corruption,” he holds aloft some of the most notorious figures in those scandals. The cartoon was published in 1880, when Grant was attempting to win the Republican nomination to run for another term as president. ( Library of Congress)
420 CHAPTER FIFTEEN Panic of 1873 the failure of a leading invest- ment banking firm, Jay Cooke and Company, which had invested too heavily in postwar railroad building. There had been panics before—in 1819, 1837, and 1857—but this was the worst one yet. The depression it produced lasted four years. Debtors now pressured the government to redeem federal war bonds with greenbacks, paper currency of the sort printed during the Civil War, which would increase the amount of money in circulation. But Grant and most Republicans wanted a “sound” currency—based solidly on gold reserves—which would favor the interests of banks and other creditors. There was approximately $356 million in paper currency issued during the Civil War that was still in circulation. In 1873, the Treasury issued more in response to the panic. But in 1875, Republican leaders in Congress, in an effort to crush the greenback move- ment for good, passed the Specie Resumption Act. It pro- vided that after January 1, 1879, the greenback dollars, whose value constantly fluctuated, would be redeemed by the government and replaced with new certifi cates, firmly pegged to the price of gold. The law satisfied credi- tors, who had worried that debts would be repaid in paper currency of uncertain value. But “resumption” made things more difficult for debtors, because the gold-based money supply could not easily expand. In 1875, the “greenbackers,” as the inflationists were called, formed their own political organization: the National Greenback Party. It was active in the next three presidential elections, but it failed to gain widespread support. It did, however, keep the money issue alive. The question of the proper composition of the currency was to remain one of the most controversial and enduring issues in late-nineteenth-century American politics.