Page:Cambridge Modern History Volume 7.djvu/675

 1873-9] Silver and specie resumption. 643 the inevitable result of an abnormal industrial expansion ; banks and speculative railways fell together ; and prices dropped until, for a time, all industry seemed to be at a standstill. For some years there were no signs of reviving prosperity ; and a great cry for relief went up, which took the form of a demand for currency inflation, both parties being affected. The result was an epoch of exceedingly confused financial legis- lation, during which the Republican policy barely escaped destruction. In 1874, Secretary Richardson, on his own motion, reissued "green- backs " ; and Congress, in a panic, passed the so-called " Inflation Act," increasing the circulation of legal tenders and national bank-notes. This Grant fortunately vetoed ; and a year later the same Congress, in a saner mood, passed an Act for the resumption of specie payments in 1879 which tended to restore the party's credit. But immediately a new danger appeared in a movement for free silver coinage, also inspired by inflationist sentiment ; since the silver dollar, demonetised in 1873 as overvalued and obsolete, had suddenly fallen in value, owing partly to the demonetisation of silver by Germany in 1873, but still more to the enormous silver production following the opening of the rich Nevada mines. Repeated attempts were made in the Congresses of 1875 and 1877 to repeal the Resumption Act and enact free-coinage bills; and, although the Senate blocked the first of these, it did not succeed in preventing the second. In 1878 the Bland- Allison Act was passed, by which the coinage of from two to four million dollars of silver per month was made obligatory. Congress at the same moment by reso- lution declared all bonds to be payable in silver. In spite of this action, Secretary Sherman managed with great skill, during the years 1877 and 1878, to pave the way for resumption, and, in spite of the outcries of silver men and inflationists, succeeded in selling bonds and accumulating a reserve. On January 1, 1879, he actually resumed specie payment. He was doubtless much aided by a combination of good crops and heavy agricultural exports; but the credit none the less belonged to him and his party, although at the moment of resumption they had helped to damage the measure by the injection of silver into the government currency. The years 1872-9 were financially perilous; but, largely owing to fortune, the reaction failed to carry the day. Specie resumption marks its end. The reaction against Republican official errors, which failed so completely in the Greeley campaign, returned again with redoubled force in Grant's second term. It was a time of absorption in things material and domestic. In foreign affairs the years 1872-8 were marked by stagnation, a few commercial, extradition, and naturalisation treaties being the only evidences of diplomatic activity. Cabinet ministers and Congressmen alike were swept along in the current of the new industrial materialism to such an extent that an epidemic of scandals broke out between 1872 and 1876. The Credit Mobilier," a CH. xx. 41 2