This Harper’s Weekly cover cartoon by Thomas Nast celebrates the passage of the Specie Resumption Act, which would return the United States to the gold standard.
Monetary policy was one of the most persistent and conspicuous issues in late-nineteenth-century American politics. During the Civil War, the federal government suspended the gold standard and began circulating paper currency (called “greenbacks”) in order to help finance the high cost of the war. For the next several decades, an often acrimonious fight was waged between “hard money” advocates who supported a return to the gold standard and “soft money” supporters who wanted to increase the money supply with more greenbacks or “free” silver (unlimited coinage).
Hard-money backers believed that gold stabilized the money supply, sustained a prosperous economy, and safeguarded a peaceful society. Soft-money enthusiasts wanted to spur inflation, which would benefit their debt-ridden constituencies, many of whom were farmers. Inflation meant that the amount of debt would be less in real value, and that, for farmers, it would take less of a crop yield (because crop prices were higher) to pay back loans.
Both the Democrats and the Republicans were divided within their parties on the “money question,” although most Republicans endorsed a hard-money policy. Goaded by the Democratic capture of the House of Representatives in the 1874 elections, the outgoing Republican Congress enacted the Specie Resumption Act in January 1875. It stipulated that beginning in January 1879 the federal government would return to the gold standard by redeeming (legally exchanging) greenbacks with gold. Efforts to rescind the act were unsuccessful, and it went into effect as scheduled.
Cartoonist Thomas Nast uses a biblical analogy to present Republican president Ulysses S. Grant as Noah, welcoming the dove of peace to “The Ark of State,” bedecked with a large American flag. Floating around the boat are the bodies of soft-money Republicans, the unrighteous men killed by God in the Great Flood of inflation. They are (clockwise from top): Senator Matthew Carpenter of Wisconsin; Senator Simon Cameron of Pennsylvania; Congressman William “Pig Iron” Kelly of Pennsylvania; Senator Oliver Morton of Indiana; Congressman Benjamin Butler of Massachusetts; and Senator John Logan of Illinois.
The public debate over monetary policy would continue for nearly two decades, ending with the decisive defeat in the 1896 presidential election of Democrat William Jennings Bryan, crusading for free silver, by Republican William McKinley. In 1933, in the midst of the Great Depression, the United States left the gold standard and returned to paper currency unbacked by gold.
