The Coinage Act of 1873, signed into law by President Ulysses S. Grant on February 12, 1873, marked a pivotal shift in the United States monetary system. The Act removed the silver dollar and silver half-dime from the list of coins that the U.S. Mint could legally issue. This demonetized silver by ending the coinage of silver into silver dollars and effectively put the United States on the gold standard.
While its supporters viewed it as a necessary modernization aligning the U.S. with global economies, critics, particularly silver miners and farmers, decried it as the “Crime of 1873.” This legislation set off economic hardships and political battles, ultimately playing a key role in shaping U.S. monetary policy for decades.
What Did the Coinage Act of 1873 Do?
The Coinage Act of 1873 made significant changes to U.S. currency laws, including:
- Eliminating the Silver Dollar – The standard silver dollar was officially discontinued, removing silver from widespread circulation.
- Introducing the Trade Dollar – A new silver coin, the Trade Dollar, was created for use in foreign trade, particularly in China.
- Establishing a Gold-Dominated Monetary System – While smaller silver coins remained, their role was reduced, cementing gold as the dominant metal in the monetary system.
The Act established which coins the U.S. Mint could issue:
- One Dollar Gold Piece
- Gold Quarter Eagle ($2.50)
- Three Dollar Gold Piece
- Gold Half Eagle ($5.00)
- Gold Eagle ($10.00)
- Double Eagle ($20.00)
- Silver Trade Dollar for international use
- Silver Half Dollar
- Silver Quarter Dollar
- Silver Dime
- Three-Cent Nickel
- Five-Cent Nickel (Nickel Coin)
- One-Cent Coin
Noticeable coins omitted from production were the silver dollar and the silver half-dime. The half-dime was phased out in favor of the nickel, and the silver dollar hadn’t been consistently minted since the late 1840s. However, by leaving out the silver dollar, the Act established gold as the dominant metal in the currency system.
This transition effectively ended bimetallism and pushed the U.S. closer to adopting a full gold standard, which was officially enacted in the Gold Standard Act of 1900.
Why Did the U.S. Shift Away from Silver?
Before 1873, the United States operated on a bimetallic standard, where gold and silver coins were accepted as legal tender. However, by the 1860s and 1870s, many European nations, including Britain and Germany, had moved to a gold-only standard. This shift pressured the U.S. to follow suit to ensure economic stability and ease international trade.
Additionally, a growing concern among policymakers was the increasing supply of silver. Silver deposits were found in Nevada and other Western states, creating large silver mines and a significant increase in silver supply. Silver prices were set to dip in relation to gold prices since demand would stay the same. If the value of silver decreased due to the substantial increase in supply, it would become overvalued in the United States. According to Gresham’s law, the undervalued gold would flee the country, and silver would eventually be the only circulating metal.
The Threat of Gresham’s Law
In 1873, the legal exchange rate of silver to gold in the United States was 16:1, meaning you could exchange 16 ounces of silver for one ounce of gold. However, if the international market valued silver at 20:1 due to a major supply increase, silver would be worth less globally than its mandated value in the U.S. monetary system.
As a result, individuals and businesses would seek to exchange silver domestically for gold at the more favorable 16:1 rate. Then, gold holders would find it more profitable to sell their gold abroad, where it carried a higher relative value.
This discrepancy, as explained by Gresham’s Law, would cause gold to leave circulation, as people hoarded or exported it for greater returns, leaving only silver as the primary circulating metal. This shift would lead to a de facto silver standard, weakening the country’s ability to maintain a bimetallic system and potentially destabilizing the economy by reducing confidence in the currency.
Influenced by Eastern financial interests such as Senator John Sherman and Treasury Secretary George S. Boutwell, the Grant administration foresaw such a scenario. They saw a move toward gold as a way to stabilize the dollar, prevent inflation, and secure stronger international investment. After three years of quiet consideration, Congress passed the Coinage Act of 1873.
Passing the Coinage Act of 1873
When it was introduced in Congress, the Coinage Act of 1873 was folded into a broader revision of U.S. Mint laws—largely viewed as a technical update rather than a transformative overhaul of the nation’s currency system. Because of this, newspapers and media outlets at the time gave it scant attention, overshadowing the bill’s long-term monetary implications.
Arguments Against the Act
- Decreased Silver Prices – Without a requirement for the government to purchase silver for coinage, silver’s market value plummeted.
- Deflation and Rising Debt Burdens – Farmers, already struggling with high-interest loans, now had to repay debts in gold-backed dollars, which had more purchasing power, effectively increasing their debt.
- Economic Hardships in the West – Mining towns suffered as silver bullion lost demand, causing widespread job losses and economic decline.
Arguments in Favor of the Act
- Stronger International Trade – A gold standard made U.S. currency more compatible with European markets, attracting investment and economic growth.
- Prevention of Inflation – Removing silver prevented an oversupply of money, which financial leaders feared would cause inflation.
- A More Stable U.S. Dollar – Eastern bankers, led by figures like Jay Cooke and industrialists, believed a stable, gold-backed dollar would make the economy stronger and more predictable.
Many lawmakers later claimed they were unaware that the legislation effectively demonetized silver, while critics alleged that pro-gold legislators and financial interests had intentionally minimized publicity. This perceived lack of transparency and public debate fed into accusations that the legislation was clandestine, giving rise to the enduring label of the “Crime of 1873.”
Why Was the Coinage Act Called the “Crime of 1873”?
Opposition to the Coinage Act of 1873 didn’t arise immediately. Many Americans were unaware of the law’s implications until they felt its economic effects.
As predicted, the international value of silver dipped by 1876. People with large amounts of silver took it to the U.S. Mint to be coined, only to learn that the Mint would no longer issue silver dollars.
The Coinage Act of 1873 was immediately criticized, with Western silver miners, Midwestern farmers, and politicians like Senator William B. Allison among the most vocal critics. They claimed the Act was passed secretly and unfairly favored bankers and industrialists. Since the Act had garnered no newspaper or media attention, it was thought to be passed through corruption.
Impact of the Coinage Act of 1873
The Coinage Act of 1873 coincided with the Panic of 1873, which triggered a financial crisis and ushered in the Long Depression (1873–1879). The Long Depression was a prolonged global economic slump that began with the collapse of the Vienna Stock Exchange in 1873.
It quickly spread to the United States and other nations, triggering widespread deflation, high unemployment, and a series of business failures across Europe and North America. As banks failed and credit tightened, the Act’s demonetization of silver further contracted the money supply.
The impact was particularly devastating for farmers and silver miners.
- Silver Miners: With silver bullion no longer needed for U.S. coinage, silver prices dropped drastically, and many mining operations suffered huge losses. The Western mining industry, which had boomed after the discovery of Comstock Lode silver deposits, faced severe setbacks.
- Farmers: Farmers relied on inflationary monetary policies to make loan repayments easier. However, eliminating silver-backed money increased the dollar’s purchasing power (deflation), making existing debts harder to pay. Many farmers lost their land or struggled to remain solvent.
Major Events Following the Coinage Act of 1873
| Year | Event | Effect |
| 1873 | Coinage Act of 1873 | Removed silver dollar, shifted focus to gold |
| 1878 | Bland-Allison Act | Mandated limited silver coinage |
| 1890 | Sherman Silver Purchase Act | Increased government silver purchases |
| 1893 | Repeal of the Sherman Silver Purchase Act | Reinforces the gold standard |
| 1896 | Bryan vs. McKinley Presidential Election | Heightened national debate on gold vs. silver |
| 1900 | Gold Standard Act Passed | Officially established the U.S. gold standard |
The Free Silver Movement and the “Cross of Gold” Speech
The Coinage Act of 1873 inspired the Free Silver Movement, which called for unlimited silver coinage to cause inflation and ease debts. By the 1890s, the movement had become a central issue in American politics.
The movement culminated during the 1896 presidential election when William Jennings Bryan, a Democratic candidate, delivered his famous “Cross of Gold” speech at the Democratic National Convention. In this fiery speech, Bryan argued that the gold standard was an economic policy that oppressed farmers and laborers, famously declaring: “You shall not crucify mankind upon a cross of gold.” Some consider this political speech one of the greatest in American history, winning Bryan the Democratic nomination for president.
Despite Bryan’s passionate support for silver-backed currency, he was defeated by William McKinley, who strongly supported maintaining the gold standard. This loss, and his loss in the subsequent rematch of 1900, marked the decline of the Free Silver Movement and confirmed the United States’ commitment to a gold-backed economy.
How Does the Coinage Act of 1873 Affect Us Today?
The Coinage Act of 1873 continues to influence monetary policy and numismatics:
- Modern Currency Policies – The debate over gold and silver continues in discussions about inflation, fiat money, and economic stability.
- Collectable Silver Coins – The Act increased the historical value of pre-1873 silver dollars, such as the Seated Liberty Dollar.
- Precious Metals Investing – Many silver bullion investors still view silver as an undervalued asset shaped by the Act’s impact.
The Lasting Legacy of the Coinage Act
The Coinage Act of 1873 remains one of the most controversial monetary laws in U.S. history. Removing silver’s role in standard coinage set the stage for decades of economic and political battles, culminating in adopting the gold standard in 1900. Today, the Act’s effects are still seen in monetary policy debates and the enduring value of gold and silver in the global economy.
