1 juin 1873 - Panic of 1873

Description:

The banks gave out too many loans and profit never materialized so the banks lost money.

People did not trust the government and inflation followed.

Resumption act of 1875 forced the government to withdraw greenbacks and redeem all paper currency in gold at face value starting in 1879.

Congress discontinued the silver dollar in 1873 because the silver miners discovered they could make a better profit elsewhere.

The accumulation of gold by the government was known as contraction. Because greenbacks were being replaced by gold they became rare and expensive.

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