Financial issues dominated the political agenda during the presidency of Ulysses S. Grant.
After the Civil War the Treasury had assumed that the $400 million worth of greenbacks, paper money issued during the war, would be retired from circulation and that the nation would revert to 'hard money' currency, gold coins. Many agricultural and debtor groups resisted this contraction of the money supply, believing that it would mean lower prices for their crops and would make it harder for them to pay long-term debts. They were joined by a large number of Radical Republican politicians who thought a combination of high tariffs (taxes to protect American goods) and inflation would generate more rapid economic growth.
In 1868, Congressional supporters of such a 'soft-money' policy halted the retirement of greenbacks, leaving some $356 million outstanding. There matters stood when Grant took office.
The Color of Money
The hard-money advocates, mostly bankers and merchants, claimed Grant's election was a mandate to save the country from an idea put forward by the Democrats to repay government bonds with the greenbacks in circulation. Influential in Republican circles, the hard-money advocates also had the benefit of the popular assessment that payment in gold was morally preferable to paper currency. Grant agreed, and in his inaugural address he endorsed payment of the national debt in gold as a point of national honor. In March of 1869, the Public Credit Act endorsing that principle became the first act of Congress that he signed.
The complexities of the 'money question' exasperated Grant, but that was the least of his worries, for his administration soon fell into a cesspool of scandal. The first hint of scandal touched Grant in the summer of 1869, when the successful and crafty business mogul Jay Gould and associate Jim Fisk conspired with the president's brother-in-law to corner the gold market.
Gould concocted an argument that the government should refrain from selling gold on the market because the resulting rise in gold prices would raise temporarily depressed farm prices. Grant apparently smelled a rat from the start, but was seen in public with the speculators.
As the rumor spread on Wall Street that the president had bought into the argument, gold rose from $132 to $163 an ounce. When Grant finally persuaded his brother-in-law to pull out of the deal, Gould began quietly selling out. Finally on 'Black Friday', September 24, 1869, Grant ordered the Treasury to sell a large quantity of gold, and the bubble burst. Fisk got out by repudiating his agreements and hiring thugs to intimidate his creditors. A Congressional investigation was conducted, led by James Garfield (who would later become the 20th president of the United States) and led to the resignation of the Treasury Secretary.
The plot to corner the gold market was only the first of several scandals that rocked the Grant administration. During the campaign of 1872 the public first learned about the financial pirating of the Credit Mobilier, a construction company that had milked the Union Pacific Railroad for exorbitant fees in order to line the pockets of insiders who controlled both firms. Rank-and-file Union Pacific shareholders were left holding the bag. Most of this had transpired before Grant's election in 1868, but it now touched several prominent Republicans. Of the 13 members of Congress involved, only two were censured by Congress, which, before it adjourned in 1873, voted itself a pay raise from $5,000 to $7,500 - retroactive, it decided, for two years. Public uproar forced repeal, but raises did go through for the president and Supreme Court justices.
The 'Black Friday' scandal of 1869 was not the first scandal to hit Grant, and it was not the last. Up against the tradition of 2-term-only presidents, debate over reconstruction, and financial scandal, Grant was done after his second term. Grant would be remembered as a great military leader of the Civil War and the head of corrupt presidential administrations.
When you are done, you should be able to:
- Discuss the conflict over soft-money and hard-money currencies after the Civil War
- Summarize the Black Sunday scandal
- Recall some of the other scandals that affected the Grant administration
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