WI Grant Vetoes the Coinage Act of 1873?

I feel it would make the depression worse.

Although many more people fall upon gold as a currency, those using Silver would feel the impact, and many more would fall into the pit of depression.

I'm not good with economics, but this will bump it up for those aspiring economists.
 
I think the general economic consensus (among monetarists, keynesians, etc) is that when you constrict the money supply during a recession, you make it worse; AIUI, that's what happened when the Panic of 1873 hit after this law.
Right, so vetoing the bill, keeping the US on 'softer' money should slightly ease the panic.
 
It might slightly ease the panic, but I don't think it would avert it altogether since a constrictive money supply wasn't really the problem facing the economy during that era anyway. You still had the ravaging of the Southern cotton production with the boll weevil and the post-Civil War boom in railroad construction and manufacturing had to crash at some point. Also, the depression in the US was only part of a worldwide depression during the 1870s.

Using both gold and silver would make US currency more volatile, since it would remove the United States from the big gold standard countries later on, when Britain, France, and Germany were all cooperating to keep their currencies running high.
 
That's actually a very good point, certainly about the inevitable crash of the post Civil War boom; the global depression is true, though AIUI it had it's origins in the US Panic. I think where this leaves it is, even at the most optimistic, Grant vetoing the bill would only delay and soften the economic crisis, and even then it may only soften it.

(Oh, and not to nitpick, but didn't the boll weevil not arrive in the US until 1892?)
 
That's actually a very good point, certainly about the inevitable crash of the post Civil War boom; the global depression is true, though AIUI it had it's origins in the US Panic. I think where this leaves it is, even at the most optimistic, Grant vetoing the bill would only delay and soften the economic crisis, and even then it may only soften it.

(Oh, and not to nitpick, but didn't the boll weevil not arrive in the US until 1892?)
IIRC the Panic of 1873 started in Austria-Hungary first, then spread to the rest of Europe and the United States. The US keeping the silver standard wouldn't really help things, since the demand for silver was falling internationally anyway after the Franco-Prussian War.

And yes, you are right. I forgot the boll weevil arrived that late, but cotton demand and production was falling already due to the rise of Egyptian cotton.
 
I think you may be right; still, Actually, I'm still not so sure about the basic idea:

a constrictive money supply wasn't really the problem facing the economy during that era anyway

At the least, there seems to be a modern historical view that says the US was facing this kind of problem

Wikipedia said:
The primary cause of the price depression in the United States was the tight monetary policy that the U.S. followed to get back to the gold standard after the Civil War. The U.S. was taking money out of circulation to achieve this goal, therefore, there was less available money to facilitate trade. Because of the monetary policy described above the price of silver started to fall causing considerable losses of asset values, however, by most accounts, after 1879 production was growing, thus further putting downward pressure on prices due to increased industrial productivity, trade and competition.
 
AIUI, & reading this, the problem was as much overproduction, which was, at the time (& into the 1930s), based on a (mistaken:eek::rolleyes:) belief production created demand.:eek::confused: So long as that view prevails, monetary policy makes slim difference IMO.
 
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elder.wyrm

Banned
The Panic itself is significantly less severe, and the subsequent trough is shallower and smaller.

Two primary problems effected the US economy in this period: A relatively fragile banking system, and a relatively inflexible money supply. While riding the wave of credit cycles launched by the financial chaos of the 1860's, relatively small shocks could throw the whole economy into depression. A highly contractionary move by the Federal government, like the Coinage Act, could cause a secondary deflation in the economy in general. The coinage acts were, more or less, what passed for monetary policy in this time period, and this would be the equivalent of selling securities in modern OMOs.

Considering the importance the US economy would increasingly play with respect to global trade as the 19th century goes on, this could have huge ramifications.
 
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