Reconstruction and the Gilded Age 171mental agencies could resist the temptation to put their hands in the
till. Congress itself plundered the Treasury in March 1873 by passing
the so-called “Salary Grab Act,” by which the President’s salary was
doubled to $ 50 , 000 and the salaries of representatives and senators
were raised from $ 5 , 000 to $ 7 , 500. Worse, the raise for congressmen
was awarded retroactively, thereby giving each member a $ 5 , 000 bo-
nus. But the public reacted so vehemently that Congress promptly re-
pealed the law at its very next session, except for the President’s increase
and that of the judges of the Supreme Court.
And the former Speaker of the House of Representatives, James G.
Blaine, now the minority leader and favored candidate for the Republi-
can presidential nomination in 1876 , was also accused of offering worth-
less bonds as collateral for a loan of $ 64 , 000 which he had received
from the Union Pacific Railroad and which he had never been asked to
repay. Supposedly he had used his influence as Speaker to obtain for
the railroad a generous land grant. In a dramatic speech from the fl oor
of the House he denied the charges, and his effort was so convincing
that his audience broke out in wild applause.
The consequences of these scandals and the involvement of Con-
gress with big business were bad enough for the administration and the
Republican Party, but the onset of the Panic of 1873 proved devastating.
This was an economic depression that hit hard and lasted from 1873 to
1879. Triggered by the wild speculation in railroads, dishonest banking
practices, overexpansion in industry, commerce, and agriculture, and
the failure of Jay Cooke’s banking firm, the Panic generated widespread
suffering. Three million workers lost their jobs over the next fi ve years,
the stock market collapsed, banks closed, farm prices fell, and one in
four railroads defaulted on its bonds.
To counter the depression, Congress released $ 26 million in green-
backs. Previously, in February 1873 , before the Panic struck, it had
passed the Coinage Act, which eliminated silver coins from circulation
and designated gold as the only coin to be minted. Then, when the
country went bust in September with this devastating depression, those
who favored soft (paper) money such as greenbacks denounced the
Coinage Act as the “Crime of ’ 73 .” They demanded a further increase
in the money supply through the coinage of silver. They insisted that
millions of silver dollars be minted and circulated at a ratio to gold of