Was the 1873 Coinage Act a corrupt crime or a calculated economic shift?
In short: Known by critics as the Crime of '73, the Coinage Act of 1873 effectively ended bimetallism in the United States. While some later claimed the removal of the silver dollar was an accidental oversight, evidence suggests key officials intentionally engineered the transition to a gold standard to ensure long-term economic stability.
The Coinage Act of 1873 was a comprehensive revision of laws governing the United States Mint. By omitting the standard silver dollar from the list of authorized coins, the act stripped private citizens of their right to have silver bullion coined into legal tender. This effectively placed the nation on a gold standard by default, as gold remained the only metal with unlimited legal tender status. The legislation also introduced a Trade dollar for export to Asia and discontinued several small-denomination coins, including the half dime.
For decades, the act was the subject of intense political controversy. Critics labeled it the Crime of '73, alleging a corrupt, surreptitious effort to demonetize silver. Many historians long accepted the traditional narrative that the change was an unplanned by-product of technical legal revisions. However, economists like Milton Friedman and historians such as Walter T. K. Nugent have argued that the omission was intentional. Key figures, including Treasury Secretary George Boutwell, John Jay Knox, and Senator John Sherman, were aware of the consequences and believed a gold standard was necessary for the nation.
The architects of the bill were motivated by the anticipation of increased silver production in the Far West. They correctly forecast that rising supply would lower silver's market price, making it profitable for producers to deposit bullion at the Mint. Officials feared that if silver were allowed to circulate as legal tender, it would drive gold from the economy, as predicted by Gresham's law. By eliminating the silver dollar, they sought to avoid the government losses associated with paying out gold in exchange for devalued silver. The dispute was eventually settled when the gold standard was formally enacted in 1900, before the U.S. moved toward fiat currency in 1933.
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