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Grant’s second term was as difficult as his first, this time due to economic problems rather than scandals. During the economic boom of his first term, Americans had taken out too many bad loans and overspeculated in the railroad and business industries. This activity led to the Depression of 1873, the first major economic collapse in U.S. history. The depression lasted for roughly five years, and millions of Americans lost their jobs.
In response to dire economic conditions, the poor clamored for cheaper paper and silver money to combat day-to-day hardships. Afraid of driving up inflation, however, Republicans in Congress stopped coining silver dollars in 1873 and passed the Resumption Act of 1875 to remove all paper money from the economy. These economic policies helped end the depression in the long run but made the interim years more difficult for many Americans.
The Depression of 1873 was politically damaging to radical and moderate Republicans in Congress. Many long-time supporters of the Republican Party, especially in the North, voted Democrat in the congressional election of 1874, angry that radical and moderate Republicans adhered so rigidly to hard-money policies even when unemployment in the United States reached nearly fifteen percent.
These northern votes, combined with white votes in the South, ousted many Republicans from Congress and gave the Democratic Party control of the House of Representatives for the first time since 1856. The remaining Radical Republicans in Congress who had not lost their seats suddenly found themselves in the minority party, unable to pass any further legislation concerning southern Reconstruction efforts. The 1874 elections thus marked the beginning of the end of Radical Reconstruction.
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