In the economic area, the passage of the Resumption Act
, which resumed the payment of specie, brought an end to the severe depression following the Panic of 1873.
Finally, the decision to resume convertibility on January 1, 1879, was made in the Resumption Act of January 14, 1875, which the lame-duck Republican Congress passed by a majority of one.
As Calomiris (1988) points out, the credibility of the restoration of the gold standard rule was probably established six years before the Resumption Act, by the Act of March 18, 1869, which guaranteed redemption and principal in gold, and the Supreme Court decision in Venzie Bank vs Fenno, which supported the constitutionality of gold clauses (Calomiris, 1988, p.
In the 1870s the US dollar gradually moved to its old parity, particularly after the passage of the Resumption Act of 1875.
Apparently, the uncertainties and need for capital inflows associated with resumption were large enough to perpetuate a premium on greenback loans, albeit a diminishing one, even after the Resumption Act of 1875.
He argues that the Resumption Act allowed the Secretary of the Treasury to retire greenbacks equal to the gross amount of national bank notes issued without accounting for voluntary retirement of national bank notes by the commercial banks.