Immediately after the Civil War during Reconstruction, there were large capital inflows into the United States and a general improvement in the export-to-import ratio since the export-dominant South was reintegrated with the North. The United States Treasury, however, had increased its cash balance through the summer of 1873 by selling gold for million. National banks also increased issuance of national bank notes by million. The failure of several railroad companies including Jay Cooke & Company on their bond obligations encouraged capital outflows from the United States to Europe and weakened demand for dollars leading to the Panic of 1873. Increased Treasury cash balances, continued issuance of national bank notes, and capital outflows together depreciated the currency. These factors further caused a reduction in reserves held by monetary institutions because higher prices increased domestic demand for currency. Reserves held by banks were insufficient to be able to meet seasonal demands in autumn of 1873 as greenback reserves declined from million in September 1873 to million in October 1873. Tensions surrounding the Panic of 1873 between creditors and debtors revived the specie payment resumption debate.
Immediately after the Civil War during Reconstruction there were large capital inflows into the United States and a general improvement in the export-to-import ratio since the export-dominant South was reintegrated with the North The United States Treasury however had increased its cash balance through the summer of 1873 by selling gold for million National banks also increased issuance of national bank notes by million The failure of several railroad companies including Jay Cooke & Company on their bond obligations encouraged capital outflows from the United States to Europe and weakened demand for dollars leading to the Panic of 1873 Increased Treasury cash balances continued issuance of national bank notes and capital outflows together depreciated the currency These factors further caused a reduction in reserves held by monetary institutions because higher prices increased domestic demand for currency Reserves held by banks were insufficient to be able to meet seasonal demands in autumn of 1873 as greenback reserves declined from million in September 1873 to million in October 1873 Tensions surrounding the Panic of 1873 between creditors and debtors revived the specie payment resumption debate