Previously Assistant Secretary of the Treasury under Secretary George S. Boutwell, President Grant promoted William A. Richardson (1821-1896) to Secretary when Boutwell resigned. The postwar economy had expanded so quickly that commercial banks became nervous and began calling in their loans. As a result, in the summer of 1873 the money supply tightened drastically, causing a panic. Richardson responded by issuing $26 million in greenbacks to meet the demand. The legality of his action was doubtful, but Congress did not interfere and the crisis was eased. (Such cycles of expansion and panic continued for the next thirty years, however, and were the basis for the creation of the Federal Reserve in 1913).
In his last months in office Richardson became embroiled in the "Sanborn Incident." John Sanborn, hired by Richardson under a congressional act to recover unpaid taxes, had kept much of what he had collected. Congress investigated the matter, and though no direct involvement by Richardson, his removal was demanded. Grant responded by appointing Richardson to a position on the Massachusetts Court of Claims in 1874.
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