The secret deal ensured that the Republican Party candidate, Rutherford Hayes, would become the next president and that the Democrats would regain political power in the southern state governments.

Background to the Compromise of 1877 for kids - Anarchy in the South
The process of Reconstruction was falling apart in the South towards the end of Grant's presidency, especially in Louisiana, Arkansas, and South Carolina. The political situation in Louisiana and Arkansas had led to the appointment of two sets of governors and legislatures which had  led to a small scale civil war. In South Carolina the corrupt and power hungry carpetbaggers had gained control. In other Southern states there were continued outrages on the ex-slaves. Under these conditions Grant believed it was necessary to keep Federal soldiers in the South - federal troops still remained in Louisiana, South Carolina, and Florida.  Public opinion in the North was turning against the employment of soldiers, people wanted the end of reconstruction and military intervention in the South. They wanted to get back to making money. It was under these circumstances that the election of 1876 was held.

Background to the Compromise of 1877 for kids - The Presidential Election of 1876
The Republican candidate was Rutherford B. Hayes of Ohio. His Democratic opponent was Samuel J. Tilden of New York. The electoral returns were fraught with accusations and arguments. There appeared to be two sets of returns from each of three Southern states (Florida, Louisiana, and South Carolina) and the vote of Oregon was also doubtful. The disputed results prevented either of the candidates from securing a majority of electoral votes. The Senate was Republican, and the House of Representative was Democratic. The two houses could not agree as to how the electoral returns should be counted so they referred the whole issue to an electoral commission.

The Compromise of 1877 for kids - The Electoral Commission
The electoral commission was made up of five Senators, five Representatives, and five justices of the Supreme Court. Eight of the commissioners were Republicans and seven commissioners were Democrats. The electoral commission would eventually decide by eight to seven votes that Hayes was elected  and that he would be inaugurated as President on March 4, 1877. But first the terms in the Compromise of 1877 had to be agreed

Compromise of 1877 for kids - Democratic Leaders accept the Republican Hayes
The Compromise of 1877 was secretly hammered out in the months following the Presidential election of 1876, but before the inauguration in March 1877. Republican and Democratic leaders reached a compromise to resolve the election issue and outstanding matters relating to reconstruction. Democratic leaders accepted Rutherford B. Hayes’s election as president in exchange for Republican promises to withdraw federal troops from the South and other terms and guarantees in the Compromise of 1877.

Compromise of 1877, the End of Reconstruction: Terms of the Compromise of 1877
The terms of the Compromise of 1877 were as follows:

To withdraw federal soldiers from their remaining positions in the South (Louisiana, South Carolina, and Florida)

The restoration of "Home Rule"

To appoint Democrats to patronage positions in the South

To appoint a Democrat to the president’s cabinet

To pass federal legislation that would encourage industrialization in the South

Compromise of 1877, the End of Reconstruction: The Aims and Goals of the Compromise of 1877
The goal of the Republicans with Compromise of 1877 was to ensure that their candidate, Rutherford B. Hayes, would become the next president. The aims and goal of the Democrats with the Compromise of 1877 was to ensure that the federal troops that were propping up Republican state governments in Florida, South Carolina, and Louisiana would be removed bringing Reconstruction to a formal end. That Democrats would appoint officials to government positions on the basis of political support and that a Democrat would be appointed to the Republican president's cabinet. The patronage positions were part of the infamous Spoils System that was in rampant use during this period of United States History. 

Compromise of 1877, the End of Reconstruction: Significance of the Compromise of 1877
The significance of the Compromise of 1877 was:

Reconstruction was brought to a formal end with the permanent removal of federal troops from the South

Southern politicians would play a prominent role in the southern state governments and the federal government

The national government could no longer intervene in state affairs

The terms of the compromise would allow the disfranchisement of black voters and the imposition of racial segregation

Federal funding would be made available for internal improvements in the South and construction of another transcontinental railroad would begin

The Compromise of 1877 was seen as the “Great Betrayal" by former slaves

The Republicans abandoned their efforts to obtain equal rights for Black Americans in the South

Compromise of 1877, the End of Reconstruction: The Withdrawal of the Soldiers from the South
The Withdrawal of the federal Soldiers from the South followed the Compromise of 1877. President Rutherford Hayes recalled the troops, and all the Southern states at once passed into the control of the Democrats. Hayes's withdrawal of troops from the South marked the end of Reconstruction. Hayes continued his presidency by overseeing the appropriation of federal funds for internal improvements in the South.