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| | Slavery was no longer an issue from the end of Reconstruction through 1900. With the exception of one politician (Democrat Grover Cleveland, who looked like a Republican because he was from New York, favored the gold standard and opposed unions by sending in troops to put down the Pullman Strike in Chicago in 1894), Republicans controlled the White House. During the Gilded Age, there were business scandals and there were political scandals. But there was also tremendous prosperity. | | Slavery was no longer an issue from the end of Reconstruction through 1900. With the exception of one politician (Democrat Grover Cleveland, who looked like a Republican because he was from New York, favored the gold standard and opposed unions by sending in troops to put down the Pullman Strike in Chicago in 1894), Republicans controlled the White House. During the Gilded Age, there were business scandals and there were political scandals. But there was also tremendous prosperity. |
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| | + | == Economics == |
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| | + | From about 1878 to the end of the century there was strong pressure to return the nation’s economic standard to bimetallism by including silver along with gold. Two forces drove this pro-silver or “free silver” movement: Westerners had discovered silver mines so they wanted the silver to become more valuable, and farmers wanted more money in currency to cause inflation. Westerns and Southerners arranged for passage of the Bland-Allison Act in 1878, which required the government to purchase $2-4 million worth of silver each month. Also, a bill passed over President Hayes’ veto which allowed for the free and unlimited coinage by the government of silver, such as silver dollars, at a ratio of 16 to 1 relative to gold. The government began minting silver dollars that are collectors’ items today (and worth much more than one dollar now). |
| | + | But the price of silver fell as more was mined, and so the monthly government purchases declined also. Deflation continued for the next ten years. A $100 cost in 1878 was equivalent to only $84.43 in 1890. |
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| | + | The Westerners wanted more silver purchased, and the debtors and farmers wanted more inflation. They forced passage of the Sherman Silver Purchase Act in 1890, which required even greater purchases by the government of silver. The Silver Purchase Act required the government to issue notes (like large-denomination dollar bills) to purchase 4.4 million ounces of silver each month, regardless of its value in dollars. The bill passed in a compromise with the Northerners, who obtained the high tariff in the McKinley Tariff Bill. |
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| | + | But the notes used to buy the silver each month were redeemable in gold, which was more valuable than the increasingly plentiful silver. So pretty soon the public was demanding gold from the government in return for these new notes. This created a “run” on the gold reserves of our Nation, with its total supply falling below $100 million and headed quickly towards zero. |
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| | + | The Panic of 1893 hit just after Democrat Grover Cleveland became president for his second term. He persuaded Congress to repeal the Silver Purchase Act in order to stop the run on gold. A big Wall St. banker, J.P. Morgan, arranged for more gold to be imported from Europe to protect the government reserves. The “run” on our valuable gold reserves stopped. |
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| | + | There was a huge bestselling pamphlet called “Coin’s Financial School” which was published just after the economic depression of 1893. In this fictional work, professor Coin lectures gold-standard advocates on the benefits of monetizing silver at a 16:1 ratio. The pamphlet swept the country, much as Thomas Paine’s “Common Sense” did, and laid the foundation for William Jennings Bryan’s “Free Silver” presidential campaign in 1896 against pro-gold Republican William McKinley. Ultimately Bryan rocked the country with the most famous political speech in American history, his “Cross of Gold” speech to the Democratic nominating convention: |
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| | + | :“There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it. … |
| | + | :If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.” |
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| | Rutherford B. Hayes "Ohio gov., then Repub. Pres. 1876; considered a ""moderate"" and free of scandal during his administration" | | Rutherford B. Hayes "Ohio gov., then Repub. Pres. 1876; considered a ""moderate"" and free of scandal during his administration" |