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== Bimetallism ==

== Bimetallism ==

From about 1878 to the end of the century there was strong pressure to return the nation's monetary standard to "bimetallism" (two metals: silver and gold). Because gold was the standard, advocating "bimetallism" meant adding a silver standard to the gold standard.  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 to increase the prices for their goods and lower the real cost of their debts to the banks.

Under the Grant Administration, gold was the only standard for money:  debts were payable only in gold, and paper money could be exchanged at any time for a fixed amount of gold.  This prevented inflation because the amount of gold in the world was small and nearly constant.

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.  In addition, a bill passed over President Rutherford 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).

 

 

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.  In addition, a bill passed (over President Rutherford Hayes' veto) 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, because more of something usually means it is less valuable.  The monthly government purchases declined also.  Deflation continued for the next ten years.  $100 in 1878 was equivalent to only $84.43 in 1890.  Imagine that!

But the price of silver fell as more was mined, because more of something usually means it is less valuable.  The monthly government purchases declined also.  Deflation continued for the next ten years.  $100 in 1878 was equivalent to only $84.43 in 1890.  Imagine that!

This became the Panic of 1893, and the Silver Purchase Act was repealed in order to stop the run on gold.  An immensely wealth Wall Street banker, J.P. Morgan, arranged for more gold to be imported from Europe to protect the government reserves.  The "run" on the government's gold reserves then stopped.

This became the Panic of 1893, and the Silver Purchase Act was repealed in order to stop the run on gold.  An immensely wealth Wall Street banker, J.P. Morgan, arranged for more gold to be imported from Europe to protect the government reserves.  The "run" on the government's gold reserves then stopped.

There was a bestselling and influential pamphlet called "Coin's Financial School" which was published just after the panic and 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" over a century earlier, and laid the foundation for William Jennings Bryan's "Free Silver" presidential campaign in 1896 against pro-gold Republican William McKinley.  Bryan, one of the greatest orators in history, delivered his famous "Cross of Gold" speech to the Democratic nominating convention in 1896:

There was a bestselling and influential pamphlet called "Coin's Financial School" which was published just after the panic and 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" had been so influential over a century earlier.  Coin's pamphlet laid the foundation for William Jennings Bryan's "Free Silver" presidential campaign in 1896 against pro-gold Republican William McKinley.  Bryan, one of the greatest orators in history, delivered his famous "Cross of Gold" speech to the Democratic nominating convention in 1896:

: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. ...

: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."

: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."