In
economicsEconomics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
,
bimetallism is a monetary standard in which the value of the monetary unit is defined as equivalent either to a certain quantity of gold or to a certain quantity of silver. Such a system establishes a fixed rate of exchange for the two metals. The merits of the system were the subject of debate in the late 19th century. Primarily this took place inside the United States, the U.S.
In
economicsEconomics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
,
bimetallism is a monetary standard in which the value of the monetary unit is defined as equivalent either to a certain quantity of gold or to a certain quantity of silver. Such a system establishes a fixed rate of exchange for the two metals. The merits of the system were the subject of debate in the late 19th century. Primarily this took place inside the United States, the U.S. being the only major country which was a large producer of both gold and silver.
This monetary system can be very unstable. Due to the fluctuation of the commercial value of the metals, the metal with a commercial value higher than the currency value tends to be used as metal and is withdrawn from circulation as money in accordance with
Gresham's LawGresham's law is commonly stated: "Bad money drives out good", but more accurately stated: "Bad money drives out good under legal tender laws."...
.
Political debate
In the United States, bimetallism became a center of political conflict toward the end of the nineteenth century. Newly discovered silver mines in the American West caused an effective decrease in the value of money. In 1873, in order to de-monetize silver, the government passed the Fourth Coinage Act, just as these silver resources were beginning to be exploited. Proponents of monetary silver, known as the
SilveriteThe Silverites were a political group in the United States in the late-19th century that advocated that silver should continue to be a monetary standard along with gold...
s, referred to this act as “The Crime of ’73,” as it was judged to have inhibited inflation. Instead deflation resulted, causing problems for farmers with large mortgages who found they could sell their goods for only a fraction of their post-Civil War price. In addition, improvements in transport meant it was cheaper for farmers to ship their grain to Europe, and they over-expanded production until there was a glut on the market. The
Panic of 1893The Panic of 1893 was a serious economic depression in the United States that began in 1893. This panic is sometimes considered a part of the Long Depression which began with the Panic of 1873, and like that of earlier crashes, was caused by railroad overbuilding and shaky railroad financing...
was a severe nationwide depression that brought the money issue to the fore. The "silverites" argued that using silver would inflate the money supply and mean more cash for everyone, which they equated with prosperity. The gold advocates said silver would permanently depress the economy, but that sound money produced by a
gold standardThe gold standard is a monetary system in which a region's common medium of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold...
would restore prosperity. The gold advocates won decisively in 1896 and 1900.
Bimetallism and "
Free SilverFree Silver was an important political issue in the late 19th century and early 20th century United States about whether to have an inflationary monetary policy by "free coinage of silver"; its supporters were called silverites...
" were demanded by
William Jennings BryanWilliam Jennings Bryan was the Democratic Party nominee for President of the United States in 1896, 1900 and 1908, a lawyer, and the 41st United States Secretary of State under President Woodrow Wilson. One of the most popular speakers in American history, he was noted for a deep, commanding voice...
who took over leadership of the
Democratic PartyThe history of the Democratic Party of the United States is an account of the oldest political party in the United States and arguably the oldest democratic party in the world.-Origins:...
in 1896, as well as the
PopulistThe People's Party, later erroneously also known as the Populist Party was a short-lived political party in the United States in the late 19th century. It flourished particularly among western farmers, based largely on its opposition to the gold standard...
and
Silver RepublicanThe Silver Republican Party was a United States political faction active in the 1890s. It was so named because it split from the Republican Party over the issues of "Free Silver" and bimetallism. The main Republican Party supported the gold standard....
Parties. The Republican Party nominated
William McKinleyWilliam McKinley Jr. was the 25th President of the United States, and the last veteran of the American Civil War to be elected to the office....
on a platform supporting the gold standard which was favored by financial interests on the East Coast. A faction of Republicans from silver mining regions in the West known as the Silver Republicans endorsed Bryan.
Bryan, the eloquent champion of the cause, gave the famous
“Cross of Gold” speechThe Cross of Gold speech was delivered by William Jennings Bryan at the 1896 Democratic National Convention in Chicago on July 9, 1896. The speech advocated bimetallism. Following the coinage Act , the United States abandoned its policy of bimetallism and began to operate a 'de facto' gold standard...
at the National Democratic Convention on July 9, 1896 asserting that “The gold standard has slain tens of thousands.” He referred to “a struggle between ‘the idle holders of idle capital’ and ‘the struggling masses, who produce the wealth and pay the taxes of the country;’ and, my friends, the question we are to decide is: Upon which side will the Democratic party fight?” At the peroration, he said “You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.” However, his presidential campaign was ultimately unsuccessful; this can be partially attributed to an economic upturn caused in part by the failure of Russian harvests and the resultant increase in commodity prices. The McKinley campaign was effective at persuading voters that poor economic progress and unemployment would be exacerbated by adoption of the Bryan platform. 1896 saw the election of McKinley, who implemented the gold standard and ran on it
in his 1900 re-electionThe United States presidential election of 1900 was held on November 6, 1900. It was a rematch of the 1896 race between Republican President William McKinley and his Democratic challenger, William Jennings Bryan. The return of economic prosperity and recent victory in the Spanish-American War...
. The standard lasted until the
Great DepressionThe Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
. It was abandoned in 1934 in FDR’s New Deal program.
Monometallism
The practical difficulties which in times past had confronted the maintenance of a joint standard, a concurrent circulation of the two metals, led one nation after another to abandon the effort, and to adopt a system of monometallism, with gold as its basic unit of trade.
The historical development of coinage in modern nations has been from silver monometallism through a more or less unsatisfactory experience with bimetallism, to the single gold standard. Still, in the twentieth century, both metals lost their former importance within monetary systems. Now, monometallism in the form of the
gold standardThe gold standard is a monetary system in which a region's common medium of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold...
has been abandoned by all nations.
Primary sources
- Campaign Text-book of the National Democratic Party (1896) by Democratic Party (U.S.) National Committee: this is the Gold Democrats handbook; it strongly opposed Bryan.
- Walker, International Bimetallism (New York, 1896)
- Robert Giffen
Robert Giffen , was a Scottish statistician and economist. He was born at Strathaven, Lanarkshire.He entered a solicitor's office in Glasgow, and while in that city attended courses at the university. He drifted into journalism, and after working for the Stirling Journal he went to London in 1862...
, Case against Bimetallism (London, 1896)
- Joseph Shield Nicholson
Joseph Shield Nicholson was an English economist, born at Wrawby, Lincolnshire.He matriculated at King's College London in 1867 and gained his BA with high honours in 1870. From 1872 to 1873 he studied at the University of Edinburgh. In 1873 he went to Trinity College, Cambridge, where he...
, Money and Monetary Problems (London, 1897)
- Samuel Dana Horton
Samuel Dana Horton , American writer on bimetallism, was born in Pomeroy, Ohio.He graduated at Harvard in 1864, and at the Harvard Law School in 1868, studied Roman law in Berlin in 1869, and in 1871 was admitted to the Ohio bar...
, The Silver Pound (London, 1887)
- Walker, Money (New York, 1878)
- Francis Amasa Walker
Francis Amasa Walker was an American economist, statistician, journalist, educator, academic administrator, and military officer in the Union Army. Walker was born into a prominent Boston family, the son of the economist and politician Amasa Walker, and he graduated from Amherst College at the age...
, Money, Trade and Industry (New York, 1879)
- Elisha Benjamin Andrews
Elisha Benjamin Andrews was an American economist and educator, born in Hinsdale, New Hampshire.He served in Connecticut regiments during the Civil War. Graduating from Brown University in 1870 and from the Newton Theological Institution in 1874, he preached for one year and then was president of...
, An honest Dollar (Hartford, 1894)
- Helm, The Joint Standard (London, 1894)
- Frank William Taussig
Frank William Taussig was a U.S. economist and educator, born in St. Louis.He graduated from Harvard in 1879, taught there for ten years, became professor of economics in 1892, and remained at Harvard as a professor of economics...
, The Silver Situation in the United States (New York, 1893)
- Horace White (writer)
Horace White was an American journalist and financial expert, born at Colebrook, New Hampshire. He graduated at Beloit College in 1853, and in 1854 became city editor of the Chicago Evening Journal. In 1856-57 he served as assistant secretary of the National Kansas Committee...
, Money and Banking (Boston, 1896)
- James Laurence Laughlin
James Laurence Laughlin was an American economist who helped to found the Federal Reserve System.Born in Deerfield, Ohio, Laughlin received his PhD from Harvard University. His thesis regarded "Anglo-Saxon Legal Procedure". A conservative, he generally subscribed to the economic theories of John...
, History of Bimetallism in the United States (New York, 1897)
- Langford Lovell Price
Langford Lovell Price was an English economist, born in London. He was educated at Trinity College, Oxford, in 1888 became fellow and treasurer of Oriel, and was Newmarch lecturer in statistics at University College, London in 1895-96...
, Money and its Relations to Prices (London and New York, 1896)
- Utley, Bimetallism (Los Angeles, 1899)
- Roger Q. Mills
Roger Quarles Mills was an American politician and an officer in the Confederate States Army during the American Civil War.-Background:...
, What shall we do with silver? (The North American ReviewThe North American Review was the first literary magazine in the United States. Founded in Boston in 1815 by journalist Nathan Hale and others, it was published continuously until 1940, when publication was suspended due to World War II. Publication subsequently resumed in 1964 at Cornell College...
, Volume 150, Issue 402, May 1890.)
See also
- Political interpretations of The Wonderful Wizard of Oz
Political interpretations of The Wonderful Wizard of Oz study the influences of the modern fairy tale written by L. Frank Baum and illustrated by W.W. Denslow, first published in 1900...
- Silver standard
The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver standard was widespread until the 19th century, when it was replaced in most countries by the gold standard.- Ancient Greece :...
- Gold standard
The gold standard is a monetary system in which a region's common medium of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold...
- Crime of 1873
External links