STORIES ABOUT GOLD AND SILVER MONEY
Free Silver   Wizard of Oz

Luke Beata:  Free Silver

In U.S. History, the phrase 'free silver' refers to the political movement which championed the unlimited coinage of silver. It became an important issue following the Panic of 1873 and continued to be until the close of the century. The economic strain felt in 1873-1878 brought about the support of cheap money as advocated by the popular Greenback party. On account of both American and European demonetization of silver and increases in mining production, the market price of silver fell rapidly following 1873. As inflationists failed to achieve paper money expansion, they turned to silver. They hoped that the free coinage of silver would aid their cause as well as both the Greenbacks and silver mining interests. Such demands contributed to the Bland-Allison Act which provided for limited coinage of silver at a ratio of 16 to 1 with gold. Such a compromise, however, was unable to halt the decline of silver prices or to increase the circulation of money. During this time, the decisions over money were being divided along regional lines. Sound currency and the gold standard were favored by the financial powers in the East. While the indebted agrarian population of the South and West desired inflation to lessen their debt burdens. By 1890, the strength of silver interests had reached a high and another compromise act was passed, the Sherman Silver Purchase Act. The Act called for increased government purchases of silver.
 

Further, in 1896, free silver was espoused as a major issue of presidential candidate William Jennings Bryan. However, Bryan's defeat was met with an increased supply of gold and a returning prosperity for Americans. The power of free silver advocates was again lessened. Nevertheless, silver interests maintained some political presence in the 1900's. For example, under F.D.R's presidency, the government made massive purchases of silver. But by the 1960s, the U.S. Treasury terminated the use of silver in coins and went on to sell its surplus stock of silver in 1970.

References

Dewey, D.R. Financial History of the U.S.(12th Edition,1968)

Hepburn, A.B., History of Coinage and Currency in the U.S. (1967) Personal Knowledge

Kristan  Donahue:
The silver debate of 1896
and The Wizard of Oz

Unexpected changes in the price level can facilitate a redistribution of wealth within a society. This occurrence will often result in a great deal of political unrest. If one is to consider the United States during the period 1880-1896, it can be characterized as a period of deflation. The price level during this time fell by 23%. This created a situation where creditors were happy and debtors were not. This presented a problem and solutions were proposed to reconcile the situation. One such solution was a call to replace the gold standard with a bimetallic standard. This way, gold and silver could be used in the minting of coins. The creation of a bimetallic standard would lead to an increase in the money supply. Furthermore, deflation would be put to a halt. In the heat of the dire economic situation, a presidential election was on its way. Needless to say, the debate over the use of silver became the focus of the 1896 presidential election. William McKinley, the Republican nominee, and William Jennings Bryan, the Democrat candidate, competed on contrasting platforms concerning the bimetallic standard. McKinley strongly supported sticking to the gold standard. William Jennings Bryan, on the other hand, believed it was unnecessary to remain stuck on gold. The candidate's opposing viewpoints were representative of their establishments. McKinley was a conservative from the east, which is where most bankers (creditors) were situated. William Jennings Bryan was representing the southern and western population, which, for the most part, was made up of farmers (debtors).
 

Oddly enough, the silver issue of 1896 has found its way into the ever-popular children's book, The Wizard of Oz. The book was written shortly after the election of 1896 by a journalist from the Midwest. As the story goes, Dorothy is a girl who finds herself far away from Kansas and lost in an unfamiliar place. In relation to the silver issue, Dorothy represents traditional American values. The three friends she meets during her journey: the scarecrow, tin man, and lion represent the farmer, the industrial worker, and William Jennings Bryan, respectively. The lion is representative of Bryan because the lion is said to have a roar that exceeds his might. The four characters journey along the yellow brick road which is representative of the gold standard. The four characters are in a pursuit to find the Wizard who will have the power to send Dorothy back home. At the end of the story they arrive at Oz, which is the equivalent to Washington. Here, everybody sees the world through green glasses or money, in relation to the silver issue. The Wizard of Oz makes an attempt to be all things to all people. But in the end, he is really just a fraud. The Wizard represents William McKinley. The story ends with Dorothy's problem being resolved when she discovers the power of her silver slippers (In the original, her slippers were silver, not red).

references

Mankiw, Gregory. Macroeconomics-Fourth Edition.Worth Publishers: New York, 2000.