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Hi-Ho Silver
Q. Who was the 25th President of the United
States?
A. William McKinley
Q . Who ran against him in 1896?
A. Prairie avrnger, 11101111tain lion,

Bryan, Bryan, Bryan , Bryan,
Giga11tic tm11bado1; speaking like a siege g11n
Smashing Ply111outh Rock with his boulders fro111 the West.
poet Vachel Lindsay

for gold, and. in 1967 Congress
authorized the Treasury to cease
redemption for silver.

Important economic issues are seldom decided
strictly on the basis of economic theory. Political
considerations often influence the outcome.
Du ring the second half of the nineteenth century, for example, Americans hotly debated
whether the United States should remain on the
gold standard, pitting the interests of urban America against the interests of rural. America.
The following article deals with the debate
aver the gold standard, the rise of the Populist
mavement, and the presidential election of 1896. It
attempts to tie the three together and to show how
economics and politics often become intertwined.

People who look closely at their
paper money may still spot an occasional silver certificate which guarantees that "there is on deposit in
the Treasury of the United States of
America one dollar [or five dollars or
ten dollars] in silver payable to the
bearer on demand." The words,
however, are merely reminders of a
bygone era; silver certificates are no
longer redeemable in silver.
Today our paper currency is
backed by "the full faith and credit"
of the United States government.
The Gold Reserve Act of 1934
stopped the redemption of currency

Americans don't seem to be
overly concerned by the lack of precious metal backing. A few "gold
bugs" clamor for a return to the
gold standard, and numismatists
lament the passing of silver coins.
But most people give little thought
to the fact that gold and silver no
longer play a role in the U.S. monetary system. In fact, a citizen of
post-Civil War America would
probably be astounded by presentday public indifference .
During the final three decades
of the nineteenth century, passions
ran high over the question of
whether gold, and gold alone,
should serve as the basic money of
the United States. The debate culminated in the presidential election
of 1896, but it actually began 35
years earlier with the opening shots
of the Civil War.
The war put a severe fi nancial
strain on the U.S. Treasury; during
the first year of hostilities total
expenditures of the United States
government jumped from $67 million to $475 million. Unfortunately,
revenues failed to keep pace, and by
June 30, 1862 Mr. Lincoln's government faced a $423 million deficit,
which it covered by borrowing and
by printing paper money.

Actually, Congress authorized
two types of paper money, both of
which were legal tender: national
bank notes and "greenbacks" (so
called because they were printed in
green ink).
The major difference between
the two types of paper currency was
that national bank notes were fully
collateralized and redeemable;
greenbacks were not. National bank
notes could be issued only by
national banks and only to the
extent of 90 percent of the value of
U.S. government bonds deposited
with the Treasury by the issuing
bank. Greenbacks, however, were
simply authorized by Congress and
issued by the Treasury. (During the
war, Congress authorized the issue
of $450 million in greenbacks .)
By the time Lee surrendered to
Grant at Appomattox, prices in the
North were more than double what
they had been when the war began,
and many people were blaming the
inflation on greenbacks . (In general, there was one price if you paid
for something in gold, and there
was another, higher price if you
paid for it in paper money.) People
in the cities were unhappy because

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wages did not rise as rapidly as
prices, but farmers were pleased
because they were selling their
wheat for an unprecedented $2.00 a
bushel and times were good down
on the farm.
In 1866, however, things started
to change, and hard times hit rural
America. With the hostilities ended
and the Union preserved, the U.S.
Treasury had begun to retire greenbacks from circulation. At about the
same time, farm prices dropped and
farm mortgage debt increased.
Farmers were caught in a squeeze,
and many blamed their plight on
the retirement of greenbacks. In fact
the outcry was so great that Congress relented and moved to keep
greenbacks in circulation .
Meantime, however, the silver
dollar was dropped from coinage,
in part because the leading countries of Europe had agreed in 1869 to
make gold the sole reserve against
their currencies . (At the time, many
Americans thought that what was
good for Europe must also be good
for the United States.)
Farmers enjoyed a few good
years during the 1870s and 1880s,
but those years seemed to be the
exception rather than the rule. As
the situation on the farm and in the
countryside grew increasingly desperate, farmers and legislators in
southern and western states took up
the cry of "free-silver." Advocates
of free-silver proposed that the U.S.
Treasury purchase unlimited quantities of silver and mint silver coins
for use as national currency along
with gold coins. Since the supply of
silver was far more plentiful that the
supply of gold, they hoped the free
coinage of silver would bring about
a general inflation and thereby help
farmers fetch a better price for their
crops. (Technically, free-silver
referred to the free and unlimited
coinage of silver at the ratio of 16
grains of silver to 1 grain of gold; a
silver dollar would contain 371.25
grains of silver and a gold dollar
would contain 1/16 that amount or 23.22 grains of gold.)
Those who supported the coinage of both silver and gold were
known as bimetallists; those who
favored a gold standard were called
monometallists. The bimetallists
based their position on the so-called
quantity theory of money. They reasoned that the amount of money in
circulation determined the general
level of prices and the level of economic activity. In the words of Illi2


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nois Governor John Peter Altgeld, a
prominent free-silver advocate,
"Money in the business world and
blood in the body perform the same
function and seem to be governed
by similar laws. When the quantity
of either is reduced the patient
becomes weak and what blood or
money is left rushes to the heart or
center, while the extremities grow
cold ." This view reflects the bimetallists' feeling that the gold standard
benefitted the financiers on Wall
Street and in London to the detriment of the American farmer.

Populism Raising Less Corn
and More Hell
By 1896, the free-silver movement had attracted a considerable
following. Farm prices were more
depressed than ever, and hard times
had begun to affect the cities. (Often
referred to as the "Gay ineties,"
the 1890s were actually a period of
grinding economic depression, both
on the farm and in the cities.)
As is often the case, however,
the tensions over gold and silver
were only part of an even larger
issue: the rise of industrialism and
the corresponding decline of rural
America. The McKinley/Bryan campaign marked a turning point in the
transition from an agrarian society
to an urban, industrial society.

Will iam Jennings Bryan

Courtesy, Libmry ofC011gress a11d
Federal Resen ,e Bank of New York

Monometallists, however,
argued strenuously against both the
quantity theory and free-silver. In
their view, declining farm prices
were a result of advances in production techniques and improvements
in transportation. "The only sound
policy for the civilized countries of
the West," declared Harvard Professor Frank W. Taussig, "is to
adopt and maintain the gold
standard ."
The bimetallists and the monometallists squared-off decisively in
the presidential election of 1896. The
ebraska's
Democrats nominated
William Jennings Bryan, a supporter of free-silver; the Republicans selected William McKinley of
Ohio, a staunch supporter of the
gold standard.

A century earlier, at the founding of the Republic, Thomas Jefferson had envisioned an America
populated by yeoman farmers;
proud, self-reliant, literate citizens
who worked family farms and
remained independent of big cities,
big business, and big banks. Almost
from the beginning, however, a gulf
existed between the Jeffersonian
vision and the American reality. The
gulf widened considerably after the
Civil War, but Americans clung to
the agrarian myth. Nostalgia for the
family farm deepened as more and
more young people flocked to the
city. (The agrarian myth is still very
much with us. If you want an illustration, just turn on your television
and watch the reruns of Little House
on the Prairie. Charles Ingalls and his
family have problems whenever
they go to the city or whenever the
modern world encroaches on Walnut Grove.)
The rapid pace of social and
economic change led to mounting
discontent on the farm and in the
countryside. Farmers saw themselves as the victims of railroads,
banks, and other big city financial
interests.
The anger, frustration, and bitterness that swept rural America
ultimately gave rise to a new political movement - Populism. The
Populists supported free-silver, but
they stood for much more as well.
They sought redress for the economic and financial problems that
beset farmers in the decades following the Civil War. Mary E. Lease
epitomized the spirit of Populism

when she advised farmers to "raise
less corn and more hell."
Populism represented rural
America's response to rapidly
changing social conditions. Historian Richard Hofstadter noted that,
"What the Populists meant though they did not express themselves in such terms - was that they
would like to restore the conditions
prevailing before the development
of industrialism and the commercialization of agriculture .. .In Populist thought the farmer is not a
speculating businessman, victimized by the risk economy of which
he is a part, but rather a wounded
yeoman, preyed upon by those who
are alien to the life of folkish
virtue."
In addition, Populist rhetoric
had a distinctly nativist tinge. Many
Populists felt that the rising tide of
immigration from Europe threatened to erode America's AngloSaxon heritage.
This reaction to industrialism
and immigration explains why Populism's centers of support were confined to the Cotton Belt, the Wheat
Belt, and the silver-producing states
of the Rocky Mountain region.
Although the Populists made
attempts to enlist the support of
laborers and factory workers, their
efforts met with little success. Populism appealed mainly to rural,
native-born Americans of English or
Irish descent. It did not thrive in
communities where recent immigrants were concentrated, nor did it
appeal to the leaders of urban
reform movements. Socialist Labor
Party leader Daniel DeLeon characterized Populism as reactionary
rather than revolutionary and
claimed that Populism's "object is
to perpetuate a class that modern
progress has doomed, and its only
result can be to prolong the agony
of the poor people who belong to it
by deferring the day of their complete emancipation."
Be that as it may, Populism
managed to leave its mark on American history and on the presidential
election of 1896 in particular. After
the Democrats chose Bryan as their
standard bearer, the Populists convened to decide whether to support
him or to nominate a candidate of
their own. The Populist convention
in St. Louis lasted longer than anyone expected, but in the end the
Populists decided to throw their
support behind Democrat William
Jennings Bryan.

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Two weeks earlier, in Chicago,
the Democrats had nominated
Bryan for president. His nomination was not totally unexpected, but
he had not been the party favorite
when the convention began. What
really won the nomination for
Bryan was an eloquent, impassioned speech in support of
free-silver.

Cross of Gold
Bryan was renowned for the
power and the beauty of his speaking voice, but the prairie orator outdid himself at the Democratic
convention of 1896. In the opening
passages of a speech that would forever after be known as the "Cross of
Gold" speech, Bryan proclaimed
that, "The humblest citizen in all
the land, when clad in the armor of
a righteous cause, is stronger than
all the hosts of error. I come to speak
to you in defense of a cause as holy
as the cause of liberty - the cause of
humanity." From that point on, the
audience was spellbound.
His words electrified the convention delegates. "You come to us
and tell us," he continued:
that the great cities are in favor of the gold
standard. We reply that the great cities rest
upon our broad and fertile prairies. Burn
down your cities and leave your farms, and
your cities will spring up again as if by magic,
but destroy our farms and the grass will grow
in the streets of every city in the country.

Then Bryan concluded with the
words that assured him a place in
history:
Having behind us the producing masses of
this nation and the world, supported by the
commercial interests, the laboring interests,
and the toilers everywhere, we will answer
their demand 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.

After the speech, a reporter for
the New York Herald wrote that, "A
phrase has nominated a candidate
for the presidency."
Of course, not everyone was
thrilled with Bryan's candidacy and
the Democrat's platform. According
to an article in the New York Times,
"Debased coinage, unlimited paper
currency, repudiation of public and
private debts, the threat of a packed
Supreme Court, spoliation of property, cheating of labor, corruption of
the civil service - these are the
platform.''

Furthermore, Bryan did not
enjoy the support of "the commercial interests, the laboring interests,
and the toilers everywhere." He
didn't even enjoy the full support of
his own party. Democratic political
bosses in the big cities remained
suspicious of Bryan, and many
talked of voting for McKinley.
McKinley, in contrast to Bryan,
didn't campaign strenuously for the
presidency, nor did he utter any
memorable phrases. (Bartlett's
Familiar Quotations doesn't contain a
single McKinley quote.) He essentially ran a "front porch" campaign
in which many delegations came to
see him at his Canton, Ohio home.
During one such visit by a delegation from the Edgar Thomson
Steel Works, McKinley told the visitors that, "We do not propose now
to inaugurate a currency system
that will cheat labor in its pay. The
laboring men of this country whenever they give one day's work to
their employers, want to be paid in
full dollars good everywhere in the
world .... We want in this country
good work, good wages, and good
money." Statements such as these
helped to convince factory workers
and laborers to vote Republican.
In the final analysis, McKinley
and his campaign managers were
more effective than Bryan in
addressing the needs and aspirations of urban working people.
Bryan appealed to the people of
rural America, but rural America's
fortunes and its population were in
decline.
The history books show that
McKinley and the supporters of
"hard" money soundly defeated
Bryan and free-silver. Bryan made
two more unsuccessful bids for the
presidency, became Secretary of
State in the Wilson administration,
and died in 1925 while prosecuting
John T. Scopes, the Tennessee
teacher accused of teaching evolution. McKinley was killed by an
assassin's bullet in 1901 and his portrait was later placed on a piece of
paper currency (the $500-bill, which
is no longer printed or circulated).
In what may be the greatest
irony of the 1896 presidential election, American commercial farmers
entered into one of the longest sustained periods of peacetime prosperity just two years after McKinley
took office. New international discoveries of gold brought about an
inflationary movement that trans3

lated into higher farm prices. This
was the same effect that the Democra ts, the Populists, and th e
National Silver Party had hoped to
achieve through the free coinage of
silver.

Multi-Media
Too Much, Too Little, produced by
the Federal Reserve Bank of New
York and the Agency for Instructional Technology, video program,
22 minutes.
The problem of providing the
"right" amount of money for the
economy has been the focus of
lively public and political debate
since colonial times. Today, controlling the size of the money supply is
one of the key jobs of the Federal
Reserve System.
Because many young people do
not understand what the Federal
Reserve is and why it is so important to the economy, the Federal
Reserve Bank of New York has created Too Much, Too Little, a new classroom television program on how
the money supply affects the economy and why Congress established
the Federal Reserve System.
The 22-minute program traces
the nation's monetary system from
the colonial era to the present.
Highlights include the issuing of
paper money by the Continental
Congress; the constitutional provision for the minting of coins; the
chartering of banks authorized to
issue paper money backed by gold
and silver; the economic and financial demands of the Civil War and
the issuing of "greenbacks;" the
McKinley/Bryan presidential campaign and the dispute over gold or
silver as the monetary standard; the
Panic of 1907, and the signing of the
Federal Reserve Act by President
Wilson in 1913.
This historical material is set off
by a contemporary story of a young
man who learns about money and
banking when he takes out a loan cosigned by his father - for his first
car. The program includes historical
footage combined with an oncamera narrator and live-action
drama.

Too Much, Too Little was produced for the Federal Reserve Bank
of New York by the Agency for
Instructional Technology, in consultation with the Joint Council on Eco4

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nomic Education, and has been
provided free of charge to public television stations throughout the
country. Schools are encouraged to
record the program off the air on
their own videocassettes for use in
high school social studies, history,
and economics classes. Schools in
the New England area can also borrow copies of Too Much, Too Little on
1/2-inch or 3/4-inch videocassettes
at no charge. (Borrowers may duplicate the Too Much, Too Little videocassette for classroom use .) Contact:
RHR FILMEDIA, INC., 49 West
37th Street, New York, NY 10018.
Also available is a teacher's
guide that provides program objectives, a program summary, discussion questions, several pages of
historical notes, and a bibliography
of related educational materials that
can be obtained free from Federal
Reserve Banks. The teacher's guide
is available at no charge from the
Public Information Department,
Federal Reserve Bank of New York,
33 Liberty Street, New York, NY
10045. (If you borrow the videocassette, the teacher's guide will be
sent to you from RHR FILMEDIA.)

New England
Update
Two Prominent
Economic
Education
Organizations
Merge
The Joint Council on Economic
Education (JCEE) located in New
York and the National Center of
Economic Education for Children
(NCEEC) located in Cambridge,
Massachusetts merged their activities this summer.
"This merger brings together
two successful economic education
programs, materials, and philosophies under one management,"
said John A. Georges, chairman of
the JCEE. "We have built a structure
drawing upon the comparative
advantages of both organizations,
giving us an even stronger campaign to meet the demand from
teachers, schools, and communities
across the country for quality economic education programs. The

merger will also be instrumental in
helping u s to fulfill our goal of providing economic education to at
least 70% of the nation's schoolchildren in grades K-12 by the end of
the decade."
Eliot I. Snider, chairman of the
National Center, expressed excitement over the fact that " the innovative materials and approach NCEEC
brings to economic education will
now be available to a much wider
audience of schools and teachers. I
invite all those individuals interested in helping our young people
develop a better understanding of
our economic system to join us in
this strengthened endeavor."
Through the merger some
materials will be added to the many
existing JCEE curriculum products .
These key materials include the
NCEEC's The Elementary Economist, a
newsletter which helps educators
and parents introduce children to
economics and the American economic system. Also included will be
an extensive lesson plan system
which involves the participation of
parents and community leaders.
These products and services
will be delivered locally through the
JCEE's affiliated network of 50 state
Councils on Economic Education,
more than 260 university- and
college-based Centers for Economic
Education, and thousands of school
districts nationwide.
In addition, Robert Reinke,
president of the National Center,
has become director of the Joint
Council's new division for product
development and marketing. He
will also direct the development of
additional curriculum materials for
various grades to meet the needs of
educators, parents, school districts,
and communities.
Joint Council president Michael
A. MacDowell and Dr. Reinke both
agree that this merger is a "natural
marriage between two organizations which have consistently delivered quality economic education
programs and materials to th e
nation's schools and other related
audiences and which have made
excellence in economic education
their foremost goal."

the LEDGER
Editor: Robert Jabaily
Graphics Arts Designer: Ernie Norville
Photography: Wilson Snow
Johannah Miller