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RHETORIC OF THE STANDARDS: THE DEBATE OVER GOLD AND SILVER IN THE 1890s

Published online by Cambridge University Press:  19 December 2014

Wyatt Wells
Wyatt Wells*
Affiliation:
Auburn University at Montgomery
*
email: [email protected]
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Abstract

In the 1890s, questions about whether to base the American currency upon gold or silver dominated public discourse and eventually forced a realignment of the political parties. The matter often confuses modern observers, who have trouble understanding how such a technically complex—even arcane—issue could arouse such passions. The fact that no major nation currently backs its currency with precious metal creates the suspicion that the issue was a “red herring” that distracted from matters of far greater importance. Yet the rhetoric surrounding the “Battle of the Standards” indicates that the more sophisticated advocates of both sides understood that, in the financial context of the 1890s, the contest between gold and silver not only had important economic implications but would substantially affect the future development of the United States.

Type
Essays
Information
The Journal of the Gilded Age and Progressive Era , Volume 14 , Issue 1 , January 2015 , pp. 49 - 68
Copyright
Copyright © Society for Historians of the Gilded Age and Progressive Era 2015 

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References

NOTES

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2 Goodwyn, Lawrence, The Populist Moment: A Short History of the Agrarian Revolt in America (New York, 1978)Google Scholar, 312.

3 Technically, countries on the gold standard fixed their currencies not relative to each other, but to gold. Yet because all had a common denominator, the relative value of gold standard currencies fluctuated less than 1 percent.

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5 Under free coinage, anyone could bring bullion to the Treasury and have it made into legal tender coins, free of charge. Gold had this privilege under the gold standard, and silverites wanted to extend this rule to silver—hence the term “bimetallists,” which silverites often used to describe themselves. The problem lay in the ratio between the two metals. If both gold and silver coins were to serve as legal tender, there had to be a legal ratio defining their relative value. Yet gold and silver were both commodities that traded in the open market, and if the market price of the two differed from the legal ratio by more than 3 or 4 percent, an irresistible opportunity for arbitrage presented itself. Traders would buy the undervalued metal and have it coined while melting the coins of the overvalued metal and selling the product on the free market. Through this process, coins of the more expensive metal vanished from circulation. In the early 1850s, when the California Gold Rush flooded the market for the yellow metal, silver coins disappeared. By the 1890s, the situation had reversed. In the 1870s, large discoveries of silver in the American West and the decision of France and Germany to adopt the gold standard flooded the market for silver, and by the 1890s its price had fallen as low as $.63 an ounce, half the official price of $1.29. By this time, silver no longer enjoyed free coinage, and so gold remained in circulation. There seems little doubt, however, that free coinage of silver would speedily lead to the disappearance of gold and put the United States on a de facto silver standard. See Taussig, Frank, The Silver Situation in the United States, 2nd edition, reprint (Freeport, NY, 1969)Google Scholar; Russell, Henry, International Monetary Conferences (New York and London, 1898)Google Scholar; Laughlin, J. Laurence, The History of Bimetallism in the United States, 4th edition (New York, 1900)Google Scholar. For a view of gold and silver over the (very) long term, see Braudel, Fernand, Civilization & Capitalism, 15th–18th Century, Volume I, The Structures of Everyday Life (New York, 1979), 457–470.Google Scholar

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36 U.S. Congress, 52nd Congress, 1st session, Committee on Coinage, Weights, and Measures, Free Coinage of Gold and Silver, 1893, 20, 26.

37 Printed in the Cleveland Gazette, August 8, 1896.

38 Harvey, Coin's Financial School, pp. 28–30; Bryan, William J., Speeches of William Jennings Bryan, Vol. 1 (New York, 1912), 274–282Google Scholar. Bryan and Coin argued that, by increasing the demand for silver, free coinage would raise its market price to one-sixteenth that of gold. Free silver would undoubtedly have raised the relative price of the white metal, which in 1896 stood at one thirty-second that of gold, but probably not enough to restore the sixteen-to-one parity. Certainly, the record of government efforts to prop up the price of silver was not encouraging. The Sherman Silver Purchase Act, under which the U.S. government had purchased the entire output of silver mines in the United States, failed to prevent the fall of silver relative to gold in 1890–1893.

39 Between 1873 and 1897, the average wage of non-agricultural workers in the United States fell from $466 to $442, or 5 percent. Adjusted for prices, however, wages increased from $407 to $529 (1914 dollars), or 30 percent. The jump is particularly remarkable because the period in question includes two severe depressions, 1873–1879 and 1893–1897. Not surprisingly, most of the increase came in the 1880s, but wages did not fall (in real terms) during the depressions, although workers did suffer severely from unemployment. U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Bicentennial Edition, Washington, D.C., 1975Google Scholar, 165, Series D735–738.

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50 McKinley's enthusiastic support for the protective tariff—he was the author of the 1890 bill substantially raising it—also helped him among workers.

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67 Ibid., 26.

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72 Quoted in Russell, Henry B., International Monetary Conferences (New York, 1898)Google Scholar. 266.

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76 Quoted in Williams, Realigning America, 189.

77 Speech of George Hoar, August 15, 1893, 27, Silver Speeches.

78 Ritter, Goldbugs and Greenbacks, 83.

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97 Cleveland Gazette, August 8, 1896.

98 Historical Statistics of the United States, 12, 684, 694, 731, 734, Series A57–72, P123–176, P231–300, Q321–8.

99 Between 1880 and 1890, the average wage of non-agricultural workers increased from $386 to $475, or 23 percent. In constant (inflation-adjusted) dollars, the increase was even more, from $395 to $519 (1914 dollars), or 31 percent. Historical Statistics of the United States, 165, Series D735–738.

100 Quoted in Stevens, Free Silver and the People, 14–15.

101 Nugent, Walter, Progressivism: A Very Short Introduction (New York, 2010).Google Scholar

102 The best broad studies on this process remain Wiebe, Robert, The Search for Order, 1877–1920 (New York, 1967)Google Scholar; and Chandler, Alfred, The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA, 1977).Google Scholar