Populists preference of no limit to the amount of paper currency by a certain precious metal

The weight and purity of precious metal, such as gold and silver, determines its value as money. Determining weight requires a scale and a trustworthy set of weights of known measurements. Some cultures have made weights into art forms, as with these sculptural weights that were used in West Africa for weighing gold dust from the 15th to the late 19th century CE.

Scale, United States, 19th Century

Crocodile Gold Weight, Gold Coast (Ghana), about 19th Century

Shield Gold Weight, Gold Coast (Ghana), about 19th Century

​​​​​​​The use of silver and gold in transactions can be traced back more than 4,000 years to ancient Mesopotamia and Egypt. These precious metals are valued for their scarcity, making them desirable materials for saving and trading. Gold and silver became the most widely used precious metals for coins in the ancient world and were regularly used to make coins until the mid-20th century.

​​​​​​​Tetradrachm Coin, Athens, 454–404 BCE ​​​​​​​

​​​​​​​Stater Coin, Corinth, 4th Century BCE

​​​​​​​Gold Ingot, Mexico, 17th Century ​​​​​​​

​​​​​​8 Escudo Coin, Mexico, 1744

​​​​​​Silver Ingot, China, Late 19th Century

The scarcity of gold and silver, precious metals used in the production of coins, constrained monetary supplies. From the 17th century, governments increasingly began to issue paper money, which could be redeemed for gold or silver coins or bullion. These notes are gold and silver certificates issued in the United States during the late 19th and early 20th centuries.

​​​​​​​20 Dollar Note, United States, 1905

​​​​​​​5 Dollar Note, United States, 1886

​​​​​​Precious metals are no longer used to make national currencies or to back them. Today money derives its value from national laws defining what can be used as legal tender and the user’s faith in the authority that issues that money. This type of money is referred to as fiat, which means “it shall be” in Latin.

​​​​​​​1 Dollar Note, United States, 1963

Question

Why were the people living in rural areas more likely to support "free silver" in 1896 than urban dwellers?

Answer

Gold bugs v. Silverites

Political battles over currency issues became intensely divisive during the last quarter of the 19th century as industrialization accelerated in the Northeast, while the South and newly settled areas of the Midwest remained dependent on farming. From 1873 through the late 1890s, the U.S. suffered through two major economic depressions that heightened sectional and class conflict. By the 1896 election, designated by historian Walter Dean Burnham as “the first confrontation . . . among organized political forces over industrial capitalism,” positions on currency had solidified into a “battle of the standards.” “Gold bugs” believed that a “sound” national economy must be based on the gold standard to ensure the dollar’s stability, guarantee unrestricted competition in the marketplace, and promote economic liberty. “Silverites” believed that currency should be redeemable in silver as well as gold. They agitated for “free silver,” or unlimited coinage of silver, a metal that could be mined in abundance in the West, to produce an increased and more flexible money supply that they hoped would lead to a more equitable economy and foster social reforms.

Farmers for Free Silver

Congress had discontinued the minting of silver coins in 1873 in an act that came to be known as the “Crime of ’73.” Professor of government Elizabeth Sanders includes the demonetization of silver as one of a few significant policies of the period that led many working people, especially farmers, to believe that a “fraud against the people” was being “perpetrated by the national state on behalf of a financial elite.” With silver coins delegitimized, the amount of money in circulation decreased. A tightened money supply benefited creditors, like banks and merchants, at the expense of debtors, especially farmers who had to borrow annually from banks and merchants in order to plant cash crops that could bring in money for the repayment of their debts only at harvest time. Farmers sought inflation of the money supply so that more money would be available to them for credit, prices for their crops would rise, and debts would become easier to repay.

Advocates for inflating the money supply ranged from those who proposed that the federal government print paper money not backed by either gold or silver to those who called for the remonetization of silver. Free silver proponents came to believe in the 1890s that unlimited coinage of silver, a reform less extreme than others that agrarian radicals earlier had supported, could unite divergent groups into a national coalition to challenge politicians who supported monied interests.

The People’s Party, also known as the Populists, formed as a political party in 1891. As Sanders emphasizes, “Its philosophy was anti-corporate, though not anti-capitalist.” The Populist platform during the 1892 election campaign advocated free silver and other reforms with the intent, Sanders writes, “not to turn the clock back on industrial development but to harness the new technological power for social good, to use the state to check exploitative excesses, to uphold the rights and opportunities of labor (farm and factory), and to maintain a healthy and creative business competition.”

Election of 1896

Populists hoped to win the 1896 election and supplant the Democrats as one of the nation’s two major national parties. Their strategy relied on convincing silverites from the Democratic Party to vote with the Populists rather than for the expected Democratic nominee, President Grover Cleveland, who supported the gold standard, as did the Republican nominee, Ohio governor William McKinley. The Democrats, however, selected as their candidate William Jennings Bryan, a strong advocate for free silver. McKinley forces, mounting a well-funded campaign supported by the Northern intelligentsia, church and business interests, and the urban press, tarnished Bryan as a radical with an economic program that would lead to disastrous consequences for the nation. McKinley soundly won the election, and although Bryan triumphed in 22 states to McKinley’s 23, McKinley captured nearly 100 more electoral votes and prevailed in every city of more than 100,000, with the exception of Denver, where the silver mining interest was strong.

Some historians believe that many urban workers voted for McKinley because they had become convinced that Bryan’s policies would destroy the economy and result in reduced wages and increased unemployment. Some argue that Bryan’s “revivalist” style of campaigning and the Prohibitionist views of some of his supporters were distasteful to Catholics, especially Germans, in the urban labor force. Sanders contends that reporters’ coverage of Bryan’s campaign provides strong evidence that his message, in fact, did resonate with urban workers. She suggests, however, that “the powerful economic warnings of the core establishment” and the claim that a program to benefit farmers would wreck havoc upon the Northern industrial economy “were ultimately persuasive on election day.”

Sanders and others emphasize that labor organizations of the time did not want to rely on government to resolve its disputes with management. Unions sought to effect change through exerting leverage at the work site itself. Burnham writes, “From the perspective of the urban voter committed to the network of urban-industrial social and economic relationships that now existed, currency inflation could only be regarded as irrelevant at best and disruptive at worst.”

Bibliography

Burnham, Walter Dean. “The System of 1896: An Analysis.” In The Evolution of American Electoral Systems, by Paul Kleppner, et. al. Westport, CT: Greenwood Press, 1981.

Kazin, Michael. A Godly Hero: The Life of William Jennings Bryan. New York: Alfred A. Knopf, 2006.

Postel, Charles. The Populist Vision. New York: Oxford University Press, 2007.

Ritter, Gretchen. Goldbugs and Greenbacks: The Antimonopoly Tradition and the Politics of Finance in America. New York: Cambridge University Press, 1997.

Sanders, Elizabeth. Roots of Reform: Farmers, Workers, and the American State, 1877-1917. Chicago: University of Chicago Press, 1999.

Weinstein, Allen. Prelude to Populism: Origins of the Silver Issue, 1867-1878. New Haven: Yale University Press, 1970.

How did populists want the government to handle currency in the late 1800s?

What party supported the adoption of the gold standard?

What was the nickname for the supporters of the gold standard?

Why did farmers support Bimetallism or free silver?