Ch. 20 – Commonwealth, 1870s-1900
AP Themes
Economic Transformation
Politics and Citizenship
Reform
American Identity
The Agrarian Revolt
National Grange of the Patrons of Husbandry
“the Grange”
Oliver H. Kelly, 1867
Social gatherings, education
Depression of 1873
Cooperatives
Midwestern state legislatures
Agricultural prosperity, Supreme Court
Farmers’ Alliances
South and Midwest
Local problems
Larger reforms
Women
Mary Ellen Lease
Ocala Demands, 1889
People’s Party, 1892
Appeals limited to farmers
“culturally marginal”
Organized labor
“free silver”
Urban workers’ fears – inflation, high prices, anti-immigrant stance
Blacks
South
Movement fades
Omaha Platform, 1892
“subtreasuries”
Direct election of senators
Regulation/ownership of railroads, telephones, telegraphs
Graduated income tax
Currency inflation
A challenge to laissez faire
Not a challenge to capitalism and industrialization, but to its excesses
The Crisis of the 1890s
Worst depression to that point
Philadelphia and Reading Railroad
Stock market collapse
Bank failures
Interdependence
Debate over the basis of currency
“Bimetallism”
1873
“A Cross of Gold”
1896
William McKinley, Republican
William J. Bryan, Democrat
Free-silver platform
Populists’ dilemma
Business and financial communities
“front porch” campaign
Bryan’s national campaign
Modern
Antagonized urban voters
McKinley
Bryan
Not broad based enough
Populist Party
Meaning of failure
Counterbalance versus taming
Interest-group system
Economic prosperity
Dingley Tariff, 1897
Currency/Gold Standard Act, 1900
Foreign affairs
Free-silver movement
Growth of money supply had not kept pace with the economic progress
Gold standard
Some further thoughts on Gold and Silver
During the 1890s, the issue of gold, silver, and money were very important to people. In fact,
people felt so strongly about these questions that it determined how they voted in the 1896
presidential election. McKinley for the hard money policy – gold (maintaining the current
money supply), Bryan for soft money policy – free silver or bimetallism (increasing the money
supply).
A country’s money supply is the total of everyone’s coins, paper money, money in the bank,
and checks. If the money supply increases, people have more money, and they can spend more
money. However, since the supply of money has increased it is worth less or more specifically
it buys less than it did before. This is why people who have money saved or possess significant
investments do no want the store of value of their money eroded by an increase in the money
supply.
At the same time, the increase in the money supply encourages individuals such as store
owners to increase the price for the things that they sell. When prices increase over a period of
time this causes inflation.
Likewise, if the money supply decreases, people have less money and spend less. Store owners
start charging less to try to sell their things. When prices decrease over time this causes
deflation.
In the 1890s, the government of the United States used gold as one way to control the money
supply. Money was based on the gold standard. The gold standard meant that the money
supply was limited by how much gold was available. With the gold standard, our paper money
was representative money. This means that it represented something that was valuable—gold.
If you had paper money, you could go to your local bank and trade it in for a certain amount of
gold.
During the 30 years after the end of the Civil War leading to 1896, the United States
experienced deflation. Gold supplies were low and the government was decreasing the supply
of money. By 1896, people who did not have much money wanted the government to increase
the money supply. This was especially true for farmers, who were getting low prices for the
crops they were selling. Because the supply was limited by the amount of gold available, they
wanted the government to use both silver and gold. This idea was called the Free Silver
Movement. People who felt this way were called silver bugs.
People who had money wanted to keep the gold standard and not increase the money supply.
If silver was also used, they thought that inflation would happen. They thought their money
would be worth less and that they would not be able to buy as much. They were called gold
bugs.
Questions
1. You’re a Nebraska farmer. Your corn crop is selling at a very low price. You need more money
and you want your crops to sell at a higher price. Who would you vote for in the 1896 election?
2. You are a businessperson in New York. Your business is doing well and you have a lot of
money in the bank. Who would you vote for in the 1896 election?
3. Gold production in the 1870s and 1880s was relatively low, what effect would this have on
the money supply? Would this result in inflation or deflation?
4. Gold production in the 1890s increased due to the discovery of gold in Alaska, what effect
would this have on the money supply? Would this result in inflation or deflation?
5. Why did the gold standard make it hard for our government to control the money supply?
6. Is inflation a good thing or a bad thing? Explain.