The Journal of the Gilded Age and Progressive Era 14 (2015), 49–68 doi:10.1017/S153778141400053X Wyatt Wells RHETORIC OF THE STANDARDS: THE DEBATE OVER GOLD AND SILVER IN THE 1890S 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 con- fuses 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 curren- cy 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” indi- cates 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. In the 1890s, the Battle of the Standards convulsed American politics. One of the chief combatants, William Jennings Bryan, wrote, “Business partnerships were dissolved on account of political differences; bosom friends became estranged; families were divided—in fact we witnessed such activity of mind and stirring of heart as this nation has not witnessed before for thirty years.”1 At the heart of this bitter conflict was a tech- nical, even arcane financial question: should the United States maintain the gold standard or go to “free silver” at sixteen-to-one, in effect adopting a silver standard? From later perspectives, the focus on such a narrow issue seems strange, and some dismiss it alto- gether. Historian Lawrence Goodwyn describes the Battle of the Standards as a “triumph of form over substance.”2 Yet hindsight is not infallible. The people of the day considered the issue central, and in many cases, their concerns still resonate. THE FINANCIAL CONTEXT Under the gold standard, the United States redeemed dollars on demand, in gold, at the rate of $20.64 to the ounce. Americans thereby anchored their currency to those of other gold standard countries—France; Germany; and most important, Britain—which were their chief trading partners and a major source of investment capital.3 To maintain the gold standard, however, the United States pursued a restrictive monetary policy that forced prices down. Between 1873 and 1896, prices fell by roughly one-third. This decline particularly hurt farmers, who were often in debt and saw the prices of their Wyatt Wells, Auburn University at Montgomery; email: [email protected] © Society for Historians of the Gilded Age and Progressive Era 50 Wells crops sink even more than average—in the case of the most important crops, cotton and wheat, by 50 percent. Persistent deflation kept the currency issue at the forefront of pol- itics. Initially, inflationists focused on greenbacks, the paper currency issued during the Civil War.4 Yet the discovery of huge deposits of silver in the American West made it an increasingly attractive vehicle for inflation. By the 1880s, those squeezed by falling prices were demanding the “free coinage” of silver at $1.29 an ounce. Because the market price of silver was well below $1.29, free coinage would almost certainly lead to a substantial increase in the money supply, inflation, and devaluation. The results would probably help farmers but might well disrupt international trade and investment.5 The currency issue cut across party lines. Democrats from the South and Republicans from the Great Plains, who represented cotton and wheat farmers, respectively, were amenable to inflation. Democrats from New York and Republicans from Massachusetts, centers of commerce and industry, preferred gold. An all-out fight over the currency threatened to splinter both parties, giving political leaders a strong incentive to compro- mise. In the late 1870s, the government forged a workable accommodation between gold and silver. In 1879, the United States adopted the gold standard, replacing the paper cur- rency forced upon it by the Civil War; but at the same time, it began to coin a limited but significant amount of silver.6 This policy expanded the money supply, even as buoyant growth and a substantial federal budget surplus allowed the government to keep silver money at par with gold. This compromise failed to mollify the most committed partisans of either metal, popularly known as silverites and goldbugs, but most Americans seemed satisfied with it as long as the compromise worked financially, which it did for almost a decade. This equilibrium began to unravel in the late 1880s when, after several years of rel- ative stability, farm prices began falling again, generating new calls for inflation. Deflation encouraged the rise of the Farmers’ Alliance and the People’s Party (the Pop- ulists)—both of which challenged the existing political structure. Once again, politi- cians devised a compromise, having the government purchase all the silver mined in the United States with Treasury Bills that it promised to redeem, on demand, in gold. This expedient collapsed in 1893. A devastating financial crisis and an alarming drop in the U.S. government’s gold reserve convinced President Grover Cleveland that compromise was no longer realistic, and he rammed through Congress legislation ending the purchase of silver. Victory came at a high price, however. The president’s policy alienated much of his own Democratic Party, and he had to rely on Republicans to get his measure through the Senate. Cleveland believed that the affirmation of the gold standard would dispel the financial panic, but instead depression settled on the country, lasting into 1897.7 Between them, the bitter debate over silver coinage in 1893 and the Depression destroyed the middle ground and inaugurated the Battle of the Standards, which dominated national politics through the 1896 presidential elec- tion, when Republican William McKinley’s victory over Democrat William Jennings Bryan settled the matter in favor of gold. Yet the question remains: why did free silver and the gold standard arouse such pas- sions? As William Dillon, a prominent Chicago journalist and lawyer, put it, “This is a question of enormous complexity about which men of the highest capacity, who have made a special study of the subject, are still at variance. But to read the gold papers in the country one would conclude that no man who was not a born idiot could see any Rhetoric of the Standards 51 merit on the silver side. And to read the silver papers one would suppose that no man not fit subject for the penitentiary could advocate the single gold standard.”8 THE CRIME OF ‘ 73 According to silverites, the course of American history pivoted on events in 1873. As they saw it, silver coinage constituted part of the fabric of the American Republic. In 1792, at the urging of Alexander Hamilton, Congress authorized the free coinage of both gold and silver. As Senator John Daniel (D-VA) insisted, “The great men who framed our institutions were bimetallists. Our system was designed by Hamilton and Jefferson and approved by Washington; and it existed, flourished, and fulfilled its func- tion from 1793 to 1873 … We flourished as no one nation has ever flourished since time began.”9 Even the Civil War could not permanently halt the country’sprogress.After that conflict, as one silverite wrote, “hope sang is the hearts of America’smillions;the nation, despite the terrible ravages of the late war, was springing in unparalleled prosperity.” The reason was simple: “Money was plentiful.” Unfortunately, “there were … two classes disturbed over the prosperity of the people. One was England’s capitalists, and the other was the usurer class in our country—the drones in the hive of civilization.”10 In 1873, Congress demonetized silver. An otherwise routine piece of legislation stan- dardizing the coinage dropped the silver dollar from the list of authorized coins. Because this coin was the only silver money subject to free coinage, the omission effectively left gold as the sole basis for the currency. At the time, few commented on the measure, and many then in Congress would later insist that they did not recall the bill. The record clearly shows that the measure went through the usual procedures and that some senators and congressmen did discuss it, but most lawmakers probably paid little attention to what was apparently a technical measure without policy implications.11 The country was still on a paper standard—neither silver nor gold coins circulated in the normal course of busi- ness.12 Given the many issues competing for the attention of legislators, it is easy to imagine that few studied the bill carefully. Silverites considered this measure an epic piece of deceit. In Seven Financial Conspir- acies Which Have Enslaved the American People, one of the seminal texts of the Populist movement, Sarah Emery claimed, “In 1872, silver being demonetized in France, England, and Holland, a capital of $500,000 was raised, and Ernest Seyd of London was sent to this country with the fund, as agent of the foreign bond holders and capitalists, to effect the same object (demonetization of silver), which was accomplished.”13 Al- though few other silverites were as specific as Emery, a large portion of them saw the 1873 act as the product of conspiracy. A report issued in 1890 by silverite members of the House of Representatives asserted, “The conspiracy formed in the Old World, planned and so successfully carried through there and here, was aimed to confine the debt-paying medium of the nations concerned to the single metal, gold … Gold decreed to rapidly rise in value, thus adding fifty percent to the value of credits, enriching creditors, public and private, at the expense of debtors and taxpayers.”14 This was the “Crime of ‘73.” The results were disastrous.