2018년 2월 5일 월요일

[발췌] 1896 election and gold standard (in the US)


※ 발췌 (excerpts):


출처 1: American History: McKinley and the Gold Standard Win in 1896


출처 2: Crime of 1873

What is known in Populist rhetoric of the late 19th century as ^The Crime of 1873^ was demonetization of silver enacted by the Coinage Act of 1873. Alexander Hamiton had set the US on a bimetallic standard in 1792 and, with the notable exception of the Civil War, the country had not moved from this system. In practice this was a continuous switching from a gold standard to a silver standard. When the legal price of gold in terms of value ( ... ) which was set by the Coinage Act at 15 to 1, was greater than the market price, then nobody would bring gold to the mint and the country would be on a de facto monometallic silver standard.

The consequences of this technical decision were enormous, and it seems to be clear in the view of recent research that many people suffered from until the end of the century. Go to the next slide to see what were those consequences.

Immediately after the US went for a gold standard regime in 1873, the market price of gold in terms of silver began to rise, startig from about 15 in 1870 to reach a maximum of about 40 in 1900. The demonetization of silver was accompanied by several circumstances which led to a strong secular deflationary trend of about 1.6% a year in the general CPI from 1875 to 1896. (For a summary of a presentation I have given on this topic at Prof. Charles Wypolsz's seminar at the Institute for International Studies in Geneva, please scroll down.)

( ... ... )

Political agitation in favor of the free coinage of silver

Particularly hurt were the net debtors, and among them the peasant class at most because they had to face a rising real value of their (generally heavy) debts combined with a decline in agricultural prices of about 3% a year.

The silver producers, the Populist Party, the peasants and other classes badly struck bad [by??] the new monetary regime united behind William Jennings Bryan, candidate of the Democrats for the Presidential elections of 1896 on an bimetallist (for inflation's sake) and progressive platform which included women vote, income tax, end of American imperialism.

The urban electorates, the net creditors (bondholder, bankes and financiers) and other apostles of "sound money" joined the platform of the Republicans led by their nominee William McKinley.

Bryan lost the 1896 election due to a swing of the farm vote (following a rise in agricultural prices) and the following, but became secretary of State. ( ... ... )


Political Groups and their Backers

From 1879 to the end of the century a constant agitation for the expansion of the money stock raged in the US. Political parties like the Inflationist Party were founded whose sole purpose was to make, by one mean or antoehr, the total money supply rise. Some favored the issue of paper money, like the extremist Greenbackers, some return to the Bimetallic Standard. Farmers were the most cruelly struck of all by the deflation. In rural areas, as the wholesale price of agricultural commodities fell at a greater rate of about 3% a year. As many farmers, esp. in the West, were deeply indebted, this meant that the real value of their debts ^increased^ every year. Sellers of goods whose price fall have a stronger political influence than buyers of rising prices commodities, because they are concentrated in an industry. Farmers were thus powerful backers of Bryan and the inflationist cause. (more on this)

( ... ... ) The country was split in two before the Presidential elections of 1896, with about one half backing Bryan and his progressive platform (with the free coinage of silver as its main tenet), and the other for the Republican Mc Kinley, who advocated a Gold Standard. ( ... )


( ... ... ) We see between 1875 and 1896 a deflation of about 1% a year in the gerneral CPI. At the same time the output rose by 6% a year. Economists reader should not say, "Gee what a growth even with those declining prices!" It's precisely this growth that made the prices go down. With a fixed quantity of money if the number of transactions rises and the velocity cannot rise sufficiently, then prices have to fail.

All this led to a depression so great that you would have to wait for 1932 to see the same gain. Unemployment peaked at 18% in 1894. ( ... )

On the monetary side, this deflation made many bank loans turn sour, as the debtors struggled to honor their obligations with rising real value of their debts. Some famous banking panics occurred(1892), but globallty the trust of the public in the banking system increased.


출처 3: The Election of 1896: William McKinley (R) v. William Jennings Bryan (D)

The election of 1896 is seen as the beginning of a new era in American politics, or a “realignment” election. Ever since the election of 1800, American presidential contests had, on some level, been a referendum on whether the country should be governed by agrarian interests (rural indebted farmers–the countryside–“main street”) or industrial interests (business–the city–“wall street”). This was the last election in which a candidate tried to win the White House with mostly agrarian votes.

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