One conclusion that politicians reached after analyzing the 1892 election was that the money question, particularly the controversy over the coinage of silver, was of paramount interest to the voters. Despite the wide-ranging appeal of the Populist platform, most of Weaver’s strength came from the silver-mining states.
In truth, the issue of gold versus silver was superficial; the important question was what, if anything, should be done to check the deflationary spiral. The declining price level benefited people with fixed incomes and injured most others. Industrial workers profited from deflation except when depression caused unemployment.
By the early 1890s, discussion of federal monetary policy revolved around the coinage of silver. Traditionally, the United States had been on a bimetallic standard. Both gold and silver were coined, the number of grains of each in the dollar being adjusted periodically to reflect the commercial value of the two metals. The discovery of numerous gold mines in California in the 1840s and 1850s depressed the price of gold relative to silver. By 1861, a silver dollar could be melted down and sold for $1.03. No miner took silver to the mint to be stamped into coin. In a short time, silver dollars were withdrawn and only gold dollars circulated. However, an avalanche of silver from the mines of Nevada and Colorado gradually depressed the price until, around 1874, it again became profitable for miners to coin their bullion. Alas, when they tried to do so, they discovered that the Coinage Act of 1873, taking account of the fact that no silver had been presented to the mint in years, had demonetized the metal.
Silver miners denounced this as the “Crime of ‘73.” Inflationists joined them in demanding a return to bimetallism. They knew that if more dollars were put into circulation, the value of each dollar would decline; that is, prices and wages would rise. Conservatives, still fighting the battle against inflationary greenback paper money, resisted strongly. The result was a series of compromises. In
L. Frank Baum, author of The Wonderful Wizard of Oz (1900) and a fan of William Jennings Bryan, perhaps wrote his story as an allegory of the 1896 election. Dorothy, wearing "silver” slippers (in the original), follows a "yellow brick road” (gold) on a crusade to free the Munchkins (the oppressed little people) from the Wicked Witch of the East (the rapacious corporations and financiers). Liberation is to come in Emerald City (greenbacks) through the intervention of a kindly, but ultimately ineffective wizard (Bryan). Only the entire people—Dorothy and entourage— can prevail against wickedness. Judy Garland starred as Dorothy in the film version of The Wizard of Oz (1939).
Source: The Wizard of Oz ©1939 The Kobal Collection/ MGM. Warner Brothers Motion Picture Titles.
1878 the Bland-Allison Silver Purchase Act
Authorized the buying of between $2 million and $4 million of silver a month at the market price, but this had little inflationary effect because the
Government consistently purchased the minimum amount. The commercial price of silver continued to fall. In 1890 the Sherman Silver Purchase Act required the government to buy 4.5 million ounces of silver monthly, but in the face of increasing supplies the price of silver fell still further. By 1894, a silver coin weighed thirty-two times more than a gold one.
The compromises satisfied no one. Silver miners grumbled because their bullion brought in only half what it had in the early 1870s. Debtors noted angrily that because of the general decline in prices, the dollars they used to meet their obligations were worth more than twice as much as in 1865. Advocates of the gold standard feared that unlimited silver coinage would be authorized, “destroying the value of the dollar.”