free silver

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Republican campaign poster of 1896 attacking Free Silver.

Free Silver was an important political issue in the late 19th century and early 20th century United States about whether to have an inflationary monetary policy by "free coinage of silver"; its supporters were called silverites. It largely pitted the financial establishment of the Northeast, who were creditors and would be hurt by inflation, against the more rural areas of the country, who were debtors and would benefit from inflation: farmers in the Midwest, miners in the West, and Southerners still chafing against federal government control.

The debate lasted from the Coinage Act of 1873, which demonetized silver, to the Federal Reserve Act of 1913, which radically overhauled the US monetary system, coming to a head in the presidential election of 1896, most memorably in the Cross of Gold speech. Throughout, Free Silver was consistently defeated. While the Free Silver movement ended, debates about inflation and monetary policy continue to this day.

Definitions and explanation

To understand exactly what is meant by "free coinage of silver", it is necessary to understand the way mints operated in the days of the gold standard. Essentially, anyone who possessed uncoined gold, such as successful prospectors, or assayers or refiners to whom they had sold their holdings, could deposit it at one of the U.S. Mints, where it would be made into gold coins.The coins would then be given to the depositor, less a small deduction for processing and funding Mint operations. Possibly in most cases the depositor would not receive coins made of the actual gold he had deposited, but would receive his due compensation in coins the mint already had ready. Free silver advocates wanted silver to be accepted by the mints in the same way: if a person deposited enough silver, by weight, to manufacture a silver dollar, then the mint should pay out a silver dollar to that person.

Response

Cartoon from Puck showing a silverite farmer and a Democratic donkey whose wagon has been destroyed by the locomotive of sound money.

Many populist and radical organizations favored a very inflationary monetary policy on the grounds that it enabled debtors (often farmers, laborers, and industrial workers) to pay their debts off with cheaper, more readily-available dollars; those who suffered under this policy were the creditors such as banks, leaseholders, and landlords, who under this theory could well afford any loss this caused them. Other supporters obviously included silver miners and those who supplied them, territorial and state governments in silver-producing areas, and other interests who desired to see gold demonetarized or at least reduced in prominence, including many Southerners.

For the most part, the Republican Party steadfastly opposed Free Silver, arguing that the best road to national prosperity was "sound money," a policy of attempting to maintain or even increase the dollar's value, as this rewarded those who had accumulated wealth and provided them with a strong incentive to produce and accumulate even more, which they saw as the engine driving economic growth. In 1896, some pro-Free Silver Republicans from western states split from the main Republican Party to form the short-lived Silver Republican Party.

The Sherman Silver Purchase Act of 1890, while falling short of Free Silver's goals, required the U.S. government to buy millions of ounces of silver (driving up the price of the metal and pleasing silver miners) for money (pleasing farmers and many others).^[1] Once he regained power, and after the Panic of 1893 had begun, Grover Cleveland engineered the repeal of the Act, setting the stage for the key issue of the next presidential election.

Climax

The Populist Party had a strong Free Silver element. Its subsequent combination with the Democratic Party moved the latter from the support of the gold standard which had been the hallmark of the Cleveland administration to the Free Silver position epitomized by 1896 presidential nominee William Jennings Bryan in his Cross of Gold speech. Bryan's 1896 candidacy was supported by Populists and Silver Republicans as well as Democrats.

The issue was over what would back the US currency. The two options were: gold (wanted by the Goldbugs and William McKinley) and silver (wanted by the Silverites and Bryan). Unbacked paper (wanted by the Greenbacks) represented a third option. Free Silver was a political movement for "Pro Silver".

Result

Largely as a result of the support of monied interests which gave the Republicans an unmatchable campaign war chest, the Democrats failed to win any presidential elections in which the Free Silver issue was paramount, and the next Democratic President to be elected, Woodrow Wilson in 1912, had a very different plan for monetary reform, which resulted in the creation of the Federal Reserve Banking system in 1913. Free Silver thus ceased to be a major issue, although its influence could perhaps be seen 20 years after the creation of the Federal Reserve in President Franklin D. Roosevelt's devaluation of the dollar (fixing the value of gold at $35 per troy ounce rather than $20 per troy ounce) and (partial) abandonment of the gold standard and ban against private ownership of gold coins and bullion, adopted in 1933 as measures intended to counter the Great Depression.

In popular culture

The Wonderful Wizard of Oz is often read as an allegory of the Free Silver movement.

The Wonderful Wizard of Oz, by L. Frank Baum, is often read as an allegory of the Free Silver movement, among other political interpretations – it features silver slippers walking down a yellow brick (gold) road.

References

See also

• Bimetallism
• Alexander del Mar