Wednesday 261104

 Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 10 Money and Prices in the Long Run
Chapter 30 of 36 Money Growth and Inflation
Section 24 of 25
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(This article here in book)
The Wizard of Oz and the Free silver Debate
The movie The Wizard of Oz was based on a children's book written in 1900.
It is the story of a young girl, Dorothy, who finds herself lost in a strange land.
The story actually is an allegory about late 19th century U.S. monetary policy.
From 1880 to 1896, the price level in the U.S. fell by 23%.
Because this deflation was unanticipated, it led to a major redistribution of wealth.
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Most farmers in the western part of the country were debtors.
Their creditors were the eastern bankers.
When the price level fell it caused the real value of these debts to rise which enriched the banks and hurt the farmers.
Populist politicians held the solution to the farmers' problem was coinage of silver.
At the time the U.S. was operating with a gold standard.
The quantity of gold determined the money supply and the price level.
Free silver advocates wanted silver, as well as gold, to be used as money.
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This proposal, if adopted would have:
· increased the money supply
· pushed up the price level
· reduced the real burden of the farmers' debts
The heated debate over silver was central to 1890s politics.
A Populists’ common election slogan was "We Are Mortgaged. All but Our Votes."
William Jennings Bryan, the Democratic nominee for president in 1896, was a prominent advocate of free silver.
In his speech at the Democratic Party's nominating convention, he said "You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."
However, Bryan lost the election to Republican William McKinley, and the U.S. remained on the gold standard.
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Author of the book The Wonderful Wizard of Oz, L. Frank Baum was a midwestern journalist.
When writing the story, he made the characters represent protagonists in the free silver debate.
Economic historian Hugh Rockoff, writing in the Journal of Political Economy in 1990, listed and described the characters of the story:
Dorothy: Traditional American values
Toto: Prohibitionist party, also called the Teetotalers
Scarecrow: Farmers
Tin Woodsman: Industrial workers
Cowardly Lion: William Jennings Bryan
Munchkins: Citizens of the East
Wicked Witch of the East (dies at the beginning): Grover Cleveland
Wicked Witch of the West (dies at the end): William McKinley
Wizard: Marcus Alonzo Hanna, chairman of the Republican Party
Oz: Abbreviation for ounce of gold
Yellow Brick Road: Gold standard
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At the end of the story Dorothy finds her way home, but not by just following the yellow brick road.
After a long and perilous journey, she learns the wizard cannot help her or her friends.
Rather, Dorothy finally discovers her silver slippers have magical power.
Dorothy's slippers were changed from silver to ruby in the movie.
The Hollywood filmmakers apparently were more interested in showing off the new technology of Technicolor than in telling a 19th-century monetary policy story.
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Although the Populists lost the free coinage of silver debate, they eventually did get the monetary expansion and inflation they wanted.
In 1898, prospectors discovered gold near the Canadian Yukon Klondike River.
Increased amounts of gold also arrived from Africa.
The money supply and the price level started rising in the U.S. and other countries on the gold standard.
Within 15 years prices in the U.S. were back to 1880s levels, and farmers were better able to manage their debts.
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long and perilous journey
nagakute kiken na tabi
長くて危険な旅
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William Jennings Bryan information. ChatGPT:
William Jennings Bryan (1860–1925) was one of the most influential American political figures of the late 19th and early 20th centuries.
He represented Nebraska in the U.S. House from 1891 to 1895 and became famous nationally for his 1896 “Cross of Gold” speech, in which he attacked the gold standard and argued for the free coinage of silver as a way to expand the money supply, raise prices, and ease the debt burden on farmers and other borrowers.
He became the leading national spokesman for people who believed the gold standard kept the money supply too tight, depressed farm prices, and made debts harder to repay.
His “free silver” campaign was essentially an argument for a more expansionary monetary system.
That speech helped him win the Democratic presidential nomination at age 36.
Bryan ran for president three times and lost each time — 1896 to William McKinley, 1900 to William McKinley again, and 1908 to Howard Taft..
In 1896 and 1900 he was also supported by the Populist Party.
His political appeal centered especially on farmers, workers, debtors, and opponents of concentrated financial power, earning him the nickname “The Great Commoner.”
He later supported reforms such as the federal income tax and direct election of U.S. senators. History, Art & Archives
Under President Woodrow Wilson, Bryan served as Secretary of State from 1913 to 1915.
He promoted international arbitration and negotiated peace agreements with numerous countries, but he resigned after the sinking of the Lusitania because he believed Wilson’s increasingly forceful policy toward Germany risked drawing the United States into World War I.
In his later years Bryan became strongly associated with Protestant religious causes, prohibition, and opposition to teaching evolution in public schools.
He took part in the famous Scopes “Monkey Trial” in Tennessee in 1925, arguing against the teaching of evolution.
He died in Dayton, Tennessee, on July 26, 1925, just days after the trial ended.
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Reasons for Bryan loss to McKinley in 1896. CGPT:
Bryan lost to McKinley in 1896 mainly because McKinley
- was stronger in the industrial Northeast and Midwest
- had much greater financial backing
- convinced many urban workers, business owners, and middle-class voters the gold standard promised stability and prosperity
Bryan’s “free silver” program appealed strongly to indebted farmers and many voters in the South and West, but it frightened creditors, investors, manufacturers, and many wage earners who feared inflation would reduce the value of savings and wages.
McKinley also benefited from the unpopularity of the incumbent Democratic Grover Cleveland administration after the Panic of 1893 which was a severe U.S. financial crisis and depression triggered by railroad failures, bank collapses, falling confidence, and concerns over the nation’s gold reserves..