Silverites, Goldbugs and the Cross of Gold

Part 2 of our series on William Jennings Bryan’s famous 1896 Cross of Gold Speech provides background on the issue at the heart of that momentous address to the Democratic National Convention.

When gold was discovered in California in 1848, there was a Gold Rush that opened the west and changed the nation. When silver was discovered in the west in the 1860s, however, there was no Silver Rush. For decades the federal government had valued silver at 16:1 against gold—that is, it took 16 ounces of silver to equal 1 ounce of gold in value. It was much more lucrative to find gold than silver.

But the U.S. was not on the gold standard. Anyone could turn in gold or silver in any form—jewelry, bars, coins, etc.—to a U.S. Mint and receive dollars for their metal. Gold and silver could both be turned in for dollars, and this is called bi-metallism. Our currency was backed by silver and gold.

This system was threatened, however, by the Gold Rush. Gold flooded the market, making silver relatively scarce. While the Mint still offered the 16:1 ratio, silver could be sold privately for more—12:1, 10:1, etc. People stopped taking their silver to the Mint and began hoarding it or selling to it private or foreign buyers.

Such was the situation when silver was discovered in Nevada in the 1860s. While there was no Silver Rush, silver did begin to flood the market, and those private buyers and great 12:1 deals for silver dried up. Now you had to take 20:1 or 25:1 deals. But the U.S. Mint was still offering 16:1, and people who found themselves with too much silver on their hands flocked back to the Mint to turn it in for dollars. As a result, more silver dollars were minted.

All of this silver being turned in for dollars was good news for westerners, rural farmers, and the poor because it put more dollars into circulation. You can’t spend your silver jewelry, but you’ll spend the dollars you get for it. More money in circulation means there’s less of a need for people to borrow money, and that drives down interest rates. Farmers who needed to buy the new farm equipment that the Industrial Revolution was making necessary could buy it without going into debt with a loan. Poor people could buy more goods. These were the Silverites, who welcomed the liquidity of bi-metallism during a silver boom.

But not everyone was happy. The heart of business in the U.S. was in the east, on Wall Street and in the big industrial cities, and eastern banks had made fortunes loaning money to westerners, especially farmers, and charging high interest rates. With the boom in silver, that was diminished, and big business cried foul to the government through its lobbyists. These were the Goldbugs, who wanted to make dollars scarce by stopping the conversion of silver to dollars.

The situation came to a head in 1873. All that basically worthless silver pouring into the federal government for a decade had caused an economic crisis. The dollar was being backed more and more by silver, and less and less by gold. And since silver had lost so much value, the dollar might lose its value abroad. If a European won’t buy your silver, they’re not going to accept your silver-backed dollars. So Congress passed the Coinage Act of 1873, which stated that the dollar would no longer be backed by silver, eliminated the silver dollar, and severely limited how much silver Mints were allowed to accept from the public. Bi-metallism was over.

Silverites called it the  “Crime of ’73,” and claimed that justice was thwarted by rich businessmen. Goldbugs celebrated this embrace of the gold standard and claimed it was “sound money” policy.

Now you see what Bryan is driving at. He was from Nebraska, a western farming state whose people were hurting from the clampdown on silver. In his speech he is saying that he will not let the U.S. crucify the common man on a cross of gold—he will not let the government stay on the gold standard at the expense of the poor, the farmer, the western rancher or small businessman. If elected president, he will bring back bi-metallism, the dollar will be backed by gold and silver, and there will be more dollars in circulation, reducing debt.

Next time: close-reading the speech

The “Cross of Gold” speech: what is it about?

Welcome to a series on William Jennings Bryan’s famous 1896 Cross of Gold speech. This speech, delivered at the Democratic National Convention, helped win the Bryan, former Representative to Congress for Nebraska, the presidential nomination of the Democratic party. It’s a very famous speech and it was powerfully delivered, and was so popular that for decades after the convention Bryan was asked to deliver the Cross of Gold speech, and did.

But let’s start by being frank: this speech suffers, for the 21st-century reader, from two major drawbacks: first, and foremost, it never makes clear what on Earth the problem is that it’s addressing; and second, it is written in the bombastic 19th-century style that thrives on rhetorical flourishes and long, drawn-out analogies. Thus it’s hard for modern-day readers to make much headway through Cross of Gold. One might read the entire speech and not understand what issue Bryan is addressing. The reason for this is that by the time he gave this speech, the issue of coining silver v. remaining on the gold standard had been a violently contested political, social, and economic issue for decades. Bryan’s audience didn’t need a lesson on what the issue was. Everyone in that convention hall knew what their party’s stand was on silver, and all Bryan had to do was to reinforce the righteousness of that stance by talking about how it would help the farmer and other “common men”. It would be like giving a speech today where you just kept saying “Tea Party ideas”—your audience would know what that shorthand means. You wouldn’t have to explain it. You could just talk about how a) harmful or b) good those ideas were, depending on your political stance.

But today, we know little about the savage war over the coinage of silver, and this has created a terrible vacuum where we continue to study Bryan’s famous speech with almost no background on what it was addressing and no conception of what it means. It has become a ritual with no meaning. Let’s rectify that here.

We’ll move into the background of the speech next time with a history of the battle between Silverites and Goldbugs, as they were called, and the principles they were fighting over. It is actually fascinating, and focuses on themes that are still very much front-and-center in 21st-century U.S. politics, including “class warfare”, business v. individual rights, how much control the federal government should have, financial booms and busts, and more.

Next time: Silverites v. Goldbugs