Late 1800s Gold versus Silver backed money
GhosOfRudy
Posts: 108 ✭✭✭
Hey all,
Wrote this up for another site I am on, figured you might enjoy it as well. US History lesson
I bought this awesome lithograph on eBay:
Full size here: http://imgur.com/uQOtNof
It was in Puck, a humor magazine in NY from 1871-1918.
You might need this cheat sheet while reading this.
President | Years
Grant | 1869-1877
Hayes | 1877-1881
Garfield | 1881-1881
Arthur | 1881-1885
Cleveland | 1885-1889
Harrison | 1889-1893
Cleveland | 1893-1897
McKinley | 1897-1901
Roosevelt | 1901-1909
In general, during this era, Western Republicans and Southerners (those who made the most $ on mining) were pro gold and silver. Where bankers and business people were backers of paper money, but were split on it being Gold/Silver or Promise based backing.
In 1869, the US was recovering from the Civil War, and in order to recover, they pulled in gold coinage and put out Greenbacks. The government saved and sold gold coinage to help fix damages from the war. Ulysses Grant saw the inflation and worked hard to get us back on the Gold standard. He passed the Public Credit Act of 1969, which meant bond holders would be repaid in Gold instead of Greenbacks which were NOT backed by Gold. Investors saw inflation and scrambled to buy and hoard gold, sending premiums up while these unbacked Greenbacks caused inflation even more. Grant asked the hoarders to sell, and they did, causing a Gold crash known as Black Friday. The US dollar was very weak and caused the Long Depression in 1873. Also in 1873, the Coinage Act of 1873 passed. This abolished silver bullion holders from having it struck into legal tender.
It was known as the Crime of '73 by opponents. In 1876, when the price of silver neared exactly one dollar, many were surprised to find they were unable to have their silver minted into dollars. Those who collect silver dollars know that from 1873-1885 trade dollars were minted rather than "US dollars" until 1878, which is when Morgan dollars resumed. During this time the US dollar was a gold coin. and you can see the mintages for 1873 and 1874 in the Indian Princess Head dollar coins were 100s of thousands ahead of other years to make up for that.
In 1877 the presidency went to Republican Rutherford B Hayes. During this time, he was fighting hard to get us back on the Gold Standard. He fought against both silver coinage and greenbacks.
His successor, James A Garfield (who is also known for his investigation into Black Friday (the Gold market crash) of 1869) also supported the gold coinage, but had supported a Gold Backed Dollar during reconstruction from the Civil war.
Then Congressman William McKinley voted for a bill that Congress attempted to pass named the Bland-Allison act of 1878. This measure was vetoed by Hayes, but was overridden by congress and enacted as law. Garfield was a congressman at the time, and was also fighting against the Bland Allison Act.
Chester A Arthur did essentially nothing to monetary policy during his time, but then came Grover Cleveland, a Democrat from New York. Cleveland had managed to avoid a stance on Gold and Silver in the monetary system (Bimetallism) during his first term, and in between his two terms, Harrison came in.
A Republican from Indiana, Harrison supported bimetalism, and wanted US Silver and Gold coins. He appointed a Treasury secratary who was a known Silverite who managed to land the Sherman Silver Purchase Act in 1890 - which didn't authorize coining, but increased the amount the US was to purchase and keep in stockholds. Harrison however, allowed the treasury surplus to evaporate, and our economic health worsened, a precursor to the Panic of 1893. Harrison lacked support and it became clear a second term wasn't an option. To make matters worse, the Democrats nominated Cleveland, basically saying "let's have a rematch of the last election" and then the final blow, poor guy lost his wife two weeks prior to the election. It ended up being the most decisive presidential election in 20 years!
Cleveland was ready to rock. He reentered office in 1893, Cleveland had repealed the Coinage Act of 1873 showing his hand as not in favor of gold and silver in our coinage. Shortly after, the Panic of 1893 set in following bank failures and a run on the gold supply. If you collect Morgans, you know 1893 is a key date in most mint marks!
I am copy pasting the Wikipedia article on this panic, as I couldn't write it better:
The Free Silver movement arose, gaining support from farmers (who sought to invigorate the economy and cause inflation, thus allowing them to repay their debt with cheaper dollars) and mining interests (who sought the right to turn silver directly into money). The Sherman Silver Purchase Act of 1890, while falling short of the Free Silver movement's goals, required the U.S. government to buy millions of ounces of silver above what was required by the 1878 Bland-Allison Act (driving up the price of the metal and pleasing silver miners). People attempted to redeem silver notes for gold. Ultimately, the statutory limit for the minimum amount of gold in federal reserves was reached and U.S. notes could no longer be successfully redeemed for gold. Investments during the time of the panic were heavily financed through bond issues with high interest payments. The National Cordage Company (the most actively traded stock at the time) went into receivership as a result of its bankers calling their loans in response to rumors regarding the NCC's financial distress. The company, a rope manufacturer, had tried to corner the market for imported hemp. As the demand for silver and silver notes fell, the price and value of silver dropped. Holders worried about a loss of face value of bonds and many became worthless.
A series of bank failures followed, and the Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad failed. This was followed by the bankruptcy of many other companies; in total over 15,000 companies and 500 banks, many of them in the west, failed. According to high estimates, about 17%–19% of the workforce was unemployed at the panic's peak. The huge spike in unemployment, combined with the loss of life savings kept in failed banks, meant that a once-secure middle-class could not meet their mortgage obligations. Many walked away from recently built homes as a result.
1896 was an election year, and William McKinley, an Ohio Republican beat the Democratic candidate William Bryan. Bryan won the Democratic bid with his Gold Cross speech, denouncing Gold backed dollars. So you see, we were in a place where we were out of Gold, and had all this Silver from the Sherman purchase.
The Republican Party tried any number of tactics to ridicule Bryan's economic policies. In one case they printed fake dollar bills which had Bryan's face and read "IN GOD WE TRUST...FOR THE OTHER 53 CENTS," thus illustrating their claim that a dollar bill would be worth only 47 cents if it was backed by silver instead of gold.
It was a close race, and Republicans also claimed Bryan was a religious fanatic, not suitable for office. Regardless, McKinley won a narrow victory.
So this lithograph is from a run of that magazine in New York in June of 1896, the summer before what was called one of the most dramatic presidential run ups ever, with farmers and miners supporting Silver, and Republicans and businessmen supporting Gold backed currency. Silver and Gold divided the nation and the political parties. You can see the police officer riding the "sound money" democrats who actually supported McKinley (a Republican!) chasing the Silverite miner, who is clearly painted as kind of a kooky guy - basically this was a political cartoon of the Gold Democrats basically distancing themselves from the Free Silver Democrats.
McKinley was shot on 9/5 at the Pan-Am expo, twice in the abdomen by Leon Czolgosz, an anarchist who believed that there was a great injustice in American society, an inequality which allowed the wealthy to enrich themselves by exploiting the poor. He concluded that the reason for this was the structure of government itself. He used a .32 he bought for $4.50 (4 morgan dollars and a barber half)
Fun fact - there was a primitive X ray machine on display, but it was not used to save the president. His VP, Teddy Roosevelt would take the office on September 14th, as McKinley died of gangrene. His killer got the chair less than 2 months later. His last words were: "I killed the President because he was the enemy of the good people – the good working people. I am not sorry for my crime."
We've come this far, so I will close out the Morgan series, which you might know I am passionate about. In 1904, our silver supply had run short, so the Morgan dollar was ceased.
Fast forward a bit to 1918, the Pittman act allowed 270M Morgan dollars to be melted down into bullion. Pursuant to this a one year run of Morgans was done in 1921, the highest mintage year for all mint marks (85M across all mints)
Hope you enjoyed, this came out longer than expected.
Wrote this up for another site I am on, figured you might enjoy it as well. US History lesson
I bought this awesome lithograph on eBay:
Full size here: http://imgur.com/uQOtNof
It was in Puck, a humor magazine in NY from 1871-1918.
You might need this cheat sheet while reading this.
President | Years
Grant | 1869-1877
Hayes | 1877-1881
Garfield | 1881-1881
Arthur | 1881-1885
Cleveland | 1885-1889
Harrison | 1889-1893
Cleveland | 1893-1897
McKinley | 1897-1901
Roosevelt | 1901-1909
In general, during this era, Western Republicans and Southerners (those who made the most $ on mining) were pro gold and silver. Where bankers and business people were backers of paper money, but were split on it being Gold/Silver or Promise based backing.
In 1869, the US was recovering from the Civil War, and in order to recover, they pulled in gold coinage and put out Greenbacks. The government saved and sold gold coinage to help fix damages from the war. Ulysses Grant saw the inflation and worked hard to get us back on the Gold standard. He passed the Public Credit Act of 1969, which meant bond holders would be repaid in Gold instead of Greenbacks which were NOT backed by Gold. Investors saw inflation and scrambled to buy and hoard gold, sending premiums up while these unbacked Greenbacks caused inflation even more. Grant asked the hoarders to sell, and they did, causing a Gold crash known as Black Friday. The US dollar was very weak and caused the Long Depression in 1873. Also in 1873, the Coinage Act of 1873 passed. This abolished silver bullion holders from having it struck into legal tender.
It was known as the Crime of '73 by opponents. In 1876, when the price of silver neared exactly one dollar, many were surprised to find they were unable to have their silver minted into dollars. Those who collect silver dollars know that from 1873-1885 trade dollars were minted rather than "US dollars" until 1878, which is when Morgan dollars resumed. During this time the US dollar was a gold coin. and you can see the mintages for 1873 and 1874 in the Indian Princess Head dollar coins were 100s of thousands ahead of other years to make up for that.In 1877 the presidency went to Republican Rutherford B Hayes. During this time, he was fighting hard to get us back on the Gold Standard. He fought against both silver coinage and greenbacks.
His successor, James A Garfield (who is also known for his investigation into Black Friday (the Gold market crash) of 1869) also supported the gold coinage, but had supported a Gold Backed Dollar during reconstruction from the Civil war.
Then Congressman William McKinley voted for a bill that Congress attempted to pass named the Bland-Allison act of 1878. This measure was vetoed by Hayes, but was overridden by congress and enacted as law. Garfield was a congressman at the time, and was also fighting against the Bland Allison Act.
Chester A Arthur did essentially nothing to monetary policy during his time, but then came Grover Cleveland, a Democrat from New York. Cleveland had managed to avoid a stance on Gold and Silver in the monetary system (Bimetallism) during his first term, and in between his two terms, Harrison came in.
A Republican from Indiana, Harrison supported bimetalism, and wanted US Silver and Gold coins. He appointed a Treasury secratary who was a known Silverite who managed to land the Sherman Silver Purchase Act in 1890 - which didn't authorize coining, but increased the amount the US was to purchase and keep in stockholds. Harrison however, allowed the treasury surplus to evaporate, and our economic health worsened, a precursor to the Panic of 1893. Harrison lacked support and it became clear a second term wasn't an option. To make matters worse, the Democrats nominated Cleveland, basically saying "let's have a rematch of the last election" and then the final blow, poor guy lost his wife two weeks prior to the election. It ended up being the most decisive presidential election in 20 years!
Cleveland was ready to rock. He reentered office in 1893, Cleveland had repealed the Coinage Act of 1873 showing his hand as not in favor of gold and silver in our coinage. Shortly after, the Panic of 1893 set in following bank failures and a run on the gold supply. If you collect Morgans, you know 1893 is a key date in most mint marks!
I am copy pasting the Wikipedia article on this panic, as I couldn't write it better:
The Free Silver movement arose, gaining support from farmers (who sought to invigorate the economy and cause inflation, thus allowing them to repay their debt with cheaper dollars) and mining interests (who sought the right to turn silver directly into money). The Sherman Silver Purchase Act of 1890, while falling short of the Free Silver movement's goals, required the U.S. government to buy millions of ounces of silver above what was required by the 1878 Bland-Allison Act (driving up the price of the metal and pleasing silver miners). People attempted to redeem silver notes for gold. Ultimately, the statutory limit for the minimum amount of gold in federal reserves was reached and U.S. notes could no longer be successfully redeemed for gold. Investments during the time of the panic were heavily financed through bond issues with high interest payments. The National Cordage Company (the most actively traded stock at the time) went into receivership as a result of its bankers calling their loans in response to rumors regarding the NCC's financial distress. The company, a rope manufacturer, had tried to corner the market for imported hemp. As the demand for silver and silver notes fell, the price and value of silver dropped. Holders worried about a loss of face value of bonds and many became worthless.
A series of bank failures followed, and the Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad failed. This was followed by the bankruptcy of many other companies; in total over 15,000 companies and 500 banks, many of them in the west, failed. According to high estimates, about 17%–19% of the workforce was unemployed at the panic's peak. The huge spike in unemployment, combined with the loss of life savings kept in failed banks, meant that a once-secure middle-class could not meet their mortgage obligations. Many walked away from recently built homes as a result.
1896 was an election year, and William McKinley, an Ohio Republican beat the Democratic candidate William Bryan. Bryan won the Democratic bid with his Gold Cross speech, denouncing Gold backed dollars. So you see, we were in a place where we were out of Gold, and had all this Silver from the Sherman purchase.
The Republican Party tried any number of tactics to ridicule Bryan's economic policies. In one case they printed fake dollar bills which had Bryan's face and read "IN GOD WE TRUST...FOR THE OTHER 53 CENTS," thus illustrating their claim that a dollar bill would be worth only 47 cents if it was backed by silver instead of gold.
It was a close race, and Republicans also claimed Bryan was a religious fanatic, not suitable for office. Regardless, McKinley won a narrow victory.
So this lithograph is from a run of that magazine in New York in June of 1896, the summer before what was called one of the most dramatic presidential run ups ever, with farmers and miners supporting Silver, and Republicans and businessmen supporting Gold backed currency. Silver and Gold divided the nation and the political parties. You can see the police officer riding the "sound money" democrats who actually supported McKinley (a Republican!) chasing the Silverite miner, who is clearly painted as kind of a kooky guy - basically this was a political cartoon of the Gold Democrats basically distancing themselves from the Free Silver Democrats.
McKinley was shot on 9/5 at the Pan-Am expo, twice in the abdomen by Leon Czolgosz, an anarchist who believed that there was a great injustice in American society, an inequality which allowed the wealthy to enrich themselves by exploiting the poor. He concluded that the reason for this was the structure of government itself. He used a .32 he bought for $4.50 (4 morgan dollars and a barber half)
Fun fact - there was a primitive X ray machine on display, but it was not used to save the president. His VP, Teddy Roosevelt would take the office on September 14th, as McKinley died of gangrene. His killer got the chair less than 2 months later. His last words were: "I killed the President because he was the enemy of the good people – the good working people. I am not sorry for my crime."
We've come this far, so I will close out the Morgan series, which you might know I am passionate about. In 1904, our silver supply had run short, so the Morgan dollar was ceased.
Fast forward a bit to 1918, the Pittman act allowed 270M Morgan dollars to be melted down into bullion. Pursuant to this a one year run of Morgans was done in 1921, the highest mintage year for all mint marks (85M across all mints)
Hope you enjoyed, this came out longer than expected.
0
Comments
Actually all silver dollars 1891-1897 were coined under authority of the Sherman Act of 1890.
This act repealed the provisions of the 1878 act as regards coinage of silver dollars. The 1890 act mandated coinage of 2 million ounces (out of 4,500,000 ounces purchased) of silver per month into silver dollars until 1 July 1891. Then coinage was to be only enough for the redemption of Treasury notes of 1890 for silver dollars. People were redeeming these notes for gold not silver. Hence we have the unusual low mintages of 1893 - 1895. What I don't understand is the large mintages of 1896 - 1897. I suspect the treasury might have been redeeming Treasury notes of 1890 and turning the silver dollars in for silver certificates. The number of silver dollars in circulation were not going up that much.
Additional coinage of silver dollars were authorized by the War Revenue Act of 1898 and the Gold Standard Act of 1900.
Edit: corrected date of 1 July 1891.
Much of this paragraph is confused and should be re-written.
For example, gold coins disappeared from circulation at the end of 1861 and Greenbacks were introduced in 1862. Also, it was in 1853 that the free coinage of subsidiary silver coins was ended. As I recall, free coinage of silver dollars was still permitted until the silver dollar was eliminated in 1873. While later on it was called the "Crime of 1873," I doubt if anyone was surprised at the lack of free coinage in 1876 - the Act of 1873 had received a lot of publicity and debate at the time of its passage. Also, the mintage of Morgan dollars certainly wasn't "resumed" in 1878.
Check out the Southern Gold Society
It seems strange that the Pittman act resulted in the melting of 270 million silver dollars, only to have 275 million new silver dollars minted within a few years.
I believe that this had something to do with the vintage counterfeits (micro-o's and similar) that were invasive in general commerce at the time.
I believe that this had something to do with the vintage counterfeits (micro-o's and similar) that were invasive in general commerce at the time.>>
The Pittman replacements were completed in 1928 and silver dollar coinage ceased.
A token amount was struck in 1934-1935 for Roosevelt's silver purchase acts of 1933 and 1934.
In general, during this era, Western Republicans and Southerners (those who made the most $ on mining) were pro gold and silver. Where bankers and business people were backers of paper money, but were split on it being Gold/Silver or Promise based backing.
The silverittes were mostly farmers and people who used credit banking, not bankers. Bankers, mining and big business were mostly gold bugs.
In 1869, the US was recovering from the Civil War, and in order to recover, they pulled in gold coinage and put out Greenbacks. The government saved and sold gold coinage to help fix damages from the war. Ulysses Grant saw the inflation and worked hard to get us back on the Gold standard.
The greenbacks were made to finance much of the Civil War. Gold coinage was hoarded and used only at a very high premium to the Greenback. The Government didn't save gold, businesses and anyone who have the wealth to do so did. Grant thwarted the 1869 gold play by Jim Fisk and Jay Gould, resulting in Black Friday. Other than that he had little to do with monetary policy. The person who did was John Sherman.
The US dollar was very weak and caused the Long Depression in 1873. Also in 1873, the Coinage Act of 1873 passed. This abolished silver bullion holders from having it struck into legal tender. It was known as the Crime of '73 by opponents. In 1876, when the price of silver neared exactly one dollar, many were surprised to find they were unable to have their silver minted into dollars. Those who collect silver dollars know that from 1873-1885 trade dollars were minted rather than "US dollars" until 1878, which is when Morgan dollars resumed. During this time the US dollar was a gold coin. and you can see the mintages for 1873 and 1874 in the Indian Princess Head dollar coins were 100s of thousands ahead of other years to make up for that.
The depression was cased by a railroad speculative bubble. The "Crime of '73" was a scapegoat for the silverittes to blame the depression on the gold bugs. Conversion from silver to coin stopped in 1853.
In 1877 the presidency went to Republican Rutherford B Hayes. During this time, he was fighting hard to get us back on the Gold Standard. He fought against both silver coinage and greenbacks.
The Specie Resumption Act was passed in 1874. Work on it began in 1872 by John Sherman. Hays had nothing to do with it, It was not a gold standard by law, but it had the same effect. We went on an official gold standard in 1900.
On and on... I could go on, but my point is that you can't get history from propaganda from the period.
Huh? Holders of silver buliom could no longer have it converted to subsidiary coinage but silver dollars were not affected. But who would want to when a silver dollar was worth a premium in gold? Hence there was little resistance to eliminating the silver dollar in 1873. Things changed after the Comstock lode discovery.
<<The Treasury continued to stand ready to accept unlimited amounts of silver for coinage into silver dollars, but the act authorized the Treasury’s purchase of only limited amounts of silver to mint subsidiary coinage, that is, half dollars, quarters, dimes, and half dimes. The act gave the Treasury the authority to decide the amount of silver to purchase for subsidiary coinage, an amount that would necessarily be less than holders of silver would want to bring to the Treasury at overvalued prices. The purpose of the act was to maintain gold as the primary monetary metal while furnishing the public with a subsidiary silver coinage. Theoretically, the United States remained on a bimetallic standard because silver dollars enjoyed a legal-tender status, but in practice no silver dollars were coined.>>