15 ms·

The U.S. government’s failed 1890s attempt to forge unity through currency

56 points by samizdis 5y ago

sohei 5y ago
Article leads with momentum for Tubman Twenties. Good news! You don't have to wait: https://blog.adafruit.com/2017/10/12/turn-your-20s-into-tubmans-with-this-diy-3-d-printed-stamp-wired-adafruit-ustreasury-stevenmnuchin1/ https://blog.adafruit.com/2017/10/12/turn-your-20s-into-tubm...
cratermoon 5y ago
Twice in my education, once in middle school and once in college (my instructor did a very dramatic read of William Jennings Bryan's "Cross of Gold" speech), I encountered the Free Silver movement in history classes. I never understood it then and to this day I still don't understand what the kerfuffle was about. It seems like a religious doctrinal difference rather than one that would have any real economic effect. Somewhat before I cared about money, in 1971, Nixon decoupled the dollar from gold, and although I do recall hearing about the accompanying wage/price freeze, I don't think it's ever mattered to me whether or not I could exchange my paper for gold.
- billytetrud 5y ago
  You couldn't exchange your paper for gold since 1931. Maybe that's why it felt like nothing changed to you. However, institutions could. Since 1971, unfettered monetary inflation has been used to siphon wealth from the people for the benefit of a segment of rich elites close with the federal reserve. It's no coincidence that real wages haven't increased significantly since that Nixon administration. https://economics.stackexchange.com/questions/15558/productivity-vs-real-earnings-in-the-us-what-happened-ca-1974 https://economics.stackexchange.com/questions/15558/producti... Requiring backing for dollars was a real limiter on inflation and government spending. Inflation fuels an ever increasing debt cycle that is incredibly harmful for the economy, but great for banks and financial institutions.
  - DaiPlusPlus 5y ago
    > Requiring backing for dollars was a real limiter on inflation Which directly leads to instability when the value of the backing changes. I'm not aware of any mainstream movement amongst orthodox economists to revert to pre-Nixon policies.
    - dnautics 5y ago
      That's understandable. The value of stability seems to be doctrinal in orthodox economics (it is the orthodoxy, after all) Like any other metric, stability comes at a cost (and it also comes with baked-in assumptions). I wish there were more rigorous discussion of what the social cost of stability is (is it worth it to have stability if that means siphoning money from the poor?), who benefits from 'stability', what values our metrics for stability encode, and to what extent the Federal Reserve system is a victim of Goodheart's law in all of the goals it seeks, to include 'stability'.
      - kube-system 5y ago
        It is undoubtably the working classes who benefit from stability. The people who control businesses are not laying themselves off first, nor are they living paycheck-to-paycheck.
        billytetrud 5y ago
        There is quite a lot of reason to doubt that is the case in the long run. What I think dnautics is saying is that stability is trading off short term gains for long term gains. What about the stagnated real wages in the last 50 years? Is that good for the poor? What about seigniorage? Is that good for the poor? When someone says something like "undoubtedly/obviously X" or "its commen sense that X" 99% of the time they haven't put much thought into it.
        kube-system 5y ago
        We're not comparing equal "short term" and "long term" events though. The short term effects are much more severe in nature. And because they are severe, these "short term" economic effects end up causing long term financial impacts for the people they impact, even after the economy has recovered. Most non-high income people do not have huge rainy-day funds. If they lose their job, even for a short period of time, they will find themselves relying on debt that is a lot more expensive than 2% inflation. Stability has a high value, it is just hard to measure in dollars. > When someone says something like "undoubtedly/obviously X" or "its commen sense that X" 99% of the time they haven't put much thought into it. Or rather, it's an easy question to answer because we've seen the situation happen many times. Who suffers during economic downturns?
- dmckeon 5y ago
  The key issue for “Free Silver” is not paper certificates, nor unlimited coinage, but the fixed exchange rate between silver and gold, in which the two metals were considered primarily as money, and not as commodities with separately varying supply and demand patterns. Imagine briefly a market in which APPL and TSLA common stock were subject to a fixed price ratio. Crazy idea, yes? But a 16:1 ratio for silver:gold makes just as much sense from a market point of view. For the consumer, investor, banker, a fixed ratio is a nice convenience, but if the supply or demand for either gold or silver were to change significantly, opportunities for arbitrage could become very profitable. Now think of the California gold rush, the Comstock silver lode, and the hundreds of other mining booms between 1850 and 1896. Who benefited, and who paid? Were WJ Bryan and other orators and politicians champions of the masses or tools of the robber barons?
  - skak 5y ago
    Ultimately, WJ Bryan was both a tool of capital and a champion of the masses, but the free silver effort was an the exceptional issue for the reasons you explained. I think farmers loans are worth mentioning specifically. The fixed ratio was terrible for farmers who had to seasonally borrow money and pay it back with interest.
    - AnimalMuppet 5y ago
      Could you expand on that a bit? Why did the fixed ratio hurt farmers (or anyone who had to borrow)? Or, how would a float between silver and gold have helped them? It's not like a bank is going to lend you gold dollars and accept being paid back in silver dollars (or vice versa) if the ratio between them isn't fixed... [Edit: Never mind, ffggvv answered this question below.]
  - cratermoon 5y ago
    Oh, there's the gap in my history class. We never learned about the economics and the fixed exchange ratio. I always looked back and presumed they were independently trading commodities the way they are today. To answer your question, Bryan was a champion of the masses in the same way the prior occupant of the Oval Office was a champion of the masses.
- Gibbon1 5y ago
  One thing I read about. Before the great depression mortgages were much different than they are after the New Deal Reforms. Loans were usually interest only. You had to either pay or refinance the principle at the end of the term. Which might be five or ten years. If you defaulted the lender would take the collateral, all of it. Critically loans were denominated in both dollars and gold. And could be called in often at any time to be repaid in dollars or gold, which ever was highest. You can easily see how these could be abused by banks. If you were a small time farmer during a downturn the price your crops fetch drops, the value of your farm drops. But the price of gold goes up which increases the amount you owe. The bank would then call in your loan and because you can't pay in gold take your farm. Leaving you with zilch. The above is why FDR closed the banks when he took office. Because banks were strategically destroying the economy.
- ffggvv 5y ago
  as far as i can tell (correct me if im wrong) Farmers had massive loans that were gold denominated. (dollar backed by gold). The currency was deflationary, and the massive debts were breaking the back of farmers/rural areas. Adding silver as backing of dollar essentially increases supply of the backing of the currency, creating inflation. which relieves the farmers debts. (pay back less real money) so the farmers and WJB basically just wanted inflation to relieve their debt load. (and silver interests also obviously backed the idea)
  - cratermoon 5y ago
    I get it now, thanks to you and another reply. I was never taught the economic technical details, just the socio-political history.
  - nickik 5y ago
    This is mostly correct. I added some context in my answer that you might be interested in. I think it would be more correct to say that adding silver would mostly cause increase liquidity it unlikely silver would have caused significant inflation. In general I would argue the issue with silver was way overblown, if silver or not would not have changed the fundamental problem. The people who opposed silver predicted over the top results and those who were pro silver overestimated the actual effect it would have. The US monetary system had far more important issues related to unit banking, reserve pyramids and note issue.
- nickik 5y ago
  So let me maybe explain this. This is a issue that is really not understood at all even by most economists. History of economics and banking history is not really tough much beyond some broad interdiction as far as I know. There are some good economic historians that have done great work on this. I'm gone try not to go to far back, but it does require a little bit of background to understand of banking and bank regulation in the 19th century US. The first thing to understand is that banks would issue private bank notes in this period. Think of these like checking accounts. So a checking account is a IOU the bank has towards you, and for the privilege of you lending them money, they pay you interest. Now a bank note is basically the same thing, just that the interest actually goes to the bank. This is basically the economic driver behind bank notes in the first place. Every bank wants to have as wide and large a distribution as possible because that is basically money that was lent to them but they don't have to pay interest. This is a fine enough system and worked well in many places around the world for quite a long time, earliest accounts going back to China 1200 century. So the idea is that if people want to hold a lot of cash, the bank prints more notes because there is less demand for there reserves, higher cash preference. However if people prefer to have more money in their checking account, they equally have to reduce the amount of notes otherwise they are in danger of gold reserves being drained to other banks who did reduce their circulation. Other banks usually realize that you are losing gold faster then you are getting it so they start to blacklist you and then you are basically done. In practice this is very evident because the amount of notes in circulation would spike up in the summer when you had to pay workers and do a lot of transaction, and many fewer notes were in circulation in the winter because there was just less reason to carry cash. Remember that much of the economy was still driven by farming and the harvest. To earn interest the bank has to use money to make loans or buy stocks or obligation. In some system like Canada at the time there was little restriction put on the bank what they should use to 'back' these notes. The banks basically just had to made sure they are liquid enough reserves to cover incoming IOU from costumers or more likely other banks who had accumulated many of your notes and wanted to settle. (Little aside, these settlements were done periodically 1:1 with each bank you have accumulated notes off. Better developed such system eventually developed private clearing houses that would do this arbitration for banks and what banks lost or gained reserves, either simply moving them from one account to another on its own ledger or ordering one bank to send another the gold reserves) The US has a somewhat different history, once state governments allowed competitive banks at all, they required notes to be treated differently then checking accounts. And take a guess what states wanted as a backing asset for notes. Good old state government debt obligation. This is not so much different from many historical kingdoms where the king would basically force the banks to loan money to him. This caused a lot of problems because it would mean some banks would be highly leveraged with state debt and states in that period were not very not very reliable. So if a state defaulted the bank might just collapse at the same time. This was not the main issue with banking in the US and the problems caused were mostly limited and localized. Now because of the Civil War spending requirements changed and they now started to allow 'national banks' (National Bank System). And if you think the reason behind this is that these new federally regulated banks were required to buy federal debt, rather then state debt. You would be correct. This was a reasonable measure to pay for the war as far as these things go. People continued to use state bank currency in many cases anyway so eventually those banks were hit with a significant tax and that meant that you either became a national bank or stopped issuing currency. The problem however came when the Republican government after the Civil War basically had a major policy of debt reduction. See in this nice chart: https://cdn.theatlantic.com/assets/media/img/3rdparty/2012/11/debt-and-gdp-03.png https://cdn.theatlantic.com/assets/media/img/3rdparty/2012/1... You can now understand what this means. Basically the government did what we would now call 'monetary policy' but instead of having some kind of actual goal, they simply did it without realizing the implications on banking. Now put the "Cross of Gold" speech on that timeline and it makes more sense. If you are only allowed to print notes if you have federal debt and the federal debt is being reduced year over year then the amount of notes banks can actually issue is reduced. This is effectively caused two issues, one is that it is mildly deflationary (nothing like Great Depression but still not great) but the most significant impact is that there simply wasn't liquidity as banks were no longer responsive to note demand. By 1890 virtually all government debt was bound up to back notes, even if one bank wanted to issue more notes, they had to buy these papers from other banks who in turn had to reduce their amount of notes. So instead, banks just were not responsive. Silver was basically seen as an alternative more liquid currency. In my opinion they correctly identified the problem but the solution wasn't really the right one (not that I think silver as currency would have caused meaningful problems). The solution was to simply stop forcing banks to back their notes with ever reducing federal debt. You could go back and allow state and federal debt or allow a limited broader set of 'good assets', or simply bank what they would accept from other banks. However, William Jennings Bryan himself used all his power to prevent exactly that solution, starting as a congress men around 1890 he basically believed such a solution would basically give power to the banks. He virulently oppose currency and bank reforms for the next 20 years even during major liquidity crisis. As leader of the progressive wing we was very powerful person in the opposition to these reforms. His opposition were point to Canada that had non of the US issues, neither bank failures nor liquidity restrictions and had exactly such an 'Asset Currency'. There are nice graphs that I can't find anymore you can see how the currency in Canada is very responsive to the seasonal cycles. These reforms would have fixed 'some' of the other issue in the US system as well but they were not politically viable. They had some powerful support, specially from some 'Mid' sized banks but were opposed by the large New York bank, the powerful rural banks. So one could say Bryan was one of the major blockers of solving the actual problem and used the resulting crisis to make himself incredibly popular and powerful. To be clear, I'm not saying he knowingly did that, but this is what happened. This is of course also how the initial version of the Fed was created a few years later. The Federal Reserve System is basically 12 new banks that don't suffer from the same regulation, so they can issue notes for assets, as Rick (from Rick and Morty) would say "That is just Asset Currencies with extra steps". So instead of just having assets and printing bank notes backed by those assets, you take the very same assets to the Fed and they would give you federal notes. This was more viable because for the Bryan's because while these Federal Reserve Banks were theoretically private, they were regulated by the government to a stronger degree. Seems to me it would have been far easier to simply have additional regulation on banks and regulators publish a list of viable assets that existing banks had to follow rather then creating a whole new layer of banks on top. Now, I should say, the this is only one not 'the' major cause of the increase number of banking panics and runs that happen towards that period. The US Banking System had a number of sub-optimal policies that all acted together to cause panics in this period. I hope this helps. I left out a lot of stuff but this post is to long already.
deleted 5y ago
[deleted]
macawfish 5y ago
In case you hadn't heard, some people think this is what the Wizard of Oz is all about: https://en.wikipedia.org/wiki/Political_interpretations_of_The_Wonderful_Wizard_of_Oz https://en.wikipedia.org/wiki/Political_interpretations_of_T...

56 points by samizdis 5y ago

Article leads with momentum for Tubman Twenties. Good news! You don't have to wait: https://blog.adafruit.com/2017/10/12/turn-your-20s-into-tubmans-with-this-diy-3-d-printed-stamp-wired-adafruit-ustreasury-stevenmnuchin1/ https://blog.adafruit.com/2017/10/12/turn-your-20s-into-tubm...

cratermoon 5y ago

Twice in my education, once in middle school and once in college (my instructor did a very dramatic read of William Jennings Bryan's "Cross of Gold" speech), I encountered the Free Silver movement in history classes. I never understood it then and to this day I still don't understand what the kerfuffle was about. It seems like a religious doctrinal difference rather than one that would have any real economic effect. Somewhat before I cared about money, in 1971, Nixon decoupled the dollar from gold, and although I do recall hearing about the accompanying wage/price freeze, I don't think it's ever mattered to me whether or not I could exchange my paper for gold.

billytetrud 5y ago
You couldn't exchange your paper for gold since 1931. Maybe that's why it felt like nothing changed to you. However, institutions could. Since 1971, unfettered monetary inflation has been used to siphon wealth from the people for the benefit of a segment of rich elites close with the federal reserve. It's no coincidence that real wages haven't increased significantly since that Nixon administration. https://economics.stackexchange.com/questions/15558/productivity-vs-real-earnings-in-the-us-what-happened-ca-1974 https://economics.stackexchange.com/questions/15558/producti... Requiring backing for dollars was a real limiter on inflation and government spending. Inflation fuels an ever increasing debt cycle that is incredibly harmful for the economy, but great for banks and financial institutions.
- DaiPlusPlus 5y ago
  > Requiring backing for dollars was a real limiter on inflation Which directly leads to instability when the value of the backing changes. I'm not aware of any mainstream movement amongst orthodox economists to revert to pre-Nixon policies.
  - dnautics 5y ago
    That's understandable. The value of stability seems to be doctrinal in orthodox economics (it is the orthodoxy, after all) Like any other metric, stability comes at a cost (and it also comes with baked-in assumptions). I wish there were more rigorous discussion of what the social cost of stability is (is it worth it to have stability if that means siphoning money from the poor?), who benefits from 'stability', what values our metrics for stability encode, and to what extent the Federal Reserve system is a victim of Goodheart's law in all of the goals it seeks, to include 'stability'.
    - kube-system 5y ago
      It is undoubtably the working classes who benefit from stability. The people who control businesses are not laying themselves off first, nor are they living paycheck-to-paycheck.
      - billytetrud 5y ago
        There is quite a lot of reason to doubt that is the case in the long run. What I think dnautics is saying is that stability is trading off short term gains for long term gains. What about the stagnated real wages in the last 50 years? Is that good for the poor? What about seigniorage? Is that good for the poor? When someone says something like "undoubtedly/obviously X" or "its commen sense that X" 99% of the time they haven't put much thought into it.
        kube-system 5y ago
        We're not comparing equal "short term" and "long term" events though. The short term effects are much more severe in nature. And because they are severe, these "short term" economic effects end up causing long term financial impacts for the people they impact, even after the economy has recovered. Most non-high income people do not have huge rainy-day funds. If they lose their job, even for a short period of time, they will find themselves relying on debt that is a lot more expensive than 2% inflation. Stability has a high value, it is just hard to measure in dollars. > When someone says something like "undoubtedly/obviously X" or "its commen sense that X" 99% of the time they haven't put much thought into it. Or rather, it's an easy question to answer because we've seen the situation happen many times. Who suffers during economic downturns?
dmckeon 5y ago
The key issue for “Free Silver” is not paper certificates, nor unlimited coinage, but the fixed exchange rate between silver and gold, in which the two metals were considered primarily as money, and not as commodities with separately varying supply and demand patterns. Imagine briefly a market in which APPL and TSLA common stock were subject to a fixed price ratio. Crazy idea, yes? But a 16:1 ratio for silver:gold makes just as much sense from a market point of view. For the consumer, investor, banker, a fixed ratio is a nice convenience, but if the supply or demand for either gold or silver were to change significantly, opportunities for arbitrage could become very profitable. Now think of the California gold rush, the Comstock silver lode, and the hundreds of other mining booms between 1850 and 1896. Who benefited, and who paid? Were WJ Bryan and other orators and politicians champions of the masses or tools of the robber barons?
- skak 5y ago
  Ultimately, WJ Bryan was both a tool of capital and a champion of the masses, but the free silver effort was an the exceptional issue for the reasons you explained. I think farmers loans are worth mentioning specifically. The fixed ratio was terrible for farmers who had to seasonally borrow money and pay it back with interest.
  - AnimalMuppet 5y ago
    Could you expand on that a bit? Why did the fixed ratio hurt farmers (or anyone who had to borrow)? Or, how would a float between silver and gold have helped them? It's not like a bank is going to lend you gold dollars and accept being paid back in silver dollars (or vice versa) if the ratio between them isn't fixed... [Edit: Never mind, ffggvv answered this question below.]
- cratermoon 5y ago
  Oh, there's the gap in my history class. We never learned about the economics and the fixed exchange ratio. I always looked back and presumed they were independently trading commodities the way they are today. To answer your question, Bryan was a champion of the masses in the same way the prior occupant of the Oval Office was a champion of the masses.
Gibbon1 5y ago
One thing I read about. Before the great depression mortgages were much different than they are after the New Deal Reforms. Loans were usually interest only. You had to either pay or refinance the principle at the end of the term. Which might be five or ten years. If you defaulted the lender would take the collateral, all of it. Critically loans were denominated in both dollars and gold. And could be called in often at any time to be repaid in dollars or gold, which ever was highest. You can easily see how these could be abused by banks. If you were a small time farmer during a downturn the price your crops fetch drops, the value of your farm drops. But the price of gold goes up which increases the amount you owe. The bank would then call in your loan and because you can't pay in gold take your farm. Leaving you with zilch. The above is why FDR closed the banks when he took office. Because banks were strategically destroying the economy.
ffggvv 5y ago
as far as i can tell (correct me if im wrong) Farmers had massive loans that were gold denominated. (dollar backed by gold). The currency was deflationary, and the massive debts were breaking the back of farmers/rural areas. Adding silver as backing of dollar essentially increases supply of the backing of the currency, creating inflation. which relieves the farmers debts. (pay back less real money) so the farmers and WJB basically just wanted inflation to relieve their debt load. (and silver interests also obviously backed the idea)
- cratermoon 5y ago
  I get it now, thanks to you and another reply. I was never taught the economic technical details, just the socio-political history.
- nickik 5y ago
  This is mostly correct. I added some context in my answer that you might be interested in. I think it would be more correct to say that adding silver would mostly cause increase liquidity it unlikely silver would have caused significant inflation. In general I would argue the issue with silver was way overblown, if silver or not would not have changed the fundamental problem. The people who opposed silver predicted over the top results and those who were pro silver overestimated the actual effect it would have. The US monetary system had far more important issues related to unit banking, reserve pyramids and note issue.
nickik 5y ago
So let me maybe explain this. This is a issue that is really not understood at all even by most economists. History of economics and banking history is not really tough much beyond some broad interdiction as far as I know. There are some good economic historians that have done great work on this. I'm gone try not to go to far back, but it does require a little bit of background to understand of banking and bank regulation in the 19th century US. The first thing to understand is that banks would issue private bank notes in this period. Think of these like checking accounts. So a checking account is a IOU the bank has towards you, and for the privilege of you lending them money, they pay you interest. Now a bank note is basically the same thing, just that the interest actually goes to the bank. This is basically the economic driver behind bank notes in the first place. Every bank wants to have as wide and large a distribution as possible because that is basically money that was lent to them but they don't have to pay interest. This is a fine enough system and worked well in many places around the world for quite a long time, earliest accounts going back to China 1200 century. So the idea is that if people want to hold a lot of cash, the bank prints more notes because there is less demand for there reserves, higher cash preference. However if people prefer to have more money in their checking account, they equally have to reduce the amount of notes otherwise they are in danger of gold reserves being drained to other banks who did reduce their circulation. Other banks usually realize that you are losing gold faster then you are getting it so they start to blacklist you and then you are basically done. In practice this is very evident because the amount of notes in circulation would spike up in the summer when you had to pay workers and do a lot of transaction, and many fewer notes were in circulation in the winter because there was just less reason to carry cash. Remember that much of the economy was still driven by farming and the harvest. To earn interest the bank has to use money to make loans or buy stocks or obligation. In some system like Canada at the time there was little restriction put on the bank what they should use to 'back' these notes. The banks basically just had to made sure they are liquid enough reserves to cover incoming IOU from costumers or more likely other banks who had accumulated many of your notes and wanted to settle. (Little aside, these settlements were done periodically 1:1 with each bank you have accumulated notes off. Better developed such system eventually developed private clearing houses that would do this arbitration for banks and what banks lost or gained reserves, either simply moving them from one account to another on its own ledger or ordering one bank to send another the gold reserves) The US has a somewhat different history, once state governments allowed competitive banks at all, they required notes to be treated differently then checking accounts. And take a guess what states wanted as a backing asset for notes. Good old state government debt obligation. This is not so much different from many historical kingdoms where the king would basically force the banks to loan money to him. This caused a lot of problems because it would mean some banks would be highly leveraged with state debt and states in that period were not very not very reliable. So if a state defaulted the bank might just collapse at the same time. This was not the main issue with banking in the US and the problems caused were mostly limited and localized. Now because of the Civil War spending requirements changed and they now started to allow 'national banks' (National Bank System). And if you think the reason behind this is that these new federally regulated banks were required to buy federal debt, rather then state debt. You would be correct. This was a reasonable measure to pay for the war as far as these things go. People continued to use state bank currency in many cases anyway so eventually those banks were hit with a significant tax and that meant that you either became a national bank or stopped issuing currency. The problem however came when the Republican government after the Civil War basically had a major policy of debt reduction. See in this nice chart: https://cdn.theatlantic.com/assets/media/img/3rdparty/2012/11/debt-and-gdp-03.png https://cdn.theatlantic.com/assets/media/img/3rdparty/2012/1... You can now understand what this means. Basically the government did what we would now call 'monetary policy' but instead of having some kind of actual goal, they simply did it without realizing the implications on banking. Now put the "Cross of Gold" speech on that timeline and it makes more sense. If you are only allowed to print notes if you have federal debt and the federal debt is being reduced year over year then the amount of notes banks can actually issue is reduced. This is effectively caused two issues, one is that it is mildly deflationary (nothing like Great Depression but still not great) but the most significant impact is that there simply wasn't liquidity as banks were no longer responsive to note demand. By 1890 virtually all government debt was bound up to back notes, even if one bank wanted to issue more notes, they had to buy these papers from other banks who in turn had to reduce their amount of notes. So instead, banks just were not responsive. Silver was basically seen as an alternative more liquid currency. In my opinion they correctly identified the problem but the solution wasn't really the right one (not that I think silver as currency would have caused meaningful problems). The solution was to simply stop forcing banks to back their notes with ever reducing federal debt. You could go back and allow state and federal debt or allow a limited broader set of 'good assets', or simply bank what they would accept from other banks. However, William Jennings Bryan himself used all his power to prevent exactly that solution, starting as a congress men around 1890 he basically believed such a solution would basically give power to the banks. He virulently oppose currency and bank reforms for the next 20 years even during major liquidity crisis. As leader of the progressive wing we was very powerful person in the opposition to these reforms. His opposition were point to Canada that had non of the US issues, neither bank failures nor liquidity restrictions and had exactly such an 'Asset Currency'. There are nice graphs that I can't find anymore you can see how the currency in Canada is very responsive to the seasonal cycles. These reforms would have fixed 'some' of the other issue in the US system as well but they were not politically viable. They had some powerful support, specially from some 'Mid' sized banks but were opposed by the large New York bank, the powerful rural banks. So one could say Bryan was one of the major blockers of solving the actual problem and used the resulting crisis to make himself incredibly popular and powerful. To be clear, I'm not saying he knowingly did that, but this is what happened. This is of course also how the initial version of the Fed was created a few years later. The Federal Reserve System is basically 12 new banks that don't suffer from the same regulation, so they can issue notes for assets, as Rick (from Rick and Morty) would say "That is just Asset Currencies with extra steps". So instead of just having assets and printing bank notes backed by those assets, you take the very same assets to the Fed and they would give you federal notes. This was more viable because for the Bryan's because while these Federal Reserve Banks were theoretically private, they were regulated by the government to a stronger degree. Seems to me it would have been far easier to simply have additional regulation on banks and regulators publish a list of viable assets that existing banks had to follow rather then creating a whole new layer of banks on top. Now, I should say, the this is only one not 'the' major cause of the increase number of banking panics and runs that happen towards that period. The US Banking System had a number of sub-optimal policies that all acted together to cause panics in this period. I hope this helps. I left out a lot of stuff but this post is to long already.

deleted 5y ago

[deleted]

macawfish 5y ago

In case you hadn't heard, some people think this is what the Wizard of Oz is all about: https://en.wikipedia.org/wiki/Political_interpretations_of_The_Wonderful_Wizard_of_Oz https://en.wikipedia.org/wiki/Political_interpretations_of_T...