4 ms·

The bimetallic argument was basically a fight between those who already were wealthy and wished to preserve their position, and those who were not yet wealthy b

The bimetallic argument was basically a fight between those who already were wealthy and wished to preserve their position, and those who were not yet wealthy but wanted to improve their position. Backers of a gold-only standard (mostly in the eastern US) wanted it because their fortunes were already amassed, and denominated in gold or gold-backed currency, and they did not want this diluted by the influx of silver from mines in the western US. Backers of the bimetallic standard had access to silver mines, or to the resulting silver, and wanted the ability to either have silver coined, or to present it and receive in return legal tender (which had been taken away in 1873). For an edifying take on the populist/bimetallic position, consider reading William Jennings Bryan's "Cross of Gold" speech, which is full of eminently-quotable and still-relevant lines. For example, a rebuttal of what came to be known as the "trickle-down" theory: Mr. Carlisle said in 1878 that this was a struggle between "the idle holders of idle capital" and "the struggling masses, who produce the wealth and pay the taxes of the country"; and, my friends, the question we are to decide is: Upon which side will the Democratic party fight; upon the side of "the idle holders of idle capital" or upon the side of "the struggling masses"? That is the question which the party must answer first, and then it must be answered by each individual hereafter. The sympathies of the Democratic party, as shown by the platform, are on the side of the struggling masses who have ever been the foundation of the Democratic party. There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.

dnautics 13y ago
The question that is whether the assertion that diluting the value of gold by introducing to serve as a second currency actually did improve the lot of the less wealthy. Historical evidence suggests that a fiat devaluation hurts the poor (well ultimately it hurts the rich when the poor overturn the wealthy in revolution). Moreover, the architects of this policy failed to see in-retrospect-obvious problems like arbitrage destabilization of bimetallism as the gold-silver exchange rate was, effectively fixed by law. Suffice it to say my confidence in their ability to be correct about the complex net social effects is low, given they missed this crucial, first-order economics problem.
- ubernostrum 13y ago
  Backers of bimetallism knew it would "dilute" the value of existing currency (i.e., would cause inflation, with subsequent known negative effects). They did not "miss" that, or overlook it; they accepted it as part of a tradeoff. They knew there would be some pain at the outset, but believed that the eventual outcome -- of increasing the number of people who could turn metal into legal tender at a favorable rate, and breaking up some of the power of established wealthy interests -- would outweigh that pain through resulting economic mobility and wider-spread prosperity. Hence the argument for "trickle up", effectively, as opposed to "trickle down".

dnautics 13y ago

The question that is whether the assertion that diluting the value of gold by introducing to serve as a second currency actually did improve the lot of the less wealthy. Historical evidence suggests that a fiat devaluation hurts the poor (well ultimately it hurts the rich when the poor overturn the wealthy in revolution). Moreover, the architects of this policy failed to see in-retrospect-obvious problems like arbitrage destabilization of bimetallism as the gold-silver exchange rate was, effectively fixed by law. Suffice it to say my confidence in their ability to be correct about the complex net social effects is low, given they missed this crucial, first-order economics problem.

ubernostrum 13y ago
Backers of bimetallism knew it would "dilute" the value of existing currency (i.e., would cause inflation, with subsequent known negative effects). They did not "miss" that, or overlook it; they accepted it as part of a tradeoff. They knew there would be some pain at the outset, but believed that the eventual outcome -- of increasing the number of people who could turn metal into legal tender at a favorable rate, and breaking up some of the power of established wealthy interests -- would outweigh that pain through resulting economic mobility and wider-spread prosperity. Hence the argument for "trickle up", effectively, as opposed to "trickle down".