Panic of 1873
Industrial Capitalism
The Panic of 1873 stands as the first global depression brought about by industrial capitalism. It began a regular pattern of boom and bust cycles that distinguish our current economic system and which continue to this day. While the first of many such market "corrections," the effects of the downturn were severe and, in 1873, unexpected. Unlike earlier mercantile capitalism, which is dependent on local markets and periodic shortages of labor or materials, industrial capitalism is controlled by access to venture capital and the productivity of capital investments in stocks, bonds, and large-scale mechanization. Money, not labor or goods, remains the critical factor in economic growth.
In a sense, the money supply acts like oxygen for a fire.
In a sense, the money supply acts like oxygen for a fire: too little and the flame dwindles, too much and it rages uncontrolled. In today's market, currency and stock regulation try to limit rapid swings in value of our nation's currency. But in 1873 these adjustments were unknown and the ability of national authorities to control the money supply was immature. As a result, the Panic of 1873 led to the longest recorded economic downturn in modern history, spanning from October 1873 to March 1879, according to the National Bureau of Economic Research.
By 1873, most developed nations in Europe and North America had experienced the transition to industrial capitalism. Capitalists could invest their money in international currencies, ownership of individual firms (stock), or as lenders (bonds and loans). Countries backed their currencies using precious metals (both silver and gold, also called specie), making it possible for investors to compare the success of their investment choices in objective terms. While one option might earn 100 U.S. dollars and another 100 English pounds, ultimately the ability to convert those currencies to silver and gold led to an "apples to apples" comparison. In times of national emergency, however, governments often went "off" the precious metal standard. They supplied "easy money" not tied to the value of gold. This was the case in the United States when, in 1861, the Civil War began.
Greenbacks
During the U.S. Civil War, the federal government printed over $356 million in paper greenbacks, essentially promissory notes which paid for military procurements, soldiers' salaries, building a transcontinental railroad, and developing interiors land for commerce and higher education. Mass manufacturers, financial institutions, and especially railroad investors soaked up these funds, producing more goods and employing more people over a broader geographic market. Northern investment bankers like Jay Cooke & Company (who managed the transfer of these funds) made millions (see Primary Source Great Northern Railway Route Map [1920]). The good times were predicated on an assumption that consumers (and, during the war, this included the U.S. government) would continue to have easy access to the capital needed to purchase these modern goods and services.
These cheerful market assumptions also made it easy for corrupt politicians and their local benefactors to artificially inflate the value of their particular interests. While, on any given day, the New York Stock Exchange might rank a railroad stock or corporate bond based on the estimated value at that time, no one knew for certain the value of their land holdings or federal contracts. Unlike "sound money," backed by specie, the greenbacks' value reflected only the relative optimism of individual investors.
Gold Standard and Silver
Beginning in the early 1870s, several leading industrial nations made significant changes to their national currencies which, unknowingly, started the Panic. In 1871, Germany ended the use of silver as a monetary metal. While placing the deutschmark on the "gold standard" instantly increased the value of Germany's money, relative to other currencies, it also meant a rising worldwide supply of silver.
Unlike "sound money," backed by specie, the greenbacks' value reflected only the relative optimism of individual investors.
In a classic case of supply-and-demand, more silver meant less value per ounce and less value for those currencies that still allowed an exchange between silver and gold (as in the United States).
The "deflation" of silver-backed currencies cascaded throughout the world. While complicated in theory, the practical problem was obvious. If one could exchange cheap silver for precious gold in countries, like the U.S., that still used both to back their currency, the global value of that currency would rapidly fall. As a result, other nations felt strong economic pressures to follow Germany's lead.
In America, Congress passed the 1873 Coinage Act to gradually retire silver currency and to bolster the relative value of the U.S. dollar. While the Treasury also released an additional $26 million in greenbacks, the economic effect was a decrease in the amount of capital available to all investors—akin to choking off the oxygen supply to a fire. Now limited by the amount of gold held in the U.S. Treasury, access to currency and credit contracted sharply, interest rates skyrocketed, and investors were forced to pay off their high stakes gambles (made with cheap paper dollars) with hard-earned gold. Congress passed the Specie Resumption Act in 1875, placing the U.S. on the path to a complete gold-standard currency.
Banks and the Panic
As with the Great Depression, the private investment banks felt the change first. Jay Cooke was an influential Wall Street banker who played a vital role in brokering federal bonds during the Civil War (providing credit for the Union and earning millions for Cooke). Jay Cooke & Company was deeply invested in post-war railroad construction, including the Northern Pacific Railroad. Like the more famous Union Pacific line, the Northern was fueled by vast federal land grants (over 60 millions acres were signed over to Cooke's firm) that he then used as collateral to sell more stock and to secure loans.
The contraction of currency dried up investor interest into these speculative lands. Unable to fund its debts, Cooke's firm folded on September 13, 1873. His bankruptcy rippled through the markets, first into private investment houses and banks, then railroad and industrial holdings. The New York Stock Exchange suspended trading for nearly two weeks, yet the panic resumed and spread inland through the tenuous credit links binding the country's young industrial economy.
Immediate Impact
Numbers fail to convey the depth of the economy distress. Average wages fell by nearly a quarter. Thousands of American companies defaulted on over a billion dollars in debt, nine out of 10 U.S. railroad concerns failed, and the country faced double-digit unemployment for over a decade.
The worst effects of the downturn were concentrated in the industrial sectors.
The worst effects of the downturn (unemployment, homelessness, malnutrition) were concentrated in the industrial sectors, but every region suffered and the economy continued to sputter. The long-term effects were quite noticeable from today's perspective. While the U.S. economy raged like a furnace from 1840 to 1860, averaging over six percent annual growth per year, the country's economic productivity fell by over 24 percent during the two decades that followed the Panic of 1873.
Coverage
Textbooks differ in their treatment of the Panic in significant ways. Most tie the depression to the national political controversies surrounding Reconstruction. Northern Republicans, who hoped to transform the South and the status of freedman through market reforms, were blamed for the economic downturn. As noted in Holt, Rinehart, and Winston's United States History: Beginnings to 1877, the crisis also meant that "Northerners were becoming less concerned about southern racism and more concerned with their financial well-being."
The result was division in the Republican party over their approach to Reconstruction and whether the U.S. currency should be hard (backed by gold) or easy. More advanced textbooks, such as Wadsworth's The American Pageant: A History of the American People, do a better job of establishing the long-term political consequences of these currency standards and their influence upon American politics. Too often, textbooks combine the Panic with the political scandals which rocked the Grant administration. While certainly a source of the political crisis facing Republicans in the 1870s, the roots of the Panic run far deeper than merely Grant's poor political skills.
Economic Changes
As with the better known crises of 1929 and 1893, the Panic of 1873 produced some profound changes to American society. Economically, the long downturn further concentrated capital in the hands of fewer and fewer suppliers. An ironic product of most depressions, those who had access to sound capital investments found their money was now more valuable. They could, and did, use this advantage to acquire controlling interests over competitors with less secure footing.
Large, wealthy manufacturers, like Andrew Carnegie, John Rockefeller, and Cyrus McCormick, solidified their hold over their industries and increased their influence in the halls of government as a direct result of the Panic of 1873. George K. Holmes reported that, by 1890, 71 percent of the nation's wealth belonged to less than 9 percent of the public—an unhealthy and lopsided disparity of wealth distribution that has only been equaled, in this country, in the past 20 years.
End of Reconstruction
The most important social change accelerated by the Panic proved to be the termination of the great experiment in Southern Reconstruction. Fearing increased labor violence, which began with the Great Railroad Strike of 1877, and a political crisis in confidence in the Republican Congress, who took the blame for the downturn, federal troops were redeployed closer to the nation's industrial center and far from Southern blacks in 1877. Desperation also fueled massive movements of immigrants to the United States and of eastern citizens into the interior and the Far West. It was not by accident that prospectors were willing to enter the dangerous Black Hills, controlled by the formidable Sioux nation, in search of gold in 1875, nor that American troops were called to Little Big Horn the following year.
Political Change
The Panic also carved deep channels that, over subsequent generations, defined the American political landscape of the Gilded Age. One was a general distrust of aggressive labor organizations. Established in a time of want, unions like the Knights of Labor and the American Federation of Labor lost public support when worker disputes turned violent. Bloodshed involving the Molly Maguires (1874–1875) and during the "Great Railway Strike" grabbed the headlines and undermined the legitimacy of workers' rights over safety, fair wages, reasonable hours, and the use of child and convict labor.
The long downturn further concentrated capital in the hands of fewer and fewer suppliers.
To others, the Panic exposed the injustice of economic inequality in America—how one's unique condition (such as race, gender, or geographic location) could determine their relative success far more than their talents and abilities. The urban settlement house movement and social service reforms, for example, both received increased attention following the crisis.
Finally, the Panic shattered the balance of power between the established two-party system. From 1873 to 1896, the country witnessed a series of insurgent third parties driven by a desire to address monetary policy in America (such as the gold standard and the use of greenbacks). William Hope Harvey published a national bestseller, Coin's Financial School (1893), which politicized the issue of bimetallism in the United States (see Primary Source Coin's Financial School [1873]). William Jennings Bryan tied the largest of these third-party movements (Populism) to the Democratic Party in 1896, with his famous "Cross of Gold" speech (see Primary Source "Cross of Gold" [1896]). Summarizing both the causes and effects of the Panic of 1873, Bryan suggested that a new style of national activism would soon appear in the United States to address issues first raised by the Panic.
Coin's Financial School (1893)
Annotation
William Hope Harvey published Coin’s Financial School (1893) as a means of educating the public on the "battle of the standards" between gold and silver coinage. A national sensation, Harvey's book exposed the difference between wealth earned through currency (such as banking, lending, and speculation) and wealth generated by farmers, craftsmen, and other producers. The link below brings you to the full text of Harvey's book, but, also and more importantly, to a political cartoon that gives a shorthand explanation of what he saw as the critical problem. Balanced by the hand of politics, the scales of economic justice are being undercut by "Financial Manipulators" who used hoarded gold to change the amount of money received for products like cotton or wheat. Harvey's Biblical citation on the opposing page suggests how knowledge of these "crimes" is the essential ingredient to combating the problem.
Primary Source(s)
Cartoon from Coin's Financial School:
"I thank thee, O Father, Lord of Heaven and Earth, because thou hast hid these things from the wise and prudent and hast revealed them unto babes" — MATTHEW, Chapter xi, Verse 25."
Money, Trade, and Industry (1879)
Annotation
Francis Amasa Walker was a leading popular author on economics and American society. He published Money, Trade and Industry (1879) as a means to educate the public on the source of the Panic. Examining just the table of contents, students can appreciate both the complexity of the issues confronting people in an industrial capitalist economy as well as how earnestly many sought to educate themselves on the source of their ills (ones that still affect us today).
The following excerpt is the preface to the book.
Primary Source(s)
Excerpt from Money, Trade and Industry:
The present work differs from the treatise on Money published in 1878, of which it is, in a certain sense, an abridgment, in two respects. In the publication of 1878, comprising of a lecture delivered in a university, it was sought to trace the history of doctrines, and copious extract were given with a view to introduce the student to the literature of the subject. The present work consisting of lectures delivered before a popular audience in the Lowell Institute of Boston, does not profess to deal with the literature of the Money Question; and I have been content to reach correct results without undertaking; in all or most cases; to balance conflicting views against each other, and set out the arguements on either side according to the methods of the classroom.
There is a second respect in which the present work differs from its predecessor. In my Baltimore lectures I held strictly to the topic of Money, denying myself any excursion into general economics, and stopping short always on the line which bounded my immediate subject. In the Boston lectures the title of the course was enlarged to take in the relations of Money to Trade and Industry. Under this extension of plan, the present work deals with many questions which lay beyond the scope of the former. I have seen no reason to modify at any essential point the views of the nature and uses of money which were set forth in that work, and I have not thought it necessary to alter modes of expression merely to avoid the appearance of identity between corresponding portion of the two books.
Not only the general progress of opinion, but the course of public events during the past two years, will serve to explain the greater emphasis which is here laid upon the question of Bimetallism, and the introduction of the political aspects of the subject, from which in the former publication, I deemed myself precluded.
In dealing with the question of Inconvertible Paper Money, it has been sought to trace out the ground upon which economists may take and maintain a stand against Government issues. Doubtless it will appear to many that too much ground has been surrendered to the advocates of fiat-money; but I am satisfied that no more can be held by the friends of "honest money," who are bound also to be the friends of honest argument. The claim that "greenbacks" are not money in the fullest sense of that term; that they cannot do all in the way of measuring values, so called, which gold or silver may do, is untenable, and it can be of no advantage to any really sound cause to seek to maintain it.
New Haven, April 15, 1879.
"Cross of Gold" (1896)
Annotation
One of the most famous speeches in American political history was delivered by William Jennings Bryan on July 9, 1896, at the Democratic National Convention in Chicago. The issue was whether to endorse the free coinage of silver at a ratio of silver to gold of 16 to 1. (This inflationary measure would have increased the amount of money in circulation and aided cash-poor and debt-burdened farmers.) An excerpt from his speech (recorded 21 years later for Gennett Records in Richmond, IN) is featured here; the full transcript of the original speech is below.
Primary Source(s)
I would be presumptuous, indeed, to present myself against the distinguished gentlemen to whom you have listened if this were but a measuring of ability; but this is not a contest among persons. The humblest citizen in all the land when clad in the armor of a righteous cause is stronger than all the whole hosts of error that they can bring. I come to speak to you in defense of a cause as holy as the cause of liberty—the cause of humanity. When this debate is concluded, a motion will be made to lay upon the table the resolution offered in commendation of the administration and also the resolution in condemnation of the administration. I shall object to bringing this question down to a level of persons. The individual is but an atom; he is born, he acts, he dies; but principles are eternal; and this has been a contest of principle.
Never before in the history of this country has there been witnessed such a contest as that through which we have passed. Never before in the history of American politics has a great issue been fought out as this issue has been by the voters themselves.
On the 4th of March, 1895, a few Democrats, most of them members of Congress, issued an address to the Democrats of the nation asserting that the money question was the paramount issue of the hour; asserting also the right of a majority of the Democratic Party to control the position of the party on this paramount issue; concluding with the request that all believers in free coinage of silver in the Democratic Party should organize and take charge of and control the policy of the Democratic Party. Three months later, at Memphis, an organization was perfected, and the silver Democrats went forth openly and boldly and courageously proclaiming their belief and declaring that if successful they would crystallize in a platform the declaration which they had made; and then began the conflict with a zeal approaching the zeal which inspired the crusaders who followed Peter the Hermit. Our silver Democrats went forth from victory unto victory, until they are assembled now, not to discuss, not to debate, but to enter up the judgment rendered by the plain people of this country.
But in this contest, brother has been arrayed against brother, and father against son. The warmest ties of love and acquaintance and association have been disregarded. Old leaders have been cast aside when they refused to give expression to the sentiments of those whom they would lead, and new leaders have sprung up to give direction to this cause of freedom. Thus has the contest been waged, and we have assembled here under as binding and solemn instructions as were ever fastened upon the representatives of a people.
We do not come as individuals. Why, as individuals we might have been glad to compliment the gentleman from New York [Senator Hill], but we knew that the people for whom we speak would never be willing to put him in a position where he could thwart the will of the Democratic Party. I say it was not a question of persons; it was a question of principle; and it is not with gladness, my friends, that we find ourselves brought into conflict with those who are now arrayed on the other side. The gentleman who just preceded me [Governor Russell] spoke of the old state of Massachusetts. Let me assure him that not one person in all this convention entertains the least hostility to the people of the state of Massachusetts.
But we stand here representing people who are the equals before the law of the largest cities in the state of Massachusetts. When you come before us and tell us that we shall disturb your business interests, we reply that you have disturbed our business interests by your action. We say to you that you have made too limited in its application the definition of a businessman. The man who is employed for wages is as much a businessman as his employer. The attorney in a country town is as much a businessman as the corporation counsel in a great metropolis. The merchant at the crossroads store is as much a businessman as the merchant of New York. The farmer who goes forth in the morning and toils all day, begins in the spring and toils all summer, and by the application of brain and muscle to the natural resources of this country creates wealth, is as much a businessman as the man who goes upon the Board of Trade and bets upon the price of grain. The miners who go 1,000 feet into the earth or climb 2,000 feet upon the cliffs and bring forth from their hiding places the precious metals to be poured in the channels of trade are as much businessmen as the few financial magnates who in a backroom corner the money of the world.
We come to speak for this broader class of businessmen. Ah. my friends, we say not one word against those who live upon the Atlantic Coast; but those hardy pioneers who braved all the dangers of the wilderness, who have made the desert to blossom as the rose—those pioneers away out there, rearing their children near to nature’s heart, where they can mingle their voices with the voices of the birds—out there where they have erected schoolhouses for the education of their children and churches where they praise their Creator, and the cemeteries where sleep the ashes of their dead—are as deserving of the consideration of this party as any people in this country.
It is for these that we speak. We do not come as aggressors. Our war is not a war of conquest. We are fighting in the defense of our homes, our families, and posterity. We have petitioned, and our petitions have been scorned. We have entreated, and our entreaties have been disregarded. We have begged, and they have mocked when our calamity came.
We beg no longer; we entreat no more; we petition no more. We defy them!
The gentleman from Wisconsin has said he fears a Robespierre. My friend, in this land of the free you need fear no tyrant who will spring up from among the people. What we need is an Andrew Jackson to stand as Jackson stood, against the encroachments of aggregated wealth.
They tell us that this platform was made to catch votes. We reply to them that changing conditions make new issues; that the principles upon which rest Democracy are as everlasting as the hills; but that they must be applied to new conditions as they arise. Conditions have arisen and we are attempting to meet those conditions. They tell us that the income tax ought not to be brought in here; that is not a new idea. They criticize us for our criticism of the Supreme Court of the United States. My friends, we have made no criticism. We have simply called attention to what you know. If you want criticisms, read the dissenting opinions of the Court. That will give you criticisms.
They say we passed an unconstitutional law. I deny it. The income tax was not unconstitutional when it was passed. It was not unconstitutional when it went before the Supreme Court for the first time. It did not become unconstitutional until one judge changed his mind; and we cannot be expected to know when a judge will change his mind.
The income tax is a just law. It simply intends to put the burdens of government justly upon the backs of the people. I am in favor of an income tax. When I find a man who is not willing to pay his share of the burden of the government which protects him, I find a man who is unworthy to enjoy the blessings of a government like ours.
He says that we are opposing the national bank currency. It is true. If you will read what Thomas Benton said, you will find that he said that in searching history he could find but one parallel to Andrew Jackson. That was Cicero, who destroyed the conspiracies of Cataline and saved Rome. He did for Rome what Jackson did when he destroyed the bank conspiracy and saved America.
We say in our platform that we believe that the right to coin money and issue money is a function of government. We believe it. We believe it is a part of sovereignty and can no more with safety be delegated to private individuals than can the power to make penal statutes or levy laws for taxation.
Mr. Jefferson, who was once regarded as good Democratic authority, seems to have a different opinion from the gentleman who has addressed us on the part of the minority. Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson rather than with them, and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business.
They complain about the plank which declares against the life tenure in office. They have tried to strain it to mean that which it does not mean. What we oppose in that plank is the life tenure that is being built up in Washington which establishes an office-holding class and excludes from participation in the benefits the humbler members of our society. . . .
Let me call attention to two or three great things. The gentleman from New York says that he will propose an amendment providing that this change in our law shall not affect contracts which, according to the present laws, are made payable in gold. But if he means to say that we cannot change our monetary system without protecting those who have loaned money before the change was made, I want to ask him where, in law or in morals, he can find authority for not protecting the debtors when the act of 1873 was passed when he now insists that we must protect the creditor. He says he also wants to amend this platform so as to provide that if we fail to maintain the parity within a year that we will then suspend the coinage of silver. We reply that when we advocate a thing which we believe will be successful we are not compelled to raise a doubt as to our own sincerity by trying to show what we will do if we are wrong.
I ask him, if he will apply his logic to us, why he does not apply it to himself. He says that he wants this country to try to secure an international agreement. Why doesn’t he tell us what he is going to do if they fail to secure an international agreement. There is more reason for him to do that than for us to expect to fail to maintain the parity. They have tried for thirty years—thirty years—to secure an international agreement, and those are waiting for it most patiently who don’t want it at all.
Now, my friends, let me come to the great paramount issue. If they ask us here why it is we say more on the money question than we say upon the tariff question, I reply that if protection has slain its thousands the gold standard has slain its tens of thousands. If they ask us why we did not embody all these things in our platform which we believe, we reply to them that when we have restored the money of the Constitution, all other necessary reforms will be possible, and that until that is done there is no reform that can be accomplished.
Why is it that within three months such a change has come over the sentiments of the country? Three months ago, when it was confidently asserted that those who believed in the gold standard would frame our platforms and nominate our candidates, even the advocates of the gold standard did not think that we could elect a President; but they had good reasons for the suspicion, because there is scarcely a state here today asking for the gold standard that is not within the absolute control of the Republican Party.
But note the change. Mr. McKinley was nominated at St. Louis upon a platform that declared for the maintenance of the gold standard until it should be changed into bimetallism by an international agreement. Mr. McKinley was the most popular man among the Republicans ; and everybody three months ago in the Republican Party prophesied his election. How is it today? Why, that man who used to boast that he looked like Napoleon, that man shudders today when he thinks that he was nominated on the anniversary of the Battle of Waterloo. Not only that, but as he listens he can hear with ever increasing distinctness the sound of the waves as they beat upon the lonely shores of St. Helena.
Why this change? Ah, my friends. is not the change evident to anyone who will look at the matter? It is because no private character, however pure, no personal popularity, however great, can protect from the avenging wrath of an indignant people the man who will either declare that he is in favor of fastening the gold standard upon this people, or who is willing to surrender the right of self-government and place legislative control in the hands of foreign potentates and powers. . . .
We go forth confident that we shall win. Why? Because upon the paramount issue in this campaign there is not a spot of ground upon which the enemy will dare to challenge battle. Why, if they tell us that the gold standard is a good thing, we point to their platform and tell them that their platform pledges the party to get rid of a gold standard and substitute bimetallism. If the gold standard is a good thing, why try to get rid of it? If the gold standard, and I might call your attention to the fact that some of the very people who are in this convention today and who tell you that we ought to declare in favor of international bimetallism and thereby declare that the gold standard is wrong and that the principles of bimetallism are better—these very people four months ago were open and avowed advocates of the gold standard and telling us that we could not legislate two metals together even with all the world.
I want to suggest this truth, that if the gold standard is a good thing we ought to declare in favor of its retention and not in favor of abandoning it; and if the gold standard is a bad thing, why should we wait until some other nations are willing to help us to let it go?
Here is the line of battle. We care not upon which issue they force the fight. We are prepared to meet them on either issue or on both. If they tell us that the gold standard is the standard of civilization, we reply to them that this, the most enlightened of all nations of the earth, has never declared for a gold standard, and both the parties this year are declaring against it. If the gold standard is the standard of civilization, why, my friends, should we not have it? So if they come to meet us on that, we can present the history of our nation. More than that, we can tell them this, that they will search the pages of history in vain to find a single instance in which the common people of any land ever declared themselves in favor of a gold standard. They can find where the holders of fixed investments have.
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, it is simply a question that we shall decide upon which side shall 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 that the party must answer first; and then it must be answered by each individual hereafter. The sympathies of the Democratic Party, as described 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 just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.
You come to us and tell us that the great cities are in favor of the gold standard. I tell you that the great cities rest upon these broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic. But destroy our farms and the grass will grow in the streets of every city in the country.
My friends, we shall declare that this nation is able to legislate for its own people on every question without waiting for the aid or consent of any other nation on earth, and upon that issue we expect to carry every single state in the Union.
I shall not slander the fair state of Massachusetts nor the state of New York by saying that when citizens are confronted with the proposition, “Is this nation able to attend to its own business?”—I will not slander either one by saying that the people of those states will declare our helpless impotency as a nation to attend to our own business. It is the issue of 1776 over again. Our ancestors, when but 3 million, had the courage to declare their political independence of every other nation upon earth. Shall we, their descendants, when we have grown to 70 million, declare that we are less independent than our forefathers? No, my friends, it will never be the judgment of this people. Therefore, we care not upon what lines the battle is fought. If they say bimetallism is good but we cannot have it till some nation helps us, we reply that, instead of having a gold standard because England has, we shall restore bimetallism, and then let England have bimetallism because the United States have.
If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.
Citation
Official Proceedings of the Democratic National Convention Held in Chicago, Illinois, July 7, 8, 9, 10, and 11, 1896, (Logansport, Indiana, 1896), 226–234. Reprinted in The Annals of America, Vol. 12, 1895–1904: Populism, Imperialism, and Reform (Chicago: Encyclopedia Britannica, Inc., 1968), 100–105.
Bryan, William Jennings. "Cross of Gold." Audio recording, Richmond, IN: Gennett Records, 1917.
Great Northern Railway Route Map (1920)
Annotation
The Great Northern Railway connected a vital economic sector of the United States. Still, much of the land between Minneapolis and Seattle was then, and remains today, undeveloped and largely unconnected to the marketplace. This map compares the historic route to the modern route and shows the territory clearly, which can lead students to a discussion about the value of selling these lands at inflated prices (exactly what Jay Cooke hoped to do). How likely was it that depots along the line would suddenly spring to life and become major cities? This was the gamble that land speculators took throughout the boom and bust periods of the Gilded Age A larger and zoomable image of the map is available through the Washington University Archives.
Primary Source(s)
"Survival of the Fittest," Puck (1900)
Annotation
Puck was a satirical political magazine which, typically, assumed that politics were the product of entrenched economic interests. For the cover of their March 1900 issue, the editors show the ultimate defeat of bimetallism in the United States. Two gladiators labeled "Gold Standard" and "Silver Standard" are pictured. Silver Standard's sword, labeled "16 to 1," lies broken at his side as Gold Standard stands victoriously over the fallen currency standard.
Primary Source(s)
Citation
Dalrymple, Louis. Chromolithograph. "Survival of the Fittest." Puck, March 14, 1900.
Primary Source Annotated Bibliography
Andrews, Elisha Benjamin. "An Honest Dollar." The American Economic Association 4:6 (1889).
Compilation of articles that provide an introductory lesson in bimetallist theory.
Giffen, Robert. The Case Against Bimetallism. London: George Bell & Sons, 1892.
Contains several previously printed essays on bimetallism and argued against the use of bimetallism and those who had strayed from "sound monetary tradition." Giffen referred to bimetallists as "currency faddists."
Laughlin, James Laurence. History of Bimetallism in the United States. New York: D. Appleton and Company, 1896.
Touches upon Giffen's theory, calling it fallacy, and discusses the purchasing power of both gold and silver and the history of the metals' uses in the United States and Europe as it related to the topic of bimetallism.
Mills, Roger Q. “What Shall We Do with Silver?” The North American Review 150:402 (1890).
Dry analysis of the usefulness of silver relative to the economy, which expresses the belief that the interchangeable nature of using gold and silver as a standard for the national currency would keep prices more stable.
Nicholson, Joseph Shield. A Treatise on Money and Essays on Monetary Problems. London: Adam and Charles Black, 1893.
Deals with international economy and how bimetallism affects price fluctuation and stability.
Price, Langford Lovell. Money and Its Relations to Prices. London and New York: Swan Sonnenschein & Co., Limited, 1896.
A collection of lectures delivered by the author, who was the Newmarch Lecturer in Statistics at University College, London.
Taussig, Frank William. The Silver Situation in the United States. New York: G.P. Putnam's Sons, 1896.
Intricate exploration of silver standard, the use of gold, bimetallism, and the possible outcomes of the world economy.
Walker, Francis Amasa. International Bimetallism. New York: Henry Holt and Company, 1896.
—— Money. New York: Henry Holt and Company, 1883.
Walker hoped his work would be seen as instructional in dealing with the current economic crisis effectively. He believed restoring silver would alleviate the economic downturn.
Secondary Source Annotated Bibliography
Fels, Rendigs. "American Business Cycles, 1865–79." The American Economic Review 41:3 (1951), 325–349.
Economic history dealing with the Panic of 1873 can be complex and filled with arcane jargon. This is not the case with Rendigs Fels's article, which was later included in his book American Business Cycles (University of North Carolina Press, 1959).
Friedman, Milton. "The Crime of 1873." Journal of Political Economy 98:6 (1990): 1159–1194.
——"Bimetallism Revisited." Journal of Economic Perspectives 4 (1990): 85–104.
The influential economist and former chairman of the Federal Reserve Milton Friedman closely studied the Panic of 1873. While his writing is less accessible, his scholarship and analysis remain sharp.
Glasner, David; Cooley, Thomas F., eds. Business Cycles and Depressions: An Encyclopedia. New York: Garland Publishing, 1997.
The single most comprehensive reference book on cycles and depressions, which offers a fuller treatment, as well as the long-term historical consequences, of many of the economic concepts introduced in this essay.
Lubetkin, M. John. Jay Cooke's Gamble: The Northern Pacific Railroad, the Sioux, and the Panic of 1873. Norman, OK: University of Oklahoma Press, 2006.
Connects events on the American frontier to those on Wall Street.
Unger, Irwin. The Greenback Era: A Social and Political History of American Finance, 1865–1879. New Jersey: Princeton UP, 1964.
Supplies a readable and substantial analysis of the origins and consequences of the crisis.