Presidents and the Economy: William McKinley and the Gold Standard Election
In January 1791, Treasury Secretary Alexander Hamilton set the first policy for US currency. At the time, there was no mint in the United States and foreign coins were used by Americans. Hamilton proposed a monetary system based on bimetallism, that is based on two metals: gold and silver. Under the new system, the new US currency would be equal to a set amount of gold, or a larger amount of silver. At the time, gold was worth about 15 times as much as silver. Hamilton understood that adjustment might be needed from time to time as the value of these precious metal fluctuated.
Hamilton proposed the establishment of a mint, where citizens could present gold or silver, and receive it back, struck into money in coin form. On April 2, 1792, Congress passed the Mint Act of 1792. This legislation defined a unit of value or currency for the new nation, to be known as a dollar. A dollar was defined to be equal to 24.75 grains (1.604 g) of gold, or alternatively, 371.25 grains (24.057 g) of silver, establishing of ratio of value between gold and silver of 15 to 1.
In the early 1800s century, gold became more valuable due to the Napoleonic Wars. United States gold coins to be worth more as bullion (i.e. as the metal itself) than as money, and they began to vanish from circulation. In 1830, Treasury Secretary Samuel Ingham proposed increasing the ratio between gold and silver in US currency. In 1834 Congress changing the gold/silver ratio to 16.002:1, which made it uneconomic to export either US gold or silver coins. But when silver prices rose because of the California Gold Rush, silver coinage was worth more than its face value, and silver coins now began to be exported overseas for melting. Since silver was now undervalued at the Mint, little of it was presented for striking into money.
The Coinage Act of 1873 eliminated the standard silver dollar and repealed the practice of allowing silver bullion to be presented to the Mint and returned in the form of circulating money. In passing the Coinage Act, Congress eliminated bimetallism.
During the economic chaos of the Panic of 1873, the price of silver dropped significantly. The Mint would accept no silver for striking into legal tender. Silver producers complained, and many Americans believed that a return to bimetallism was needed so that the nation achieve and maintain prosperity. They called for the return to pre-1873 laws, which would require the Mint to take all the silver offered it and return it, struck into silver dollars. Bimetallists believed that this would increase the nation's prosperity, while critics believed that the inflation which would follow such a policy.
The issue came to a head in the election of 1896. Before the Republican convention, William McKinley had stadled the fence on the issue, but he ultimately endorsed the gold standard. The nation was still undergoing bad economic times since the panic of 1893, which strengthened the hand of silver advocates. The issue divided the Democratic Party with President Grover Cleveland firmly supported the gold standard, but an increasing number of rural Democrats wanting silver, especially in the South and West. The silverites took control of the 1896 Democratic National Convention and chose William Jennings Bryan for president. Bryan’s financial radicalism shocked financiers, who thought his inflationary program would ruin the economy. William McKinley's campaign manager Mark Hanna approached them for support to win the election, and they gave $3.5 million to McKinley's campaign.
Bryan’s campaign ran on a budget of about $500,000. Bryan decided on a whistle-stop political tour by train. Hanna urged McKinley to match Bryan’s tour with one of his own, but instead. McKinley remained at home in Canton and let the people to come to him. McKinley’s ‘Front Porch Campaign’ proved very successful. He made himself available to the public every day except Sunday, receiving delegations from the front porch of his home. The railroads subsidized the visitors with low travel rates. The Cleveland Plain Dealer, a paper that supported Bryan, complained that going to Canton had been made “cheaper than staying at home”.
The battleground proved to be the Midwest. Bryan was expected to win the South and most of the West and the Northeast was considered safe for McKinley. As the campaign wore on, public support for silver receded, and McKinley began to emphasize the tariff issue as a means of protecting workers who might otherwise vote for Bryan. By the end of September, the Republicans had discontinued printing campaign material on the silver issue, and concentrated on the tariff question.
On election day, November 3, 1896, McKinley won the entire Northeast and Midwest. He won 51% of the vote. Bryan had concentrated entirely on the silver issue, and had not appealed to urban workers. Voters in cities supported McKinley. He won the electoral college by a margin of 271 to 176. McKinley’s view of building American industry through protective tariffs and a dollar based on gold proved to be a winning strategy.
Hamilton proposed the establishment of a mint, where citizens could present gold or silver, and receive it back, struck into money in coin form. On April 2, 1792, Congress passed the Mint Act of 1792. This legislation defined a unit of value or currency for the new nation, to be known as a dollar. A dollar was defined to be equal to 24.75 grains (1.604 g) of gold, or alternatively, 371.25 grains (24.057 g) of silver, establishing of ratio of value between gold and silver of 15 to 1.
In the early 1800s century, gold became more valuable due to the Napoleonic Wars. United States gold coins to be worth more as bullion (i.e. as the metal itself) than as money, and they began to vanish from circulation. In 1830, Treasury Secretary Samuel Ingham proposed increasing the ratio between gold and silver in US currency. In 1834 Congress changing the gold/silver ratio to 16.002:1, which made it uneconomic to export either US gold or silver coins. But when silver prices rose because of the California Gold Rush, silver coinage was worth more than its face value, and silver coins now began to be exported overseas for melting. Since silver was now undervalued at the Mint, little of it was presented for striking into money.
The Coinage Act of 1873 eliminated the standard silver dollar and repealed the practice of allowing silver bullion to be presented to the Mint and returned in the form of circulating money. In passing the Coinage Act, Congress eliminated bimetallism.
During the economic chaos of the Panic of 1873, the price of silver dropped significantly. The Mint would accept no silver for striking into legal tender. Silver producers complained, and many Americans believed that a return to bimetallism was needed so that the nation achieve and maintain prosperity. They called for the return to pre-1873 laws, which would require the Mint to take all the silver offered it and return it, struck into silver dollars. Bimetallists believed that this would increase the nation's prosperity, while critics believed that the inflation which would follow such a policy.
The issue came to a head in the election of 1896. Before the Republican convention, William McKinley had stadled the fence on the issue, but he ultimately endorsed the gold standard. The nation was still undergoing bad economic times since the panic of 1893, which strengthened the hand of silver advocates. The issue divided the Democratic Party with President Grover Cleveland firmly supported the gold standard, but an increasing number of rural Democrats wanting silver, especially in the South and West. The silverites took control of the 1896 Democratic National Convention and chose William Jennings Bryan for president. Bryan’s financial radicalism shocked financiers, who thought his inflationary program would ruin the economy. William McKinley's campaign manager Mark Hanna approached them for support to win the election, and they gave $3.5 million to McKinley's campaign.
Bryan’s campaign ran on a budget of about $500,000. Bryan decided on a whistle-stop political tour by train. Hanna urged McKinley to match Bryan’s tour with one of his own, but instead. McKinley remained at home in Canton and let the people to come to him. McKinley’s ‘Front Porch Campaign’ proved very successful. He made himself available to the public every day except Sunday, receiving delegations from the front porch of his home. The railroads subsidized the visitors with low travel rates. The Cleveland Plain Dealer, a paper that supported Bryan, complained that going to Canton had been made “cheaper than staying at home”.
The battleground proved to be the Midwest. Bryan was expected to win the South and most of the West and the Northeast was considered safe for McKinley. As the campaign wore on, public support for silver receded, and McKinley began to emphasize the tariff issue as a means of protecting workers who might otherwise vote for Bryan. By the end of September, the Republicans had discontinued printing campaign material on the silver issue, and concentrated on the tariff question.
On election day, November 3, 1896, McKinley won the entire Northeast and Midwest. He won 51% of the vote. Bryan had concentrated entirely on the silver issue, and had not appealed to urban workers. Voters in cities supported McKinley. He won the electoral college by a margin of 271 to 176. McKinley’s view of building American industry through protective tariffs and a dollar based on gold proved to be a winning strategy.