ID: Bimetallism
When: 1870s-1890s (Specifically, the debate intensified after the Coinage Act of 1873 and culminated in the passage of the Sherman Silver Purchase Act of 1890 and its repeal in 1893)
Who:
- Supporters: Farmers, debtors, silver miners (often associated with the Populist Party)
- Opponents: Bankers, creditors, industrialists (often associated with the Republican Party’s conservative wing)
What:
A monetary system that uses both gold and silver as standards for currency, allowing for the free coinage of both metals at a fixed ratio. The debate centered around the value of silver relative to gold and the implications for the money supply and inflation. The “Crime of ‘73” referred to the discontinuation of the free coinage of silver.
Impact: Why Significant?:
- Economic Instability: Fluctuations in the relative value of silver and gold created economic uncertainty and volatility. Debtors favored bimetallism as it potentially increased the money supply, making it easier to repay debts. Creditors preferred a gold standard for its perceived stability.
- Political Polarization: The bimetallism debate sharply divided the nation along economic and political lines, fueling the rise of the Populist Party and intensifying class conflict. The free silver movement became a major political issue in the 1896 presidential election.
- Sherman Silver Purchase Act (1890): A compromise that increased the amount of silver the government was required to purchase, but did not allow for free coinage. This ultimately exacerbated economic problems and contributed to the Panic of 1893.
- Panic of 1893: A severe economic depression partly attributed to the strain on the gold reserve caused by the Sherman Silver Purchase Act. This led to the Act’s repeal in 1893.
- Gold Standard Act (1900): Officially ended bimetallism and established the gold standard as the sole basis for US currency. This marked a significant victory for the proponents of a stable, gold-backed currency.