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Free Silver
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“”You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.
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| —William Jennings Bryan[1] |
Free Silver was a dubious economic policy promoted by late 19th century populists, most notably William Jennings Bryan. Although the Free Silver Movement promoted something of a "Free Money!!!" scheme, it does get a bad rap in popular history.
How things went down
During the Civil War, Abraham Lincoln took the US off the gold standard to finance the war. In 1873, the Coinage Act (called "The Crime of '73" by the Silverites) put America back on the gold standard, and allowed only the coinage of gold. This was mostly uncontroversial until the Panic of 1873 set in soon after, when a banking crisis driven by a railroad bubble set off what became known as the Long Depression. Because the gold standard was harshly deflationary in nature, debtors got massively screwed over by a substantial drop in prices, especially prices for agricultural products, while the rich saw their gold-based wealth increase in value. This led to the beginnings of the push for the free coinage of silver.
The push for free silver
The call for bimetallism reached its peak with William Jennings Bryan's run on the Democratic ticket in 1896. The Bland-Allison Act of 1878 did allow restricted coinage of silver, however. The campaign became something of a class war between poor Midwestern and Southern farmers on one hand and the banking elite of the Northeast on the other. The Silverites were, naturally, also backed by the silver miners of the West.
It's unclear just exactly what effect Bryan's policy would have had. A completely unrestricted coinage of silver could have flooded the economy with too much money and caused massive inflation, the exact opposite problem that the gold standard was causing. However, in hindsight, it is also clear that there was too little money in the system at the time, keeping many locked in poverty. In any event, a flood of gold from the Klondike Gold Rush and improvements in gold refinery in the early 20th century ended the Free Silver movement.
What history has borne out is that it was essentially one type of economic woo versus another, as commodity-backed money has no relation to the actual output of the economy as a whole. Franklin Roosevelt proved this when he ended the exchangeability of gold and devalued the dollar. In light of this, Free Silver does seem much less ridiculous, as inflation under FDR did have a positive effect. The battle between the Silverites and gold bugs was eventually lost by both sides, as the use of fiat currency advocated by the short-lived Greenback Party would ultimately be adopted.