Interesting Coin Cartoon From 1896 Regarding Silver US Dollars

Is that the Donkey Goose that laid the golden egg? Again the symbolism/humor/satire escapes me.

Until 1853 we had "free coinage" of gold and silver. Anyone could take their gold or silver to the mint and if it was of suitable fineness, have it made into coins free of charge. (if the fineness wasn't suitable you would have a modest fee for parting or refining) After 1853 and the reduction in the weight of the silver coins you could still sell your silver to the government but the seigniorage profits from turning the bullion into coins went to the government. There was no longer free coinage of silver. There was still free coinage of gold until 1933.



The donkey head represents the Democratic party which is attached to the "wild goose chase" of the populist movement. Note the POP on the goose. Byran was officially a Democrat, but his policies drew heavily from the Populist movement.

The term "free silver" in the 1890's had to do with the Sherman Act, which required the government to buy massive amounts of silver and coin it, mostly into Morgan dollars. The redemption of these silver dollars for gold coin is what touched off the run on the government's gold supply and caused the suspension of the Act.

It may be coincidental, but the coinage of gold was very high in 1893-1894 (especially Philadelphia), at the same time the coinage of Morgan dollars was very low.

Frank Baum may not have been intentional about it, but his Wizard of Oz looks and blusters like Bryan, especially in the movie. At the time Baum wrote the book Bryan was the perennial candidate who never won. The Yellow Brick Road had nothing to do with gold - it was the color of the street bricks in Holland MI where Baum wrote much of the book.

The 1896 election was held while America was in the deepest depression the country experienced. Other depressions were longer, but none were as steep.

The 1892-1896 depression was touched off by several factors. The "last straw" was the collapse of Britain's Baring Brothers Bank. (Yes, the same Baring Brothers that touched off the 2008-2010 recession.) Baring Brothers had invested disproportionate amounts of money in Argentina, evidently believing that a country with a capitol that looked European had a European economy. It didn't, of course, and the wave of loan defaults pulled Baring Brothers under. The British government bailed out Baring Brothers, but on the condition that Baring Brothers restrict lending to Britain proper. That saved the British economy, but pulled Baring Brothers out of the American financial market at a crucial time, and caused a liquidity crisis. Baring backstopped many of the western banks, which quickly failed.

Unemployment topped 44% in Michigan. Some cities had almost incomprehensible unemployment. Denver was at least 60%, and San Francisco somewhere around 80%, although accurate statistics are almost impossible to find. Denver had 39 banks at the start of March 1893, and only 3 at the end of April 1893. Over half of the businesses in Denver failed before summer.

The "free silver" movement sought to inflate the money supply, to expand the economy and allow western interests and farmers to repay loans with cheaper dollars. The counter argument was to return the country to the gold standard, to shore up the dollar for trade and to allow those with money to invest in rebuilding the economy. Functionally, it is the debate we still see between increased spending and decreased taxes. At its core, the debate was between two views of which of two evils should come first: inflation or depression. The prevailing 1896 argument was that a depression preceding inflation would still allow investors to rebuild the economy, but a depression following inflation would leave no one able to start a recovery.

For collectors, the 1892-1896 coinage figures show both aspects of the debate. These years had some of the highest and some of the lowest mintage figures at the same time.

Some of the historical newspapers from the era make fascinating reading.

It wasn't the redemption of the silver dollars that cause the gold crisis, the silver dollars never really left the vaults after they were struck. The problem came from the Series of 1890 "Coin Notes" that were used to pay for the silver. They were redeemable in either gold or silver. But due to the falling value of silver the notes could be redeemed for gold that was worth significantly more the silver which was sold. (hundreds of millions of dollars in coin notes were paid out for that silver but by 1896 only about 2 million was left unredeemed, mostly for gold.) The drain on the US gold reserves left the government in the embarrasing situation that they had obligations coming due that HAD to be paid in gold, and they didn't have the gold to cover them. Let alone other future obligations. The government was seriously in the position of having to default on their bills.