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Distant Authority Monetary Policy & the Tariff
Today’s Agenda • • Review Distant Authority Slide Show Homework Study for Unit Test (Thursday!!!)
Review • Describe the Gilded Age • Describe the problems farmers had during the 1890 s. • Who were the Grangers? • What is the significance of Munn v. Illinois? • What is significant about the Wabash case? • Describe the problems labor had during the Gilded Age.
The Gilded Age
Today you will be able to: • Identify what a protective tariff is, who would favor it, and why? • Identify differences between Bryan and Mc. Kinley Describe the difference between a debtor and creditor and analyze what each would have thought about the money supply. • Explain what a “tight” and “loose” money supply is. • Identify William Jennings Bryan and analyze his “Cross of Gold” speech. • Explain and analyze the results of the election of 1896.
Coxey’s Army Presentation
What happened to the US economy in 1893? • Panic of 1893 – 20% unemployment – Cleveland= laissez faire • Jacob S. Coxey – businessman led march of 500 people from Ohio to Washington – Wanted to call attention to high rate of unemployment – Arrested for walking of grass What does silver have to do with the economy?
Panic of 1893 & Coxey’s Army.
Describe America’s financial policy in the 1890 s. • Tight money policy – U. S. ’s money supply based on Gold – Very limited (tight) supply – Hurt farmers most • Food prices had dropped • Mortgage payments remained the same
What did the farmers want? • Bi-metalism & a loose money policy – Dollars backed by gold and silver – Would increase supply of money – Make money cheaper – Allow them to pay off their debts
Which money policy did eastern bankers favor? • Tight or Gold only money policy • Why? • Less money in supply means that its worth more (has more buying power) • Farmers owed them a “fixed” amount of cash (ex. $1000) • $1000 gets them more if less of it is available
What was Grover Cleveland’s attitude towards the economy?
What other issue affected farmers and laborers? • Tariffs
What is a tariff? A tax on imported goods. Imported goods= products made in other countries
What kinds of tariffs are there? • Protective – intended to keep identified foreign products out of our country so that Americans will “Buy American!” • Revenue – designed to raise money for the country – calculated to be small enough so as not to curtail trade
Revenue Tariff Example: The United States imposes a five percent tariff on foreign wine. Pre tariff price: $20. 00 bottle After tariff price: $21. 00 bottle Result: Demand will probably not drop much for the product and the imposing country will raise funds.
Protective Tariff Example An artificial increase in foreign prices Foreign Steel Cost With 30% Tariff $100 per ton $130 per ton Domestic Steel Cost $120 per ton US Sales Foreign Sales
How does a tariff work? Farmers can buy an American tractor for $100 and English tractor for $130 A fledgling American factory makes tractors to sell for $100 each The US Gov. places a $40 fee (tariff) on each English tractor Tractors are transported to America. A steel mill in England makes tractors to sell for $90 each
How will foreign nations react to a protective tariff? • retaliate by imposing tariffs on our exports. • IE. Farm products
Who is hurt and helped by a protective tariff? Hurt Helped Consumers Owners of Protected Industries Exporters Workers in Protected Industries
How did protective tariffs hurt farmers? • Made farm products more expensive overseas • Cut their sales in other nations
Election of 1896 Presentation
Describe the Election of 1896. • Big Issues: – Bi-metalism – Tariff • Candidates – William Jennings Bryan • Great orator • Supported by Democrats and Populists, farmers • Tireless campaigner – William Mc. Kinley • Conservative • A friend to big business • Never left front porch
What does Bryan mean by a “cross of gold? ” • Burn down your cites 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…you shall not crucify mankind upon a cross of gold. ” • Gold only money policy is crushing (crucifying) the farmers