Populism and Bimetallism
What was populism? • Late 19 th century political movement • For the common man and against wealthy industrialists and bankers • Supported heavily by farmers (as well as many Democrats) • Pushed for bimetallism: the use of gold and silver in the money supply
A little bit about farming in the 1880 s… • Many Americans were lured to the West by the thought of free land romantic ideas. • In fact, for many farmers, it sucked!
A little bit about farming in the 1880 s… (cont) The 1880 s were hard times for farmers: • industrialization of farming • high railroad shipping prices • low prices for crops • plagues of grasshoppers • terrible droughts and blizzards
By the end of the 1880 s many farmers were desperate for help! They were in debt, crop prices were lower and mother mature was punishing them.
The answer: bimetallism • Many farmers began to rally together behind an idea called bimetallism. • Bimetallism was the idea that the government should use both silver and gold to back-up its money.
How would bimetallism help?
Gold is used to back-up money • Yes, at one point in time there could only be as much money printed as the government had gold in some piggy bank. For every dollar printed… …there had to be $1 worth of gold in the government’s piggy bank.
If there isn’t much gold Then you can’t print as much money The fewer dollars printed, the more they are worth! • The economic rule of scarcity: The less of something you have the more valuable it is. • If a dollar is worth more, then you can buy more with it. • To a farmer, that means that his customers can buy more corn for $1 than they used to--or that the price of corn has gone down. • Notice, however, that if you owe $20, 000 and the value of money has risen, then you’re trying to pay off the same loan with less money. • When the value of money goes up and the prices of goods and services goes down, it is called deflation.
Deflation was a doublewhammy for farmers… Many of them had loans to pay off while the prices of their crops were going down. How do you pay your bills if you’re making half as much as you used to?
Again, the answer: bimetallism • Many farmers began to rally together behind an idea called bimetallism. • Bimetallism was the idea that the government should use both silver and gold to back-up its money.
If there isn’t much gold, add silver Then you can print more money The more dollars printed, the less they are worth! • Economic rule of scarcity: The more of something you have the less valuable it is. • If a dollar is worth less, then you can buy less with it. • To a farmer, that means that his customers can buy less corn for $1 than they used to--or that the price of corn has gone up. • Notice, however, that if you owe $20, 000 and the value of money has gone down, then it’s easier to get money and easier to pay off your loan. • When the value of money goes down and the prices of goods and services goes up, it is called inflation.
Inflation was good for farmers… Many of them had loans to pay off. Inflation means crop prices would go up making it easier to pay off loans. How do you pay your bills if you’re making twice as much as you used to? Easily!
So… Farmers supported backing up the dollar with both gold and silver (bimetallism). This would allow the government to print more money. The more money printed the less valuable It is. When money is worth less, then goods and services are worth more. This is called inflation. Inflation would allow crop prices to go up and give farmers more money to pay off their loans.
Sounds like a plan. Call up the President and tell him to make bimetallism happen. The country’s farmers are in need of help! Not so easy!
Inflation may be good for farmers whose crops are devalued, but is it good for everybody? • Do you want to pay more for corn? Or any other product for that matter? • Neither did many Americans. • Rich people especially. Inflation meant that their money was worth less. Would you want to see the money in your bank account worth less because of inflation?
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