The Story of Silver

CHAPTER 3 FREE SILVER

WILLIAM JENNINGS BRYAN, A NEBRASKA CONGRESSMAN WHO RAN unsuccessfully three times for the American presidency, made headlines soon after arriving in the capital. The Washington Post reported Bryan’s speech on tariffs in the House of Representatives in March 1892 under the banner “Fame Won in an Hour.”¹ The newspaper ignored the congressman’s detailed attack on protectionism, which would have put its readers to sleep, and focused instead on Bryan’s delivery, his “eloquent words in picturing his thoughts.”² Bryan’s theme was, “We are demanding for the people equal and exact justice to every man, woman, and child. We desire that the laws of the country shall not be made, as they have been, to enable some men to get rich while many get poor.”³

Bryan’s biographer Paxton Hibben expanded on his subject’s way with words: “If anyone knew how to give emotional expression to a practical matter it was William Jennings Bryan.”⁴ But even Bryan’s eloquence failed to sway the electorate in favor of “free silver,” which meant the free and unlimited coinage of silver, the dominant issue in the 1896 presidential campaign between Democrat Bryan and Republican William McKinley. The defeat of William Jennings Bryan buried silver as a monetary standard in the United States, forcing the white metal to battle for price respectability at the dinner table.

Billy Bryan was born in Salem, Illinois, on March 19, 1860, to a frugal mother, Mariah Elizabeth, and a disciplinarian father, Silas, whose religious outlook shadowed the household. Young Bryan recalled, “My parents were quite strict with me and I sometimes considered the boys more fortunate who were given more liberty.”⁵ His father’s favorite quote was from the Book of Proverbs: “Foolishness is bound in the heart of a child; but the rod of correction will drive it from him.” Despite the severity, young Billy idolized his father, a district judge in Marion County, who disciplined himself as well. The Honorable Silas Bryan would interrupt judicial proceedings three time a day, fall to his knees and pray in full view of his courtroom, and then resume deliberations.⁶

Billy Bryan attended court as a young boy, sitting like an obedient puppy on the steps leading up to the bench, watching his father rule. Silas resembled an Old Testament prophet dispensing justice and Billy knew then that he wanted to be a lawyer, although some of his teachers would say otherwise. When he first arrived in school the teacher asked, “ ‘Well, little man, … What do you mean to be when you grow up?’ ‘President of the United States,’ gravely replied Billy Bryan.”⁷ No one could accuse him of not trying.

Bryan grew up on a farm just outside of Salem, a small community in southern Illinois that had more in common with citizens of adjacent Missouri and Kentucky than with Abraham Lincoln’s Illinois. The locals may not have been outright segregationists as in the rural regions of those neighboring states, but they surely believed in the evils of the East Coast banking elite, a prejudice that permeated Bryan’s brain by osmosis. It would bubble forth later in life with complaints like “We simply say to the East take your hands out of our pockets and keep them out.”⁸

Young Billy built a muscular back baling hay on the family farm and then sharpened his tongue in the debating society at Illinois College in Jacksonville. He benefited from a clear baritone voice that commanded attention but usually came in second during debating competitions, a yellow caution sign ignored by the Democratic Party.⁹ When he returned to Salem on vacation and addressed the crowd during a Saturday night rally at the courthouse, the men dressed in their best denim overalls were overheard saying as they left the gathering, “Well, Billy Bryan’s got a nice voice, but he ain’t the man his father was—and never will be.”¹⁰

Bryan learned to support both sides of an issue during his debating days, often taking the unpopular position simply for the sake of argument.¹¹ His life as a politician, which began when he moved to Lincoln, Nebraska, in 1887 after failing to prosper as an Illinois lawyer, benefited from this rhetorical flexibility. Bryan separated his personal preferences from what mattered to his constituents. The Prohibition Party, which had been active in the United States since 1869 and would sponsor a candidate for the presidency in the 1890s, threatened Nebraska’s thriving brewing industry. Bryan personalized his teetotalism during the 1890 congressional elections: “Although I do not touch liquor myself, I do not endorse the prohibition amendment.”¹² He won with support from the brewers, despite a finding by the Nebraska legislature of fraud by the liquor interests.¹³

Soon after arriving in Washington Bryan witnessed the dislocations of the Panic of 1893, including the suspension of almost five hundred banks in the United States, more than ten times the previous decade’s annual average, and causing the bankruptcy of popular rail companies, such as the Union Pacific Railroad and the Atchison, Topeka, & Santa Fe.¹⁴ The unemployment rate of 18% in 1894, combined with falling industrial output and sinking agricultural prices, resembled the conditions of the Great Depression that would prevail some forty years later.¹⁵ In a preview of the 1930s, voters turned their backs on prohibition and towards the money question, whether America should remain on the rigid gold standard, which gave the dollar international credibility, or remonetize silver under Hamilton’s bimetallic system, which would expand U.S. currency and promote easier credit to support the domestic economy.

Bryan knew what to do. He had told a crowded gathering of his constituents in September 1892, “I don’t know anything about free silver. … The people of Nebraska are for free silver and I am for free silver. I will look up the arguments later.”¹⁶ It sounded good and got a laugh, but Bryan had already studied the silver coinage question when he was first elected to Congress in 1890, reading popular pamphlets issued by the Bimetallic League and wading through a dense academic critique by Professor J. Laurence Laughlin of the University of Chicago.¹⁷ Bryan knew all the arguments and had adopted the free silver motto long before his public quip, but he was a ham and could not resist.

William Jennings Bryan not only favored the restoration of bimetallism in the United States, but he also wanted free and unlimited coinage of silver at the pre-1873 ratio of 16 to 1, which meant sixteen ounces of silver would be equivalent in value to an ounce of gold.¹⁸ In 1894 the price of silver averaged 64¢ an ounce, so with gold fixed at $20.67 per ounce by the U.S. Treasury, the prevailing gold to silver price ratio was 32:1, making an ounce of gold worth thirty-two ounces of silver.¹⁹ Restoring the 16 to 1 ratio meant raising the price of silver through unlimited purchases by the Treasury until it reached $1.29, the mint price established in the Act of 1792, which would have enriched mine owners and diluted the currency according to Bryan’s critics. The Chicago Tribune raised the obvious question: “Silver mining has never been one of the interests of Nebraska. It has raised wheat, corn, hogs, sheep, and some statesmen like Bryan, who are sillier and ‘absurder’ than sheep, but it has produced no silver. Why then should Nebraskans run their legs off to give the miners to the west of them more for their metal than it is worth in the world’s markets?”²⁰

The congressman’s constituents favored the free coinage of silver because they believed more circulating currency would bring higher prices for wheat, corn, hogs, and sheep, not to mention higher prices for their heavily mortgaged farmlands, which were threatened with foreclosure. The New York Times reported that “the most powerful argument [for silver] … is wheat at 35¢ per bushel on Kansas farms. At this price no Kansas farmer can get either a gold or a silver dollar or a day’s labor to say nothing of [paying] interest on either farm mortgage[s] or cost of machinery.”²¹ The superintendent of the New York State Banking Department had criticized investments by “some of the savings banks of the eastern states” in “western farm mortgages” because “the market value of real estate … has at times depreciated to such an extent as to induce borrowers to surrender their holdings in preference to paying the mortgage loans.”²²

Bryan supported silver for the same reason that it dominated gold as the medium of exchange in ancient times, because the white metal was valuable but sufficiently abundant to support growing economic activity. Silver was a softer and more elastic currency than gold. Throughout history the supply of silver fed the sea of commerce like an underground spring, keeping prices and production afloat. Gold had been too scarce to serve the masses until the discoveries of the 1850s, which led to the worldwide switch to the yellow metal in 1873. But gold failed to flow as expected, and the resulting currency shortage in America sank prices. The burden of deflation fell primarily on debtors, farmers, and small businessmen who had to repay fixed dollar obligations like mortgages and bank loans with lower revenues. A typical Bryan supporter, Louis Kohnstamm, who ran a small meat market in New York City, commented, “There is not money enough in circulation, and unlimited issue of silver dollars will throw more money into business, and that’s what I want.”²³

Bryan’s pro-silver sentiments were most popular west of the Mississippi but reflected more than just a hometown bias. He thought that the power to create money belonged to the government and “can no more with safety be delegated to private individuals than we could afford to delegate to private individuals the power to make penal statutes or levy taxes.”²⁴ This may sound obvious today but back then America had no central bank to manage its currency and much of what passed as money were national bank notes, direct obligations of privately owned commercial banks, such as the Bank of California, the Bank of New York, and the First National Bank of Birmingham, Alabama. Bryan acknowledged the creditworthiness of bank currency, which was backed by U.S. government bonds, but he wanted the government to control the quantity in circulation to promote economic growth. He believed “the great thing desirable in a dollar is stability” and the free coinage of silver would promote that goal.²⁵ Carter Glass, a delegate to the Democratic convention in 1896, and a future congressman from Virginia who would sponsor the legislation in 1913 to create the Federal Reserve System, America’s central bank, supported the presidential candidacy of William Jennings Bryan.²⁶ Bryan would return the favor by publicly supporting Glass’s currency bill creating the Fed.

Resurrecting silver to full monetary status was not the only radical proposal Bryan supported at the Democratic Convention in Chicago in July 1896. He also favored an income tax, direct election by voters of U.S. senators, and women’s suffrage; radical ideas that branded him a socialist at best and an anarchist at worst but would soon become conventional wisdom. He was ahead of his time, like Barry Goldwater, the Republican Party’s presidential candidate in 1964 whose conservative stance on welfare and defense led to Democrat Lyndon Johnson’s landslide victory, but whose ideas triumphed a generation later with Ronald Reagan. Bryan and Goldwater would surely recoil at their shared fate.

Bryan arrived at the Democratic convention without a national campaign organization but his famous “Cross of Gold” speech on July 9, 1896, turned the delegates into a volunteer army of true believers. Bryan presented himself as a humble citizen “clad in the armor of a righteous cause,” and said that “the money question was the paramount issue of the hour.”²⁷ He claimed that free coinage of silver would promote prosperity for the common man, mark U.S. independence from the gold standard countries of Europe, and “is the issue of 1776 over again.”²⁸ His closing plea to “not crucify mankind upon a Cross of Gold” added religious thunder to the revolutionary spirit. An eerie silence greeted Bryan’s final words in the convention hall, as though a lightning bolt had stunned the audience, and then a boisterous celebration exploded. Cheering delegates rose to their feet, threw hats, umbrellas, and newspapers into the air, while two sturdy members of the Georgia delegation raced across the floor, lifted the bulky six-foot Bryan on their shoulders, and paraded him through the hall.²⁹ It was as though he had just hit a walk-off home run to win the World Series.

The emotional outburst to bimetallism, with both gold and silver serving as monetary metals, a topic usually as exciting as a debate over the Malthusian Theory of Population, lay in Bryan’s oratorical skills and in the growing resentment to deflation following the Crime of 1873. Bryan had refined his message through repetition, like the preparation of a professional athlete, and had used the Cross of Gold metaphor during an earlier speech in the House of Representatives.³⁰ No one took notice back then, but his message resonated more forcefully with the ravages of the depression that began in 1893. Unemployment was still 14% in the election year of 1896, down from 18% two years earlier but higher than anything America would experience until 1931 during the Great Depression.³¹

And yet he lost the election.

William McKinley defeated William Jennings Bryan for many reasons. Republican expenditures were fourteen times bigger than the Democrats even though McKinley never left his front porch during the campaign, while Bryan crisscrossed the country like a travelling salesman.³² McKinley, aged fifty-three, was an experienced executive as governor of Ohio and had served in the Union Army during the Civil War, while Bryan, aged thirty-six, had served two terms as a congressman and was holding a rattle rather than a rifle during the War Between the States. Harper’s Weekly magazine lampooned the contrast in a cartoon entitled “The Deadly Parallel,” showing a soldier in full dress facing a nearly naked toddler.³³ McKinley’s carefully scripted speeches never missed their mark while Bryan’s impromptu remarks often gave the opposition explosive ammunition. The Nebraska congressman explained that he launched his campaign in New York’s Madison Square Garden so that “our cause might be presented first in the heart of what now seems to be the enemy’s country.”³⁴ Newspapers skewered Bryan on that final divisive phrase, helping the Republicans win every state in the Northeast as well as four southern border states—Maryland, Kentucky, West Virginia, and Delaware—that had been Democratic strongholds since the Civil War.³⁵

But the man who orchestrated McKinley’s victory, campaign manager Mark Hanna, an Ohio millionaire businessman with interests in coal, steel, and railroads, said it best early in the campaign: “[Bryan’s] talking silver all the time and that’s where we’ve got him.”³⁶ Newspapers throughout the country denigrated Bryan’s obsession with the free coinage of silver, running stories promoting a sound currency backed by gold rather than silver dollars filled with bullion worth half its face value. The New York Times quoted an immigrant cabinet maker, M.E. Thoesen from New York City, “I am for gold through and through and all the time and do not want any fifty-three-cent dollars. What good would such money [do] to the workman?”³⁷ The Washington Post followed up: “These jokes about the 53-cent dollar won’t go any more. It’s only a 50-cent dollar now. The price of silver has dropped.”³⁸ Senator James K. Jones of Arkansas, chairman of the Democratic National Committee, was not amused: “The thing which hurts us most is the constant statement that free silver means a fifty-cent dollar.” ³⁹

The Republican arithmetic was right. Silver sold for an average of 63.5¢ an ounce in 1896 and the silver dollar contained threequarters of an ounce of the white metal, so the silver dollar was worth about 49¢ of bullion.⁴⁰ But Bryan should have said that the value of a dollar depends on how much it can buy and not on its intrinsic value, an obvious fact today in a world of fiat currency, where dollars are worth more than the paper they are printed on because the government promises to keep them scarce. But back then almost everyone believed, and many still do, that making the currency convertible into a precious metal keeps the government honest, ensuring that it will not debase the currency by printing too much money and causing inflation. Concern over the intrinsic value of money may seem like a medieval superstition similar to ghosts and goblins, but John Maynard Keynes, who considered the gold standard a barbarous relic, worried at the start of the Great War that a break with gold would undermine the credibility of the British pound.⁴¹

Bryan answered his fifty-cent critics by saying “free and unlimited coinage by the United States alone will raise the bullion value of silver to its coinage value and thus make silver bullion worth $1.29 per ounce.”⁴² And he invoked the law of supply and demand for support: “Any purchaser who stands ready to take the entire supply of any given article at a certain price can prevent that article from falling below that price. So the Government can fix a price for gold and silver by creating a demand greater than the supply.”⁴³ Bryan was right about purchases and sales by the mint setting the price of precious metals and he added an analogy about eggs for the common folk: “If any man in this community would offer to buy all the eggs produced at 25 cents a dozen … nobody would sell eggs for less, no matter what the cost of production, whether one cent or five cents a dozen. So with silver.”⁴⁴

Students at the Metropolitan Business College in downtown Chicago tossed eggs at a Bryan campaign parade as it passed the corner of Michigan Avenue and Monroe Street but that was a minor indignity compared with the splatter greeting Bryan’s metaphor in the press.⁴⁵ The Chicago Daily Tribune offered the following narrative:⁴⁶ “Let us see what would happen with the eggs. First, everybody would want to sell eggs. … Second, eggs would be sent in from Mexico, from Canada, and from every country which had eggs. … Third, people could not afford to eat eggs kept so dear. … Fourth, … the man [buying the eggs] would have his hands full and his barns full of rotten eggs. … The man would be bankrupt long before he bought all the eggs. [And] any government would be bankrupt long before it bought all the silver. The eggs would rot. The ‘dollar’ would be rotten too.”

The eggs analogy laid bare the consequences of Bryan’s proposal to raise the price of silver to $1.29 per ounce from the 63.5¢ prevailing in the bullion market in 1896. Mexico and Canada would have shipped silver at its inflated value to the United States in exchange for gold. And so would every European country on the gold standard, which included Britain, France, and Germany. Bryan had touted the support of the Iron Chancellor, Prince Otto von Bismarck, to bolster his campaign for free silver until the press headlined Bismarck’s ulterior motive: to dump Germany’s store of pre-1870 silver at the U.S. Mint.⁴⁷ Recall that Bismarck had triggered the run on silver by adopting the gold standard after the Franco-Prussian War ended in 1871.

Bryan’s campaign to coin silver at the pre-1873 ratio of 16 to 1 would have increased the domestic stock of money in the United States and promoted easier credit, a desirable outcome in the 1870s, when America faced decades of deflation, but was counterproductive in 1896, when gold became more plentiful and fueled an emerging inflationary spiral.⁴⁸ His timing was bad, like selling umbrellas during a drought, and the economic resurgence kept the Democrats out of the White House until Woodrow Wilson was elected in 1912. Bryan served as Wilson’s secretary of state between 1913 and 1915, which was the closest he ever got to being president. At that time the secretary of state was second in line, after the vice president, to succeed an incapacitated or impeached president.⁴⁹

During the final years of his life, Bryan applied the righteous fervor he felt for silver to fighting the teaching of Charles Darwin’s theory of evolution. His most famous confrontation was the 1925 battle with prominent lawyer Clarence Darrow, who defended John Thomas Scopes, a substitute science teacher accused of violating a Tennessee law forbidding the teaching of evolution in public schools.⁵⁰ Bryan’s prosecution brought a guilty verdict in the Scopes Trial, fictionalized in the hit 1960 movie Inherit the Wind. William Jennings Bryan died less than a week after the trial ended and did not live to see the verdict overturned by the State Supreme Court. His death may have been merciful from that perspective, but he also never lived to see the resurrection of his 16 to 1 war cry for silver during the Great Depression and its influence on master politician Franklin Delano Roosevelt.