econ 2200 - Study Guide - Test 3

econ 2200 - Study Guide - Test 3 - ECON 2200-Moore Study...

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ECON 2200-Moore Study Guide for Test 3 1. Why did proponents of the “Free Silver” movement call the Coinage Act of 1873 “a crime?” Describe the market and mint values of silver in 1873. What happened to the silver market after 1874? Describe the market and mint values of silver after 1874. -Coinage act of 1873 -no provision for minting silver coins( except for some small denomination silver coins) -silver was not circulating as money in 1873( market val > mint val) -coinage act not controversial at the time of passage. After 1874, supply of silver increased(discoveries of silver in U.S. western mines & European countries converting to gold standard) -silver was now overvalued at the mint, but the treasury was not buying/minting silver -silver producers joined w/ “reflationists” in south and west -opposed “demonetization “ of silver -wanted coinage of silver at old mint ratio 2. What groups tended to support the “sound money” position? Explain their position. Sound money advocates Republicans, North & East; urban 3. What groups tended to support the Free Silver Movement, and what did they want the government to do? Describe the legislative response of Congress (first in 1878, and later in 1890). To what extent were Free Silver proponents satisfied by this legislation? Use a graph to illustrate changes in the silver bullion market in the 1870s and 1880s. “Free Silver Movement” Democrats, South & West; rural -opposed “demonetization “ of silver -wanted coinage of silver at old mint ratio -Bland Allison Act of 1878 -limping monetary standard was a compromise -limited coinage of silver -treasury to purchase $2-4 million of silver purchased per month at market price Price of silver continued to fall despite treasury purchases Supply increase was greater than demand increase Sherman silver purchase act of 1890 -treasury’s monthly purchase increased to 4.5 million ounces(roughly double) at market price -sellers received special treasury notes -legal tender -redeemable in gold or silver at discretion of treasury -preserved defacto gold standard but -market price of silver continued to fall (supply of silver inc more than demand) -treasury gold reserves declined
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4. Why was the Sherman Silver Purchase Act repealed? (Describe the concerns of “sound money” advocates, including President Cleveland.) -sound money advocated and treasury officials feared that they would be forced to suspend specie payment due to inadequate gold reserves -1893: Sherman silver purchase act repealed 5. While the aggregate price level fell for most of the postbellum period, after 1896 the price level began to increase. What caused this change in the movement of prices? (Use the QTM to support your answer.) How did these events impact the Free Silver movement? -After 1896 gold flowed into the U.S. from favorable trade surplus and new discoveries of gold in S.Africa
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econ 2200 - Study Guide - Test 3 - ECON 2200-Moore Study...

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