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lect2 - History of U.S Mogfitarx Standard M&B Ch 3 O...

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Unformatted text preview: History of U.S. Mogfitarx Standard M&B Ch. 3 O Colonial Silver Standard O Revolutionarx ngerinflation p/IJM O Bimetallic Standard, 1792—1861 A De Faoto Silver: 1792 = 1§§4 De Facto Gold, 1834 = 1861 '0 Greenback Standard, 1862-1879 ‘abjuve 0 Gold Standard, 1879-1933. Bimetallism Movement, 1896, 1900 Q Federal Reserve Note Standard, 1933épresent. b—‘w 5m Colonial Silver Standard m Spanish Dollar ( eso) = 9 reaIes lg Bits). Originally Hapsburg Thaler Ps - $ 2 peso sign Ps"fr‘>$ $’§‘:U-S- Eevolutionary Hyperinflation a [77" ’3 Paper Continental Dollars become worthless. Figure 1. SiIVer Dollars Bimetallic Standard, 1792-1861 0 Silver coinage: 1 US Dollar 1.293 $1.293 / troy oz = mint price of silver. troy oz pure silver 1/2, 1/4, 1/10, 1/20 $ coins with Erogortionate silver. Coins only valid at actual weight. Free and Unlimited coinage. 0 Gold coinage: 1 gold eagle E l :39 troy o2 pure gold. double, 1/2, 1/4 eagle coins with proportionate gold. Free and Unlimited coinage. 1 gold eagle legal tender for 10 silver dollars and vice-versa. (Otherwise dual monetary standard). Mint price of gold = $19.39/oz. Original mint ratio = 19.5§:I.§93 2 15:1. — a» an:- dJ/rc 54.4.4 0 Ir.-/ M ’15 jm 494/ Sgrt/er FM-awws (nayes eh- (Ash/[jn-l.) /6-& ave“: ’3'... 23.3 3"“ 0;:714-‘5 W Gresham's Law a If two forms of money are both legal tender, at a mint ratio that differs from the market price ratio, the overvalued money will tend to drive the undervalue money out of circulation. _l- J/‘fjlatfi- O‘F‘ Gresham's Law. De Facto Silver Standard, 1792 - 1834 Before 1834:_US mint ratio = 15:1 Eugene miLmiinsulEzrml. Gold —+ Europe, Silver —+ US. US on de lure bimetalligugtaggarg, but de facto monometallic silver std. —._..—._—-.q-— .. ‘ Favored 553k notes for over $1. De Facto Gold Stan * - 1834: Mint price of gold raiaed to SQQ.67, Silver uncfiEfifiEd Andrew Jackson After 1834:_US mint ratio = 1631 Silver -+ Europe, Gold -+ US. US still de lure bimetallic, but now de facto on monometa11i§#ggid std. small cha ' disa ared. 5/ 622%? Clfivp-p-e 1853: Subsidiary silver coinage. "" " SiIver 3 éEITI_?fiII weIEHE, but did not circulate. Silver $.50, .25, .10 minted with 93% of full silver content. Silver 1/2 dime replaced by nickel. Subsidiary silver not free or unlimited. Circulated to 1295-— ,J; Snfita’;efiérfl3nj7£ Silver drives geld cut of Chart 1. Grosnam's Law, before 1834: .________d_ U.S. Gold drives silver out of after 1834: Chart 2. Gresham's Law, ___________ ‘U.s. Federal Reserve Note Standard, 1933-present. W Federal Reserve Act 1913 Federal Reserve Notes 1914 - Originally obligations to pay gold coin or gold certificates on demand. 40% gold reserves, 60+% gold-denominated securities. Banking crisis 1930-33. March 1933 banking holiday ((0 don't") Gold, gold certificates called in, replaced by FR Notes FR Note made Legal Tagger 1935: s devalued to i oz gold. ($35.00/oz). 35 Gold possession criminal for US citizens until 1975. Gold important internationally until 1968. r_______ 1963: Silver certificates disappeared. 1965: Subsidiary silver coinage replaced by copper—nickel alloy coins. 1968: int'l convertibility "temporarily" suspended. 1971, 1973: Official Gold price -+ $38/oz, $42.22/oz, but a fiction. 1973: int'l convertibility permanently suspended. Greenback Standard, 1862—1879 Civil War 1861-1865. Unitedm§tates Edges (greenbacks) Conversion suspended 12/31/61 Made legal tender 2/62. Ultimately, $1 gold piece T $2.85 paper, even 1¢ out of circulation? ' Fractional paper currency. Gradual deflation 1865-1879. Resggetion of gold conversion 1879. Gold Standard, 1879-1933. 1873 la islation called fer resumption in gold aE $26. 755} but eliminated silgg;_g§§;ng§;9g of dollar. . afiajgd1l ‘-+ Monometallio gold standard after 1879. IV Only limited minting of silver S, a silver certificates. Silver fell to $.63/oz by 1894. Bimetallism Movement. o Bimetallism: Wm Jennings Bryan (D);(?hm‘“J‘/) a'Gold: Wm. McKinley (R). 1396, 1900 Advocated restoring unlimited minting of silver @ 1.293/02, legal tender for all prior and future aeEts. "Crime of '73" Cross of Gold speech Economics of oz L. Frank Baum, The Henderful Wizard of 02, 1900 Henry M. Littlefield, American Quarterly, 1964 Hugh Rockoff, Journal of Political Economy, 1990 Range!- pghe) we Mama“; we‘d/J as) 200/ Oz - oz. Scarecrow 5 Farmer Tin Woodsman E Worker Cowardly Lion E Bryan Dorothy i America Wicked Witch of East a Grover Cleveland Wicked Witch of the West i McKinley Wizard = Marcus Hanna, a political manipulator operating behind the scenes Emerald City = Washington Yellow Brick Road = Gold Standard Dorothy’s Magic Slippers are Silver, not Ruby Red! The Wiz (Diana Ross) = Silver. _-— THE OHIO STATE LANTERN. Monday. Se [ember 21. 1998 .l‘T he Wonderful Wizard of Qz’: Children’s novel or political satire - , ' SOUTH BEND. Ind. (AP) — Roger Baum -snd Michael Gen- ovese agree on one thing -- '1th was just a dog. ' " Beyond that, “The Wizard of 102" is either the greatest chil- . dren’s novel ever written or a story about the collapse of Pop- -ulism in the late 1800s. - Baum, the great-grandson of , “Oz” author L. Frank Baum, {will be in Chesterton'thistweelg- and for the 17th .annua'llWizard ‘ of Oz - festival. -His views are 'ing 02 as just a fairy taileé‘hgut. aim was written solely to pleasure children of today," Baum said, quoting from the introduction .to the book written 98 years ago. But Genovese, a political sci- enceprofessor at Loyola Mary- mount University. says Oz has a political dimension beyond the yellow brick roadeesci-ib- a girl fromifia‘uias isllike ‘ -= ing "Mo'l:‘?'-iDi'clr" 'is no’thing_ - more-thanastory-aboutiwhite -' clear. “The Wonderful Wizard of Oz allels: -— The title Oz is actually the abbreviation for ounce, the standard measure used for gold. —- The Tin Woodman is the industrial worker, left heartless by dehumanizing work in facto- ries. —- The brainless Scarecrow is the farmer, not intelligent enough to recognize his politi- _c.a.l.inter.e_sts.._ __ _.__- ' '-'—‘ 'The"Cowa"r‘dly“Lion is” Williams Jennings Bryan, a leader in the Populist move- whsle. he says. ""' “You don't have "tb'biiy into' Henry Littlefield. a teacher ment ridiculed for having more bark than bite. — The Wizard is any one of several presidents in office in the late 18003 trying 'to be everything to everybody but were just common men, ruling others through deception. —- The wicked witches of the East and West are the capital-I ists and_bankers who'kept the “little peopld'g—f that would be it,” Littlefieldwsaidé 51th; just _a way of loo “f: at tEEpe‘ronder: .—‘~ “This is in Pebble Beach, Calif., is cred- ited with finding the Populism theme. Populists advocated free coinage of silver to counteract inflation. abolition of national banks and a graduated income tax, among other things. Littlefield interpreted the yellow brick road and Dorothy's silver shoes — ' they were i changed to ruby in the movie to ! show off new color technology _-:_I3 representing .the gold. standard and thE'coi'fi'a'ge' of sil- ' var. His students found more par- i'ul stories written by this absolute genius at writing fan- tasy." But for Baum, all the talk of subtext blasphemes a charming children’s book. There are a handful of pro- fessors here who love to turn ‘02’ into a political satire. and there’s just_r_i'o- basis for it in any.ot' great-‘granddad’s notes . «Jr-anything also, and it has a themunt‘thkinsfi-‘ejnfiéndages ___._tendency to 'fe'arrdown,‘ some of "the things"we-cherish so much :_in this country," Baum said. Wane." -:.r' 55!“ ' ...
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