Transcript The Wizard of Oz: A Parable for Populism

Populism and
Bimetallism
What was populism?
• Late 19th 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 1880s…
• Many Americans were
lured to the West by
the thought of free
land and romantic
ideas.
• In fact, for many
farmers, it sucked!
A little bit about farming in the
1880s… (cont)
The 1880s 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 1880s
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?