Bimetallism Pros And Cons

The Gold Standard Act The Gold Standard Act put the United States on the Gold Standard in 1900. This means the standard economic unit of account is based on a fixed quantity of gold. This act declared that the gold dollar "shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard"(Gold Standard). The Gold Standard Act was the pinnacle of Republican monetary conservatism, making gold the standard for all of the nation’s currency. The Treasury was required to maintain a minimum of $150 million in gold reserves and the price of gold was set at $20.67 per ounce in. The Gold Standard had dropped the silver dollar sharply and stopped bimetallism.
monetary system. Bimetallism meant that the value for currency is silver-gold should be used as a legal tender of currency. Bankers wanted the gold standard for financial interest and they feared inflation, farmers and laborers who were being hit hard by deflation were advocates of the bimetallism currency. The debate over the gold standard culminated in the presidential election of 1896 between Republican William McKinley, an advocate of the gold standard, and populist Democrat William Jennings Bryan, who opposed it. Bryan, an advocate for free silver made a speech at the Democratic National Convention which became known as the “Cross of Gold” in his speech he spoke against the gold standard and for silver to be back as a monetary standard. During the movement farmers attempted to flood the market with paper money, which caused inflating the prices because there was more available bimetallism currency. While trying to make the silver dollar more available this lowered the value of silver more to paperback currency. This was considered the high point of the
23, 1913, President Woodrow Wilson signed the Federal Reserve Act into law. The Federal Reserve System was created in part as a response to the severe financial panic of 1907 and to stabilize gold and create currency values. The gold standard broke down during World War I after countries except the United States had to abandon it for military spending. After the war, countries returned to the modified gold standard. Once the Great Depression hit, the Federal Reserve pursued a policy of deflation which it allowed the money in circulation to drop in relation to its gold reserves. This caused many banks to fail which caused an explosion in public demand to redeem Federal Reserve notes for gold. By early March of 1933 the gold reserve was below the 40% legal limit because people started hoarding gold instead of depositing them for paper currency (McGraw-Hill). This was because the public did not trust the banks