The Crime of 1873 and the Emotional Divide
The United States effectively went onto the gold standard, attaching the US
dollar exclusively to gold, with the Coinage Act of 1873 signed by President
Ulysses S. Grant. (The Gold Standard Act of 1900 further clarified the standard.)
Prior to 1873, the United States had been under a bimetallic standard (in effect,
without calling it that), and the Coinage Act of 1834 specified the ratio of silver
to gold at sixteen to one. The 1873 move was part of an international
standardization of currencies around the gold standard.5 The 1873 act was
followed in the next two decades by persistent deflation (that is, falling
consumer prices). Some observers labeled the 1873 Coinage Act “a crime”
because the deflation impoverished debtors, especially farmers who bought their
farms with a mortgage, by lowering the price at which they could sell their crops
and raising the real value of their debts. Also, people who’d made major
purchases were dismayed to see that they could have bought them for less if only
they’d waited. The talk at that time, notably by farmers, encouraged moral
outrage and public support for a return to bimetallism.
The bimetallism proposal, which was discussed internationally in the late
nineteenth century and which gained enormous traction in the United States,
advocated a return to having two metals backing the currency, enabling people
who owed money denominated in dollars in effect to choose which metal to pay
in. Under the gold standard as defined in the United States, a contract specifying
payment of one dollar was a contract to deliver 1/20.67 of an ounce of gold.
Under a bimetallic standard with a 16-to-1 ratio, the contract would have been
interpreted as an agreement to deliver either this amount of gold or 16 times as
many ounces of silver. Advocates of bimetallism became known as “Silverites,”
almost as if they were a political party, though in the United States in fact they
were allied with the Democratic Party. The Silverites never succeeded in moving
the United States to bimetallism, but by the 1890s the Silverites’ proposal
suddenly gained popularity.
However, by the 1890s the actual market prices of the two metals in world
commerce implied a ratio of around 30 to 1. Thus the bimetallism proposal
would have allowed debtors to cut their debts roughly in half by choosing to
repay them in silver rather than gold. In effect, the result would have been a
default on about half the value of all debts denominated in US dollars.

Supporters of the gold standard therefore thought of themselves as upholding
truth and honesty.
As Figure 12.1 shows, the term gold standard has not appeared very often in
English-language books, newspapers, or magazines except in two decades: the
1890s and the 1930s. (There is also an uptrend in use of the term after the year
2000, but with “the gold standard” usually meaning just “the best.”) Those two
decades, the 1890s and the 1930s, were precisely the decades of the two biggest
US depressions as measured by the unemployment rate. Because the gold
standard was talked about very much during those depressions, we ought to
consider how the gold standard narratives relate to the potential for severe
depression. In both cases, the 1890s and the 1930s, the talk was of debauching
the gold standard, allowing debt to be paid with less gold, and complaining that
ending the gold standard meant ending something traditional and honest. People
seem to have a natural respect for ideas that they perceive as coming from the
wisdom of the past and that reflect true or important values.
FIGURE 12.1. Frequency of Appearance of Gold Standard in Books, 1850–2008, and News, 1850–2019
The term has had two separate epidemics decades apart, both associated with major depressions. Sources:
Google Ngrams, no smoothing, and author’s calculations using data from ProQuest News & Newspapers.
The term devaluation entered the English language in 1914, referring to the