Bimetallism and Bitcoin
The enthusiasm for bimetallism in the nineteenth century seems similar to the
excitement for Bitcoin we have seen in recent years. Among my students at Yale,
some seem passionate about Bitcoin, and others appear extremely intrigued
when I bring up Bitcoin. Maybe part of the appeal is that understanding Bitcoin
requires some effort and talent. There is an air of mystery around Bitcoin, just as
there is with conventional money. Few people understand how paper money gets
its value and sustains it either.
As we noted in chapter 1, there is a detective-story-like mystery about
Bitcoin, aided by the narrative that it was invented by Satoshi Nakamoto, who
might be a multibillionaire as a result of his Bitcoin holdings. However, no one
has ever found him or confirmed his existence. Indeed, the Bitcoin narrative is
associated with secret codes, like the codes that are still talked about in popular
World War II narratives. The idea that savvy young people understand Bitcoin,
but that old fogies never will, appeals to many.
It is no coincidence that, a century ago, William Hope Harvey made Coin a
young man. In the 1890s, the monetary standard offered some of the same
mystery that Bitcoin does today. Young people in the 1890s wondered: What
exactly is this money we have, and why does it have value? They might then
have asked: How can we be on the gold standard when I almost never see a gold
coin, only paper money, copper pennies, and silver dimes? What would happen
if I walked into a bank and tried to demand my gold? Most people in the 1890s
never tried to do that, and they might have been rebuffed if they did, because
banks satisfied their obligations when they gave depositors paper dollars. So,
even in the 1890s, the gold standard was a tantalizing mystery.

Silverites and Gold Bugs
In many ways the Silverites of the 1890s anticipated the supporters of Donald J.
Trump in the 2016 US presidential election, both in their sympathies and in the
contempt that many intellectuals held for them. A Washington Post reporter
visiting Seattle in July 1896 wrote:
A spirit of ardent Americanism pervades the entire population. They believe
in a nation with a big N, and think America is strong enough to whip the rest
of the world, if need be, and surely to put into force any legislation it may
undertake without the consent or cooperation of any other government. They
are wide-awake, hospitable, and honorable. “Sunset” Cox, after a trip among
them, aptly described the Westerners as “the cream of Eastern young
enterprise.”
Thousands of them regularly read the Eastern papers from their old homes.
For the first time in their lives they now discover in these same papers that
they are “idiots” and “anarchists.” While editor Dana, of The New York Sun,
is exhausting the adjectives of abuse for Western people in general, his own
nephew and adopted son, John K. Dana, is quietly and industriously earning a
living on a wheat and stock farm four miles west of Oakesdale, this State, and
is a free silver man of the Populist variety.11
The notion that bimetallism is the only route to prosperity became strong
among Silverites, who suggested that the 1890s depression would go on forever
if the gold standard were allowed to stand. This idea was misguided, for the gold
standard had been around for decades and depression had not been permanent.
But the idea became ego-involving for Silverites, a core truth that they’d
discovered that was nonetheless opposed by pretentious eastern intellectuals.
During the presidential election campaign of 1896, William McKinley said that
sound money is the route to general prosperity:
Read the history of the great financial depressions and panics of 1817, 1825,
1837, 1841, 1857, 1873, 1893, and 1896, and see if this is not true. The
triumph of sound money and protection at the polls in November will, in my
judgment, restore confidence and thereby help every species of business, and
when that is done your business will share in the general advancement and

profit by the general prosperity.12
The implication was that the Silverites, typically rural and ignorant farming
people, did not read history. But the idea that the depression would last forever
spread among them nonetheless, and the idea itself worked against prosperity,
for it discouraged spending and investing.
Meanwhile, those who were fiery in their support of the gold standard became
known as gold bugs. Rare in 1874, the term took off on what appears to be a
hump-shaped infective curve, peaking in 1896 during the depths of the great
depression of the 1890s. After McKinley defeated William Jennings Bryan in the
1896 presidential election, a joke went viral. A Silverite would ask a gold bug,
“Have you seen the General?” The other would invariably respond, “General
who?” The answer was “general prosperity,” referring to McKinley’s words
during the campaign. The joke faded in 1897 around a year after the election; it
lost its effect when the economy began showing signs of improvement.13