The effect of these conflicting narratives was to leave people unusually
uncertain about the value of money and business activity in the near future.
Louis Sloss of the Alaska Commercial Company was one of many businessmen
who described in 1896 their unwillingness to sign contracts or commit resources
at a time when they feared a major devaluation of the money supply and
abrogation of contracts:
Business is very dull, almost at a standstill. Capital is timid and confidence is
shaken. Nobody wants to invest in any enterprise, no matter how alluring the
proposition, until this scare of unsound money is over. I know of an instance
which illustrates to what extent business suffers from this unrest and agitation
and the uncertainty of our financial basis. One of my relatives and a member
of this firm contemplated erecting two magnificent houses to cost at least
$50,000. The plans were drawn, the bids had been submitted and all was
ready, except the signing of the contracts. The prospective builder refused to
sign or undertake the building until after the election, when the financial
question of the country will be settled. There are undoubtedly many similar
instances, and they are the things that stagnate the course of trade.26
Among economists and other intellectuals, it was widely thought that moving
to a bimetallic standard might double the price level, because the market price of
gold meant the ratio should have been 30 to 1. According to classical economics
and Gresham’s Law (“Bad money drives out good”), silver would drive out gold,
putting the United States onto a de facto silver standard.27 To return to the houses
that Sloss wrote about: bimetallism would mean, in effect, that each $50,000
house should sell for $100,000. With that expected sales price, the buyer would
be eager to sign at $50,000, while the builder would want $100,000. But
expectations were muddy because the politics of bimetallism were uncertain and
unprecedented. It is easy to see how the buyer and the builder might find it
difficult to come to an agreement.
An 1893 article from the Chicago Daily Tribune illustrates how dramatic
bimetallism’s effects might be:
If we continue the purchase of silver or make the coinage free at the ratio of
16 to 1 or 20 to 1, we shall practically demonetize gold and drive it out of the
country and sink to a silver basis. This would mean to every wage-worker the
loss of nearly one-half the purchasing power of his wages—to every bank

depositor the loss of nearly one-half the value of his deposit. Free coinage of
silver in this country would be the most gigantic fraud and robbery ever
perpetrated on a people.28
How, then, is it possible that William Jennings Bryan came close to being
elected president of the United States and committing that “fraud and robbery”?
Bryan’s popularity came from a sequence of popular narratives about
bimetallism that went viral because they seemed to justify, at least to some
voters, that bimetallism was legitimate, or, more precisely, that bimetallism at a
16:1 or 20:1 ratio with gold was legit.
We mustn’t assume that the typical American had a deep, or even any,
understanding of the monetary system. In the 1890s, most people in the United
States were fundamentally confused about bimetallism and the existing
monometallic (gold) standard. The confusion came because there were both gold
and silver coins in circulation that were freely accepted as of equivalent value
even though the gold content of a gold coin was worth in the metals market
about twice the market value of a silver dollar. Also, there were paper dollars,
the silver certificates, that had inscribed on them, “one silver dollar” and
“payable to the bearer on demand.” Isn’t that a silver standard? In fact, however,
if one brought 100 silver dollars or $100 worth of silver certificates to a US
subtreasury office, then they would freely give 100 gold dollar coins in
exchange. They would do this since failing to do so would disrupt the free
convertibility of the gold and silver dollars. The key point that many people did
not understand is that the US Treasury would not give gold dollars in exchange
for metallic silver. If they did that, then the US Treasury would see a vast
amount of silver presented for conversion in gold. Anyone could then have done
this repeatedly: buy metallic silver on the market, exchange it for gold at the
subtreasury, using the gold to buy more silver on the metals market, and repeat
the process every day, which would allow one eventually to amass a huge
fortune. But the supply of US silver dollars was limited by the US government.
Practically no one paid any attention then to the type of currency they
received or spent. In fact, most people didn’t even know how to convert their
cash into gold if they wanted to.
Why, then, did narratives of unsound money circulate so strongly? Why did
the call for a bimetallic standard become so vehement in the last decade of the
nineteenth century? One reason is obvious: the idea was promoted that debtors

would see their burden cut in half if they could pay in silver at 16 to 1. That idea
must have seemed like a form of salvation to them, and any story suggesting the
possibility of such a change would certainly be appealing. Recall, too, that the
bimetallism narrative often was framed as revenge for the “Crime of 1873”
through which an act of Congress ended the bimetallic standard.
Put these together: Bimetallism was a proposal to make a seemingly subtle
and clever change in the backing of the currency that most uninformed people
wouldn’t even grasp, like the cryptography behind Bitcoin that very few
understand today. So bimetallism was a cool idea, or a “capital idea” as they
would say in the 1890s. On top of that, bimetallism might compensate for
perceived injustice, the source of much anger. The two together gave
bimetallism intense contagion.