1896 Election

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During the time of the election, many Americans wanted a gold standard and felt that the US should support its money with gold. They felt that a "gold" standard would keep the value of the American dollar high. However, many other Americans wanted the US to support both gold and silver. Americans thought the value of the dollar was too high and felt that a high dollar would drive down prices for agricultural support. A silver standard would lower the value of the dollar.

There was another debate over the gold and silver because of the depression. Banks and businesses closed and millions lost their jobs. Foreign investors withdrew their money from America and those Americans with money were afraid to invest. Many people believed the depression wold end if the government issued more paper money backed by silver.

President Cleveland was a democrat and many democrats had become "silverites". They gained control of the democratic party in western and southern states. However, the Republican party was also divided over gold and silver and some members from the Republican party and from the silver-mining states in the west left the party,

The Gold Standard, Bimetallism, or 'Free Silver'?

The bitter controversy surrounding the issues of "free silver" and "sound money," so central to the 1896 campaign, has proved difficult for historians to explain. Partisans on both sides made exaggerated claims of the impact monetary policy could have on the nation's economic health. They implied that coinage of silver (on Bryan's side) or adherence to the gold standard (on the Republican side) was the single key to prosperity--and sometimes to the nation's honor.

Oddly, before 1896 both McKinley and Bryan had focused more attention on the tariff than on currency issues. Despite his party's platform, McKinley sought to emphasize the tariff and to avoid being labelled a "monometallist" or "bimetallist," leading to accusations of waffling. While he was a Congressman, Bryan allegedly once said that "the people of Nebraska are for free silver, so I am for free silver. I will look up the arguments later." His 1896 campaign became a free silver crusade.

Since the Civil War, a series of third parties had criticized Republicans' policy of contracting the money supply. Lincoln's issue of Greenbacks, the first national paper money, had helped finance the war but it also stimulated inflation. In subsequent decades, national Republican leaders sought to withdraw the greenbacks until each dollar had 100% backing in metal reserves. During the economic depressions of the 1870s and 1890s, in particular, this policy was roughly opposite to that which today's Federal Reserve might pursue in an economic downturn. It drew criticism as tending to favor bankers and lenders--who needed the value of a borrowed dollar to hold steady, or increase, until it was repaid--and detrimental to borrowers and workers.

Heirs to the Greenback Party of the 1870s believed that paper money was the solution. In post-war decades, however, the opening of vast silver veins (such as Nevada's Comstock Lode) had sharply increased the nation's silver supply. To Silver Democrats, federal coinage of silver (at a weight ratio of 16 ounces to 1 ounce of gold, hence the slogan "16 to 1") was a moderate solution to the currency problem. After all, silver was a precious metal, not mere paper. "Free silver" thus temporarily allowed a spectrum of currency reformers--from Southern Democrats to Populists--to unite. To horrified Gold Democrats and Republicans, "free silver" was an appeal for cheaper dollars. It would cheat lenders of an honest return on their money, allowing profligate borrowers to steal value from those who had extended loans.

Free silver at "16 to 1" would have expanded the money supply, but as a lone measure it would hardly have solved ...