Neither the beloved gold standard nor the splendid little Spanish-American War did anything to cure America of its real ills".© BrainMass Inc. brainmass.com December 24, 2021, 5:00 pm ad1c9bdddf
Let me address the gold standard issue first. The gold standard is a little complicated so let me provide some background as to make my explanation a little clearer. Today the total value of currency is based on public confidence in the government. In the late 19th century however currency was considered worthless unless it was backed by something concrete (i.e. gold or silver). Up until the 1870s, the government had coined gold and silver dollars. Officially gold was worth 16 times as much as silver. However silver producers preferred to sell silver on the open market rather than to the government since they could get more than 1/16th value. As a result in 1873, Congress officially stopped coining silver and adopted a gold standard. Within just a few years though, new silver mines opened in the west and as a result the market became flooded with silver and the market price dropped. Thus a demand came for the government to begin coining silver again. Groups like farmers who were heavily in debt petitioned the government to begin coining silver again because it would put more currency into circulation and allow them to pay off their debts easier. Creditors and businessmen disagreed because they favored a more stable, tightly controlled money supply backed only by gold. In 1890 Congress passed the Sherman Silver Purchase Act which committed the government to buy 4.5 million ounces of silver each month at a ratio of 16 to 1. The western mining boom made silver even more plentiful and its value fell, but the government still exchanged gold for the less valuable silver. Businessmen ...