It looks like one of the big questions in the coming political debate in America may yet be the gold standard. That is the report on the Bloomberg news wire last week. If it’s true — and Bloomberg quotes a number of Republicans who are nursing the issue — one of the things to listen for will be the Jewish angle.
The last election that centered on our monetary system (during the presidential campaign of 1896) was riddled with anti-Semitism. This bigotry erupted after the Civil War in the campaign for inflation known as the Free Silver movement. One newspaper, the Graphic in New York, quoted opponents of the gold standard as blaming America’s monetary predicament on “the great Jew bankers of the world.”
It would be inaccurate to suggest that we are on the verge of an outbreak of this kind of talk. But it would be short-signed not to remember the history. Paper money had been brought in by Lincoln to pay for the Civil War. Eventually President Grover Cleveland struck a deal with J.P. Morgan and the Rothschilds to sell bonds for gold to cover America’s currency obligations.
Advocates of paper money fought it with a xenophobic campaign. The anthem of the Greenback Labor party included this refrain: “Then smash old Shylock’s bonds/With all his gold coupons.” A Democratic congressman of Nebraska, William Jennings Bryan, went onto the floor of the House of Representatives, pulled out Shakespeare and read the bard's entire description of Shylock’s 'pound of flesh' bond to the House of Representatives.
The Free Silver agitation would propel Bryan in 1896 to the top of the Democratic ticket. He accepted his nomination with one of the most famous speeches in American history. It ended: “We will answer their demands for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns. . . .”
At this point, newspapers at the time reported, Bryan moved his hands, fingers spread inward, down and close to his temples, as one biographer described it, “so that the spectators were almost hypnotized into seeing the thorns piercing the brow and the blood trickling from the wounds.” Then the famous line: “You shall not crucify mankind on a cross of gold.”
At this point, he held his arms out straight to the sides and stood there like he’d been crucified, holding the pose for five seconds. The audience erupted with a roar of whoops and cheers. Some delegates in the mob, screamed “Down with gold! Down with the hook-nosed Shylocks of Wall Street! Down with the Christ-killing gold bugs!”
The good news is that the gold-standard campaign waged by William McKinley defeated the inflationists and anti-Semites. The gold-standard act of 1900 ended the debate over whether America would have a silver-backed or gold-backed dollar. There, to paint with a broad brush, things stood until 1971, when President Nixon closed the gold window and ended the Bretton Woods system.
This put America on a system of fiat money – that is, paper money that must be accepted as legal tender by government fiat although though it has no intrinsic value in itself and is not convertible into gold or silver. There are those of us who reckon it is at the root of our current travail. The value of the dollar has collapsed to less than a 1,250th of an ounce of gold. It is up from its nadir of less than a 1,900th of an ounce of gold. But it still lurks at levels that would have been unimaginable to the architects of America. And to the architects of the post-World-War-II expansion.
In the last election, in 2012, the Republicans put a call for a restoration of sound money into their platform. It promised to convene a new gold commission to study monetary reform. Governor Mitt Romney, however, didn’t believe in it and pointedly shrank from standing on the plank.
There is a faction that reckons Romney's failure to use the issue of sound money hurt him. hurt him and are rooting for new generation Republicans, like Congressmen Paul Ryan and Kevin Brady and Senators like Rand Paul, Ted Cruz, and Mike Lee, who have, to one degree or another, been advancing this issue. If the Bloomberg dispatch proves correct, a great clash could be building.
It’ll be a time to remember the xenophobia that erupted on the left the last time our monetary system was at the center of a national campaign.
Seth Lipsky is editor of The New York Sun (in print 2002-2008,now online: www.nysun.com). He was a foreign editor and a member of the editorial board of The Wall Street Journal. He was the founding editor of The Forward and editor from 1990 to 2000. His books include “The Citizen’s Constitution: An Annotated Guide,” and most recently “The Rise of Abraham Cahan.”
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