DeCanio, S. (2011) Populism, Paranoia, and the Politics of Free Silver. Studies in American Political Development, 25(1), 1-26.
In 1896, a Democrat politician named William Jennings Bryan realized that people were very angry at banks and existing monetary policy. He then set out to get elected as President of the United States on the basis of exploiting their anger.
His core idea? Free silver. In modern terms, inflationary policy (i.e., the state’s ability to print money in an unlimited manner in order to have control over the economy). Whilst Bryan never got elected, his ideas are said to have changed the Democratic party.
What DeCanio wants to do is to trace the process by which free silver became such a massive item in the political agenda. He believes that the key lies in understanding two interrelated events: the ‘Coinage Act of 1873’, which demonetised silver and caused economic struggle, and the subsequent debate about why said act passed. Three alternative explanations exist.
- Act was the results of politicians acting upon bribes from Eastern U.S. and European bankers.
- Act was good politics and the rest was result of impersonal economic forces.
- There was a conspiracy, although one internal to the US focusing to protecting the Gold Standard rather than tales of European bribery.
Populists typically come out of this story as having been paranoid for siding with explanation #1. DeCanio wants to show #3 (i.e., there is evidence of bribery, although not the one thought by populists).
Two characters are at the centre of DeCanio’s explanation. Henry Linderman, director of the Mint at the time of passing the act. And William Ralson, William Ralston, president of The Bank of California, who was involved in various schemes to protect the financial empire he had constructed from his control of Nevada’s Comstock silver mines” (p. 4). The former drafted the bill at the behest of the latter. When things did not go to plan the very same representatives bribed, in fear of their careers, echoed accusations made in newspapers.
What a beauty!
In the rest of the article DeCanio deepens into this issue. Since this is not a review, however, I will just note a couple golden nuggets:
Ralston was neither ‘cool’ nor smart (p. 7):
Ralston’s business empire depended upon the stability of The Bank of California, which was in turn dependent upon the value of the Comstock silver mines. The stability of Ralston’s bank was constantly an issue because Ralston’s extensive business investments left him perpetually overextended. Lacking the self-control of many financiers, Ralston was prone to invest in many enterprises that proved unprofitable, and he often masked the nature of his risky investments with bookkeeping gimmicks.
But he was surrounded by similarly not cool guys. Great! Including Linderman, but also Senators, high ranking officials in US Departments, and many business people. Linderman, in particular, was the point of reference for the matter because of his understanding of economics. He was, to put it in Machiavellic terms, the best person to bribe.
DeCanio gives compelling evidence of bribes having taken place. Really compelling. I was expecting a good argument, but he goes as far as to include snapshots of payments and conversations that leave no room for doubt. Everything was kept under wraps.
As it turns out, Ralston managed to manipulate politics, but he was so clueless about economics that the result was not what he wanted. To the point that he managed to bankrupt his own bank (although he died before its collapse). Since almost no one but Linderman really understood what was going on, everyone in the country was basically clueless about what had happened.
Therein the need for explanations. Therein Ralston’s (and allies’) ability to play out a fantastic narrative.
Anyway… DeCanio continues to explain the situation at length but at this point providing more details seems like plagiarism. The full story is, quite honestly, too captivating as to not read in full!
Everyone was wrong. Populists were blaming the wrong people. Those who denied that anything happened were naive. By the same token, nobody was entirely wrong. And populists were right to be paranoid but wrong on the reasons to be paranoid.
Also, the analysis highlights the importance of a well informed electorate, and the difficulty of one such thing happening when even politicians can be supremely ill-informed.
My [probably irrelevant] comments
Well, that goes to show that what we think happens may not be what’s happening. Great! Now I’m the one paranoid.