Bimetallism

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In economics, bimetallism is a monetary standard in which the value of the monetary unit can be expressed either with a certain amount of gold or with a certain amount of silver: the ratio between the two metals is fixed by law.

This monetary system is very unstable: due to the fluctuation of the commercial value of the metals, the metal with a commercial value higher than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law). This occured in the United States throughout the 19th century as the official bimetallic standard became in effect a silver standard.

In the United States, toward the end of the nineteenth century, bimetallism became a center of political conflict. Newly discovered silver mines in the American West caused an effective decrease in the value of money. This created a conflict between those that favored inflationary policies caused by a bimetallic standard and those that favored sound money produced by a gold standard. Bimetallism and "free silver" were favored by Democrats, populists, and Western states with silver mines, in contrast to the gold standard which was favored by financial interests in the East Coast.

William Jennings Bryan, the eloquent champion of the cause, gave a famous speech at the National Democratic Convention on July 9, 1896 asserting that "The gold standard has slain tens of thousands. He referred to "a struggle between 'the idle holders of idle capital' and 'the struggling masses, who produce the wealth and pay the taxes of the country;' and, my friends, the question we are to decide is: Upon which side will the Democratic party fight?" At the peroration, he said "You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold." However, his presidental campaign was ultimately unsuccessful and 1896 saw the election of William McKinley who implemented the gold standard in 1900.