Financial History Issue 132 (Winter 2020) | Page 31

was equal to $50 per capita. The Populists won four states and 8.5% of the vote in the 1892 election, but this would be the party’s best showing. Their monetary ideas, how- ever, were yet to crest. The 16:1 valuation ratio of gold to sil- ver was an integral part of the platform, because a 16:1 ratio deliberately over-val- ued silver. Silver was being mined in large quantities in the 1870s and 1880s in Nevada and Colorado, but even under normal conditions the valuation ratio is much greater than 16 to 1. (Today’s ratio is roughly 80 to 1.) By over-valuing silver, politicians sought to encourage its mon- etary use, in the same way that greenbacks displaced gold from use in the 1860s. For farmers struggling to pay back loans denominated in gold, silver was a metallic version of the greenback. The gold standard problem mentioned earlier—its inability to keep prices from falling occasionally—grew intractable in the early 1890s. Gold mine output had peaked in 1853 with the California gold rush, and by the early 1890s it had declined to only half the levels of the early 1850s. The decline caused gold to increase in value, lowering prices and making debt- service difficult. By 1893, the United States was in a recession, and as it deepened with each passing month the nation’s leaders struggled to find a solution. The Populist Party’s bimetallism ideas were given another look. Initially it was an eclectic group comprised of Democratic farmers and Republicans from silver min- ing areas, but as the movement gained adherents it coalesced under the Dem- ocratic tent. Democrats controlled the South and parts of the Midwest—agricul- tural areas where some currency inflation would be a welcome relief—and although their eastern banking wing was influential (its leading figure was President Gro- ver Cleveland), their agrarian wing was numerically larger. In the wake of a run on US Treasury gold reserves during the winter of 1894– 1895, these “silver men” convened small state conventions and sent members to a national conclave in Washington, DC, that August. They called the event the “Bime- tallic DNC,” and it was dedicated to these monetary principles and not to any partic- ular leader. With a Democrat in the White House committed to gold-backed money, it was clearly an attempt to wrest control from the Cleveland wing of the party. Graph of US gold mining output over the years 1840–2012. When the Democrats convened in Chi- cago in July 1896 and it became clear that the silver men would control the party platform (right down to the 16 to 1 ratio that had been used by the Populist Party four years before), they needed a presi- dential candidate to champion their cause. Speeches were delivered making the case for bimetallism, but they were uninspir- ing. Opponent William Russell, governor of Massachusetts, warned the convention that such “a new and radical policy” would lead the party to the “darkness of defeat and disaster” in the fall. William Jennings Bryan—a two-term congressman from Nebraska little known outside the Midwest—responded with the speech of a lifetime. He summarized the economic approach of his opponents as follows: “If you just legislate to make the well-to-do prosperous, their prosper- ity will leak through on those below.” He warned his allies that, “If they [their opponents] dare to come out and in the open defend the gold standard as a good thing, we shall fight to the uttermost.” He concluded with powerful words still remembered today: “You shall not crucify mankind on a cross of gold.” The crowd went wild. “I had never dreamed that a mortal man could so grip and fill with enthusiasm thousands of men,” one delegate later wrote. Some 2,500 miles northwest of the mad- ding crowd in the Chicago Coliseum, Joe Ladue ran a trading post in the Yukon Territory where the 60 Mile River empties into the Yukon River. He and his neighbors lived solitary, hardscrabble lives largely deaf to American political oratory. The Yukon River flows east and north out of the mountains that push up against the Pacific Ocean and drains a vast taiga landscape sandwiched between mountain ranges. The area was rumored to contain gold in the mountains and in the placer deposits down below, but the pickings as of July 1896 had been sparse. Ladue made it his business to gather details of any gold finds in the area, however, and pass such information on to his customers to encourage trade in the goods he had for sale. Bryan was likely still basking in his nomination and in that thunderous applause when a visitor entered Ladue’s trading post. Robert Henderson, an invet- erate gold prospector, had stopped by Ladue’s place two summers before, when Ladue had recommended Henderson try panning the Indian River, which flows into the Yukon some 10 miles upstream of Ladue’s place. Henderson had done so, with little success. It was when Hender- son went to the headwaters of the Indian River and crossed over the divide to a small creek that drains into the Klondike River that he had better luck. Encouraged, Henderson followed the Klondike down- stream to the Yukon River that summer of 1896 and back to Ladue’s place to buy www.MoAF.org  |  Winter 2020  |  FINANCIAL HISTORY  29