American Colossus: The Triumph of Capitalism, 1865-1900

by H. W. Brands

  In a city like Chicago, with its large population of capitalists and creditors, Coin’s audience inevitably included individuals who favored gold. One such person, a novice reporter for the financial press, interrupted the speaker with a question evidently designed to throw him off balance. Coin answered it easily. William Harvey remarked, “The young journalist turned red in the face and hung his head.” A second challenger rose, putting to Coin a more esoteric question requiring specific mastery of the laws relating to the currency. This man was sure he had caught Coin out. “He sat down looking as proud as a cannoneer who has just fired a shot that has had deadly effect in the enemy’s ranks,” Harvey wrote. But Coin stood his ground. Reciting the statutes as though the law books lay open to his mind’s eye, he rebuffed the challenge masterfully. The questioner slunk away.

  Coin returned to the Coinage Act of 1873. Though “purporting to be a revision of the coinage laws,” he said, the new law soon proved to be far more. It accomplished a revolution in the American money system, overthrowing silver and replacing it with gold. Quoting a senator who had been present, Coin said the revision had slipped through Congress with “the silent tread of a cat.” Coin conceded that most of the lawmakers didn’t know what they were doing; confusion was precisely the aim of the sponsors, who did know what the law was about. “An army of a half million of men invading our shores, the warships of the world bombarding our coasts, could not have made us surrender the money of the people and substitute in its place the money of the rich,” Coin declared. “A few words embraced in fifteen pages of statutes put through Congress in the rush of bills did it. The pen was mightier than the sword.”

  A new challenger leaped up. The act of 1873, he said, had simply formalized an existing state of affairs. Silver had long been out of circulation. No conspiracy was required to remove it.

  Coin rejected this assertion as precisely what the conspirators wanted people to believe. Such arguments were “all the bastard children of the crime of 1873,” he said. The cabal against silver was undeniable. “It was demonetized secretly, and since then a powerful money trust has used deception and misrepresentations that have led tens of thousands of honest minds astray.”

  This exchange concluded the initial lecture, which piqued the interest and affronted the interests of Chicago’s bankers and other big capitalists, who crowded the next day’s session. William Harvey suspected a plot to embarrass the wunderkind. “Knotty questions would be hurled at him—perplexing queries and abstruse propositions,” Harvey wrote. “They would harass him, worry him, and tangle him, laugh at his dilemma and then say: ‘We told you so.’ This was the programme.”

  The leader of the plot, Lyman Gage, the chairman of Chicago’s First National Bank, commenced the assault almost as soon as Coin began speaking. “All eyes were on him,” Harvey said. “He had been watching for an opening, and now he thought he had it, where he could deliver a telling, and follow it up with a knock-out, blow.” Gage went right to the heart of the issue of bimetallism; noting the vagaries of supply and demand, he queried how the government could maintain a fixed ratio of value between gold and silver.

  Coin nodded knowingly. This was the question, he granted. And for ordinary commodities, supply and demand could create imbalances. But gold and silver were not simply commodities: they were money, the measure of commodities. And because the government was—or should be—the purchaser of last resort for gold and silver, a condition of essentially unlimited demand developed.

  Coin illustrated with pictures. On a blackboard he drew a board suspended by two ropes. One rope represented gold, the other silver. So long as both ropes held steady, the board—signifying the national economy—remained in balance. But should one rope be severed, as the silver rope had been severed in 1873, the economy must swing dangerously awry, as the economy had swung awry since then. Coin drew another picture, this time of two tanks of water. The two tanks were connected by a pipe beneath them, and separate spigots poured water into the top of each tank. So long as the connecting pipe remained open and unclogged, the water levels in the two tanks remained the same, regardless of the inflows into the separate tanks. But should the connection be broken—as the connection between gold and silver had been broken in 1873—one tank might overflow while the other drained to empty.

  “A pin could almost have been heard to drop at any moment,” Harvey related. Coin had answered the hardest question the big capitalists could hurl at him—had answered the fundamental question of money—in a way that made sense to the simplest man or woman. “They had listened critically, expecting to detect errors in his facts or reasoning,” Harvey said of the capitalists in the crowd. “There were none. They were amazed.”

  In subsequent sessions Coin continued to amaze. He illustrated the confining effects of gold as single specie by having assistants measure off on the floor and walls of the auditorium an imaginary cube twenty-two feet in length, width, and height. This cube, he said, could encompass all the gold ever dug from the ground and made available as money. The audience murmured in disbelief. Coin compared a one-metal currency to a one-legged man or a one-winged bird. The man could walk, but only with difficulty; the bird couldn’t fly at all. So the economy hobbled and crashed. He depicted the earnings and savings of ordinary Americans as a maiden about to be ravished by big capital in the form of a banker wearing a silk hat labeled “England.” Employing a favorite image of the Populists, he showed the American economy as a giant cow straddling the Appalachians. Hardworking Western farmers fed the cow; parasitic Eastern bankers milked the cow. Another Populist image appeared as a monster octopus with tentacles that reached from London across the oceans and continents. The octopus was named “Rothschild,” and the caption declared, “The English Octopus: It Feeds on Nothing but Gold!”

  Coin created a sensation in Chicago with his financial school. By the end of the week the city could speak of nothing else. Erstwhile skeptics converted to silver by the thousands. But something troubled even the most devoted of the silverites. The American economy existed as a part of the world economy. The capitalists of the other great trading powers had embraced gold and shunned silver; how could the United States resist their power? How could America remonetize silver unilaterally?

  Coin reserved this final, implementation question till the last day of the seminar. He reminded his audience what was at stake. “In the midst of plenty, we are in want,” he said. “Helpless children and the best womanhood and manhood in America appeal to us for release from a bondage that is destructive of life and liberty.” Nor were ordinary Americans alone in their distress. “All the nations of the Western Hemisphere turn to their great sister republic for assistance in the emancipation of the people of at least one-half the world. The Orient, with its teeming millions of people, and France, the cradle of science and liberty, look to the United States to lead in the struggle to roll back the accumulated disasters of the last twenty-one years.” Humanity cried for relief. “What shall our answer be?”

  The audience strained to hear.

  “If it is claimed we must adopt for our money the metal England selects, and can have no choice in the matter,” Coin declared in a rising voice, “let us make the test and find out if it is true. It is not American to give up without trying.” What if England resisted? “Let us attach England to the United States and blot her name out among the nations of the earth!”

  The audience burst into patriotic hurrahs.

  “A war with England would be the most popular war ever waged on the face of the earth!”

  The audience cheered louder.

  “If it is true that she can dictate the money of the world and thereby create world-wide misery, it would be the most just war ever waged by man!”

  The blood lust of the audience was up, and Coin let them roar their defiance at perfidious Albion.

  “Fortunately, this is not necessary,” he said, now calm again. Britain might be the banker to the world, but America was the breadbasket a
nd the workshop. London might stick with gold, but if America added silver to its money supply, the resulting surge of economic growth would leave England far behind. “The bimetallic standard will make the United States the most prosperous nation on earth.” England would crawl to America, willing to do whatever was necessary to obtain America’s business.

  This bounteous future would be lost if Americans preemptively surrendered. The independence Americans had won from England in the eighteenth century by arms might be lost at the end of the nineteenth century by gold. And just as the Tories, those minions of King George, had tried to sap Americans’ will to fight in the war for American political independence, so today’s Tories, the big capitalists and their allies, strove to undermine the American spirit in the war for economic independence. “The business men of New York City passed strong resolutions against the Declaration of Independence in 1776, and they are passing strong resolutions against an American policy now,” Coin said. American liberty was in peril; Americans must spring to action.

  The integrity of the government has been violated. A Financial Trust has control of your money, and with it, is robbing you of your property. Vampires feed upon your commercial blood.… This is a struggle for humanity. For our homes and firesides. For the purity and integrity of our government.… Go among the people and awake them to the situation of peril in which they are placed. Awake them as you would with startling cries at the coming of flood and fires. Arouse them as did Paul Revere as he rode through the streets shouting: “The British are on our shores!”

  Coin’s audience stamped their feet and yelled themselves hoarse. Those near the front surged onto the stage to clap the young man on the back. Even one banker, well known about the city for his strong support for gold, was swept up in the enthusiasm. “Three cheers for Coin!” he shouted. The audience shouted back, “Hip! Hip! Hurrah!” and poured into Michigan Avenue.

  “Thus ended the school,” William Harvey wrote. “Chicago has had its lesson on bimetallism.” Harvey was one of those cheering for Coin, and he hoped silver would triumph. But he understood that truth and virtue were no guarantee of success. “In the struggle of might against right, the former has generally triumphed. Will it win in the United States?”28

  DURING THE MID-1890S William Harvey’s account of the Coin Financial School, as the lecture series was called, was the best-selling, most influential book in America. A million copies were sold between its 1894 publication and the elections of 1896, and the average copy certainly found multiple readers. Doubtless a large portion of those millions caught on that Coin wasn’t real and that the Chicago seminar never took place. But many others believed—or certainly wanted to believe—that the boy genius actually existed and that he had truly bearded the lions of capitalism in their lakefront den.

  Harvey’s book, which made the author wealthy, inspired imitations. Ignatius Donnelly wrote a tale of a banker and a farmer thrown together on a long train ride. The banker tries to instruct the farmer regarding the intricacies of the currency question and the multiple advantages of the gold standard, but the farmer, with the naïve wisdom of the earth, refutes every argument and converts the banker to silver.29

  Harvey’s book spawned an even larger counterliterature. The Mistakes of Coin, Coin’s Financial Fool, Coin’s Financial School Exposed and Closed, and similar titles rebutted the lessons of Coin. The gold authors attacked Harvey on the law (the 1792 coinage act had defined only the dollar coin exclusively in terms of silver; the dollar as a unit of money had been defined in both silver and gold), on history (the currency system had operated far less smoothly before 1873 than Coin suggested; the pipe connecting his two tanks was constantly getting clogged), and on the feasibility of a unilateral American adoption of silver (the American economy, whether the silverites liked it or not, was fully enmeshed in the world economy; those most damaged by a loss of international faith in the dollar, which remonetization of silver was bound to provoke, would be the poor).

  Yet the critics missed much of the point. Coin’s Financial School was about the money question, but it was also about the relationship of ordinary people to the wealthy and powerful—that is, about the relationship of democracy to capitalism. Readers might or might not have followed Coin’s—Harvey’s—reasoning, and they might or might not have been persuaded by his analogies. But most of those millions of readers presumably endorsed Coin’s claims that the money power had gutted America’s traditional values. When the silverites called silver the “dollar of our daddies,” they summoned an entire constellation of values, real and imagined. For obvious reasons they avoided the phrase “golden age” in referring to the time when everything had been better, but that was what they meant.

  To explain the demise of that blessed era, in a country nominally democratic, Harvey and the Populists turned to conspiracy theories. The demonetization of silver in 1873 couldn’t have been an accident, for that would have indicted democracy. Instead it must have been the work of self-conscious, self-interested elites—and hence a “crime.” Every reform movement requires enemies, the more specific and identifiable the better. Many Populists realized that the farmers’ predicament involved industrialization and related trends over which they had no control, but industrialization didn’t make a satisfactory villain. Industrialists, on the other hand, and especially their collaborators in finance, made perfect villains. Railroad magnates and bankers really did pursue policies inimical to farmers. And their foreign connection—the specter of London’s Lombard Street—made the bankers especially tempting targets. That some of the most prominent foreign bankers, notably the Rothschilds, were Jews lent an implicit—and occasionally explicit—anti-Semitism to the Populist conspiracy theories. Harvey and other Populists could cast their movement as an exercise in patriotism and traditional values, a revival of the American Revolution, and hope for a patriotic and traditionalist response. The Populists were probably no more xenophobic or anti-Semitic than most other Americans of their day, but they couldn’t resist an opportunity to march into political battle under the flag of all things dear to the historic heart of the American people.30

  WILLIAM ALLEN WHITE had a different bone to pick with the Populists. The Emporia editor considered them whiners who couldn’t get ahead and were determined to see that others didn’t either. “What’s the Matter with Kansas?” he demanded in an editorial that became one of the most reprinted pieces in the history of American journalism. White noted a report from the Kansas Department of Agriculture that the population of the state was stagnating. The country overall was growing rapidly, but Kansas was barely holding its own. “In five years ten million people have been added to the national population, yet instead of gaining a share of this—say, half a million—Kansas has apparently been a plague spot and, in the very garden of the world, has lost population by ten thousands every year.” To make matters worse, the leavers were just the ones Kansas couldn’t spare. “Every moneyed man in the state who could get out without loss has gone. Every month in every community sees someone who has a little money pack up and leave the state. This has been going on for eight years. Money has been drained out all the time. In towns where ten years ago there were three or four or half a dozen money-lending concerns, stimulating industry by furnishing capital, there is now none, or one or two that are looking after the interests and principal already outstanding.” Any Kansan could describe the result. “What community knows over one or two men who have moved in with more than $5,000 in the past three years? And what community cannot count half a score of men in that time who have left, taking all the money they could scrape together?”

  It wasn’t simply the hardship of life at midcontinent. White noted that Missouri to the east had gained two million in population; Nebraska to the north and Colorado to the west were likewise growing. (The Indian Territory—Oklahoma—to the south was growing, too, but White didn’t mention it.) “What’s the matter with Kansas?” he demanded again.

  The matter was the po
litics of the state, he said. In particular, the matter was the Populists, who preached against progress and railed at success.

  We have an old mossback Jacksonian who snorts and howls because there is a bathtub in the State House; we are running that old jay for Governor. We have another shabby, wild-eyed, rattle-brained fanatic who has said openly in a dozen speeches that “the rights of the user are paramount to the rights of the owner”; we are running him for Chief Justice.… Then, for fear some hint that the state had become respectable might percolate through the civilized portions of the nation, we have decided to send three or four harpies out lecturing, telling the people that Kansas is raising hell and letting the corn go to weed.

  White gave his sarcasm free rein.

  Oh, this is a state to be proud of! We are a people who can hold up our heads! What we need is not more money, but less capital, fewer white shirts and brains, fewer men with business judgment, and more of those fellows who boast that they are “just ordinary clodhoppers but they know more in a minute about finance than John Sherman.” … We don’t need population, we don’t need wealth, we don’t need well-dressed men on the streets, we don’t need standing in the nation, we don’t need cities on the fertile prairies; you bet we don’t! What we are after is the money power. Because we have become poorer and ornerier and meaner than a spavined, distempered mule, we, the people of Kansas, propose to kick; we don’t care to build up, we wish to tear down.