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was worth $ When more dollars are put into circulation, each dollar goes down in value and will buy less stuff. $ So manufacturers.

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Presentation on theme: "was worth $ When more dollars are put into circulation, each dollar goes down in value and will buy less stuff. $ So manufacturers."— Presentation transcript:

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18 $ When more dollars are put into circulation, each dollar goes down in value and will buy less stuff. $ So manufacturers raise the price of their goods, so they can get more of these less valuable dollars.

19 Good Girl, Bessie! I can sell your milk for $3.00 a gallon this year! Last year we only got $2.00. I just love inflation. And I love you too Bessie.

20 I sure am in debt for my land and this new barn and tractor. It’s a good thing there’s plenty of cheap money in circulation to pay the bank back with. LOL.

21 Real Life Example of Inflation over Time 1980 New teacher makes $12,000 a year ($1000 per month) Teacher buys house – $50,000 House payment to the bank is $500 a month (30 year mortgage)

22 2000 After steady inflation Teacher now makes $48,000 a year ($4000 per month) The house is now worth $100,000. House payment to the bank is still $500 a month.

23 Was Good or bad for the teacher? Why?

24 I have to pay my bank employees more every year, but loan payments from 20 years ago are still the same. Those old loans are worthless now. It’s not fair.

25 Is Good or bad for the banker? Why?

26 $ Good for farmers because they get more dollars for the products they sell. $ Good for people who are in debt because the dollars used to pay back debt are worth less than the dollars they borrowed. $ Bad for bankers and other creditors because the dollars they are paid back are worth less than the dollars that were borrowed.

27 So what is the opposite of

28 $ When less money is issued, every dollar goes up in value and can buy MORE stuff. $ Since every dollar can buy more stuff, manufacturers lower their prices. $ Good for people lending money (bankers) because the dollars being paid back are worth more than dollars they lent out earlier.

29 So what causes and

30 The amount of money (coins and/or paper currency) in circulation in a country’s economy

31 The government’s plan for controlling the money supply

32 When the government reduces the money supply in order to encourage deflation

33 $ After the Civil War, the federal government pulled the money that had been issued during the War out of circulation, causing deflation. $ Many farmers who were in debt lost their farms.

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35 $ Paper dollars (currency ) that the government issued for people to use for making purchases. $ Treasury notes could be taken to a bank and traded in for coins (specie). $ Specie is made (minted) of precious metal – gold or silver.

36 = $20 gold treasury note This $20 treasury note could be redeemed for a $20 worth of gold. $20 gold piece

37 $10 silver treasury note = This $10 treasury note could be redeemed for a $10 worth of silver. 10 silver dollars

38  Having a nation’s currency backed by both gold and silver (2 precious metals) in the U.S. Treasury  Until 1873 we were on a bimetallic standard. (In other words, people used coins made of gold or silver or had U.S. treasury notes that could be traded in for actual gold and silver.)

39  Having a nation’s money supply backed ONLY by gold  In 1873, the government put our currency on the gold standard to stop inflation and stabilize the economy.  This greatly reduced the amount of money in circulation because the money supply was limited by the amount of gold owned by the U.S. government.

40  Conservatives who wanted the U.S. to be on the gold standard  Mainly bankers

41 The unlimited minting of silver dollars to increase the money supply

42 People who supported “free silver” Mostly farmers and silver miners

43 Five Dollar Silver Certificates 1889 Issued and payable until 1964

44  organization that helped farmers by forming cooperatives in which farmers could buy goods in larger quantities and lower prices  Also pushed for regulatory laws on industries on which farmers depended - like the RR’s and grain storage elevators

45 1870’s – Political organizations formed by farmers across the nation to fight for reforms, such as –Federal regulation of the RR’s –More money in circulation –A state department of agriculture –Antitrust laws –Farm credit –Federal help for natural disasters

46  Political party founded in 1891 by the Farmers’ Alliances  Also called the People’s Party  They wanted:  Increased circulation of money  Free silver

47  A progressive income tax (higher incomes pay higher tax rate)  Government control of communication and RR systems  8-hour workday  End to the use of Pinkertons

48 William Jennings BryanWilliam McKinley

49 $Republican $Governor of Ohio $Supported the gold standard $Campaign was funded by wealthy industrialists like Rockefeller

50 Democrat from Nebraska Supported “free silver” Nominated by both the Populists and Democrats

51 W. J. Bryan’s passionate speech at the Democratic National Convention in 1896 ended with these words: “You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold!”

52 William Jennings Bryan delivers his “Cross of Gold” speech, 1896

53 Political Cartoon Depicting Bryan


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