Distant Authority
Monetary Policy & the Tariff
Today’s Agenda
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Review
Distant Authority Slide Show
Homework
Study for Unit Test (Thursday!!!)
Review
• Describe the Gilded Age
• Describe the problems farmers had during the
1890s.
• Who were the Grangers?
• What is the significance of Munn v. Illinois?
• What is significant about the Wabash case?
• Describe the problems labor had during the
Gilded Age.
The Gilded Age
Today you will be able to:
• Identify what a protective tariff is, who would favor it, and
why?
• Identify differences between Bryan and McKinley
Describe the difference between a debtor and creditor
and analyze what each would have thought about the
money supply.
• Explain what a “tight” and “loose” money supply is.
• Identify William Jennings Bryan and analyze his “Cross
of Gold” speech.
• Explain and analyze the results of the election of 1896.
Coxey’s Army Presentation
What happened to the US economy in
1893?
• Panic of 1893
– 20% unemployment
– Cleveland= laissez faire
• Jacob S. Coxey
– businessman led march of 500
people from Ohio to
Washington
– Wanted to call attention to high
rate of unemployment
– Arrested for walking of grass
What does silver
have to do with
the economy?
Panic of 1893 & Coxey’s Army.
Describe America’s financial policy in the
1890s.
• Tight money policy
– U.S.’s money supply
based on Gold
– Very limited (tight)
supply
– Hurt farmers most
• Food prices had
dropped
• Mortgage
payments
remained the
same
What did the farmers want?
• Bi-metalism & a
loose money policy
– Dollars backed
by gold and
silver
– Would increase
supply of money
– Make money
cheaper
– Allow them to
pay off their
debts
Which money policy did eastern
bankers favor?
• Tight or Gold only
money policy
• Why?
• Less money in supply
means that its worth
more (has more buying
power)
• Farmers owed them a
“fixed” amount of cash
(ex. $1000)
• $1000 gets them more if
less of it is available
What was Grover Cleveland’s attitude towards
the economy?
What other issue affected farmers and
laborers?
• Tariffs
What is a tariff?
A tax on
imported
goods.
Imported
goods=
products
made in
other
countries
What kinds of tariffs are there?
• Protective
– intended to keep
identified foreign
products out of our
country so that
Americans will “Buy
American!”
• Revenue
– designed to raise
money for the country
– calculated to be small
enough so as not to
curtail trade
Revenue Tariff Example: The
United States imposes a five percent
tariff on foreign wine.
Pre tariff price:
$20.00 bottle
After tariff price:
$21.00 bottle
Result: Demand will probably not
drop much for the product and the
imposing country will raise funds.
Protective Tariff Example
An artificial increase in foreign prices
Foreign Steel Cost
With 30% Tariff
$100 per ton
$130 per ton
Domestic Steel Cost
$120 per ton
US
Sales
Foreign
Sales
How does a tariff work?
Farmers
can buy an
American
tractor for
$100 and
English
tractor for
$130
A fledgling
American
factory
makes
tractors to
sell for
$100 each
The US
Gov.
places a
$40 fee
(tariff) on
each
English
tractor
Tractors are
transported
to America.
A steel
mill in
England
makes
tractors
to sell for
$90 each
How will foreign nations react to a
protective tariff?
• retaliate by
imposing tariffs
on our exports.
• IE. Farm
products
Who is hurt and helped by a protective tariff?
Hurt
Consumers
Exporters
Helped
Owners of Protected
Industries
Workers in Protected
Industries
How did protective tariffs hurt farmers?
• Made farm
products more
expensive
overseas
• Cut their sales
in other nations
Election of
1896
Presentation
Describe the Election of 1896.
• Big Issues:
– Bi-metalism
– Tariff
• Candidates
– William Jennings Bryan
• Great orator
• Supported by
Democrats and
Populists, farmers
• Tireless campaigner
– William McKinley
• Conservative
• A friend to big business
• Never left front porch
What does Bryan mean by a “cross of
gold?”
• Burn down your cites and
leave our farms, and your
cities will spring up again as
if by magic. But destroy our
farms and the grass will grow
in the streets of every city in
the country…you shall not
crucify mankind upon a cross
of gold.”
• Gold only money policy is
crushing (crucifying) the
farmers