How Did the Panic of 1893 Affect the Election of 1896?
The Panic of 1893 was a major economic crisis in the United States, the largest it had seen up to that time. Many Americans saw the panic as a result of increased railroad speculation after the Civil War and a rigid attachment to the gold standard. The panic gave power to the Populists, a political movement of farmers who opposed the growing power of industrialists, and brought the issue of eliminating the gold standard to the center of the 1896 election.
1 Railroad Speculation
The Gilded Age (1860-1896) saw the rapid expansion of railroads across the United States. This extensive railroad building required large amounts of capital and it resulted in some investors and industrialists who controlled this capital becoming immensely wealthy, but also in over-speculation of potential railroad futures by other investors. This speculation culminated in an economic recession, the Panic of 1873, yet one which did not halt the railroad speculation. After the panic, railroad building continued, and it would eventually lead to the greater Panic of 1893.
2 Currency Debate
The other major issue which many Americans saw as the cause of the Panic of 1893 was the attachment to the gold standard, which had also been the product of early Gilded Age practices. After the Panic of 1873, the U.S. Congress passed the Coinage Act, which eliminated silver backed currency and effectively placed the U.S. on a gold standard. Limiting the money supply to gold only kept inflation low, benefiting industrialists over farmers, as the high value of money made it more difficult for farmers to pay back loans and made bankers and those who held money wealthier. Though this gold standard prevented inflation, it contributed to the Panic of 1893 by keeping the value of money so high.
3 Populist Movement
These discontented farmers coalesced into a political movement known as the Populists. At first, farmers formed local organizations known as Granges, which sought to influence policy on a state level to favor farmers. Eventually these Granges formed a national political party, known as the Populist Party, which put forth a series of political platforms. Though established in 1891, the Populist Party's ideas gained currency, so to speak, after the Panic of 1893, when their criticism of the gold standard seemed validated.
4 Cross of Gold
The gold standard became the central issue of the election of 1896.The Democrats adopted merged with and adopted the platform of the Populist Party and in that year ran William Jennings Bryan, a young but fiery orator, as their candidate. Bryan famously delivered the "cross of gold" speech in July of 1896, when he called for an end to the gold standard as it was a heavy burden on farmers. Despite his popularity, Bryan lost the election of Republican William McKinley, who had the backing of the railroad and banking industries. Soon after, in 1900, Congress passed the Gold Standard Act, which officially put the U.S. on the gold standard it had been unofficially following since 1873.