Why were Americans arguing over gold or silver money? After all, money is money, right?
Gilded Age Politics
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It actually is not that true to say that “money is money.” We all know this in a sense because we know that things used to cost really tiny amounts of money (at least in nominal dollars) years ago. For example, first class postage via the US Postal Service cost 20 cents thirty years ago. Today it costs 45 cents and next week it will go up to 46 cents. This is because the value of money tends to decline over time due to inflation. So a dollar today is not worth the same as a dollar 30 years ago and a dollar 30 years from now will be worth less. Money, therefore, is not money.
The argument between the “gold bugs” and the “free silver” movement had to do with the value of money. The US, at the time, was on the gold standard. All money had to be either made of gold or backed by gold. The free silver movement wanted silver to be used as money too. If this had been allowed, the supply of money would have increased because there was a lot of silver being mined. This would have reduced the value of money (because there was more money around for people to spend on the same amount of goods and services).
If the value of money dropped, people who owed money (most notably farmers who were deeply in debt) would have an easier time paying it back. People who lent money would be harmed because the money they would be paid back would be worth less. Thus, the issue of gold money vs. silver money had real economic implications for various people in the US. This is why it was such a big issue.
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