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In the late 1800s, populists like William Jennings Bryan wanted to allow the dollar to depreciate by going off the gold standard and allowing "free silver." This is what Bryan was advocating in his "Cross of Gold" speech.
But when a currency depreciates, some people lose. Those are mainly people who have money invested and gaining interest. If I loan you money, I want to get back an amount of money that is worth more than what I loaned you. But if the currency depreciates, the money you repay me may be worth less than what I loaned you.
Because of this, there was strong opposition to the idea of depreciation from anyone who had a lot of money loaned out or invested. These, of course, included many rich and powerful people.
In the 1890s, there was a lot of discussion about our money supply. It was a key theme in the presidential election of 1896. Farmers were suffering because they were deeply in debt. This occurred because the prices they received for the crops were very low. They also had to pay high-interest rates on the loans they received to buy their farms. Thus, to help resolve their financial issues, they wanted the government to go to a bi-metallic money supply, which is a money supply based on both gold and silver.
If we went to a bi-metallic money supply, inflation would have probably occurred since there would have been more money in the economy and people would most likely have demanded more products. An inflationary period hurts creditors because the money that is repaid to them can’t buy as much as the money could have bought before the inflation occurred. An inflationary period is good for people in debt because the money they are paying back doesn’t buy as much as the money that they were loaned. The creditors strongly supported the Republican Party that wanted only a money supply based on gold. Many of the creditors were influential people and involved in politics.
Therefore, there was opposition to a bi-metallic money supply. Business owners, creditors, and those influential in politics wanted a money supply based only on gold. This would help to prevent inflation, which would have hurt businesses and people that had loaned money. Businesses threatened to lay off workers if the Democrats won the election of 1896 because the Democrats supported a bi-metallic money supply. Workers were concerned about losing their jobs. This, in part, helped the Republicans win the election of 1896. We stayed with a money supply based only on gold.
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