Distant AuthorityMonetary Policy & the Tariff

Today’s Agenda

• 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

Foreign Steel Cost $100 per ton

Domestic Steel Cost $120 per ton

With 30% Tariff $130 per ton

US Sales

Foreign Sales

An artificial increase in foreign prices

How does a tariff work?

A steel mill in

England makes

tractors to sell for $90 each

Tractors are transported to America.

The US Gov.

places a $40 fee

(tariff) on each

English tractor

A fledgling American

factory makes

tractors to sell for

$100 each

Farmers can buy an American tractor for $100 and English

tractor for $130

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 Helped

Consumers

Exporters

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