“Family and friends,” chapter 16 of The Dragon Lady of Stockbridge, is now available. Rebecca goes home to see her parents, only to confront new magical surprises. And how does one receive a daughter who is feared by the town as a witch? If you’re not reading the story already, you can start here.
Today’s historical digression is money. The hotel Rebecca is staying in, the Double Eagle? It’s named after the twenty-dollar gold piece, which was then the highest denomination coin in circulation. A crass name, but it was Barnabas Dawson who named it. What more need I say?
Not that many people would see a twenty-dollar gold piece. Rebecca and the wealthy summer people from New York might use them, but the local workers wouldn’t. A manufacturing laborer might expect to make between $1 – $1.50 per day. About 60% of that would go toward food, 25% toward housing, 10% to clothing, leaving him maybe 5% of his wages as “discretionary” money. A farm laborer would make half that, though he’d get some allowance in room and board.
The wealthy visitors to the Berkshires thought in different terms. They were willing to spend tens of thousands of dollars, or even hundreds of thousands, to built their modest summer cottages of twenty or forty or more rooms. No wonder they could afford to hire servants!
You sometimes hear people talk about the gold standard? Well, that’s what the United States was on in 1886. (Technically, the country was on a gold and silver standard, but for various reasons the silver part of the standard didn’t work and wasn’t really expected to.) An ounce of gold was worth just over $20, a rate set by law, and so the double eagle coin had just under an ounce of gold in it. Any time you wanted, you could exchange American currency for gold, at a rate of about $20 an ounce. Most of the “civilized” (i.e., European) countries were also on the gold standard.
The gold standard does have its benefits. But it also created a major social problem in the period 1873-1898. The money supply, namely the amount of gold in circulation, increased more slowly than the economies of the civilized nations. That put a downward pressure on wages and prices. And wouldn’t you know, wages fell faster than prices did. Bad enough to see your pay cut. But to see it cut when the price of necessities doesn’t fall by the same amount drove workers to the edge of poverty. It was a period of substantial labor strife. Workers tried to hold the line on pay. Corporate managers insisted they had to cut wages to pay out the dividends to which shareholders were entitled. And so there were strikes, lockouts, and violence on both sides.
By the 1890s, the country had split between those who supported the gold standard, and those who believed it was harming the country. At the Democratic Party convention in 1896, a dark horse Presidential candidate named William Jennings Bryan would capture the nomination with just one speech, which ended with this memorable protest against the gold standard: “Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests, and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”
Bryan lost the election, though. Gold strikes in the Yukon and South Africa increased the money supply and ended deflation as a political issue. In 1900, Congress made the gold standard official, dropping any pretense at having a silver standard as well.