Distant Authority Monetary Policy

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Distant AuthorityMonetary Policy the Tariff
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Todays Agenda

• Review
• Distant Authority Slide Show
• Homework
• Study for Unit Test (Thursday!!!)

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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.

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The Gilded Age
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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.

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Coxeys Army Presentation
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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?
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Panic of 1893 Coxeys Army.
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Describe Americas 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

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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

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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

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What was Grover Clevelands attitude towards the
economy?
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What other issue affected farmers and laborers?

• Tariffs

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What is a tariff?
A tax on imported goods. Imported goods products
made in other countries
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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

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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.
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Protective Tariff Example
An artificial increase in foreign prices
Foreign Steel Cost 100 per ton
With 30 Tariff 130 per ton
Domestic Steel Cost 120 per ton
US Sales
Foreign Sales
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How does a tariff work?
Farmers can buy an American tractor for 100 and
English tractor for 130
A steel mill in England makes tractors to sell
for 90 each
The US Gov. places a 40 fee (tariff) on each
English tractor
A fledgling American factory makes tractors to
sell for 100 each
Tractors are transported to America.
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How will foreign nations react to a protective
tariff?

• retaliate by imposing tariffs on our exports.
• IE. Farm products

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Who is hurt and helped by a protective tariff?
Hurt
Helped
Consumers
Owners of Protected Industries
Exporters
Workers in Protected Industries
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How did protective tariffs hurt farmers?

• Made farm products more expensive overseas
• Cut their sales in other nations

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Election of 1896 Presentation
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(No Transcript)
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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

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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 countryyou
  shall not crucify mankind upon a cross of gold.
• Gold only money policy is crushing (crucifying)
  the farmers

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(No Transcript)