The Financial Crisis of the 1890s
QUESTION: Hi Martin,
You have mentioned over and over that J.P. Morgan had to bail out the US Government in the late 1890’s with gold, which was US money at that time. Can you explain to us how the US economy could be strong at that time when the US Government went broke collecting tariffs on imports?
Chaz
ANSWER: The economy was strong, it was the silver democrats who overvalued silver taking bribes from the silver miners. That led to the arbitrage silver was pouring into the USA and swapped for gold. The insolvency was not from domestic debt but from the overvaluation of silver, and gold was the international settlement – not silver.
Today, we are in a debt crisis. This is economically different. The Panic of 1896 was about foreign exchange and the Democrats trying to inflate the economy with silver as they are still trying today with endless spending and no accountability. This led to their attack on the gold standard and the 1893 march on Washington that became the Wizard of Oz. See:
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