Money Mischief_ Episodes in Monetary History - Milton Friedman [112]
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† Definitions from the Oxford English Dictionary.
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* In a fascinating paper, Hugh Rockoff (1990) persuasively argues that Frank Baum's The Wonderful Wizard of Oz "is not only a child's tale but also a sophisticated commentary on the political and economic debates of the Populist Era" (p. 739), that is, on the silver agitation generated by the so-called crime of 1873. "The land of Oz," according to Rockoff, "is the East [in which] the gold standard reigns supreme and where an ounce (Oz) of gold has almost mystical significance" (p. 745). Rockoff goes on to identify the Wicked Witch of the East with Grover Cleveland, the gold Democrat who, as president, "led the [successful] repeal of the Sherman Silver Purchase Act of 1893" (p. 746).
Similarly, Rockoff is able to identify many of the other places and characters, and much of the action, with places, people, and events that played a significant role in the final years of the free-silver movement.
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* Though France certainly adopted the ratio of 15.5 to 1 because it was roughly the market ratio in 1803, France's successful maintenance of bimetallism undoubtedly helped to stabilize the ratio (see Walker 1896b, p. 87; Fisher 1911, p. 136).
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* According to the estimates discussed in the next section of this chapter, 26 times as many ounces of monetary silver would have been accumulated as the ounces of gold actually acquired.
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* "I owe this observation to Hugh Rockoff.
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* From 1803 to 1873, when France successfully maintained a bimetallic standard at a legal gold-silver ratio of 15.5 to 1, the lowest market ratio was 15.19 in 1859, the highest 16.25 in 1813. Most of the time the range was much narrower (Warren and Pearson 1933, table 25, p. 144).
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* These are the annual reference dates used in Friedman and Schwartz (1982).
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* The estimate in chapter 4 is that the market ratio would have been about 24 to 1 in 1896 if the United States had remained on a bimetallic standard. However, as indicated in the text, I suspect that that is a considerable overestimate.
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* Many years ago, I suggested to Louis Drake, then professor of economics at the University of Southern Illinois, that he estimate the effect on U.S. and world prices of the United States' having remained on a bimetallic standard. He worked on the project for years and accumulated much data, but he was never sufficiently satisfied with his results to publish them. After his death in 1982, colleagues and friends edited a preliminary paper found in his files that retained in full his original calculations, and published the result in Drake (1985, pp. 194–219). When I began the paper which became chapter 3, I thought that I could simply use his results. However, when I read his paper in detail, I appreciated the reservations about his results that presumably had led him to refrain from publication. In consequence, I have produced an independent set of estimates, though benefiting from some of his data and analysis. Not surprisingly, my final results differ drastically from his.
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* For sources of data for these and succeeding variables, see the Source Notes at the end of the chapter.
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* I owe this approach to Hugh Rockoff. It replaces a less attractive assumption I had made initially.
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* An interesting check on these estimates, discovered after they were completed, is provided by Irving Fisher, who in 1911 wrote: "If some way had been contrived by which gold and silver could have been kept together (say by world-wide bimetallism), prices would not have fallen so much [from the average of 1873–76] in gold countries, or risen so much (if at all) in silver countries, but would probably have fallen in gold countries slightly—probably about 10 per cent up to 1890–1893 and more up to 1896." He estimates that prices in fact fell 22 percent in gold countries between 1873—76 and 1890—93 and rose 17 percent in silver countries. According to Table 1, prices in