A few weeks ago, after the famous Bear Stearns conference call, when the market meltdown started in earnest, Wall Street trader and pundit Jim Cramer went ballistic on CNBC about the “clueless” Bernanke and Poole of the Federal Reserve. At issue was monetary policy, about whether the Fed would continue to let markets seize up because of its concerns about inflation, or whether it would open the floodgates of liquidity, at least temporarily (and as Alan Greenspan often did), to ease the crisis.

The contest of tight and loose money, and the rather evident passion of Mr. Cramer, have recalled to us the debate between the gold standard and bimetallism, so memorably recorded to history in William Jennings Bryan’s Cross of Gold speech (with audio!) which he gave at the Democratic convention in 1896. Excerpt:

There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.

You come to us and tell us that the great cities are in favor of the gold standard. I tell you that the great cities rest upon these broad and fertile prairies. Burn down your cities 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.

It is the issue of 1776 over again. Our ancestors, when but 3 million, had the courage to declare their political independence of every other nation upon earth. Shall we, their descendants, when we have grown to 70 million, declare that we are less independent than our forefathers? No, my friends, it will never be the judgment of this people. Therefore, we care not upon what lines the battle is fought. If they say bimetallism is good but we cannot have it till some nation helps us, we reply that, instead of having a gold standard because England has, we shall restore bimetallism, and then let England have bimetallism because the United States have.

If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands 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.

Of course it would be unwise to press the analogy between Carmer’s rant and Bryan’s speech too far. The times and issues are vastly different, and there was no Fed in 1896. However, it is unlikely that many young students of American history have a clue about why a debate about monetary policy — gold and bimetallism — could arouse great emotions and be considered so important (if they even teach such history today). Is Cramer’s rant remeniscent of events a century ago? Reports from 1896 about Bryan’s speech said this said this: His dramatic speaking style and rhetoric roused the crowd to a frenzy. The response, wrote one reporter, “came like one great burst of artillery.” Men and women screamed and waved their hats and canes. It would be interesting to see a YouTube of that event.

Monetary policy is among the most powerful, and least visible and understood, forces in global prosperity. It is invisible only because it has been mostly going pretty well over the last few decades. We have recently received a reminder that it can become both visible and noisy when it is thought to be handled ineptly.

This entry was posted on Thursday, August 30th, 2007 at 8:46 am and is filed under Democrats, General, MSM, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.