Suspicion of eastern elites and the impact of monetary policy has switched parties since 1896
By Buttonwood
DONALD Trump has been compared with many past politicians—Richard Nixon for his suspicion of the press and Warren Harding for his isolationism are two obvious examples. Steve Bannon, Mr Trump’s alt-right hand man, has just compared him with William Jennings Bryan, who ran unsuccessfully for President in 1896, 1904 and 1908 on the Democratic ticket.
Mr Bannon said that Mr Trump is an orator in the class of Bryan, although that seems pretty hard to credit. The current President has displayed nothing like the eloquence used by Bryan in his most famous speech, to the 1896 Democratic convention.
You come to us and tell us that the great cities are in favour 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.
Having behind us the commercial interests and the labouring 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 labour this crown of thorns. You shall not crucify mankind upon a cross of gold.
Nevertheless, there is something to the comparison. Bryan appealed to the “heartlands” of America and their suspicion of the eastern elites. Another similarity is their distrust of science. Mr Trump has described climate change as a hoax and expressed his doubts about childhood vaccination; Bryan ended up an an expert witness arguing against the teaching of evolution in the Scopes monkey trial (as seen in the film Inherit the Wind). Compare their electoral maps (see below) the states won by Bryan in a losing cause were very similar to those won by Mr Trump in November. Somehow, the electoral map has turned 180 degrees since 1896, with reliably Republican states becoming Democratic and vice versa.
The cause espoused by Bryan was that of “free silver” or bimetallism; turning away from the gold standard to expand the money supply, drive up food prices and make it easier for farmers in the heartland states to pay their debts. Some believe the Wizard of Oz is an analogy for this battle; both the yellow brick road and Oz itself are golden references; the gold standard is nothing more than an old man behind a curtain; and in the book, Dorothy clicks silver slippers to escape back to her Kansas farm.
One can trace back the success of Mr Trump’s populist appeal to the “tea-party” revolt that followed the credit crisis and a feeling among many voters that bankers had driven the economy off a clifff and were nevertheless being bailed out by taxpayers. The Republicans, seen back in 1896 as part of the eastern money elite, were able to campaign against the modern version of that group.
Still, the comparison needs a few qualifications. The presence of so many billionaires in Mr Trump’s cabinet, and so many ex-employees of Goldman Sachs, runs counter to the idea that the new administration represents the common man. Had Mr Bryan won the presidency, it is hard to imagine his cabinet looking anything like the current line-up.
Secondly, just as the electorate has switched parties over 120 years, monetary policy has switched roles. In the 1890s, the financial elite believed in the gold standard because it protected the interests of creditors. Such creditors were bankers and bondholders who faced the risk of being repaid in money that had been devalued by inflation; the gold standard made that outcome impossible. The modern elite has more of its wealth in equities and property, which tend to benefit more from easy monetary policy.
Mr Trump has the chance to remake monetary policy since he could have the chance to nominate five Federal Reserve governors (out of a seven-member board)in the next year or so. Before the election, he said that Janet Yellen should be ashamed of what she was doing to the country with her easy policy. In theory, Mr Trump could pack the board with hawks. In practice, however, he is unlikely to want to "press down upon the brow of labour" with the kind of tough policy that made the economy slow and unemployment rise. Like Bryan, he might prefer a bit of gentle inflation.
