Common Sense with Paul Jacob

On Feb. 17, 1801, Thomas Jefferson was elected by the U.S. House of Representatives to be the third president of the United States, after an arduous election process that ended only 15 days prior to inauguration.

The fracas included a tie vote in the Electoral College followed by 35 indecisive ballots in the House. At that time, votes were cast for president, with the second place candidate becoming Vice-President. But in the Electoral College, Jefferson tied with his vice-presidential running mate, Aaron Burr. When that sent the balloting to the House of Representatives, the Federalists opposing Jefferson initially threw their support to Burr.

On Feb. 17, 1933, a constitutional amendment to repeal the Eighteenth Amendment to the U.S. Constitution, which had established the national prohibition of alcohol, was passed by the U.S. Senate. Known as the Blaine Act, the prime author was Wisconsin Senator John J. Blaine. By the end of 1933, the repeal of prohibition was adopted as the 21st Amendment to the Constitution.

On Feb. 16, 1878, the Bland-Allison Act, which provided for a return to the minting of silver coins, became U.S. law. Today, the value of American money is secured only by public faith in the stability of the government, but during the 19th Century, money was backed by actual deposits of silver and gold.

That is, money was silver and gold. But that did not mean that all was right with the monetary system.

Five years earlier, when Congress had stopped buying silver and minting silver coins — following the lead of European nations — a financial panic ensued. Reasons for the suspension lay in the fact that the exchange value of silver and gold had retained an old, out-moded fixed ratio that favored silver producers. Had the United States Treasury let the two standards freely float, making a distinction between silver dollars and gold dollars, none of the political strife over bimetallism would have occurred.

As it was, with silver over-valued, the silver coins increasingly “drove” gold out of circulation, as well as out of the Treasury and into private hands.

In 1893, in the midst of another financial panic, this time as a result of depletion of gold reserves in the U.S. Treasury, President Grover Cleveland called a special session of Congress to repeal the bimetallic standard. He was successful, though agrarian inflationists took over the Democratic Party and offered up, for the next election, William Jennings “Cross of Gold” Bryan as a counter to Cleveland’s old-fashioned fiscal conservative/social liberalism.