The US Constitution established both gold and silver as the basis of US currency: that is to say, it established a bimetallic standard for currency. This remained in place for about a century, until the Coinage Act of 1873, which embraced a "gold only" standard, a monometallic standard, effectively dropping silver as the basis of currency. Over the next several decades, advocates of bimetallism and advocates of the "gold only" standard fiercely debated.

The "gold only" advocates, such as William McKinley, argued that shifts in the relative value of the two precious metals could lead to wild fluctuations in the values of currency in a bimetallic system. Early in the United States history, Alexander Hamilton had tried to fix the gold-silver exchange rate by fiat, but of course, such restraints only inhibit the natural development of a free market.

Unemployment was high in the depression caused by the Panic of 1893, and many argued that these economic challenges had been triggered by abandoning bimetallism. One of the more prominent advocates of bimetallism was William Jennings Bryant: indeed, bimetallism was the very center of his presidential campaigns in 1896 and 1900, both of which he lost to McKinley. Bryant articulated the popular view that a "gold only" standard limited the money supply, and thus favored those who were already quite wealthy, against the interests of working people of all professions. He famously expressed this argument in his "Cross of Gold" speech at the 1896 Democratic National Convention, in which he argued that continuing the "gold only" standard would "crucify" the honest laboring classes on a "cross of gold."

Despite the eloquence of Bryant's arguments, history strongly favored the "gold-only" standard. The argument that increasing the money supply would lead to greater prosperity strikes us now as naïve: of course, we now understand that increasing the monetary supply can lead to runaway inflation, which hurts everyone. Furthermore, gold did not remain as limited as the advocates of bimetallism imagined. In the 1890s, scientists discovered a cyanide process that allowed workers to extract pure gold from much lower grade ore, thus significantly increasing domestic gold production. Additionally, the discovery of two immense gold deposits in South Africa substantially increased world gold supply. Thus, the "gold only" standard allowed for ample currency, and even robust prosperity in the 1920s, so bimetallism died a quiet death.

1. One reason advocates of bimetallism did not favor a “gold only” standard was that they believed that

A. the supply of gold was limited
B. it would increase the money supply
C. shifts in the prices of gold and silver were unpredictable
D. it could lead to rampant inflation
E. silver provided a check against deflation



2. It can be inferred from the passage that the author believes that government attempts to control exchange rates

A. compromise the workings of a free economy
B. will inevitably lead to fiscal collapse
C. are usually favorable in the short-term
D. run counter to the tenets of the United States
E. lead to a greater chance for inflation



3. According to the passage, bimetallism was not enduring because it

A. made unwarranted conclusions concerning the connection between value and metals
B. was not adopted by those responsible for the shaping of economic policy
C. resulted in persistent inflation that plagued all levels of the economy
D. did not allow for the possibility of a third monometallic standard
E. was based on false assumptions regarding both the money supply and the supply of gold



4. The author of the passage believes William Jennings Bryant’s argument that a gold standard favors the rich to be

A. somewhat relevant, because it accounts for a common trend seen throughout the history of bimetallism
B. lacking validity, because it believes increasing the money supply will benefit a segment of the population
C. without merit, because it is not based on actual historical accounts
D. not entirely accurate, because it overemphasizes the role of silver in regulating the money supply
E. partially correct, because it described some of the class differences between the rich and the poor



5. The primary purpose of the passage is to

A. provide a brief account of a common economic trend
B. discuss the development of and reactions to an economic policy
C. chronicle the ascendancy of an idea in economics
D. illustrate the shortcomings in multiple theories
E. argue for greater governmental control of the economy



6. The “cyanide process” mentioned in the last paragraph does which of the following?

A. Serves as a countermeasure to actions taken by advocates of the “gold only” standard
B. Provides evidence against an argument of those opposed to a “gold only” standard
C. Illustrates one way in which controlling the money supply can lead to inflation
D. Argues against the position adopted by William Jennings Bryan.
E. Offers up a compelling reason governments should be favor of bimetallism.