“We’re off to see the Wizard, the wonderful
Wizard of Oz”
Unbeknown to most of us, L Frank Baum’s “The
Wizard of Oz” is based on the Depression of the 1890s in America. Whilst many
may argue that this is a stretch of the imagination, the context in which the
book was written, as well as the parallels between the book and the Gold
Standard debate of the time, is uncanny.
Causes of the Depression of the 1890s
The Silver Purchase Act of 1890, which backed
the government’s money with silver as well as gold, is seen to have triggered
the depression. Many rushed to banks in order to take out their money so that
they could then cash it in to the government in exchange for gold. Rationally, people
wanted to ensure that they received gold, which is superior to silver. Thus, as
gold reserves fell, even more people rushed to the banks to take out their
money as they were reminded of the bank runs of the previous decade. However,
this fulfilled their prophecies and triggered further bank runs.
Furthermore, as the prices of wholesale goods
decreased, more businesses wished to cut the wages of their employees, in order
to remain competitive. However, this just resulted in a wave of violent strikes
across America. Employees suffered from money illusion because they did not
understand that a cut did not mean a fall in their real wages, as deflation
was prominent. Thus, employees felt that their cuts were unjust and unfair and
so went on strike, reducing output.
This fervent activity culminated in the
presidential election of 1896 in which William
Jennings Bryant wished to continue the free coinage of silver, whilst his
rival, Republican candidate William McKinley, wished to ensure that money was
solely backed by the Gold Standard. Bryant tried to persuade the American
public that by extending the government’s reserves to include silver as well as
gold, the money supply could also increase, thus resulting in inflation, which
would thus result in the real value of the farmers’ debt falling. However, it
should be noted that this would have been to the bereft of the creditors who
would have received lower real repayments.
But, how does this relate to the Wizard of
Oz?
- The Yellow Brick Road represents the Gold Standard
- Dorothy’s silver slippers (red in the film) represent the free coinage of silver
- Dorothy represents the American population who was swept up in a revolution, as highlighted by the cyclone, which, in the 1890s, was a metaphor for a political revolution
- The Scarecrow represents the US farmers. By 1900 prices had fallen by 22% in 16 years, and the farmers were heavily affected by the reduced income from their produce. They supported the expansion of silver, as this would have increased the monetary base, increasing the US money supply and so increasing the price levels. This would have ensured that the farmers received greater income and could have paid off their debts much more easily.
- The Tin Man is a metaphor for the industrial workers
- The Cowardly Lion represents the Democrat William Jennings Bryan, who failed to win the 1896 presidential election
- The Wicked Witch of the West represented the businessmen and their selfish interests
- The deceiving Wizard of Oz symbolised US presidents of the 1800s
- The Emerald City could represent the greenback (the US dollar), which only pretends to have a real value
Whether Baum had written his novel with these
motivations or not, this analogy should nonetheless prove as a useful way of
discussing the Depression of the 1890s and whether we should “follow the yellow
brick road” back to the Gold Standard.
References
George Akerlof, Robert Shiller, 'Animal
Spirits' (Princeton, 2009)
