Every four years we bemoan record campaign spending and every four years we are wrong. For all the fistfuls of dollars super PACs have thrown into this post-Citizens United election, the reality is the 2012 campaign isn’t even in the same vicinity of the most expensive ever.
That would be the campaign of 1896, by almost a factor of five. The chart below, courtesy of Dave Gilson of Mother Jones and Seth Masket, puts our campaign finance system in historical perspective. It looks at presidential spending as a share of GDP, rather than in nominal dollars, over the past century and a half. There was remarkably more campaign spending in 1896 than in the next four priciest elections combined.
With apologies to Franklin Roosevelt, this is what it looks like when business is united against a single candidate as they never have been before or since. What inspired such historic hatred back in 1896? In a word, silver. Democratic nominee William Jennings Bryan famously wanted to stop crucifying mankind, or at least the economy, on a cross of gold—that is, he wanted a bimetallic money standard. The economics were on his side. The 1890s were the heyday of the gold standard, but also the heyday of deflation and depression. The economy was in recession more often than not between 1873 and 1896 for a painfully simple reason—there wasn’t enough money. Look at what happened to prices in the decades following the Panic of 1873; by 1896 prices were 30 percent lower than 24 years earlier.
A stronger dollar, which is just another way of saying falling prices, was good news for creditors and bad news for debtors. Lenders got paid back with dollars that were worth more than when they made their loans, and vice versa for borrowers. Now, if falling prices sent too many debtors into default, falling prices would be painful for creditors too, which is what happened during the Great Depression. But whether it’s the 1930s or the 1890s, bankers tend to fear inflation more than they do bankruptcies—as Matt Yglesias pointed out, businessmen don’t always know what’s good for business when it comes to macroeconomics. This inflation-phobia is why Wall Street threw such unprecedented and since unmatched sums into defeating Bryan and his pro-silver platform. (Coincidentally, we still got inflation even without Bryan thanks to major gold finds in South Africa in 1896 and the Yukon in 1898).
As much as Wall Street hates Dodd-Frank in 2012 or hated Glass-Steagall in 1936, it hated silver with a singular passion in 1896. It’s hard to understand now, but business back then couldn’t conceive of civilization without the gold standard. They thought silver was an existential threat to the world as they knew it, and they treated it as such.
Our gilded age has nothing on that one—yet.