SOMEWHERE, OVER THE HI-TECH BUBBLE

Goodbye, yellow brick road (Bill O'Rahilly, August 4 2003, Financial Times)

Seldom can we draw upon fiction and witchcraft to direct us through economic history. But in 1964, Henry Littlefield, a school teacher, published a study entitled The Wizard of Oz: A Parable on Populism. In this essay he presented L. Frank Baum's, The Wizard of Oz, as an allegory for late 19th century America. His description of this popular novel has echoes in today's US economy.

The story covers the 1890s, during which the US endured grinding deflation. Farming communities in the west, represented by the Scarecrow, saw their incomes and asset values collapse and the real cost of debts rise. This benefited the bankers in the east - in the guise of the Wicked Witch of the East. Throughout the period the gold standard was in operation, represented by the Yellow Brick Road. The supply of money was confined by the fixed availability of gold. According to Littlefield, Baum supported the Democratic pro-silver candidacy of the time and wove this theme into his tale. Dorothy was the US, Oz gold, the Tin Man industry and the Emerald City Washington. Perhaps the allegory was lost on Messrs Metro Goldwyn and Mayer - or maybe they employed artistic licence for visual effect. But in Baum's original story, Dorothy did not have ruby shoes but silver ones, representing the silver campaign.

In a National Democratic Convention debate on monetary policy at the time, William Jennings Bryan, a little-known Democrat, called for a move towards a silver standard. Silver would, he said, provide a more abundant reserve against which banks could produce money and ultimately reflate the
economy. Drastic times called for dramatic rhetoric. Bryan's manifesto earned him the Democratic presidential nomination that year as he
electioneered: "You shall not press down upon the brow of labour this crown of thorns, you shall not crucify mankind upon a cross of gold".

Victory eluded Bryan in the 1897 election and the gold standard remained.

So are the Democrats the Munchkins or the Flying Monkeys?

MORE:
The Parable on Populism: An Autobiography of a Wizard (Christopher Steven Marcum) Posted by Orrin Judd at August 7, 2003 9:14 AM