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Volume 14, Number 1
Gen. Longstreet Wars for Gold
Thomas J. DiLorenzo
The Gold Standard Act of 1890, which officially established the gold standard in America,
the culmination of a twenty-year battle between inflationists, who favored unlimited government
purchase of silver (the "Free Silver" movement), and the advocates of sound money based on the
gold standard. The inflationists were led by Senator John Sherman, author of the 1890 Sherman
Silver Purchase Act (as well as the monopolistic Sherman Antitrust Act), brother of Gen.
William Tecumseh Sherman.
A fascinating aspect of this debate is that one of Sen. Sherman's most outspoken political
opponents was none other than the former Confederate General James Longstreet who, during
the War Between the States, was second in command of the Army of Northern Virginia,
outranking even Stonewall Jackson, and whom Robert E. Lee affectionately referred to as "My
Old War-horse." Having defeated the elder Sherman on the battlefield on several occasions,
Longstreet now took on his younger brother over monetary policy.
After Appomattox, Lee's Old War-horse rekindled his friendship with Ulysses S. Grant, a
Point classmate who had married Longstreet's cousin before the war. Longstreet had introduced
the couple and was a member of the wedding party.
After the war, Longstreet became something of an outcast in the South after accepting a
government post from President Grant, becoming a Republican, and assisting in the military
occupation of the South (i.e., Reconstruction). Nonetheless, by pushing for the gold standard, he
was doing the South a great service: nothing restrains a central government like sound money.
Longstreet was active in Republican party politics for many years until his death in 1904 at
age of 83. In his 1896 cross-country lecture tour, the General championed the gold standard
against those who demanded unlimited coinage of any silver brought to the mint, which was a
prescription for hyperinflation.
The 1873 Bland-Allison Act required the Treasury to purchase between $2 million and $4
million worth of silver per month, and the 1890 Sherman Silver Purchase Act required the
government to buy increasing amounts of silver, paid for in Silver Certificates and Treasury
Notes that were redeemable in gold.
These two laws increased the U.S. money supply by more than $500 million and created
inflationary pressures. Big silver producers simply wanted the government to purchase their
product at inflated prices, while farmers and other members of the free-silver movement--like
Keynesians--mistakenly believed that inflation would cause prosperity.
Longstreet's opinions are recorded in his published speech "McKinley on the Gold Standard
Bryan and the Silver Standard" (from the Helen Longstreet Papers at the Georgia Historical
Society). Having witnessed firsthand the economic misallocations caused by government-created
inflation in the Confederacy, Longsteet was an impassioned defender of sound money.
"The last breakfast I had in Richmond, before General Lee pulled us away from there" in
Longstreet recalled, "was a small steak, plain biscuit, and warm water, that had a faint suspicion
of coffee about it" and it "cost me twenty-nine dollars."
"A depreciated currency," Longstreet warned his audience, "will reduce nearly every home"
"suffering, and many to poverty." No nation "ever lowered its financial standard without
weakening the confidence of the people in their own government, besides incurring the distrust
and contempt of the great family of nations."
As to the "clamor for 'cheap money, more money,'" we have a "forcible illustration" in the
Between the States. For "in 1864, when one-third of [Southern] states were under the control of
the Federal armies, the volume of money in circulation...had climbed" twenty times. This
"cheapened Confederate money to a degree from which it never rallied."
This happened not only in the Confederacy, but in "various other countries that have tried the
wild experiment of fiat-money." "This silver craze merely points the arduous long way all
Nations must wearily travel, who wrongfully see a night cut to prosperity by a money debauch."
Moreover, while under the gold standard the silver dollar is: "an honest one-hundred cent dollar,"
under "free coinage" it "becomes a dishonest dollar."
The 1896 election was the high tide of the free silver movement, characterized by William
Jennings Bryan's famous "cross of gold" speech in which he denounced the deflation that
accompanied the gold standard and advocated inflationary finance as the key to prosperity. Bryan
lost the election to William McKinley, the Sherman Silver Purchase Act was repealed, and the
country went on the gold standard. Such was the final victory of Lee's "Old War-horse."
Thomas J. DiLorenzo teaches Economics at Loyola College and is an adjunct scholar for the Mises Institute