The Driver - Part VII - Panic of 1893
Click here for Parts 1, 2, 3, 4, 5 and part 6 of my review of The Driver.
Garrett's focus on the Panic of 1893 can be better understood in light of a brief explanation of that crisis. A main factor in precipitating that crisis was the federal government's decree that Gold and Silver trade at parity with each other. The two metals were treated by Congress as equal in value, the laws of economics notwithstanding. "Naive trust in the power of words to command reality is found in all mass delusions." [p. 89].
The forced parity between the metals caused a run on gold, leading to a general credit collapse. The story is more complicated, but the government's populist attack against gold (and previously against silver in 1873) was the root cause of the panic. The situation was not rectified until the government returned to the gold standard after the election of 1896.
Much of this information does not appear in The Driver except by passing reference.
There were other similarities with today's bubble. Just as today's elected officials have received favorable treatment from mortgage companies at the heart of the financial meltdown, "United States Senators were discovered speculating in the stock of corporations that were interested in tariff legislation, particularly the Sugar Trust." [p. 93]
Another similarity relates to Wall Street:
The name of Wall Street became accursed, not that morality was lower in Wall Street than anywere else, but because the consequences of its sins were conspicuous.[p. 93]
It is always easy to blame "Wall Street" for the consequences of the government's currency devaluation.
A principle difference between the two crises can be seen in the solutions. While President McKinley returned the country to sound money, our government seems determined to devalue our currency to the point where U.S. Treasury bonds will be unmarketable. (This devaluation is in addition to increased political controls that will further cripple the economy, censor political opponents and ensure one party rule.) A century of currency devaluation has enshrined the power of mass delusion.
A by-product of the Panic of 1893 has been the lasting effect on American culture. The Driver's plot was based on the Panic. The Driver was one of many influences on the writings of Ayn Rand - writings that remain powerful and influential to this day.
Others have speculated about the influence of the Panic and the gold-silver controversy on the original book version of the Wizard of Oz in 1900. I have also read that the Panic, due to the rapid abandonment of newly built homes by suddenly insolvent individuals, created the legend of the abandoned, victorian haunted house that appears in so many movies, television programs and amusement parks. I will leave that speculation for others.
I will comment only that for the present crisis to have a lasting effect on our culture such that writers, readers and viewers in 100 years will see elements in fiction that grew out of this crisis, policies will have to change. We cannot bankrupt the United States and expect literature and culture to thrive in the future. Vibrant culture grows out of vibrant civilizations, not decaying, balkanized people mired in chaos over a destroyed currency. If the U.S. is reduced to a third world country, no one will remember the allegedly "historical" political events that have been celebrated in recent months, and no mythology equivalent to the Wizard of Oz/haunted house legends will emerge to commemorate our economic woes.
Click here for Part VIII.