The Only Three Questions That Still Count: Investing By Knowing What Others Don't, 2nd Edition

APPENDIX F1

The Wizard of Oz and an OZ of Gold

Did you know when L. Frank Baum put pen to paper to write The Wonderful World of Oz (published in 1900 and later immortalized in the film starring, among others, Judy Garland, Ray Bolger and Bert Lahr), he didn’t intend to write a magical children’s story? No. He meant it as sharp political satire and monetary allegory, involving the economic debates and political players of the 1890s.

Don’t scour the movie for hidden meaning. The 1939 film was indeed intended as lighthearted fare during dark times. Instead, go back to the original text, where no one in 1900 could miss the meaning behind Dorothy’s silver shoes. (Red looked better in Technicolor.) It should grab you instantly that “Oz” is an ounce of gold. Here is the story as Baum meant it.

In the 1890s and into the early part of the twentieth century, debate raged between those who supported the gold standard for our currency and those who would abandon it in favor of a bimetallic or even silver standard. After America returned to the gold standard in 1879, a period of ravaging deflation followed—prices and wages fell nationwide. A variety of policy mishaps, domestic and foreign, culminated in the Panic of 1893 and a subsequent global depression. This wasn’t one of our very biggest depressions, but it wasn’t insignificant, either. Though we now know there wasn’t a single culprit, and American economic woes were part of a larger global trend, in America, the gold standard got its ...