How McKinley's 1897 gold discoveries expanded the money supply and sparked inflation.

Outline:

• Hook and context: Period 6, McKinley era, and a surprising economic turn.

• The gold discoveries: Alaska and Klondike as trigger points for new gold flowing into the economy.

• Money, supply, and prices: why more gold meant a bigger money supply and rising prices.

• The big policy debate: gold standard versus bimetallism and how that framed decisions.

• Why this matters historically: connections to later economic growth and political debates.

• Quick look at the other options: why they don’t fit the story of 1897.

• Close with a takeaway: how this episode helps us read the era as a whole.

What happened when gold changed the money in the vault

Let me explain a moment that feels almost like a money-meter turning a bit too fast. In the late 1890s, the United States was still feeling the aftershocks of economic strain from the Panic of 1893. Then, under McKinley’s watch, the discovery of new gold—first in Alaska and then in the Klondike—added a sizable flow of gold into the economy. It wasn’t just a handful of coins; it was a fresh oscillation in the way people could back currency with gold. In plain terms: more gold meant more money could circulate.

That’s the kind of shift that changes how everyday stuff works. If you’ve ever watched a small town suddenly fill with new coins from a bank vault, you know what it felt like on a national scale. People could borrow a little more confidently, prices for goods and services could edge upward, and merchants priced in a way that reflected this bigger money supply. This wasn’t chaos; it was a recalibration.

Inflation on the horizon—and what that meant for the economy

So what does more money circulating really do? In the simplest terms, it tends to push prices up if the demand for goods and services doesn’t slump at the same rate. Imagine a summer fair with more tickets in circulation; vendors might raise prices on cotton candy and lemonade if folks still want to buy. In the late 1890s, that kind of logic applied to an entire national economy. The influx of gold allowed the government to back more currency, which meant more purchasing power in circulation. When money expands, inflation tends to follow—though the exact tempo depends on a host of other factors, like consumer demand, wages, and the pace of industrial growth.

This is the core reason why the historical record labels the era as a time when inflationary pressures began to reappear after the earlier deflationary climate of the long post-Panic years. Prices weren’t skyrocketing in a dramatic splurge, but there was a recognizable tilt upward. The debate wasn’t just about coins and ledgers; it was about what kind of monetary anchor the country should rely on. Gold, silver, or a mix—these debates shaped political discourse and policy choices for years to come.

A quick detour that matters for the bigger picture

If you’re charting U.S. economic policy, this moment sits at a crossroads. The late 19th century was a battleground over the gold standard and whether silver should be a monetary partner. The Bland-Allison Act and, later, the Gold Standard Act of 1900, reflected a tug-of-war between those who trusted gold’s stabilizing pull and those who believed silver could amplify the money supply and reduce pressures on farmers and laborers. McKinley’s era didn’t settle the theory once and for all, but it did push the conversation from theory into tangible policy choices. And that transition matters when you’re tracing how economic ideas become real-world decisions.

The real people behind the numbers

Think about farmers, shopkeepers, and urban wage earners. A larger money supply can mean more cash for a harvest loan, a bigger market for goods, and a chance to negotiate better terms with creditors. It can also mean prices for bread, for clothing, for fuel—things everyday people notice when their grocery bill creeps up a notch or two. The Alaska and Klondike gold discoveries didn’t just fill the national vault; they shifted how ordinary Americans moved through the economy. It’s a reminder that policy isn’t a string of abstract movements; it’s a series of choices that ripple through households, farms, and factories.

What the other answer choices get wrong

If we fast-forward and compare, the question’s other options don’t line up with the real turn of events in 1897. An increase in unemployment is not the direct hinge of this particular moment. The period’s unemployment question was tangled with cyclical recession, labor unrest, and structural shifts, but the gold discoveries themselves didn’t primarily trigger a spike in joblessness. It’s the money supply story that fits the record.

A decrease in tariffs? Tariffs are a trade policy matter, not a direct result of gold discoveries in the economy. While tariff policy and industrial protectionism were hot topics in the era, the immediate economic consequence tied to those late-1890s gold finds was monetary expansion, not tariff movement.

Deflationary pressures? That would imply falling prices, which runs counter to the inflationary impulse described here. The gold influx tended to push prices up, not down, especially after a period where deflation had pressed on wages and purchasing power earlier in the decade. So deflation isn’t the best fit for the question’s scenario.

Connecting this moment to the longer arc of Period 6

Period 6 in APUSH is all about rapid changes—industrialization, urbanization, shifts in politics, and big questions about money and power. The McKinley era sits at a hinge point: a move away from the earlier, harsh deflationary pressures toward a more expansive monetary stance that could fuel growth. The Alaska and Klondike discoverieslock into a chain of events that touched banking, lending, prices, and political debate. It’s a tidy example of how a natural resource surprise can shape policy, which in turn shapes the everyday world of work and family budgets.

A few thoughts to anchor the takeaways

• The core idea: Gold discoveries increased the money supply, which contributed to inflationary pressures. This is the direct economic consequence tied to McKinley’s presidency in 1897.

• The context matters: The country was balancing on the gold standard and competing ideas about bimetallism. Monetary policy wasn’t just numbers on a page; it affected farmers, merchants, and financiers.

• The ripple effects: Inflationary tendencies can ease some financial strains from previous deflation but can also raise the cost of living. The policy choices of the era tried to manage those tensions while supporting growth.

A small, human moment to tie it together

If you’ve ever ridden a streetcar that suddenly speeds up because more money is circulating in the economy, you know why this matters. It’s not simply about coins in a drawer; it’s about what that flow of money does to prices, to loans, to the ability of a family to buy a winter coat, or a farmer to store grain for the next season. History often lands on these concrete moments: a discovery, a policy choice, a shift in how people live their daily lives. The Alaska and Klondike gold finds didn’t just fill vaults; they filled the pages of the economic story of the United States.

Bringing it back to the big question

The correct takeaway is simple, even if the implications run deep: one of the economic consequences of McKinley’s presidency, driven by gold discoveries in 1897, was inflation of the money supply. That’s the thread that connects the gold rushes to the broader narrative of late 19th-century America—how a surge in gold could loosen the screws on prices, influence policy debates, and set the stage for the country’s next steps into the 20th century.

If you’re mapping out your understanding of Period 6, this is one of those crisp, illustrative instances where a single event—the discovery of new gold—nudges multiple levers at once: money, policy, and the lived experience of people across the United States. It’s the kind of thread that keeps weaving through the era, reminding us that history isn’t a checklist of dates; it’s a story of cause and effect, the way an economy responds when a new river of wealth spills into the system.