* The Wizard of Oz: a financial allegory *


Richard Moore

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Chapter 1

"The great Oz as spoken! Pay no attention to that man behind the curtain! I am 
the great and powerful Wizard of Oz!"

In refreshing contrast to the impenetrable writings of economists, the classic 
fairytale The Wizard of Oz has delighted young and old for over a century. It 
was first published by L. Frank Baum as The Wonderful Wizard of Oz in 1900. In 
1939, it was made into a hit Hollywood movie starring Judy Garland, and later it
was made into the popular stage play The Wiz. Few of the millions who have 
enjoyed this charming tale have suspected that its imagery was drawn from that 
most obscure and tedious of subjects, banking and finance. Fewer still have 
suspected that the real-life folk heroes who inspired its plot may have had the 
answer to the financial crisis facing the country today!

The economic allusions in Baum's tale were first observed in 1964 by a 
schoolteacher named Henry Littlefield, who called the story "a parable on 
Populism," referring to the People's Party movement challenging the banking 
monopoly in the late nineteenth century.1 Other analysts later picked up the 
theme. Economist Hugh Rockoff, writing in the Journal of Political Economy in 
1990, called the story a "monetary allegory."2 Professor Tim Ziaukas, writing in
1998, stated:

"The Wizard of Oz" . . . was written at a time when American society was 
consumed by the debate over the "financial question," that is, the creation and 
circulation of money. . . . The characters of "The Wizard of Oz" represented 
those deeply involved in the debate: the Scarecrow as the farmers, the Tin 
Woodman as the industrial workers, the Lion as silver advocate William Jennings 
Bryan and Dorothy as the archetypal American girl.3

The Germans established the national fairytale tradition with Grimm's Fairy 
Tales, a collection of popular folklore gathered by the Brothers Grimm 
specifically to reflect German populist traditions and national values.4 Baum's 
tale did the same thing for the American populist (or people's) tradition. The 
Wizard of Oz has been called "the first truly American fairytale."5 It was all 
about people power, manifesting your dreams, finding what you wanted in your own
backyard. According to Littlefield, the march of Dorothy and her friends to the 
Emerald City to petition the Wizard of Oz for help was patterned after the 1894 
march from Ohio to Washington of an "Industrial Army" led by Jacob Coxey, urging
Congress to return to the Greenback system initiated by Abraham Lincoln. The 
march of Coxey's Army on Washington began a long tradition of people taking to 
the streets in peaceful protest when there seemed no other way to voice their 
appeals. As Lawrence Goodwin, author of The Populist Moment, described the 
nineteenth century movement to change the money system:

[T]here was once a time in history when people acted. . . . [F]armers were 
trapped in debt. They were the most oppressed of Americans, they experimented 
with cooperative purchasing and marketing, they tried to find their own way out 
of the strangle hold of debt to merchants, but none of this could work if they 
couldn't get capital. So they had to turn to politics, and they had to organize 
themselves into a party. . . . [T]he populists didn't just organize a political 
party, they made a movement. They had picnics and parties and newsletters and 
classes and courses, and they taught themselves, and they taught each other, and
they became a group of people with a sense of purpose, a group of people with 
courage, a group of people with dignity.6

Like the Populists, Dorothy and her troop discovered that they had the power to 
solve their own problems and achieve their own dreams. The Scarecrow in search 
of a brain, the Tin Man in search of a heart, the Lion in search of courage 
actually had what they wanted all along. When the Wizard's false magic proved 
powerless, the Wicked Witch was vanquished by a defenseless young girl and her 
little dog. When the Wizard disappeared in his hot air balloon, the unlettered 
Scarecrow took over as leader of Oz.

The Wizard of Oz came to embody the American dream and the American national 
spirit. In the United States, the land of abundance, all you had to do was to 
realize your potential and manifest it. That was one of the tale's morals, but 
it also contained a darker one, a message for which its imagery has become a 
familiar metaphor: that there are invisible puppeteers pulling the strings of 
the puppets we see on the stage, in a show that is largely illusion.

Money in the Land of Oz

The 1890s were plagued by an economic depression that was nearly as severe as 
the Great Depression of the 1930s. The farmers lived like serfs to the bankers, 
having mortgaged their farms, their equipment, and sometimes even the seeds they
needed for planting. They were charged so much by a railroad cartel for shipping
their products to market that they could have more costs and debts than profits.
The farmers were as ignorant as the Scarecrow of banking policies; while in the 
cities, unemployed factory workers were as frozen as the Tin Woodman from the 
lack of a free-flowing supply of money to "oil" the wheels of industry. In the 
early 1890s, unemployment had reached 20 percent. The crime rate soared, 
families were torn apart, racial tensions boiled. The nation was in chaos. 
Radical party politics thrived.

In every presidential election between 1872 and 1896, there was a third national
party running on a platform of financial reform. Typically organized under the 
auspices of labor or farmer organizations, these were parties of the people 
rather than the banks. They included the Populist Party, the Greenback and 
Greenback Labor Parties, the Labor Reform Party, the Antimonopolist Party, and 
the Union Labor Party. They advocated expanding the national currency to meet 
the needs of trade, reform of the banking system, and democratic control of the 
financial system.7

Money reform advocates today tend to argue that the solution to the country's 
financial woes is to return to the "gold standard," which required that paper 
money be backed by a certain weight of gold bullion. But to the farmers and 
laborers who were suffering under its yoke in the 1890s, the gold standard was 
the problem. They had been there and done it and knew it didn't work. William 
Jennings Bryan called the bankers' private gold-based money a "cross of gold." 
There was simply not enough gold available to finance the needs of an expanding 
economy. The bankers made loans in notes backed by gold and required repayment 
in notes backed by gold; but the bankers controlled the gold, and its price was 
subject to manipulation by speculators. Gold's price had increased over the 
course of the century, while the prices laborers got for their wares had 
dropped. People short of gold had to borrow from the bankers, who periodically 
contracted the money supply by calling in loans and raising interest rates. The 
result was "tight" money ­ insufficient money to go around. Like in a game of 
musical chairs, the people who came up short wound up losing their homes to the 

The solution of Jacob Coxey and his Industrial Army of destitute unemployed men 
was to augment the money supply with government-issued United States Notes. 
Popularly called "Greenbacks," these federal dollars were first issued by 
President Lincoln when he was faced with usurious interest rates in the 1860s. 
Lincoln had foiled the bankers by funding the government with U.S. Notes that 
did not accrue interest and did not have to be paid back to the banks. The same 
sort of debt-free paper money had financed a long period of colonial abundance 
in the eighteenth century, until King George forbade the colonies from issuing 
their own currency. The money supply had then shrunk, precipitating a depression
that led to the American Revolution.

To remedy the tight-money problem that resulted when the Greenbacks were halted 
after Lincoln's assassination, Coxey proposed that Congress should increase the 
money supply with a further $500 million in Greenbacks. This new money would be 
used to redeem the federal debt and to stimulate the economy by putting the 
unemployed to work on public projects.8 The bankers countered that allowing the 
government to issue money would be dangerously inflationary. What they failed to
reveal was that their own paper banknotes were themselves highly inflationary, 
since the same gold was "lent" many times over, effectively counterfeiting it; 
and when the bankers lent their paper money to the government, the government 
wound up heavily in debt for something it could have created itself. But those 
facts were buried in confusing rhetoric, and the bankers' "gold standard" won 
the day.

The Silver Slippers: The Populist Solution
to the Money Question

The Greenback Party was later absorbed into the Populist Party, which took up 
the cause against tight money in the 1890s. Like the Greenbackers, the Populists
argued that money should be issued by the government rather than by private 
banks. William Jennings Bryan, the Populists' loquacious leader, gave such a 
stirring speech at the Democratic convention that he won the Democratic 
nomination for President in 1896. Outgoing President Grover Cleveland was also a
Democrat, but he was an agent of J. P. Morgan and the Wall Street banking 
interests. Cleveland favored money that was issued by the banks, and he backed 
the bankers' gold standard. Bryan was opposed to both. He argued in his winning 
nomination speech:

We say in our platform that we believe that the right to coin money and issue 
money is a function of government. . . . Those who are opposed to this 
proposition tell us that the issue of paper money is a function of the bank and 
that the government ought to go out of the banking business. I stand with 
Jefferson . . . and tell them, as he did, that the issue of money is a function 
of the government and that the banks should go out of the governing business. . 
. . [W]hen we have restored the money of the Constitution, all other necessary 
reforms will be possible, and . . . until that is done there is no reform that 
can be accomplished.

He concluded with these famous lines:

You shall not press down upon the brow of labor this crown of thorns, you shall 
not crucify mankind upon a cross of gold.9

Since the Greenbackers' push for government-issued paper money had failed, Bryan
and the "Silverites" proposed solving the liquidity problem in another way. The 
money supply could be supplemented with coins made of silver, a precious metal 
that was cheaper and more readily available than gold. Silver was considered to 
be "the money of the Constitution" although the Constitution only referred to 
the "dollar," because the dollar was understood to be a reference to the Spanish
milled silver dollar coin then in common use. The slogan of the Silverites was 
"16 to 1": 16 ounces of silver would be the monetary equivalent of 1 ounce of 
gold. Ounces is abbreviated oz, hence "Oz." The Wizard of the Gold Ounce (Oz) in
Washington was identified by later commentators as Marcus Hanna, the power 
behind the Republican Party, who controlled the mechanisms of finance in the 
administration of President William McKinley.10 (Hanna was reportedly admired by
Karl Rove, who followed the model as political adviser to President George Bush 

Frank Baum, the journalist who turned the politics of his day into The Wonderful
Wizard of Oz, marched with the Populist Party in support of Bryan in 1896. He is
said to have had a deep distrust of big-city financiers. But when his dry goods 
business failed, he bought a Republican newspaper, which had to have a 
Republican message to retain its readership.12 That may have been why the 
Populist message was so deeply buried in symbolism in his famous fairytale. Like
Lewis Carroll, who began his career writing uninspiring tracts about mathematics
and politics and wound up satirizing Victorian society in Alice's Adventures in 
Wonderland, Baum was able to suggest in a children's story what he could not say
in his editorials. His book contained many subtle allusions to the political and
financial issues of the day. The story's inspirational message was evidently a 
product of the times as well. Commentators trace it to the theosophical 
movement, of which Baum was an active member.13 Newly-imported from India, it 
held that reality is a construct of the mind. What you want is already yours; 
you need only to believe it, to "realize" it or "make it real."

Looking at the plot of this familiar fairytale, then, through the lens of the 
contemporary movements that inspired it . . . .

An Allegory of Money, Politics
and Believing in Yourself

The story began on a barren Kansas farm, where Dorothy lived with a very sober 
aunt and uncle who "never laughed" (the 1890s depression that hit the farmers 
particularly hard). A cyclone came up, carrying Dorothy and the house into the 
magical world of Oz (the American dream that might have been). The house landed 
on the Wicked Witch of the East (the Wall Street bankers and their man Grover 
Cleveland), who had kept the Munchkins (the farmers and factory workers) in 
bondage for many years.

For killing the Wicked Witch, Dorothy was awarded magic silver slippers (the 
Populist silver solution to the money crisis) by the Good Witch of the North 
(the North was then a Populist stronghold). In the 1939 film, the silver 
slippers would be transformed into ruby slippers to show off the cinema's new 
technicolor abilities; but the monetary imagery Baum suggested was lost. The 
silver shoes had the magic power to solve Dorothy's dilemma, just as the 
Silverites thought that expanding the money supply with silver coins would solve
the problems facing the farmers.

Dorothy wanted to get back to Kansas but was unaware of the power of the 
slippers on her feet, so she set out to the Emerald City to seek help from the 
Wizard of Oz (the apparently all-powerful President, whose strings were actually
pulled by financiers concealed behind a curtain).

"The road to the City of Emeralds is paved with yellow brick," she was told, "so
you cannot miss it." Baum's contemporary audience, wrote Professor Ziaukas, 
could not miss it either, as an allusion to the gold standard that was then a 
hot topic of debate.14 Like the Emerald City and the Great and Powerful Oz 
himself, the yellow brick road would turn out to be an illusion. In the end, 
what would carry Dorothy home were silver slippers.

On her journey down the yellow brick road, Dorothy was first joined by the 
Scarecrow in search of a brain (the naive but intelligent farmer kept in the 
dark about the government's financial policies), then by the Tin Woodman in 
search of a heart (the factory worker frozen by unemployment and dehumanized by 
mechanization). Littlefield commented:

The Tin Woodman . . . had been put under a spell by the Witch of the East. Once 
an independent and hard working human being, the Woodman found that each time he
swung his axe it chopped off a different part of his body. Knowing no other 
trade he "worked harder than ever," for luckily in Oz tinsmiths can repair such 
things. Soon the Woodman was all tin. In this way Eastern witchcraft dehumanized
a simple laborer so that the faster and better he worked the more quickly he 
became a kind of machine. Here is a Populist view of evil Eastern influences on 
honest labor which could hardly be more pointed.

The Eastern witchcraft that had caused the Woodman to chop off parts of his own 
body reflected the dark magic of the Wall Street bankers, whose "gold standard" 
allowed less money into the system than was collectively owed to the banks, 
causing the assets of the laboring classes to be systematically devoured by 

The fourth petitioner to join the march on Oz was the Lion in search of courage.
According to Littlefield, he represented the orator Bryan himself, whose roar 
was mighty like the king of the forest but who lacked political power. Bryan was
branded a coward by his opponents because he was a pacifist and anti-imperialist
at a time of American expansion in Asia. The Lion became entranced and fell 
asleep in the Witch's poppy field, suggesting Bryan's tendency to get 
side-tracked with issues of American imperialism stemming from the Opium Wars. 
Since Bryan led the "Populist" or "People's" Party, the Lion also represented 
the people, collectively powerful but entranced and unaware of their strength.

In the Emerald City, the people were required to wear green-colored glasses 
attached by a gold buckle, suggesting green paper money shackled to the gold 
standard. To get to her room in the Emerald Palace, Dorothy had to go through 7 
passages and up 3 flights of stairs, an allusion to the "Crime of '73," the 
congressional Act that changed the money system from bimetallism (paper notes 
backed by both gold and silver) to an exclusive gold standard. The Crime of '73 
proved to all Populists that Congress and the bankers were in collusion.15

Dorothy and her troop presented their requests to the Wizard, who demanded that 
they first vanquish the Wicked Witch of the West, representing the 
McKinley/Rockefeller faction in Ohio (then considered a Western state). The 
financial powers of the day were the Morgan/Wall Street/Cleveland faction in the
East (the Wicked Witch of the East) and this Rockefeller-backed contingent from 
Ohio, the state of McKinley, Hanna, and Rockefeller's Standard Oil cartel. Hanna
was an industrialist who was a high school friend of John D. Rockefeller and had
the financial backing of the oil giant.16

Dorothy and her friends learned that the Witch of the West had enslaved the 
Yellow Winkies and the Winged Monkeys (an allusion to the Chinese immigrants 
working on the Union-Pacific railroad, the native Americans banished from the 
northern woods, and the Filipinos denied independence by McKinley). Dorothy 
destroyed the Witch by melting her with a bucket of water, suggesting the rain 
that would reverse the drought, and the financial liquidity that the Populist 
solution would bring to the land. As one nineteenth century commentator put it, 
"Money and debt are as opposite in nature as fire and water; money extinguishes 
debt as water extinguishes fire."17

When Dorothy and her troop got lost in the forest, she was told to call the 
Winged Monkeys by using a Golden Cap she had found in the Witch's cupboard. When
the Winged Monkeys came, their leader explained that they were once a free and 
happy people; but they were now "three times the slaves of the owner of the 
Golden Cap, whosoever he may be" (the bankers and their gold standard). When the
Golden Cap fell into the hands of the Wicked Witch of the West, the Witch had 
made them enslave the Winkies and drive Oz himself from the Land of the West.

Dorothy used the power of the Cap to have her band of pilgrims flown to the 
Emerald City, where they discovered that the "Wizard" was only a smoke and 
mirrors illusion operated by a little man behind a curtain. A dispossessed 
Nebraska man himself, he admitted to being a "humbug" without real power. "One 
of my greatest fears was the Witches," he said, "for while I had no magical 
powers at all I soon found out that the Witches were really able to do wonderful

If the Wizard and his puppet were Marcus Hanna and William McKinley, who were 
the Witches they feared? Behind the Wall Street bankers were powerful British 
financiers, who funded the Confederates in the Civil War and had been trying to 
divide and conquer America economically for over a century. Patriotic Americans 
had regarded the British as the enemy ever since the American Revolution. 
McKinley was a protectionist who favored high tariffs to keep these marauding 
British free-traders out. When he was assassinated in 1901, no conspiracy was 
proved; but some suspicious commentators saw the invisible hand of British high 
finance at work.18

The Wizard lacked magical powers but was a very good psychologist, who showed 
the petitioners that they had the power to solve their own problems and manifest
their own dreams. The Scarecrow just needed a paper diploma to realize he had a 
brain. For the Tin Woodman, it was a silk heart; for the Lion, an elixir for 
courage. The Wizard offered to take Dorothy back to Kansas in his hot air 
balloon, but the balloon took off before she could get on board. Dorothy and her
friends then set out to find Glinda the Good Witch of the South, who they were 
told could help Dorothy find her way home.

On the way they faced various challenges, including a great spider that ate 
everything in its path and kept everyone unsafe as long as it was alive. The 
Lion (the Populist leader Bryan) welcomed this chance to test his new-found 
courage and prove he was indeed the King of Beasts. He decapitated the mighty 
spider with his paw, just as Bryan would have toppled the banking cartel if he 
had won the Presidency.

The group finally reached Glinda, who revealed that Dorothy too had the magic 
tokens she needed all along: the Silver Shoes on her feet would take her home. 
But first, said Glinda, Dorothy must give up the Golden Cap (the bankers' 
restrictive gold standard that had enslaved the people).

The moral also worked for the nation itself. The economy was deep in depression,
but the country's farmlands were still fertile and its factories were ready to 
roll. Its entranced people merely lacked the paper tokens called "money" that 
would facilitate production and trade. The people had been deluded into a belief
in scarcity by defining their wealth in terms of a scarce commodity, gold. The 
country's true wealth consisted of its goods and services, its resources and the
creativity of its people. Like the Tin Woodman in need of oil, all it needed was
a monetary medium that would allow this wealth to flow freely, circulating from 
the government to the people and back again, without being perpetually drained 
into the private coffers of the bankers.

Sequel to Oz

The Populists did not achieve their goals, but they did prove that a third party
could influence national politics and generate legislation. Although Bryan the 
Lion failed to stop the bankers, Dorothy's prototype Jacob Coxey was still on 
the march. In a plot twist that would be considered contrived if it were 
fiction, he reappeared on the scene in the 1930s to run against Franklin D. 
Roosevelt for President, at a time when the "money question" had again become a 
burning issue. In one five-year period, over 2,000 schemes for monetary reform 
were advanced. Needless to say, Coxey lost the election; but he claimed that his
Greenback proposal was the model for the "New Deal," Roosevelt's plan for 
putting the unemployed to work on government projects to pull the country out of
the Depression. The difference was that Coxey's plan would have been funded with
debt-free currency issued by the government, on Lincoln's Greenback model. 
Roosevelt funded the New Deal with borrowed money, indebting the country to a 
banking cartel that was surreptitiously creating the money out of thin air, just
as the government itself would have been doing under Coxey's plan without 
accruing a crippling debt to the banks.

After World War II, the money question faded into obscurity. Today, writes 
British economist Michael Rowbotham, "The surest way to ruin a promising career 
in economics, whether professional or academic, is to venture into the 'cranks 
and crackpots' world of suggestions for reform of the financial system."19 Yet 
the claims of these cranks and crackpots have consistently proven to be correct.
The U.S. debt burden has mushroomed out of control, until just the interest on 
the federal debt now threatens to be a greater tax burden than the taxpayers can
afford. The gold standard precipitated the problem, but unbuckling the dollar 
from gold did not solve it. Rather, it caused worse financial ills. Expanding 
the money supply with increasing amounts of "easy" bank credit just put 
increasing amounts of money in the bankers' pockets, while consumers sank 
further into debt. The problem proved to be something more fundamental: it was 
in who extended the nation's credit. As long as the money supply was created as 
a debt owed back to private banks with interest, the nation's wealth would 
continue to be drained off into private vaults, leaving scarcity in its wake.

Today's monetary allegory goes something like this: the dollar is a national 
resource that belongs to the people. It was an original invention of the early 
American colonists, a new form of paper currency backed by the "full faith and 
credit" of the people. But a private banking cartel has taken over its issuance,
turning debt into money and demanding that it be paid back with interest. Taxes 
and a crushing federal debt have been imposed by a financial ruling class that 
keeps the people entranced and enslaved. In the happy storybook ending to the 
tale, the power to create money is returned to the people, and abundance returns
to the land. But before we get there, the Yellow Brick Road takes us through the
twists and turns of history and the writings and insights of a wealth of key 
players. We're off to see the Wizard . . . .

© Copyright 2007 Ellen Brown. All Rights Reserved.

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