The Wonderful Wizard of Oz
No one really knows if Baum meant the story as an allegory, but it is a favorite for teaching economics nonetheless. Here is a case study from my intermediate macro textbook (the 6th edition of which is hot off the press--I just got my copy a few hours ago):
Down the Yellow Brick Road of Overinterpretation
This is a big year for Oz fans. Not only is it the 50th anniversary of the movie's first appearance on television, but it's also the sesquicentennial of Baum's birth....
There are several theories about how Baum came up with the name Oz, whose pronunciation initially seems to have rhymed with "was." These include the charming (he enjoyed stories that made children cry out with "ohs" and "ahs") and the unlikely (he borrowed it from "Ozymandias," the sonnet by Shelley). The most plausible explanation may be the one that Baum himself supplied: It came to him one day when he was staring at a set of filing drawers labeled "A-G," "H-N" and "O-Z."
Yet there is a long history of digging deeper into Baum's books and searching for hidden meanings. The most famous of these is to interpret "The Wonderful Wizard of Oz" as a parable of the Populist movement of the 1890s: Dorothy represents the American people, the Scarecrow symbolizes farmers, the Tin Woodman stands in for factory workers, and the Cowardly Lion is William Jennings Bryan, the three-time Democratic presidential candidate. One of the leading concerns of Bryan and the Populists was to get off the gold standard (the Yellow Brick Road) and replace it with the silver standard (the color of Dorothy's slippers in the book).
This hypothesis was first proposed by Henry M. Littlefield, a high-school history teacher. He tested it on his students and argued past their objections -- most notably, the fact that Dorothy's slippers in the movie aren't silver. The producers had gone with red because they wanted to show off their newfangled color technology. Littlefield published his ideas in 1964, and it wasn't long before reading the Oz books became a kind of parlor game.
Although many Baum enthusiasts were disdainful of these efforts, the challenge of trying to figure out exactly what Baum meant to imply when he wrote about Toto the dog (teetotalism?) and the Winged Monkeys (Plains Indians?) was too much to resist. According to one analysis, "Oz" is more than a nonsense word borrowed from a filing drawer -- it's a cunning reference to the abbreviation for "ounce," a common unit of measurement for both gold and silver.
The Free Silver Movement, the Election of 1896, and the Wizard of Oz
The redistributions of wealth caused by unexpected changes in the price level are often a source of political turmoil, as evidenced by the Free Silver movement in the late nineteenth century. From 1880 to 1896 the price level in the United States fell 23 percent. This deflation was good for creditors, primarily the bankers of the Northeast, but it was bad for debtors, primarily the farmers of the South and West. One proposed solution to this problem was to replace the gold standard with a bimetallic standard, under which both gold and silver could be minted into coin. The move to a bimetallic standard would increase the money supply and stop the deflation.
The silver issue dominated the presidential election of 1896. William McKinley, the Republican nominee, campaigned on a platform of preserving the gold standard. William Jennings Bryan, the Democratic nominee, supported the bimetallic standard. In a famous speech, Bryan proclaimed, "You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.'' Not surprisingly, McKinley was the candidate of the conservative Eastern establishment, whereas Bryan was the candidate of the Southern and Western populists.
This debate over silver found its most memorable expression in a children's book, The Wizard of Oz. Written by a Midwestern journalist, L. Frank Baum, just after the 1896 election, it tells the story of Dorothy, a girl lost in a strange land far from her home in Kansas. Dorothy (representing traditional American values) makes three friends: a scarecrow (the farmer), a tin woodman (the industrial worker), and a lion whose roar exceeds his might (William Jennings Bryan). Together, the four of them make their way along a perilous yellow brick road (the gold standard), hoping to find the Wizard who will help Dorothy return home. Eventually they arrive in Oz (Washington), where everyone sees the world through green glasses (money). The Wizard (William McKinley) tries to be all things to all people but turns out to be a fraud. Dorothy's problem is solved only when she learns about the magical power of her silver slippers.
Although the Republicans won the election of 1896 and the United States stayed on a gold standard, the Free Silver advocates got the inflation that they wanted. Around the time of the election, gold was discovered in Alaska, Australia, and South Africa. In addition, gold refiners devised the cyanide process, which facilitated the extraction of gold from ore. These developments led to increases in the money supply and in prices. From 1896 to 1910 the price level rose 35 percent.
To learn more about the topic, see Hugh Rockoff's paper "The Wizard of Oz as a Monetary Allegory," Journal of Political Economy, August 1990.