Baum acknowledged the influence of the Brothers Grimm and Hans Christian Andersen, which he was deliberately revising in his "American fairy tales" to include the wonder without the horrors.
The land of Oz and other locations
Local legend has it that Oz, also known as The Emerald City, was inspired by a prominent castle-like building in the community of Castle Park near Holland, Michigan where Baum summered. The yellow brick road was derived from a road at that time paved by yellow bricks. These bricks were found in Peekskill, New York where Baum attended the Peekskill Military Academy. Baum scholars often reference the 1893 Chicago World's Fair (the "White City") as an inspiration for the Emerald City. Other legends allude that the inspiration came from the Hotel Del Coronado near San Diego, California. Baum was a frequent guest at the hotel, and had written several of the Oz books there. In a 1903 interview with Publishers Weekly, Baum said that the name "OZ" came from his file cabinet labeled "O-Z".
Some critics have speculated and suggested that Baum may have been inspired by Australia, a relatively new country at the time of the book's publication. Australia is often colloquially spelt or referred to as "Oz". Furthermore, in Ozma of Oz (1907), Dorothy gets back to Oz as the result of a storm at sea while she and Uncle Henry are travelling by ship to Australia. So, like Australia, Oz is somewhere to the west of California. Like Australia, Oz is an island continent. Like Australia, Oz has inhabited regions bordering on a great desert. One might almost imagine that Baum intended Oz to be Australia, or perhaps a magical land in the center of the great Australian desert.
Alice's Adventures in Wonderland
Another influence lay in Lewis Carroll's Alice's Adventures in Wonderland. A September 1900 review in the Grand Rapids Herald called The Wonderful Wizard of Oz a "veritable Alice in Wonderland brought up to the present day standard of juvenile literature". Although Baum found Carroll's plots incoherent, he identified their source of popularity as Alice herself, a child with whom the child readers could identify; this influenced his choice of a protagonist. Baum was also influenced by Carroll's belief that children's books should have many pictures and be pleasurable reads. Carroll rejected the Victorian-era ideology that children's books should be saturated with morals, instead believing that children should be allowed to be children. Building on Carroll's style of numerous images accompanying the text, Baum amalgamated the conventional features of a fairy tale (witches and wizards) with the well-known things in his readers' lives (scarecrows and cornfields).
American fantasy story
The Wonderful Wizard of Oz is considered the first American fairy tale because of its references to clear American locations like Kansas and Omaha. While agreeing with authors like Carroll about fantasy literature and its importance for children along with numerous illustrations, Baum also wanted to create a story that had recognizable American elements in it like farming and industrialization.
Baum's personal life
Many of the characters, props, and ideas in the novel were drawn from Baum's experiences. As a child, Baum frequently had nightmares of a scarecrow pursuing him across a field. Moments before the scarecrow's "ragged hay fingers" nearly gripped his neck, it would fall apart before his eyes. Decades later as an adult, Baum integrated his tormentor into the novel as the Scarecrow. According to his son Harry, the Tin Woodman was born from Baum's attraction to window displays. Because he wished to make something captivating for the window displays, he used an eclectic assortment of scraps to craft a striking figure. From a washboiler he made a body, from bolted stovepipes he made arms and legs, and from the bottom of a saucepan he made a face. Baum then placed a funnel hat on the figure, which ultimately became the Tin Woodman. John D. Rockefeller was the nemesis of Baum's father, an oil baron who declined to purchase Standard Oil shares in exchange for selling his own oil refinery. Baum scholar Evan I. Schwartz posited that Rockefeller inspired one of the Wizard of Oz's numerous faces. In one scene in the novel, the Wizard is seen as a "tyrannical, hairless head". When Rockefeller was 54 years old, the medical condition alopecia caused him to lose every strand of hair on his head, making people fearful of speaking to him.
In the early 1880s, when Baum's play Matches was being performed, a "flicker from a kerosene lantern sparked the rafters", causing the Baum opera house to be consumed by flames. Scholar Evan I. Schwartz suggested that this might have inspired the Scarecrow's severest terror: "There is only one thing in the world I am afraid of. A lighted match."
In 1890, while Baum lived in Aberdeen, which was experiencing a drought, he wrote a witty story in his "Our Landlady" column in Aberdeen's The Saturday Pioneer. The story was about a farmer who gave green goggles to his horses, causing them to believe that the wood chips they were eating were pieces of grass. Similarly, the Wizard made the people in the Emerald City wear green goggles so that they would believe their city was built from emeralds.
Baum, a former salesman of china, wrote in chapter 20 about china that had sprung to life.
During Baum's short stay in Aberdeen, the dissemination of myths about the plentiful West continued. However, the West, instead of being a wonderland, turned into a wasteland because of a drought and a depression. In 1891, Baum moved his family from South Dakota to Chicago. At that time, Chicago was getting ready for the World's Columbian Exposition in 1893. Scholar Laura Barrett stated that Chicago was "considerably more akin to Oz than to Kansas". After discovering that the myths about the West's incalculable riches were baseless, Baum created "an extension of the American frontier in Oz". In many respects, Baum's creation is similar to the actual frontier save for the fact that the West was still undeveloped at the time. The Munchkins Dorothy encounters at the beginning of the novel represent farmers, as do the Winkies she later meets.
Baum's wife frequently visited her niece, Dorothy Louise Gage. The infant became gravely sick and died on November 11, 1898, of "congestion of the brain" at exactly five months. When the baby, whom Maud adored as the daughter she never had, died, she was devastated and needed to consume medicine. To assuage her distress, Frank made his protagonist of The Wonderful Wizard of Oz a female named Dorothy. Uncle Henry was modeled after Henry Gage, his wife Maud's father. Bossed around by his wife Matilda, Henry rarely dissented with her. He flourished in business, though, and his neighbors looked up to him. Likewise, Uncle Henry was a "passive but hard-working man" who "looked stern and solemn, and rarely spoke". The witches in the novel were influenced by witch-hunting research gathered by Baum's mother-in-law, Matilda. The stories of barbarous acts against accused witches scared Baum. Two key events in the novel involve wicked witches who both meet their death through metaphorical means.
Baum held different jobs, moved a lot, and was exposed to many people, so the inspiration for the story could have been taken from plenty of different aspects of his life. In the introduction to the story, Baum writes that "it aspires to being a modernized fairy tale, in which the wonderment and joy are retained and the heart-aches and nightmares are left out"  This is one of the explanations that he gives for the inspiration for the Wizard of Oz.
Influence of Denslow
The original illustrator of the novel, W.W. Denslow, could also have had an impact on the story and the way it has been interpreted. Baum and Denslow had a close working relationship and worked together to create the presentation of the story through the images and the text. Color is an important element of the story and is present throughout the images with each chapter having a different color representation. Denslow also added characteristics to his drawings that Baum never described. For example, Denslow drew a house and the gates of The Emerald city with faces on them. In the later Oz books, John R. Neill, who illustrated all of the sequels, continued to include these faces on gates.
Allusions to 19th-century America
Baum did not offer any conclusive proof that he intended his novel to be a political allegory. Historian Ranjit S. Dighe wrote that for sixty years after the book's publication, "virtually nobody" had such an interpretation until Henry Littlefield, a high school teacher. In his 1964 American Quarterly article, "The Wizard of Oz: Parable on Populism", Littlefield posited that the book contained an allegory of the late 19th-century bimetallism debate regarding monetary policy.
Not only did Baum draw inspiration from the American land around him, but he also created Oz to display an American utopia where the issues of day were solved. There is little distinction between utopia and fairy tale land. Baum believed that the imagination was the best tool for creating a striving society. In a later book in the Oz series, Baum writes, “imaginations and dreams are likely to lead to the betterment of the world. The imaginative child will become the imaginative man or woman most apt to create, to invent and therefore to foster civilization.” In this way, Baum wrote The Wonderful Wizard of Oz as a modern fairy tale depicting Oz as an American utopia that displays numerous allusion and solutions to issues in the late 19th and early 20th century.
The realm of Oz very closely resembles America. It contains four countries, the Land of the North, East, West, and South, and the national capital, the Emerald City. America and its inhabitants are often divided into similar categories such as Midwestern, Southern, etc. These locations are also separated by an American color scheme that was relevant to American during the 19th century. The color blue represents the industrial East known for the blue-collar jobs. The South is red for the red earth it contains or the “redneck” inhabitants. Yellow describes the West denoting the California gold rush. Finally, the Emerald City as Washington D. C. denoting greenbacks and money of the country.
The villains of the story are the Wicked Witch of the West and the Wicked Witch of the East. The wicked witches are more powerful than the good witches and they use their power to control and enslave their subjects. There was an equal balance between good and evil and until this balance was altered there could be no change or development in Oz. This standoff can be seen as an allusion between the different political parties in America. The Wicked Witch of the West represents the American West, including the wealthy railroad, oil barons and nature. The American West’s greatest weapon in the 19th century, though, was nature, most malignantly the drought. The effects lasted longer than any fire or twister and a long enough drought could ruin a whole year's worth of crops. Thus, water as the weapon to kill the Witch of the West is quite poetic. The brown mass the witch’s remains turn into resembles mud after a heavy storm. Dorothy even cleans the melted witch off the floor and her shoes as if she had walked through a rainy puddle.
Baum’s Wicked Witch of the East has been suggested to represent Eastern financial and industrial interests, such as Wall Street, which oppresses the agricultural citizens. The Witch of the East enslaved her subjects much as industrialism was thought to enslave the working class in 19th-century Eastern America. Once Dorothy killed the Wicked Witch of the East the balance of power could be shifted. Both these groups opposed Populist efforts to move the U.S. to a bimetallic monetary standard since this would have devalued the dollar and made investments less valuable. Workers and poor farmers supported the move away from the gold standard, as this would have lessened their crushing debt burdens. The Populist party sought to build a coalition of Southern and Midwestern tenant farmers and Northern industrial workers. These groups are represented in the book by the Good Witches of the North and South.
At the beginning of the novel, Dorothy is swept from her farm to Oz by a cyclone, which was frequently compared to the Free Silver movement in Baum's time. The yellow brick road represents the gold standard and the Silver Shoes which enable Dorothy to travel more comfortably symbolizes the Populist Party's desire to construct a bimetallic standard of both gold and silver in place of the gold standard. "Oz" is the abbreviated form of ounce, a standard measure of gold. When Dorothy and the Scarecrow walk through the forest, the road begins to be rough and patchy causing the Scarecrow to trip and fall numerous times. The Scarecrow’s falls on the Yellow Brick Road resemble the damage farmers faced owing to deflation caused by the scarcity of gold. Dorothy however, simply “walks around” the holes in the road showing that the bimetallic standard works. Even when gold was scarce, the other metal in the bimetal system would be relatively cheap therefore one bypasses deflation. Throughout the book, most of the characters do not know the magic behind the silver shoes. It is not until Dorothy meets Glinda, the good Witch of the South, that she finds out that the silver shoes have had the power to transfer her back to Kansas all along. Baum is possibly alluding to the fact that the bimetallic standard has been a working solution to the economic crisis all along, though no one knows how to do it. Once Dorothy clicks her heels three times, she returns to Kansas where she realizes “The Silver Shoes had fallen off in her flight through the air, and were lost forever in the desert.” The silver shoes were lost, much like the fight for the bimetallic standard, which began to fade away in 1900.
The Wizard is the national leader of Oz, thus it is fitting for him to symbolize the President(s) of the United States during the 19th century. Politicians have been known to have many faces; it is a must if they want to be able to be everything for everyone. The Great and Terrible Wizard of Oz agrees to meet with each traveler separately, allowing him to alter his appearance to best fit each character. When the gang returns having completed the Wizard’s task, they discover that the Wizard is a fake and is actually just “a common man” who has made everyone believe he was powerful. The Scarecrow adds that he is a humbug, in which the Wizard gladly says that is he is exactly that. The Wizard made promises he could not keep, as did many 19th-century politicians, like present ones today. The Wizard later states, “How can I help being a humbug… when all these people make me do things that everyone knows can’t be done,” showing that he was able to deceive others because others were willing to be deceived.
While journeying to the Emerald City, Dorothy encounters a scarecrow, who represents a farmer. The Scarecrow believes he is a fool since his head is full of straw and not brains. Four years before the book’s release, William Allen White, a journalist from Chicago, published an article entitled “What’s the Matter With Kansas?” In the article White questions why Kansas is unsatisfied and sarcastically answers saying America needs “fewer white shirts and brains” implying Western farmers were ignorant, lazy and bad businessmen. The Scarecrow shares this opinion and doubts himself, believing he is inferior without a brain. In the same year White published his article, William Jennings Bryan delivered his famous “Cross of Gold speech” at the 1896 Democratic Convention. Bryan fought for the farmers and argued against such accusations made by White exclaiming, “The farmer who goes forth in the morning and toils all day, begins in the spring and toils all summer, and by the application of brain and muscle to the natural resources of this country creates wealth, is as much a businessman as the man who goes upon the Board of Trade and bets upon the price of grain." Baum shares Bryan’s view on American farmers by showing that the Scarecrow is sharp and capable by his actions throughout the book. The book ends with “farm interests achieving national importance” and farmers’ true potential in politics being revealed once the illusion of ignorance has been removed.
The next companion Dorothy meets on the yellow brick road is the Tin Woodsman who has been cursed by the now deceased Wicked Witch of the East. He was once a hard worker yearning to earn money to start a family with a Munchkin girl. The witch enchanted his axe so that the Woodsman chopped of each of his limbs and eventually his body. Each time a tinner healed the Woodsman by replacing his body with tin, however once the Tin Woodsman’s heart was removed he could no longer love. The Tin Woodsman symbolizes the Eastern working man competing in an industrialized society. The 19th-century man had to keep up with the machine in order to be useful and relevant. In this way the Witch of the East’s curse “dehumanized a simple laborer so that the faster and better he worked the more quickly he became a kind of machine.” The Tin Woodsman was caught in the rain and rusted in the same position for one year before Dorothy oils his joints to set him free. The Tin Woodsman’s year of waiting is parallel to the unemployment of Eastern workers during the severe depression of 1893-1897. His calls of help that were never heard relate to President Grover Cleveland’s “hard-hearted refusal” to take action during this time to reinstate the economy. While the Tin Woodsman stood still for a year, he finally slowed down enough to ponder life. During this time he discovers that “the greatest loss [he] had known was the loss of [his] heart” for without it he cannot love. Baum portrays the Tin Woodsman as an Eastern worker who lost sight of family values for a moment. Part of the Progressive movement in the 19th century was to reestablish the family as the center of American life. The curse of the Tin Woodsman by the Wicked Witch of the East is consistent with the depiction of the witch representing Wall Street and other Eastern big businesses during the late 19th and early 20th centuries.
The final addition to the traveling party is the Cowardly Lion. This character is hypothesized to be the famous Populist politician William Jennings Bryan. The muscular, six-foot-tall (183 cm) political figure was known as a compassionate but powerful speaker, which could be compared to a lion’s roar. Throughout the book, Baum is mostly sympathetic towards populist characters such as the Scarecrow; thus it seems odd that Baum would refer to the character portraying Bryan as cowardly. However, the late 19th century began an age of American expansionism in which the United States struggled to gain control of countries like Guam, Puerto Rico, and the Philippines from Spain. Bryan’s non-violent and anti-imperialist stance on the popular Spanish-American War of 1898 was often referred to as unpatriotic and cowardly. Baum seems to take this criticism and turn it into a complaint towards Bryan, showing that although the Lion is the King of the Beasts it shows more bravery to stand by than to run in towards unnecessary obstacles, no matter how popular. The Cowardly Lion’s first encounter with the Tin Woodsman shows support for both of their characters being based on Bryan and Eastern industrial workers, respectively. When they meet, the Cowardly Lion strikes the Tin Woodsman with his sharp claws, but to his surprise “he could make an impression on the tin, although the Woodman fell over in the road and lay still.” This refers to Bryan’s inability to get votes in the 1896 presidential election from Eastern workers owing to pressure from their employers to vote for McKinley. Bryan himself said, “During the campaign I ran across various evidences of coercion, direct and indirect.” Other historical sources share this opinion noting, “for some reason labor remained singularly unimpressed.” Thus, the Cowardly Lion’s claws did not pierce the Tin Woodsman body, just as Bryan’s roar did not leave an impression with Eastern industrial workers.
Baum’s fairy tale contains many other allusions to American life in the late 19th and early 20th centuries. For instance, Dorothy’s loyal companion, Toto, could be a play on “teetotalers” which is a person who never drinks alcohol. The prohibitionists deemed alcohol consumption should be unlawful and they were longtime political allies of Populists during the late 19th century. Ironically, Toto trots “soberly” behind Dorothy on their adventure. The Winged Monkeys have been thought to resemble the Plains Indians who were “once free people” but were now enslaved by the Wicked Witch of the West. Their actions can be good or bad depending on how they are controlled; however they “belong to this country alone” and therefore cannot leave, as can be said for American Indians. The Yellow Winkies that inhabit the Land of the West could represent Asian workers in California during the gold rush; their harsh work environment can be seen as enslavement. The lenses that the groups must wear before entering the City of Oz to dim the emeralds’ shine turn out to be fake, like the Wizard. The Emerald City is not a city made of emeralds but a plain, white city where the emerald color lenses cast a green hue on everything and everyone. This shows that anything can be made to look spectacular if you allow yourself to be tricked. Baum traveled all over the United States and would have been introduced to all these events in the 19th century, making it very likely that he drew inspiration from the land around him.
Baum’s modernized fairy tale, The Wonderful Wizard of Oz, ends with both the Wicked Witch of the East and West defeated and Dorothy, Toto and the Wizard returning to the United States. The Scarecrow reigns over the Emerald City; thus farmers achieve national importance. The Tin Woodsman brings industrialization to the Land of the West. And the Cowardly Lion becomes the protector in the Grand Old Forest, as Bryan commanded a smaller number of politicians.
Littlefield's thesis achieved some support, but has been strenuously attacked by others.