Currency and the Populist Movement
After the United States permanently adopted a true national currency with the
greenbacks generated to fund the Civil War, debates about our monetary system became
so complex only a handful of congressmen understood what they were voting about. The
tariff also remained a controversial issue. While Americans universally believed a tariff
was necessary, both Republicans and Democrats in states above the Mason-Dixon Line
supported a high protective tariff. Southern Democrats and liberal Republicans wanted
those tariff rates lowered. A similar division occurred over the currency. These debates
necessarily involved American farmers in protests about things they little understood.
What they believed, however, made them angry. America’s most successful third-party
movement, the Populist Movement, arose from their dissatisfaction as the world changed
around them.
Remember, a main goal after the Civil War was to establish the paper money of
the United States on firmer ground. Farmers, however, wanted to go right on with
increasingly worthless paper money because they were deep in debt. Inflation resulting
from a weak dollar would not only help them make “more” money for their crops, they
would be paying off their debts with “cheaper” money. The amount they borrowed did
not change, but the value of the dollars their creditors received in payment was slipping.
Creditors therefore sought to return America to hard money policies linked to gold, a
process that would produce “contraction” or deflation as opposed to inflation.
The Panic of 1873, however, seemed to call for inflationary policies. Some
economic analysts also called for what became known as the Ohio Idea, the notion that
the US government should pay its national debt with its own greenbacks rather than with
gold. The merest mention of such an idea increases inflation, and indulging in it too
much creates hyper-inflation such as that which would destroy the economy of Germany
after World War I and of nearly every Latin American republic during the 20th century.
President Ulysses S. Grant refused to surrender, though, and he favored the Gold
Standard. His Resumption Act provided that after January 1, 1879 Americans would be
able to walk into banks and “redeem” paper money in gold coin. This measure was
achieved by compromising with the West by permitting new branches of the National
Bank to open more easily there where farmers could thus be provided with more cash
flow.
Simultaneous to this debate in Washington, D. C. was the birth of a farmers’
organization called the Patrons of Husbandry. Oliver Hudson Kelley began this
organization, also called the Grange, in 1867. Kelley wanted farmers to experience a
solidarity similar to that of the Knights of Labor through lectures, debates, picnics, barn
singin’s, etc. The Grange was divided into local units where men and women became
equal members. By 1868 there were only ten chapters, but by 1875 800,000 farmers
from across the Midwest and the South had joined.
The Grange kept its social and intellectual themes but gradually expanded to
discuss economics and, yes, politics. Officially the Grange forbade its members to talk
about politics but the end of the meetings turned into mini-conventions. The price of
wheat was down; the price of railroad transportation to market was up. It took the value
of one bushel of wheat or of corn to pay to transport another bushel to the East.
Grangers also decried the middle men who owned grain elevators, giant silos used
to store crops as they waited for the trains. The grain elevator owners offered a lowerthan-market price, but when a farmer arrived with his crop in a wagon he was forced to
accept the price or face ruin. The dearth of National Bank branches in the West meant
fewer loans and little money. Railroads also gave rebates, as we have seen, to long
shippers of great volume, and farmers could not understand how it was cheaper to send
oil long distances than it was to ship grain short distances. Some states in the West fixed
prices for grain elevators and railroads, and in Munn v. Illinois the Supreme Court said
they could do so.
All the while the machine age promised prosperity, but few agricultural or
industrial workers got what was promised. By 1880 80% of US wheat was harvested by
machine (the McCormick Reaper) six times faster than by hand. Production was up so
high that markets were glutted and prices plummeted. Farmers expanded onto the TransMississippi prairie where a huge clash of cultures was ignited. Indians, including the
Apache, Hopi, Comanche, Sioux, Blackfeet, Nez Perce, and Cheyenne were forced onto
reservations by 1890. This year saw the last Indian “uprising” at Wounded Knee, South
Dakota where 200 Indian men, women, and children were slaughtered after a
misunderstanding in response to the Ghost Dance. The Ghost Dance was a revival of
Indian religion in which warriors became convinced that their coats became impervious
to bullets after dancing the Ghost Dance. At Wounded Knee the bullets went right
through, especially when fired from Gatling guns. The final pacification of the Plains
Indians opened up huge new lands for cultivation of the new crop alfalfa and then corn
and wheat. Miners also experienced a clash as independent outfits were replaced by huge
commercial operations.
Cattle ranchers’ herds were decimated by a severe blizzard in 1886. The snow
came so fast that cattle facing into the wind were simply suffocated. Cattle facing the
other direction found their feet frozen to the ground, and many starved to death. Those
cattle that survived lost ears and tails due to frostbite. Even future President Theodore
Roosevelt’s ranch investment was a total loss. The invention of barbed wire in 1873
ended open grazing as farmers fenced their new claims. The long drives were over.
The farmers found themselves a part of a vicious cycle. They ignored John
Wesley Powell’s warnings from the U. S. Geological Survey that “factory-style” farms
with the capacity to irrigate their crops were the only ones with a chance. He predicted
that a few giants would control agricultural wealth as conglomerates would snatch up the
414 million acres of land available. His prediction largely came true but not until after
the Great Depression. The first farmers in the West became victims of their own success.
More and more US grain was produced until it fed everyone in cities in the East
by 1874. Soon, US farmers were feeding people in European cities. Incredibly, US
production became so pronounced that American grain was cheaper after shipping across
the Atlantic than grain produced in Europe. This turn of events ruined European farmers
who, of course, migrated to American cities and filled factories (while eating US grain).
As this cycle made one revolution, American farmers forgot everything they learned
about the South and the Cotton Kingdom in their A. P. US History classrooms and
committed themselves to a cash crop economy. Without diversification, they became
slaves to the market price of wheat and corn which they had driven lower by working
harder. In 1881, a bushel of wheat sold for $1.19 and a bushel of corn for 63¢. By 1894,
prices had dropped to 49¢ for wheat and 18¢ for corn.
Farmers found themselves buying manufactured goods at tariff-bolstered prices
while selling crops in an unregulated market. Farmers worked harder and grew more but
earned less. To try to earn more they borrowed money to purchase new machinery to
boost their production thereby flooding the market even more! All the while they were
encouraged to blame their problems on the limited supply of currency by the Grange. By
1880, the Grange was divided into the Southern Alliance in the South and the Northern
Alliance on the plains and had over 1 million members. The formerly non-political
Grange opposed trusts, formed cooperatives, and pushed for cheap money (inflation).
Out of these political impulses came the formation of the Populist Party in Omaha,
Nebraska in 1891.
Quixotic speakers like William Jennings Bryan wooed farmers with statements
like, “Cities can be burned down and rebuilt; ruin farms and all the cities will have grass
in their streets within a month!” Populists ran a presidential candidate, Civil War
General James B. Weaver, by 1892 but then made their party irrelevant by the Election of
1896. Furthermore, prosperity appeared again for farmers not as a result of politics but
European markets that grew again beginning in 1910. Corn went back up to 52¢ and
wheat to 91¢ per bushel.
We’ll have to trace the political demise of the Populist Party, but their longestlasting contribution was the idea of the farmers’ cooperative. They organized the farms
of each county to be able to function like a corporation or trust. Cooperatives were
monopolies that held crops off the market and collectively purchased facilities like grain
elevators. Populists preached that farmers were raising, “Not crops but money.”
Out of the Populist Movement came an effective lobby group that hired experts in
a bureaucracy giving each county in America an agricultural agent. The notion of
“agribusiness” was coined along with the term. A man named Hamlin Garland rose up to
revive Populism but became disillusioned when all he accomplished was a 1908 drive to
revive interest in country life with the Country Life Commission. The political power of
Populism was crippled in 1896 and disappeared from American life with the prosperity of
1910. Populism remains the most successful third-party initiative in American history,
however, so we should analyze it in detail, especially if you ever want to start a third
party.
Populism was a religious movement. Populists were among the most successful
people in US history to combine Protestant Christianity and patriotism to make a
powerful political force. They wielded that force in an attempt to rid government of the
abomination of corruption as they saw it, and we use the term “grassroots” in American
political rhetoric because this first “grassroots” movement came off the Great Plains
(where there is grass). Populists viewed top-down reform movements like the push for
civil service reform as failures, so they mobilized from the bottom up to recover a lost
sense of community, pre-industrial societal unity, and old-time values.
They believed they were ushering in a “Golden Age of the Golden Rule” as they
rejected modernity. Among their ranks were some Greenback Labor Party adherents and
some (but few) laborers. Among their collective values were anti-corruption political and
social reforms, cheap money, anti-monopoly, and anti-Wall Street (which they viewed as
a vast conspiracy against them). They were in sympathy with the urban Social Gospel
movement we will study later and believed like the Social Gospelites that they were
applying the ethics of the New Testament to American reform. Populists wanted to
overcome post-war sectionalism and did get the farmers of the South to unite with the
farmers of the West.
Both types of farmers had problems. The Southern Alliance was filled with
tenant farmers, an inherently powerless class. The Northern Alliance was filled with
farmers blind to the fact that their own overproduction was ruining their markets. A
bizarre reality was the sight of wagon trains going back East! From 1880-1890 18,000
wagons filled with failed homesteaders headed back to the cities. I wonder what they did
with the wagons. Would you buy a used wagon from a failed homesteader on your way
out to claim your homestead? Wouldn’t you think twice about going?
The grassroots movement of Populism offered new opportunities for women as
members and as leaders. Female leaders included Sarah Emery, who wrote Populist
tracts, and Annie Diggs, who channeled Protestant sentiment toward prohibition. Mary
Lease was a fiery orator for the movement who is famous for having said, “Raise less
corn and more hell!” At least she seemed to understand the problem. Women were
inexperienced politically in America, of course, but so were farmers in general. The
camp-meeting atmosphere of Populist rallies preached a new “promised land,” but
Populists actually achieved none of their goals.
The Populist Movement is therefore an American political tragedy
(Shakespearean). They had a sweeping party platform that pitted their idea of true power
(farms) against money power (cities). Their goals included federal government subsidies
for farmers, a graduated income tax (punishing rich people), a flexible currency
(eliminate the gold standard), the storage of surplus crops, the direct election of senators,
laws to punish monopolies, laws to restrict immigration, and the nationalization
(government takeover) of railroads. Their slogan of “The tramps vs. the millionaires”
sounds a little “corny,” but do their ideas sound familiar? Are you aware that all of these
ideas were eventually implemented except for the nationalization of railroads, and we
even flirted with that one during World War I?
Populist rhetoric fit into the general Protestant evangelical rhetoric about the
coming millennium. Many American Christians interpreted widespread suffering as a
sign of the coming Apocalypse. As Populist leaders went to and fro preaching about corn
and hell, they carried around the writings of Thomas Jefferson and trumpeted his call for
agrarianism. This affection for Jefferson is odd since he would have had little affection
for the huge role the Populists were asking the federal government to take. They were
the first Americans to ask the government to solve all their problems, and the big
government of modern America was therefore their idea.
As to their political success, it ranks as the best a third party has ever done, but
that did not put General James B. Weaver in the presidency in 1892. A dozen
congressmen were elected, however, and Populist governors were elected in Kansas,
North Dakota, and Colorado. As we will see below, though, they sank their dreams in
one basket made of silver which was carried by William Jennings Bryan, the Democrat
running for president in 1896. Bryan championed the free coinage of silver. For all their
hopes, the Populists fell prey to the genius of corporate America in that large silver mines
had been looking for a large, disgruntled group of voters to mobilize as lobbyists to help
with silver mines’ overproduction. The price of silver followed markets just like the
price of grain.
Let’s go back a bit to explain. Grover Cleveland had blamed the Sherman Silver
Purchase Act of 1891 for destabilizing the currency and thus the economy. The US had
been committed, by yet another law from John Sherman, to buy 4.5 million ounces of
silver per month, ultimately to be used as coin. This measure caused inflation and
another gold rush, this time just to buy gold from dwindling US gold reserves. Cleveland
fought to repeal the law and thereby alienated western farmers (and silver miners).
Oddly, this Democratic president was the first to ask J. P. Morgan to bail out the country.
Morgan used his wealth to help the US issue bonds for the purchase of gold. People who
hated Morgan were therefore alienated even further from Cleveland.
The Election of 1896 was unfortunately turned into a one-issue campaign. The
Democrats wrestled at their convention with the question—Cleveland and gold or Bryan
and silver? William Jennings Bryan belted out a revival sermon at the nominating
convention that went down in US history as his “Cross of Gold Speech.” He ended the
speech against the gold standard by saying, “You shall not press down upon the brow of
labor this crown of thorns, you shall not crucify mankind upon a cross of gold!” The
convention went wild and nominated Bryan. Since the Populist Party had preached that
the free coinage of silver would solve all their problems, they threw all their support
behind Bryan and the Democrats. Even when the ratio of 16:1 for the coinage of silver to
gold was adopted, the Populists invalidated their own party and threw in their lot with the
Democrats.
The Republicans answered with William McKinley. Each candidate delivered
900 speeches during the campaign. McKinley’s were delivered from his front porch in
Canton, Ohio where the Republican Party shipped 750,000 people on 9,000 railroad cars
to hear him. William Jennings Bryan became the prophet and revival preacher swearing
to wipe away corruption and the tyranny of Money in a crusade of speaking engagements
wherever his campaign train would carry him (the origin of the phrase, “Whistle-stop
campaign”).
William McKinley was the last Civil War officer to win the presidency. He was a
product of the Ohio Republican political machine run by Mark Hanna who had groomed
McKinley to protect the protective tariff as a Congressman and then as president. The
speech he repeated 900 times expressed his version of the Golden Rule, “Live and let
live.” This odd reversal of a pietistic Democrat crusading against evil and a tolerant
Republican standing on the Gold Standard swept Catholics and Protestants, farmers and
workers, businessmen, and bankers into the Republican Party. Four of the five crucial
swing states voted for McKinley. McKinley took 7 million of the popular votes and 271
electoral votes from the East, the Midwest, California, and Oregon. Bryan’s 6.5 million
popular votes came from Populist strongholds of the South and West but only garnered
176 electoral votes. Both parties learned modern keys to victory: efficient organization,
skilled communication, flexible and sophisticated candidates, and, of course, money.
As for the Populist Party, the one basket into which they had put their eggs was
smashed. Bryan lost, and a third party that subsumes itself into one of the two main
parties could not pull back out with any credibility. The Populists faded from American
politics, but remember, their ideas did not. Populists failed, but another reform
movement took their ideas and succeeded in breaking the traditional power structure.