PopulismPopulism

Setting the Scene

• American farmers struggled against two forces: nature and the economy.

• Post-Civil War: farmers in debt.

• Borrowing heavily to purchase expensive new equipment in order to increase productivity.

• Tenant farming increased; crisis loomed.

Tenant Farmers

The Farmers’ Complaints

National panics: 1873 & 1893• Railroads failed.• Banks failed.• Businesses went under.• Unemployment soared.• Loans called in by banks.• Crop prices plummeted.

Tariffs

• In the 1800s, the country was divided on the issue of tariffs.

• Business owners: tariffs protected American factory jobs – and their own profits; tariffs reduced foreign competition.

• Workers and consumers: tariffs encouraged American business to raise prices.

Tariffs Hurt Farmers• Tariffs raised prices of manufactured

goods, such as machinery.• Tariffs on manufactured goods spurred

manufacturing nations in Europe to retaliate with their own tariffs against American crops.

• RESULT: tariffs indirectly reduced the world market for American farm products!

The Money Supply

• For some farmers, the silver supply was even more important.

• Money supply: the amount of money in the national economy; directly related to the value of money.

The Money Supply & Inflation

• Supply goes up, value of dollar drops.

• This leads to inflation, a widespread rise in prices and value of goods and services.

• People who borrow money benefit from inflation because it raises the prices of the goods they sell.

The Money Supply & Deflation

• In contrast, if the government reduces the money supply, the value of each dollar becomes greater. This causes deflation, or a drop in the prices of goods.

• People who lend money are helped by deflation because the money receive in payment of a loan is worth more than the money they lent.

Monetary Policy

• After the Civil War, the federal government made the first of several attempts to take paper money (greenbacks) out of circulation.

• This policy created a furor among farmers and others who favored inflated prices.

• The monetary policy became a major political issue.

Gold Bugs• 1873 – worst economic panic in U.S.

history to that point

• Until that point, U.S. currency was on a bimetallic standard, consisting of both gold and silver coins as well as U.S. treasury notes that could be traded for gold or silver.

U.S. Mint, New Orleans, Louisiana

• After the panic, U.S. currency was put on the gold standard.

• Result: money in circulation decreased; deflation ensued.

• “Gold Bugs,” many of them big lenders, won a major victory.

• Farmers lost…again.

Silverites & Greenback Party

• Mostly made up of western farmers and the silver-mining industry.

• Called for free silver – the unlimited coining of silver dollars to increase the money supply.

• The Greenback Party, founded in 1875 to promote continued issuing of paper money, joined the Silverite cause.

The Bland-Allison Act (1878)

• Required the federal government to purchase and coin more silver, increasing the money supply and causing inflation.

• Passed by Congress, but vetoed by Hayes, who opposed the inflation it would create.

• Congress overrode the veto, but the act had limited effect.

• The Treasury Department:

– refused to buy more than the minimum amount of silver required under the act.

– Refused to circulate the silver dollars that the law required it to mint.

Farmers Organize

Improved communication allowed farmers to organize powerful protest groups.

• The Grange (1866), a.k.a. the Patrons of Husbandry; Oliver H. Kelley, founder–Developed cooperatives through

which farmers bought goods in large quantities at lower prices.

–Pushed for farmer-friendly legislation

• The Farmers’ Alliances (1880s)

-Launched harsh attacks against monopolies, such as those that controlled railroads

-Called for more money in circulation-Encouraged the creation of state departments of agriculture-Pushed anti-trust laws-Instituted farm credit

Kansas lawyer and member of Farmers’ Alliance,

Mary Elizabeth

Lease

The Government Responds

• In every election from 1880 to 1892, no candidate won a majority of the popular vote.

• Only rarely did the president’s party control Congress.

Grover Cleveland

Interstate Commerce Act (1887)

• Interstate Commerce Act passed to regulate interstate RR freight charges

• Made it illegal to give special rates to some customers

The Sherman Anti-Trust Act

• 1890: Passed by Congress to curb the power of trusts and monopolies

• Enforcement was lax until 1900s

The Populists

The Farmers’ Alliances founded the People’s Party; its supporters became known as Populists.

The Populist Platform• Increased circulation of money• Unlimited minting of silver• Progressive income tax

–Percentage of taxes owed increases with a rise in income

–Places greater financial burden on wealthy industrialists and lesser one on farmers

• Government ownership of communications and transportation systems.

Other Populist Issues

• 8-hour work day

• Opposition to the Pinkertons, the private police force that had been involved in the bloody Homestead Strike in 1892

• United front of African-American and white farmers

• Though Populism generated excitement in the 1892 campaign, James B. Weaver earned barely one million votes.

• Cleveland returned to the presidency.

Election of 1896• Ongoing depression affects

campaign

• The candidates:

– Republican: William McKinley – gold standard platform

– Democrat and Populist: William Jennings Bryan – former Silverite congressman from Nebraska

Bryan’s “Cross of Gold”1896 Democratic Convention:

“You shall not press down

upon the brow of labor this

crown of thorns. You

shall not crucify

mankind upon a cross of

gold!”

McKinley Wins• Despite his best efforts, Bryan failed to win

the support of the industrial and urban midwestern and northern states.

• Factory workers feared that free silver might cause inflation, which would eat away at the buying power of their wages.

McKinley Administration

• 1897 – McKinley raised tariffs to new heights.

• 1900 – increased worldwide gold supply

(discoveries in S. Africa, Yukon, Alaska)• Congress returned U.S. to gold standard• To surprise of farmers, crop prices began

a slow rise.

Populism’s Legacy

• Silver movement died, as did Populism.• Goals of Populism lived on.

•In future decades, the Progressives applied populist ideas to urban and industrial problems.•A new era of reform was at hand.

• http://www.nebraskastudies.org/0700/frameset_reset.html?http://www.nebraskastudies.org/0700/stories/0700_5000.html

• Power Point Created by Mrs. Crowe LHS