During the Gilded Age of the late 19th century, farm prices fell and the federal government began supporting industry. Farmers first organized the Grange, a social movement that turned political with Farmers' Alliances. The Populist Party emerged to represent agrarian interests at the national level.
Farming in the Gilded Age
In the late 1800s, America's Gilded Age was a period of rapid change in society, technology and the economy. As with anything gilded, things aren't always quite as good as they seem on the surface. The nation transformed into an urban, industrial power, but this could only come at the expense of America's rural, agrarian community. As farmers became more distressed and discontented, they organized into one of the strongest Third Party movements in American history.
Following the Civil War, the United States experienced significant immigration and urbanization - and all those people needed to eat. This increased demand coincided with several other factors: new land available for cultivation in the West, efficient transportation via the transcontinental railroad and innovations in farming technology. By 1900, one man could produce as much wheat as 20 farmers back in 1860. And in that same period, 430 million new acres were converted to farmland.
But all of that surplus means one thing in terms of economics: prices go down. That's great news for the city dwellers. It's terrible news for the farmers who had gone into debt to buy land, tractors, seed and fertilizers. What's more, South America and Europe were also seeing bumper crops, so export markets were dwindling.
And then when American politicians decided that domestic industry needed a helping hand in the form of protective tariffs, foreign nations retaliated by placing their own tariffs on our farm goods. Prices were falling here, and no one overseas was buying. Gilded Age farmers were in trouble.
The Granger Movement and Farmers' Alliances
Beginning in 1867, the Granger movement took shape in America's farmland. Formally known as the National Grange of the Patrons of Husbandry, the organization was originally a social network. Local branches were called 'Granges' and its members were called 'Grangers.' But as economic conditions began to turn against farmers beginning with the Panic of 1873, membership exploded, and later in the decade, many Granges were linked together with 'Farmers' Alliances,' which were more political.
Farmers were drawn in to these networks by the same factors that led industrial workers to labor unions: there was power in cooperation. The Grange's primary target was the monopolistic pricing of the railroads. In one example, Eastern producers paid 95 cents per ton to ship their goods; a producer west of the Missouri River paid $3.20 per ton. Long-haul rates were more than short-haul rates.
The railroads also owned most of the grain elevators, so they gouged farmers for storage as well. But the Grange and Farmers' Alliances also sought ways to combat the federal government's economic policies, which heavily favored industry over agriculture. Besides tariffs, which I just mentioned, the government regulated currency to keep inflation low. That's great for investors, but it's bad for people in debt - like farmers.
The Grange tried to address these problems through actions like cooperative ownership of equipment and mills. They pooled their savings and banking assets to form something like early credit unions to handle their own finance needs. The more political Farmers' Alliances pressed for state laws to prohibit monopolistic railroad and grain elevator rates. Throughout the Midwest, Grangers successfully captured majorities in several state legislatures and won the passage of so-called 'Granger laws' in Illinois, Wisconsin, Minnesota and Iowa, establishing policies like price caps for shipping and grain-storage facilities.
Of course, the railroads quickly fought back. The first of the so-called 'Granger cases' reached the Supreme Court in 1877 when a Chicago grain storage facility charged that the maximum rate was unconstitutional. In Munn v. Illinois, the U.S. Supreme Court ruled that when a business affected the public interest, the government had the right to regulate it. The Munn decision was a political triumph for farmers, but it wasn't to last. Nine years later, Illinois's Granger law was overturned in the Wabash Case, which determined that the federal government - not states - had jurisdiction over interstate commerce.
The Populist Party
The Grange and Farmers' Alliances had been an important step in representing agrarian interests, but when the Wabash decision nullified all of the state regulations in 1886, it was pretty obvious to farmers that they needed legislation at the national level.
Their highest political agenda may have been currency reform. The nation had recently adopted the gold standard, which stabilized the currency and encouraged investment. But it led to deflation; people in debt prefer inflation. Consider a farmer who is in debt $2,000. If he can earn $1 for each bushel of grain, then he needs to harvest and sell 2,000 bushels just to break even. But if inflation pushes the cost of grain higher - let's say to $2 a bushel - then he can pay off his debt with just half of the harvest.
Farmers suggested that the treasury print 'greenbacks' (that's dollars that weren't backed by gold) to create inflation. Even though the 'Greenback Party' organized and ran a presidential candidate in 1876, '80 and '84, the nation wasn't ready for such a radical idea. But a related idea did catch on. The treasury could reinstate the use of silver as well as gold to back dollars, and, therefore, increase the money supply. This platform was advanced by a new political party, the Populists (sometimes also called the People's Party).
Since the end of President Grant's term in 1877, politicians hadn't attempted to pass much significant federal legislation beyond civil service reform. The Populist Party changed that. In addition to the free coinage of silver, the Populists proposed several economic and democratic reforms. Among other ideas, they demanded a graduated income tax (keep in mind that there was no income tax at the time; this would have replaced property taxes, which hit farmers the hardest and shifted the tax burden to big business), government ownership of railroads and telegraph lines, the abolition of national banks and lowering protective tariffs for manufacturing.
They also called for a one-term limit for the presidency (at the time, there was no limit), the direct, popular election of senators (at the time, they were selected by each state's legislature), recalls on public officials and secret ballots.
Populists in the Elections of 1892 and 1896
The Populists ran James Weaver as their presidential candidate in 1892. Weaver garnered more than 8% of the vote, forcing the other parties and the nation to pay attention. Their campaign downplayed international markets and economic realities and focused instead on a 'conspiracy' of Eastern financial interests that sought to replace America's agrarian tradition with an industrial future. With such a specific target, the Populists drew in more support (including many non-agricultural workers) during an economic recession that hit the next year from people who could all identify with the farmers' victimization by Big Money. As the 1896 presidential election loomed, the Populists forced the other political parties into high gear.
Most Populists had defected from the Democrat Party. In response, the Democratic candidate for the 1896 election, William Jennings Bryan, adopted some of the Populist Party's goals to win them back. At the national convention, Bryan delivered his famous 'Cross of Gold' speech, in which he condemned the gold standard, 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.' This ringing endorsement for free silver appealed to both farmers and the urban working class. Bryan's speech was a stroke of political genius. A few days after the Democrats nominated him for president, the Populist Party nominated him, too.
The decision was actually the beginning of the end for the Populists. They lost their political identity and were absorbed by the Democrats, who would never endorse their entire platform. Bryan lost the 1896 election, and the newly elected William McKinley (a Republican) committed the nation firmly to the gold standard and continued policies that favored economic growth through industry.
However, inflation was achieved anyway after gold was discovered in the Yukon, and bad harvests in Europe expanded overseas markets and drove up food prices. The Progressives would soon advance many of the policies originally endorsed by the Populists. Incidentally, the Grange reverted to its role as a social support network and exists to this day.
Let's review. American farmers faced dire political and economic circumstances during the Gilded Age, as federal policy favored industry and prices fell as a result of international economic factors. Farmers first organized themselves through the Granger movement and later through the more political Farmers' Alliances, promoting ideas to combat monopolistic pricing by the railroads and other detrimental federal policies.
The Granger laws began to address these problems at the state level, but a Supreme Court case in 1886 overturned them, forcing farmers to look for solutions at the national level. They formed the Populist Party, whose goals were the free coinage of silver and other reforms, like a graduated income tax and direct election of senators. James Weaver, the Populist candidate in the 1892 presidential election, won more than 8% of the vote, bringing the Party's agenda into the national spotlight. In the 1896 election, Democratic candidate William Jennings Bryan co-opted the free silver issue, winning the Populist Party's nomination as well. It was the end of the Populist movement.
After you have finished this lesson, you should be able to:
- Describe the Gilded Age
- Recognize the emergence of political parties (Grangers and Populist) in support of the people and not industry
- Recall the economic reasons for the differences between the democrats (Bryan) and republicans (McKinley)