Economics, Race, and the Populist Party (1867-1896)

Historical Background: Economic Turmoil of the 1870s The Panic of 1873 Northern and Southern investors borrowed more and more money, betting the post-Civil War economy would continue to grow But when the nation’s largest bank went bankrupt (could not pay debts for railroad construction), it triggered a financial panic Smaller banks closed 89 railroads went bankrupt 18,000 companies closed 5-year depression 3 million unemployed workers Currency Dispute Roots in the Civil War/Fueled by the Panic of 1873 During the Civil War the government printed “greenbacks” not backed by gold After the War, northern bankers wanted to pull greenbacks out of circulation and return to the gold standard (less money in circulation) Southern and Western farmers wanted more greenbacks in circulation (“easy money”) to help them pay off their debts

Farmers Unite to Address Common Problems Why were farmers angry? Economic Distress Problems with the Railroads Crop prices fell = lower profits and little cash Farmers had to borrow money for seed and supplies = higher interest rates and more debt Paper money was being replaced (again) with gold and silver and money was worth less = harder to pay back loans Lenders (banks) foreclosed on their mortgages Little competition among railroads = higher rates to transport crops to market Railroads charged different rates for different crops There was no standard rate (regulation)

Farmers Unite to Address Common Problems In order to affect change, farmers needed to organize The Grange Formed by Oliver Hudson Kelley in 1867 Organization of farmers Formed in order to fight for government regulation of big business (specifically railroads) Sponsored some state regulation of railroads The Farmers’ Alliances Inspired by the Grange and included people who sympathized with farmers Sent lecturers to towns to educate people about lower interest rates and regulation of railroads and banks 250,000 African Americans belonged to the Colored Farmers’ National Alliance (most organizations were segregated)

Grangers Begin to Make Progress Munn v. Illinois (1876) Supreme Court ruled that states can regulate railroads and certain other businesses within their own borders Wabash v. Illinois (1886) Supreme Court rules states could not regulate rail lines between different states (interstate) Leads to development of the Interstate Commerce Commission (federal regulation)

Is the Omaha Platform Relevant? 7. There should be a graduate income tax. 2. Wealth belongs to him who creates it. 10. The government should limit immigration into the United States. 15. The President of the United States should be able to serve one four-year term only. 8. The government should own and operate the telephone and telegraph… 5. The government alone, not the bankers, should control the money supply.

What in the world is Populism? Political Parties of the 1890s Democratic Party Populist Party Republican Party Political movement of farmers and laborers in the late 19th century (People’s Party) Goals: 1. Regulate the railroads 2. Make more cash available (back the dollar with silver, not gold) 3. Direct election of senators and 1 year terms for presidents 4. Graduated income tax 5. Restrictions on immigration and 8-hour workday “Fusion Coalition”

1892 Presidential Election: Populist candidate won over a million votes!

The Panic of 1893 Causes Results Railroads expanded faster than market Railroads went bankrupt Stock market collapsed Banks stopped loaning $ Farmers borrowed too much $ Businesses sold too much on credit 15,000 businesses collapsed 156 railroad companies went bankrupt 600 banks closed Government funds and monetary reserves dropped Gold value dropped severely

Political Parties of the 1890s The Election of 1896 Political Parties of the 1890s Democratic Party Populist Party Republican Party Southerners Wealthy farmers Supported low tariffs (wanted other countries to buy their crops) Political movement of farmers and laborers in the late 19th century Goals: 1. Regulate the railroads 2. Make more cash available (back the dollar with silver, not gold) 3. Direct election of senators and 1 year terms for presidents 4. Graduated income tax 5. Restrictions on immigration and 8-hour workday Northerners Wealthy businessmen (connected to the railroad) Southern African Americans (poor farmers)  party of Lincoln Supported high tariffs (didn’t want to compete with other countries’ products) “Fusion Coalition”

The Election of 1896 Populists decide to improve their chances by supporting the Democratic candidate, William Jennings Bryan, who agreed to support the silver-backed dollar.

Gold Bugs v. Silverites Gold Bugs and Silverites Gold Bugs Silverites (Bimetallists) Who They Were Bankers and businessmen (Northerners/Republicans) Farmers and laborers (Southerners & Westerners/Democrats & Populists) What They Wanted Gold standard Less money in circulation Bimetallism (both gold AND silver) More money in circulation Why Loans would be repaid in stable money. Products would be sold at higher prices. Effects DEFLATION Prices fall Value of money increases Fewer people have money INFLATION Prices rise Value of money decreases More people have money William McKinley (Republican) William Jennings Bryan (Democrat/Populist)

Bryan loses but carries most of the South and West The Election of 1896 Effects: 1. Period of Prosperity 2. Populists ideas were absorbed into the Progressive Party Bryan loses but carries most of the South and West

Populist Party Politics Populists didn’t always align with Democrats; sometimes they aligned with Republicans, especially in the South where Republicans were poor black farmers and Democrats were rich land owners. When Populists united with Republicans, their platform was sometimes called the “Fusion” ticket.