Populism

Declining Profits Thanks to new technologies, farmers had opened up the Great Plains and were producing a much greater supply of grains Grain supply ↑ = Grain prices ↓ Farmers were earning LESS

Rising Costs High tariffs + unionized factory workers = high prices on manufactured goods Banks were charging high interest on loans Railroads were charging higher fees for shipping grain to eastern markets Farmers were paying MORE

The Money Supply To fund the Civil War, US government had flooded the market with paper money (“greenbacks”) Supply of $↑ = Value of $↓ (inflation)

3 Types of Money Greenbacks Gold & Silver coins Bank notes backed by government bonds

Government response to inflation Stopped printing greenbacks Stopped minting silver coins Started paying off government bonds to reduce number of bank notes in circulation Response was too strong and reduced the money supply too greatly Supply of $↓ = Value of $↑ = Prices ↓ (deflation)

Deflation Hurts Farmers Decrease in money supply meant loans were harder to get and interest rates were higher Farmers were getting LESS for their crops but paying MORE for mortgages & other loans

“The Crime of ’73” Farmers believed that greedy banks had pressured government into reducing the money supply Began to organize and campaign for government to resume printing greenbacks and/or minting silver coins

The Grange “The Patrons of Husbandry” founded in 1867 by USDA official Oliver H. Kelley Designed to organize rural farmers; by 1874, the Grange had over 1 million members

The Grange Takes Action Pressured state legislatures to regulate railroad & warehouse rates Joined Independent National Party (also called the Greenback Party) a new political party aimed at getting the government to print more paper money Created farmers’ cooperatives

Farmers’ Cooperatives Pooled farmers’ crops and held them off the market in order to limit supply and force up prices By working together, farmers could also negotiate better shipping and warehousing rates

The Grange Fails Greenback Party failed to win public support – average American didn’t trust paper money Cooperatives never grew large enough to be effective Many states did pass laws setting maximum rates for railroads, but ….

Wabash v. Illinois 1886 Supreme Court ruled that states could not regulate railroads because the railroads were involved in interstate commerce; interstate commerce can only be regulated by federal law

The Farmer’s Alliance Formed in 1877 in Texas By 1890 had nearly 3 million members Also tried to create cooperatives, but failed for many of the same reasons

The Populist Party Founded in 1890, more commonly called the Populists Western farmers of the Alliance decided that the changes needed to help farmers required a new political party Southern farmers opposed a third-party because it might weaken the Democratic Party

The Subtreasury Plan Southern farmers proposed that the government set up warehouses called subtreasuries where farmers could store their surplus crops Also wanted government to provide low-interest loans to farmers Many Democratic politicians won elections in the South after promising to support the Subtreasury Plan, but then reneged

The Sherman Silver Purchase Act of 1890 Congress authorized the US Treasury to purchase 4.5 million ounces of silver per month to put more money into circulation Still, it wasn’t enough to ease deflation, so it didn’t help farmers

The Omaha Platform Called for unlimited coinage of silver at a ratio of 16 oz. of silver = 1 oz. of gold (bimetallism) Called for federal takeover of railroads Called for a graduated income tax Called for tighter government regulation of banking and industries

A Populist Candidate for President 1892, Populists met in Omaha, NE and nominated James B. Weaver to run for President of the United States Came in a distant 3rd place in the election with only 22 electoral votes, but still a strong showing for a 3rd party candidate

Panic of 1893 2 large railroad companies were forced into bankruptcy, triggering a collapse of the banks who had loaned the railroads money Worst economic crisis US had experienced to that point 18% unemployment

Treasury Crisis Panic of 1893 caused investors to cash in their government bonds for gold, draining the US gold reserve Congress responded by repealing the Sherman Silver Purchase Act to stop people from trading in silver for gold

Goldbugs vs. Silverites Repeal of the Sherman Silver Purchase Act split the Democratic Party Goldbugs believed that US currency should be backed exclusively with gold Silverites believed that coining unlimited silver would ease the economic crisis

Election of 1896 Populists wanted to nominate a candidate who supported silver, but Democrats beat them to the punch Faced with either supporting the Democratic candidate and giving up their 3rd party status or nominating their own candidate and splitting the pro-silver vote, the Populists chose to support the Democrats

William Jennings Bryan Only 36 when Democrats & Populists nominated him for president Powerful speaker who won nomination with his pro-silver “Cross of Gold” speech

The “Cross of Gold” Speech “Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold.”

Bryan’s Campaign Toured the country for weeks, giving hundreds of speeches Strongly supported in the West and South, but not by city-dwellers (who didn’t care about the silver issue) or Catholic immigrants (who didn’t like his Protestant minister style speeches)

William McKinley’s “Front Porch” Campaign Republican candidate McKinley refused to travel and speak, opting instead to stay home in Ohio and let visitors come to him Republican Party had local Republicans campaign for McKinley instead Won support of urban workers and big business

William McKinley 1843 – 1901 25th President (1897-1901) Republican Expansionist who oversaw the Spanish-American War Assassinated in 1901

Gold in Alaska Alaska had been purchased by US from Russia in 1867 for $7.2 million Discovery of gold in Alaska 1898 boosted the nation’s gold reserves and ended the silver debate, leading to the decline of the Populist Party