Chapter 16 Section 2 Populism

Unrest in Rural America Populism was the movement to increase farmers’ political power and to work for legislation in their interest. Economic problem for farmers-farm prices had dropped due to new technology Farmers were producing more High tariffs increased the cost of manufactured goods, made it hard to sell goods overseas Farmers felt they were victims of the banks and RR that set shipping rates

Money Supply United States Treasury increased money supply to finance the Union war effort Greenbacks-paper currency that could not be exchanged for gold or silver Inflation-decline in the value of money, paper money lost value prices soared

Three types of Currency after The Civil War Greenbacks, gold and silver coins, bank notes backed by government bonds To get inflation under control the federal government stopped printing greenbacks and began paying off its bonds Deflation-increase in the value of money and a decrease in the general level of prices

Deflation Hurts Farmers Money was in short supply, interest rates began to rise Falling prices of the period of deflation meant the farmers sold their crops for less Problems were due to a shortage of currency, many farmers concluded that eastern bankers had pressured Congress into reducing the money supply

“The Crime of 73” Some farmers encouraged the printing of more greenbacks to expand the money supply Westerners wanted the government to begin minting silver coins The decision to stop minting silver referred to as the “Crime of 73”

The Grange Takes Action Oliver H. Kelley founded the nation’s first national farm organization, the Patrons of Husbandry, AKA the Grange Gathered for social and educational purposes Grangers responded to crisis in three ways-pressured state legislatures to regulate railroad and warehouse rates, joined Independent National Party, pooled their resources and created cooperatives

Cooperatives-marketing organizations that worked for the benefit of their members Farmers couldn’t raise prices because of competition Cooperatives pooled farmers’ crops and held them off the market in order to force up prices Could negotiate better rates for shipping (large quantities)

The Grange Fails None of the strategies improved farmers’ competition Granger Laws-setting maximum rates and prohibiting railroads from charging more for short hauls than for long ones Greenback Party failed to gain support-people were suspicious of paper money Grange failed b/c they were too small to have an impact on prices

Farmers Alliance The Alliance Grows A new organization after the Grange Charles W. Macune was the leader Organized large cooperatives called exchanges, hoped to force farm prices up and make low interest loans to farmers

The People’s Party Large cooperatives failed because of overextending themselves by loaning too much money at low interest rates that were never repaid Wholesalers, bankers discriminated against them Still too small to affect prices on the world market People’ s Party-formed by Alliance leaders, Western states, wanted reform

The Subtreasury Plan Southern leaders opposed the idea of a third party, did not want to undermine the Democrats’ control of the South Macune suggested the Alliance call for a list of demands Subtreasury plan-called for the government to set up warehouses called subtreasuries Store crops, low interest loans from the government

Ocala Demands Intended to guide farmers in choosing whom to vote for in 1890 Called for the adoption of the subtreasury plan, free coinage of silver, end to protective tariffs and national banks, tighter regulation of the RR, direct election of senators by voters instead of by state legislatures

Sherman Silver Purchase Act of 1890 Tried to gain support of farmers Authorized the United States Treasury to purchase 4.5 million ounces of silver a month Put money into circulation but did little to help farmers

The South Turns to Populism Few Democrats followed through by supporting the Alliance Program

A Populist for President James B. Weaver, People’s Party, presidential candidate Platform Denounced the government’s refusal to coin silver Increase money supply, unlimited coinage of silver at a ratio that gave 16 ounces of silver the same value as 1 ounce of gold Federal ownership of RR, Graduated income tax-taxed higher earnings more heavily

Populists wanted to strengthen the hand of government so that could defend the public against what they saw as greedy and irresponsible private interests Omaha Platform-took positions popular with labor, including calling for an 8 hour workday, restricting immigration, and denouncing strikebreaking

Panic of 1893 Not long after Cleveland’s inauguration, the nation plunged into an economic crisis Philadelphia and Reading RR declared bankruptcy RR expanded too rapidly, found it hard to repay loans

Goldbugs and Silverites The Panic of 1893 created a crisis for the United States Treasury Many investors owned bonds, things worsened, they cashed in for gold This caused gold to drain out the treasury and left the federal government’s gold reserves low (Cleveland)Repeal of the Sherman Silver Purchase Act

Cleveland’s actions split the Democratic party into two factions Goldbugs-believed the American currency should be based only on gold Silverites- believed coining silver in unlimited quantities would solve the nation’s economic crisis

The Election of 1896 William Jennings Bryan-Democratic candidate- supporter of silver Populists Party-endorse Bryan and risk undermining the identity of party or split the silver vote

Bryan’s Campaign Cross of Gold speech (p. 506) Transformed the campaign for silver into a crusade Traveled thousands of miles making speeches

The Front Porch Campaign Republicans believed Bryan would be hard to beat in the South and West Chose William McKinley-campaigned from his front porch, met with different delegations at his home Promised workers a “full dinner pail” Republicans, convinced unlimited coinage of silver would ruin the country

Business leaders donated huge sums of money to the Republican campaign Business would fail, unemployment would rise, wages would be cut if Bryan won

Populism Declines Gold strikes in other parts of the world increased the money supply without turning to silver This meant credit was easier to obtain and farmers were less distressed Gold Standard Act passed in 1900-officially adopted a gold-based currency