Rise and Fall of the Populist Party

Unrest in Rural America. Populism was the movement to increase farmers’ political power and to work for legislation in their interest. A major problem was that farm prices had dropped due to new machinery. As production increased, the price of crops dropped- lowering profits. At the same time, high tariffs increased the cost of manufactured goods farmers needed. Farmers also felt they were victimized by large and faraway businesses: the banks from which they obtained loans (at high interest rates) and the railroads that set the costly shipping rates to bring their crops to market.

The Money Supply. One specific problem that greatly concerned farmers was the nation’s money supply. To help finance the Union war effort, the United States Treasury had greatly expanded the money supply by issuing millions of dollars in greenbacks- paper currency that could not be exchanged for gold or silver coins. This rapid increase in the money supply without an accompanying increase in goods for sale caused inflation, or a decline in the value of money. As the paper money lost value, the prices of goods soared. To get inflation under control, the federal government stopped printing greenbacks and began paying off its bonds. In 1873 Congress also decided to stop making silver into coins. These decisions meant that the United States did not have a large enough money supply to meet the needs of the country’s growing economy. In 1865, for example, there was about $30 in circulation for each American, but by 1895 it had sunk to about $23. As the economy expanded it suffered from deflation- or an increase in the value of money and a decrease in the general level of prices.

Deflation Hurts Farmers. Most farmers had to borrow money to plant their crops, invest in new technologies, or expand the size of their farms. Because money was in short supply, interest rates began to rise, which increased the amount farmers owed to the banks. The falling prices of the period meant the farmers sold their crops for less. Believing that their problems were due to a shortage of currency, many wanted the government to once again mint silver coins- decreasing the value of the money they owed to the banks. They referred to the decision to stop minting silver as “The Crime of ’73,” and began organizing in order to force government to address their problems.

The Grange. The first national farm organization was started for social and educational purposes. Then, in 1873, the nation plunged into a severe recession, and farm income fell sharply. Farmers looking for help joined the Grange in large numbers. Grangers responded to the crisis by pressuring state legislatures to regulate railroad rates. Grangers also pooled their resources and tried to create cooperatives- marketing organizations that worked for the benefit of their members. Cooperatives pooled farmers’ crops and held them off the market in order to force up prices. Because a cooperative controlled a large quantity of farm products, it could also negotiate better shipping rates with railroads. However, the 1886 Supreme Court ruling in Wabash v. Illinois greatly limited the states’ ability to regulate railroads by ruling that states could not regulate commerce that crossed state lines. The Grange’s cooperatives also failed, partly because they were too small to have any effect on prices, and partly because Eastern businesses and railroads refused to do business with them. By the late 1870s, membership in the Grange had begun to fall, as farmers moved to other organizations that they hoped would better address their problems.

The Farmer’s Alliance. As the Grange was losing members, the Farmer’s Alliance was growing in the late 1880s. The Alliance began in Texas and then spread throughout the South and on the Great Plains. By 1890 it had between 1.5 and 3 million members. The Grange adapted the use of cooperatives, in this case known as exchanges. Despite some small success, the exchanges failed for many of the same reasons as cooperatives. The failure of the Alliance caused many members to form their own political party to push for national reform laws. It began in Kansas with the formation of the People’s Party (also known as the Populists) and quickly spread to other states. The popularity of the Populists caused Republicans in Congress to pass the Sherman Silver Purchase Act of 1890. This act authorized the U.S. Treasury to purchase 4.5 million ounces of silver per month. It put more money into circulation and slightly reduced deflation, but it did little to help farmers. Meanwhile, the midterm elections of 1890 saw many Populists elected to state and national level. Populists took control of the Kansas, Nebraska, Minnesota and South Dakota legislatures. Eight Populists were elected to the U.S. House of Representatives and two to the Senate. At the same time, the South was turning to Populism due to the reluctance of the Democratic Party to adopt reforms promoted by the Alliances and the Grange. Election of 1892. In July the People’s Party held its first national convention in Omaha, Nebraska. There members officially organized their party and nominated James B. Weaver to run for president. The Omaha convention also endorsed a platform, or program, that outlined the party’s positions. The platform called for unlimited coinage of silver

Farmer with a “Grange” hat warns the people, distracted by “The Partisan” newspaper, about the approaching “Consolidation Train,” consolidating extortion, bribery and usurpation.

at a ratio that gave 16 ounces of silver the same value as 1 ounce of gold. Other platform planks called for federal ownership of the railroads and a graduated income tax, one that taxed higher earnings more heavily. The Populists had close ties with the Knights of Labor and took positions in the platform popular with labor, including calling for an eight-hour workday. The preamble, or introduction to the platform, outlined the myriad problems facing the nation:

“We meet in the midst of a nation brought to the verge of moral, political, and material ruin. Corruption dominates the ballot-box, the Legislatures, the Congress, and touches even the ermine of the bench.

The people are demoralized; most of the States have been compelled to isolate the voters at the polling places to prevent universal intimidation and bribery. The newspapers are largely subsidized or muzzled, public opinion silenced, business prostrated, homes covered with mortgages, labor impoverished, and the land concentrating in the hands of capitalists. The urban workmen are denied the right to organize for self-protection, imported pauperized labor beats down their wages, a hireling standing army, unrecognized by our laws, is established to shoot them down, and they are rapidly degenerating into European conditions. The fruits of the toil of millions are badly stolen to build up colossal fortunes for a few, unprecedented in the history of mankind; and the possessors of these, in turn, despise the Republic and endanger liberty. From the same prolific womb of governmental injustice we breed the two great classes—tramps and millionaires…”

In the end the Democrats won the White House once again with former president Grover Cleveland. The Populist James Weaver had done remarkably well, winning five states and splitting another for 22 electoral votes. Not long after the election, the Panic of 1893 resulted in the worst economic crisis the nation had ever experienced. The stock market crashed after two major railroad companies collapsed- leading to widespread bank failures and 20% unemployment.

Election of 1896. The Panic of 1893 also led to a crisis for the United States Treasury. Many American and European investors owned U.S. government bonds, but as the economy worsened, they began cashing in their bonds for gold. Gold was also lost when people traded in silver for gold under the Sherman Silver Purchase Act. To prevent the loss of more gold, Cleveland pushed for the repeal of the Sherman Silver Purchase Act. Unlike many Democrats, Cleveland believed the U.S. should use gold as the basis for its currency, not silver or paper money. The repeal of the act split the Democratic Party into two factions nicknamed the “goldbugs” and “silverites.” Goldbugs believed the American currency should be based only on gold, while silverites believed coining silver in unlimited quantities would solve the nation’s economic crisis. The Republicans were expected to support the gold standard and did. The Populists hoped to attract Democrats to their platform for the free coinage of silver. That political plan was frustrated when the Democratic Party endorsed the silver issue and nominated William Jennings Bryan. Bryan was a thirty-six year old former two-term Congressman from Nebraska. A powerful speaker, he won the nomination after delivering his famous “cross of gold” speech and the Populists soon supported him.

“No man who drags into the dust the most sacred symbols of the Christian world is fit to be the president of the United States.” Many Catholic Democrats were turned off by Bryan’s religious tone- they were wary of Protestant sermons and crusades.

“…We are fighting in the defense of our homes and our families. We have petitioned, and our petitions have been scorned … We have begged, and they have mocked us. We beg no longer; we entreat no more; we petition no more. We defy them!

You come to us and tell us that the great cities are in favor of the gold standard. I tell you that the great cities rest upon these broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic. But destroy our farms and the grass will grow in the streets of every city in this country.

Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands 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...”

-William Jennings Bryan (1896) Bryan waged an unusually energetic campaign for president, traveling thousands of miles and making 600 speeches in 14 weeks. The Republican candidate, William McKinley of Ohio, conducted his campaign in a much different manner. His “Front-Porch Campaign” involved various delegations coming to visit him at his home in Canton, Ohio. Meanwhile the Republican Party launched a campaign on his behalf in the Midwest and Northeast. Republicans blamed Cleveland’s Democratic administration for the depression and promised workers a “full dinner pail.” This meant a lot more to most urban workers than the silver issue. Urban workers did not have debts like the farmer and did not want to see their money devalued through inflation. At the same time, most business leaders supported Republicans, convinced that unlimited coinage of silver would ruin the economy and the reputation of the United States.

McKinley captured 52 percent of the popular vote and had a winning margin of 95 electoral votes- hefty numbers in an era of close elections. As expected, Bryan won the South and most of the West, but few of the states he carried had large populations or delivered many electoral votes. By embracing populism and its rural base, Bryan and the Democrats lost the Northern industrial areas where votes were concentrated. Populism Declines. Opposition to the gold-based currency dwindled during McKinley’s time in office. The depression was over, and prospectors found gold in Alaska and Canada’s Yukon Territory in 1899. That wealth, combined with new gold strikes in other parts of the world, increased the money supply without turning to silver. This meant that credit was easier to obtain and famers were less distressed. When the silver crusade died out, the Populists lost their momentum. However, some of the reforms they favored were enacted in the next century- during the Progressive Movement.