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The Plight of the Farmers

Mixed Blessings  With the rise of the industrial cities, new

opportunities for American Farmers presented themselves.  The rapidly growing cities needed large supplies of food.  American farmers responded by increasing their crop and livestock yields each year.

Mixed Blessings ď Ż Unfortunately for American farmers, so

did farmers in countries such as Canada, Great Britain, Russia, Argentina, and Australia. ď Ż As a result, food prices tumbled.

Financial Crisis for the Farmers  As food prices fell, costs increased.  Railroads continued to increase the

amounts they charged for freight service.  Some farmers responded to the situation by buying more farm land and increasing production in hopes of increasing revenue.  The increased production only further lowered prices.

Farm Prices

Financial Crisis ď Ż Almost all of the farmers borrowed

money to pay for their land or farming equipment, putting their farms up as collateral. ď Ż Those who could not repay their loans lost their farms or became tenant farmers. ď Ż Others were forced to become farm laborers.

The Unfairness of it All  The merchants who sold farm equipment

were making money.  The banks were making money.  The railroads were making money.  The farmers, who were long hard hours and fed the nation, were losing money.

The Grange Movement  In an effort to improve conditions for

themselves, farmers began to organize.  The first major farmer’s organization was the Patrons of Husbandry, better known as the National Grange.  Founded in 1867 by Oliver Hudson Kelley, the Grange was primarily a social organization for farmers.

The Grange ď Ż As membership increased and the

financial problems of farmers got worse, the Grange began to deal with both economic and political issues.

Grange Cooperatives ď Ż To lower costs some Grange members

formed cooperatives. ď Ż Co-ops sold their products directly to bigcity markets and bought farm equipment and other necessary goods in large, bulk quantities at wholesale prices. ď Ż This practice lowered costs for the farmers who belonged to the cooperative.

The Grange and Railroads ď Ż The main political focus of the Grange

was on forcing the railroads to lower their rates. ď Ż They attempted to do this by forcing the states to regulate the freight rates railroads could charge.

“The Grange Laws”  In 1870 the states of Illinois, Iowa,

Minnesota, and Wisconsin all passed “Granger Laws.”  These new regulations set up state commissions that determined the maximum rates railroads could charge.

The Railroads Fight Back  The railroad companies promptly went to

court.  The farmers won a major victory in the United States Supreme Court in Munn v. Illinois (1877).  The Supreme Court ruled that state legislatures had a right to regulate businesses, such as railroads, that served public interests.

The Railroads Fight Back ď Ż Ten years later the Supreme Court ruled

in Wabash v Illinois, that state governments had no authority to regulate the rates charged for traffic that crossed state boundaries. ď Ż Only the Federal government had that right.

The Interstate Commerce Act ď Ż The Wabash v Illinois case led to the

passage of federal legislation known as the Interstate Commerce Act which was passed in 1887.

The Interstate Commerce Act  This act prohibited railroads from:  

Giving secret rebates to large shippers. Charging more for short hauls than long hauls over the same railroad. It also state that rates had to be reasonable and just.

The Hated ICC  The act also created the Interstate Commerce

Commission to monitor the railroad company’s activities.  When initially created, the ICC had little real power to enforce its rulings.  The railroad companies often challenged the rulings in court and won.  In time the ICC became increasingly powerful and hated by the railroad companies.

The Alliance  The Farmer’s Alliance was created

during the time the Grange was waging its battle against the railroad companies.  It was founded in 1877 in Texas.  Debt ridden farmers flocked to join the Alliance.  By 1890 its membership had grown to 400,000.

The Alliance  The had three regional organizations: 

 

National Farmer’s Alliance of the Northwest. The all-white Southern Farmers Alliance. The Colored Farmer’s Alliance.

The Alliance  The Alliance formed cooperatives for its

members just ad the Grange did.  It also offered low cost insurance.  The Alliance also fought for tougher bank regulations.  The Alliance also fought for government ownership of the railroad companies.

The Alliance and Taxes ď Ż In addition to making enemies with the

railroad companies, the Alliance attacked the wealthy. ď Ż The Alliance wanted a graduated income tax that taxed higher incomes at a higher rate.

The Alliance and the Money Supply  The Alliance loudly called for an

increase in the money supply.  This had been a desire of the farmers since the end of the Civil War.  It wanted the money supply increased by simply printing more greenbacks, or paper money.

Inflation  The inflation that would result by

increasing the money supply would help the farmers in two ways: 

They could charge more for their farm products. It would be easier for them to repay their bank loans.

The Eastern Bankers  The idea of an inflated currency

frightened the Eastern Banking establishment.  They wanted the nation’s money supply tied to the gold standard.

The Gold Standard ď Ż Under this system, each dollar was

equal to and redeemable for a set amount of gold. ď Ż The amount of money in circulation was to be limited to the amount of gold held in the vaults of the U.S. Treasury.

The Government’s Response  The Government sided with the Eastern

Bankers.  Greenbacks were withdrawn from circulation.  The farmers responded by demanding that the Government back the money supply with silver.

Congress Weakens  Congress bowed to pressure and

passed the Bland-Allison Act in 1878.  It passed the Sherman Silver Purchase Act in 1890.  Both acts required the government to purchase silver each month and mint it into coins.

The “Problem”  Congress did not purchase large

amounts of silver.  The money supply did not increase noticeably.  Congress feared a money supply based on two metals – it was though such a practice would weaken the economy.

The Farmer’s Response  The Alliance fought hard in the 1890

elections.  They formed a new political party known as the Populist Party.  It was founded in St. Louis in 1892.

The Populist Party Platform  A graduated income tax  Bank regulation  Government ownership of the railroads

and telegraph companies.  Free coinage of silver.

The Populist Party  In an effort to appeal to labor and reform

votes, the platform also called for:   

Immigration restrictions Shorter workday Voting reforms

James B. Weaver  Selected as the Populist Party’s

presidential candidate in 1892.  While Weaver lost, the Populist Party did elect 3 senators, 11 congressmen, 3 governors, and numerous state legislative seats.

The Panic of 1893  New inaugurated Grover Cleveland

faced a financial crisis two months into office.  One of the nation’s leading railroad companies went bankrupt, causing a stock market crash.

The Panic of 1893 ď Ż While there were many causes for the

Panic of 1893, Cleveland chose to focus on one: The Sherman Silver Purchase Act.

Sherman Silver Purchase Act  The law required the government to

purchase silver with Treasury notes redeemable in either gold or silver.  The new silver finds (mines) in the west decreased the value of the metal.  People rushed to exchange their greenbacks for gold.

Sherman Silver Purchase Act  This rush put a huge strain on the

Treasury’s gold stock.  To protect the gold standard and to restore confidence in the economy, Cleveland called for Congress to repeal the Sherman Silver Purchase Act.  Congress did so in October of 1893.

The Election of 1896. ď Ż Cleveland saved the gold standard but

the Silver policy became a driving issue in the next election. ď Ż The Republicans gave their nomination to William McKinley, a strong gold standard candidate.

A Puck cartoon depicting the victory of the gold standard over the silver standard.

The Election of 1896  Cleveland loses the Democratic Party’s

nomination to free-silver advocate William Jennings Bryan.  The Populists Party threw its support to Bryan as well.

Republican Gold Bugs and Democratic Silver Bugs

Bryan’s Cross of Gold Speech  Bryan was a great orator. He delivered

a famous speech entitled the “Cross of Gold Speech.”  “You shall not press down upon the brow

of this crown of thorns, you shall not crucify mankind upon a cross gold.”

Bryan’s Cross of Gold Speech  Bryan moved his fingers across his temples to

suggest blood trickling from wounds on his head similar to those of Christ from the crown of thorns on Christ’s head.  He ended his speech with his arms outstretched as if he had been nailed to a cross.  The speech won him the Democratic Party’s nomination, preventing Grover Cleveland from running for re-election.

Cleveland’s Defeat  Bryan’s great speech combined with

Cleveland’s actions in breaking the Pullman strike and his policy of censuring the sale of gold bonds proved to be his undoing.

Bryan’s Cross of Gold Speech

Bryan’s Defeat  Bryan carried Populist areas such as the

south and the west, but made no inroads in the industrial east or the mixed economies of the Mid-west.  In a close election, McKinley defeated Bryan by 500,000 popular votes.

The End of the Populist Party ď Ż The free-silver issue was not a big

enough voting issue to win elections. ď Ż It was the first time that a disadvantaged group was able to use the political process to have its problems addressed.