POPULISM THE FARMERS MOVEMENT OF THE 1890s Founding of the GRANGE a social group that brings farmers together and alleviates their isolation

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Mervyn Richards
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1 POPULISM THE FARMERS MOVEMENT OF THE 1890s Late 19 th Century farmers ask, Why am I still poor, even though I m producing more? More than any other group, farmers suffer during the mid-1880s through the mid-1890s. Unlike industrial workers, they lived in isolation Founding of the GRANGE a social group that brings farmers together and alleviates their isolation Once they started talking, they found that they shared two problems 1) debt 2) railroads taking advantage of them DEBT Prices dropped through the 1880s Overproduction drives down prices further Debts accrue to local merchant With falling prices (deflation) the debt is actually growing even faster Most grow only one crop (a staple crop) if the price of that one crop drops, they go broke RAILROADS One railroad to ship your goods (often no competition) and so the railroad can charge high prices for transport Grain elevator operator also gouges him when he weighs the crops. (Sometimes the elevator operator owner works for the railroad!) 1

2 Forces beyond the farmer s control, forces that he does not comprehend are determining his fate for example, the size of cotton crop in Egypt could affect what cotton sells for in Georgia. The farmer hates middlemen. People who set prices for the farmers crops but themselves PRODUCE nothing. Producer ethic those that produce tangible goods are the backbone of the country. Financiers are parasites they shuffle paper, they don t produce anything. During the 70s and 80s laws to regulate prices; keep farmers from being exploited. Standard grain prices set in Chicago for different grades of grain. Buyers must buy at set prices In isolated communities, the rules get bent Farmers realize they re vulnerable; become suspicious. But even if they are paid the standard rate this isn t the issue. They resent the whole system in which they were kept from controlling their own fortune. Farmers had moved to the western plains to escape the system of wage labor, debt, and credit that they had found in the east. They want to maintain their own ECONOMIC INDEPENDENCE. But when they got west, they found the same system waiting for them. 2

3 Evil conspiracies afoot. Progress as defined in the east was destroying the farmer. The nation s character was at stake. When farmers complained, they were told they were producing too much (OVERPRODUCTION) They thought the problem was UNDERCONSUMPTION. Middle men charged too much for food and reaped the profit while consumers and farmers lost out. Food becomes too expensive for people to buy so farmers lose out. The key was to get around the middle man What to do about this situation? 1) self-help 2) government help 1) COOPERATIVE ACTION Bargain directly with manufacturers to get cheaper prices on supplies. Reapers for $175 not $275; wagons for $90 not $150. Manufacturers lower prices; local merchants follow to remain competitive Granges get their own ELEVATORS, MILLS, PRODUCTION PLANTS In Iowa, local Grange even begins to manufacture its own farm equipment Also, education, public relations campaign to broaden base. GRANGES become ALLIANCES become regional and national ALLIANCES 3

4 In time, however, the merchants and creditors retaliate. Farmers lack cash, so even when they pool their resources, they may not have enough to buy equipment. Banks won t lend money to the co-ops to purchase supplies; merchants risk short term losses to undercut co-ops prices. How to solve the CREDIT PROBLEM? Subtreasury system borrow money from state govmt for up to 80% of the value of their crops. 1% interest. Stored in govmt warehouses as collateral. Farmers could choose to withhold their crops so not everyone would bring the crop to market at once. This solution addresses BOTH the overproduction problem and the debt problem. RESPONSE to their proposal: Merchants cry socialism! Nope. These farmers see themselves as the true capitalists they want their piece of the pie. They re hustlers they want profit for their goods. 2) GOVERNMENT ACTION Other problem Railroads. Can t build your own railroad. Get govmt to regulate them. Granger Laws = set maximum rates for transport and elevators. 4

5 OK, but the conglomerates still exist angers farmers. Government (people) should own railroads. But they are suspicious of govmt power, too. Currency issue SILVER and GOLD Not enough cash to satisfy the demands of a growing economy. Gold Standard prohibits government from printing more money that there is gold to back it up. When there isn t enough available cash, demand for cash goes up. Cash is more valuable, so it buys more. When $1 buys more than it used to, prices go down since the $1 is more valuable. This is DEFLATION So, Value of a dollar goes up --- prices go down DEFLATION hurts debtors. Their debt remains the same (i.e. $100) but the VALUE of $100 goes up so, in essence, their debt is also going up. That $100 is worth more, so they are in debt for more. If the government prints more money, dollars decrease in value. The dollars buy less (another way of saying prices go up this is INFLATION.) You have to pay more dollars to buy the same amount of stuff since the dollars aren t as valuable. 5

6 INFLATION hurts creditors. When they are paid back, the money (i.e. $100) they get back buys less, so it actually isn t worth as much. This means that even though they got back their full $100, they still lose money since that $100 isn t worth as much it buys fewer goods. Election of 1896 comes down to the issue of the currency: Gold Standard vs Inflation (adding silver as a metal that backs up the currency so more currency can be printed) Gold Standard wins. People fear inflation will bring instability to the economy. Consumers and workers fear higher prices. Higher prices can result in fall in demand and precipitate layoffs in factories. Soon the point is moot since huge discoveries of gold in the West and in South Africa make more gold available for the government to buy (by issuing bonds) and, with more gold in reserve, the government can issue more dollars. Key takeaways Farmers must adjust to the new industrial economy just like businessmen (including Rockefeller) did. They, too, are now Businessmen (and not just isolated, independent farmers). Farmers try to band together (self-help) but soon realize they must rely on the government for help. They become more politically active to make sure their voice is heard in Washington. The currency issue becomes a main focus, but the election of 1896 really s shows the nation is sharply divided: Urban, wage laborers vs Rural farmers; Producers (farmers) vs Consumers (people who buy food) 6

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