Populism Lecture Notes

 

Main Questions:

 

Why am I still poor, even though I’m producing more?

 

What am I going to do about it?

 

 

More than any other group, farmers suffer during the mid-1880s through the mid-1890s.

 

Unlike industrial workers, they lived in isolation.

 

1867 GRANGE – social group. Bring farmers together, alleviate isolation

 

Once they started talking, they found that they shared two problems

 

1)  debt

2)  railroads taking advantage

 

DEBT

Prices dropped through the 1880s

Overproduction drives down prices further

Debts accrues to local merchant

With falling prices (deflation) the debt is actually growing even faster

One crop (staple) – price drops, they go broke

 

RAILROADS

One railroad – high prices for transport

Grain elevator operator gouges him.

 

Forces beyond his control, that he does not comprehend are determining his fate.

 

Hates middlemen. 

 

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 they found in the east. To maintain ECONOMIC INDEPENDENCE

 

But when they got west, they found the same system waiting for them.

 

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

 

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.

 

RESPONSE

 

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.

 

Banks won’t lend money to the co-ops to purchase supplies; merchants risk short term losses to undercut co-ops prices.

 

 

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.

 

OK, but the conglomerates still exist – angers farmers. Government (people) should own railroads.

 

But they are suspicious of govmt power, too.

 

STILL,

Movement must be political.  Alliance men were becoming Populists.

 

Better to found a third party or to gain influence in one of the two major parties?

 

Third Party – you can remain true to your principles and perhaps eventually capture enough votes for other parties to pay attention to your demands

 

Join the Democrats or Republicans – more immediate influence since the two parties are evenly divided; winner take all electoral system means third parties have no seats in the legislature, so cooperating with one of the parties that can win is better

 

Currency issue –

 

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. They buy less – this is INFLATION.

 

Dollars are not worth as much – they buy less – so prices rise. You have to pay more dollars to buy the same amount of stuff since the dollars aren’t as valuable.

 

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.

 

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.