EQ

• What is populism?• What were the roots of the Populist Party?• What was the goal of the Populist Party?• Why would farmers want inflation to develop?• How successful are 3rd parties in the US

system?

Farm Problems

• American farmers faced the following problems after the Civil War:– new farm machinery caused overproduction of

crops– overproduction lowered farm prices– competition from European farmers lowered

prices further– railroads charged high rates to transport farm

products

Farm Problems

• American farmers faced the following problems after the Civil War:– tariffs on foreign farm machinery increased farm

costs– farmers forced to increase mortgages to buy

needed machinery– high interest rates on mortgages led to many bank

foreclosures

Farm Problems

• In response to the lack of political support from the two main political parties, as well as a lack of support from Congress, farmers therefore formed a union for mutual protection– farm union called the Grange• Latin for grain

– demanded laws to reform and regulate the railroads

Oliver Hudson Kelley

FOUNDER:

The National Grangeof the Patrons ofHusbandry

1867

The Grange

The Grange

• The Grange helped farmers in the following ways:– sold farm produce directly to customers

– eliminated middlemen to make prices more competitive

– bought farm machinery in large quantities and at wholesale prices to make equipment affordable

The Grange

– formed insurance companies, general stores, warehouses to help farmers– lobbied on behalf of member farmers in the

government

The Grange

• By 1870’s Grange had one million members– gained political strength in Midwestern

state legislature–most political activity in 1870’s and 1880’s

concerned with the railroads (called the Granger Laws)

Chief Political Goal of the Grange

• Regulate the rates charged by the railroads and warehouses–Agitated for passage of “Granger Laws”

which were at first weak but laid strong foundation for future legislation

Supreme Court Decisions

*Munn v. Illinois, 1876

*Wabash v. Illinois, 1886

Vanderbilt’sResponse

“The public be damned”! William Henry Vanderbilt

“The public be damned! I don't take

any stock in this silly nonsense about working for anybody but

our own."

William Henry Vanderbilt

"The railroads are not run for the benefit of the 'dear public' — that cry is all nonsense — they are built by men who invest their money and expect to get a fair percentage on the same.”

–William Henry Vanderbilt

Grange v Railroads

Granger Law Cases

• Munn v. Illinois (1876):– Background:• railroads charged high transport rates in rural areas

where there was no competition• railroads also charged excessive rates for use of storage

bins along railroad tracks• farmers forced to pay high, non – competitive freight

rates-no volume discounts for the small farmer

Granger Law Cases

– Grange demanded state laws to end railroad abuses

– Illinois legislature passed laws regulating rates and other railroad charges

– other states passed similar laws during the 1870’s– state laws challenged in court by railroad

companies as a violation of the 14th Amendment (“…no State shall deprive any person of life, liberty, or property without due process of law”)

Munn v. Illinois Decision: – a private business could be regulated by the public if

that business involved the public interest– the Illinois law establishing a maximum charge for the

storage of grain was therefore constitutional– although interstate commerce was involved the

Federal Government was not exercising its right to regulate interstate Commerce in this instance

– therefore there was no interference or encroachment by the state on federal authority

–The Supreme Court modified the Munn decision with Wabash v.Illinois

Granger Law Cases

• Wabash v. Illinois (1886):– Background:

• railroads set higher freight rates for short hauls than for much longer hauls• Illinois law fixed or established rates to

prevent this practice

Granger Law cases

• Wabash v. Illinois• Decision– railroad rates set by state laws interfered with the

exclusive power of the U.S. Congress to regulate interstate commerce

– therefore the rate –fixing laws of Illinois were unconstitutional

– the Wabash decision made it impossible for states to deal with railroad abuses

Federal Legislation

• The U.S. Congress responded to public pressure to regulate business with the following two federal laws:– Interstate Commerce Act– Sherman Antitrust Act

Interstate Commerce Act1887

Interstate Commerce Act {1887}

• passed by U.S. Congress to regulate railroads in the following ways:– railroad shipping rates had to be “reasonable and

just”– required public posting of railroad rates– prohibited favorable rates and rebates to special

customers– created Interstate Commerce Commission to

enforce regulations

Sherman Antitrust Act {1890}

• Outlawed every business conspiracy “in restraint of trade”– intended to prevent monopolies from eliminating

competition

Trust

• Any large corporation that controlled a substantial share of any given market

Sherman Anti-Trust Act 1890

Sherman Anti-Trust Act 1890

OUTLAWED:

“Every contract, combination, or conspiracy in restraint of trade or commerce among

the several states, or with foreign nations”.

Farmers &Inflation

Inflation

• Farmers blamed scarcity of money on low farm prices:– wanted federal government to bring about

inflation{price increases} by coining more silver (sixteen ounces of silver equaled one ounce of gold in value)

– therefore proposed money be backed by gold and silver at “16 to 1 ratio”

Bland–Allison Act 1878

Bland – Allison Act (1878):

• Required the Federal Government to buy a set amount (b/t $2 & $4 million) of silver each year to be minted into coins – Too much silver being produced & not enough

absorbed by coinage• Value fell to 20:1

– Vetoed by President Rutherford B. Hayes, the Congress overrode Hayes' veto to enact the law.

Bland-Allison Act {1878}

• Required Federal Government to buy and coin silver

Sherman Silver Purchase Act 1890

Sherman Silver Purchase Act {1890}

• Required the Federal Government to increase the amount of silver purchased each year– also allowed the Treasury Department to issue

money backed by silver

• eastern Republicans disliked coinage of silver– supported silver laws to gain western and

southern support for a higher tariff

McKinley Tariff Act 1890

McKinley Tariff Act {1890}

• Imposed a 50% tariff on foreign import– highest tariff of nineteenth century – In return for its passage, the Sherman Silver Act

was given Republican support.– The McKinley Tariff Act raised tariffs and

brought new trouble to farmers, who were forced to buy high-priced, protected products from American manufacturers but sell their own products into highly competitive, unprotected world markets.

Result of Silver Coinage:

• Miners expected price of silver to rise as Federal Government purchased silver output– farmers expected a flood of paper money into the

economy (inflation)– silver prices continued to decline from

overproduction of silver• farm prices also declined

– many people called for formation or third political party

Populist Party Platform• Populist Party favored the following policies:– coinage of silver at 16 to 1 ratio– cause inflation by increasing money supply– a graduated income tax– government ownership of telephone, telegraph,

railroad systems

Populist Party Platform

– eight hour work day– direct election of U.S. senators by voters– decrease immigration

• lost Presidential election in 1892

Election of 1892

The Candidates

William Jennings Bryan

• Supported for President by the following political parties:– Democrats– Populists

• Bryan made “Cross of Gold” speech at Democratic Party Convention:– attacked gold standard– “You shall not crucify mankind upon a cross of

gold”

Bryan’sCross of Gold Speech

“You shall notcrucify mankindupon a cross of gold”.

William Jennings Bryan

William Jennings Bryan

• Bryan:– favored free and unlimited coinage of silver, lower

tariffs, government regulation of business– supported by miners and farmers– most political support in South and West

William McKinley

Gold Standard

High tariffs

Laissez – faire

Prosperity

William McKinley

• Conservative Ohio politician– the opposite of Bryan

• McKinley:– favored gold standard, high tariffs, non-

interference by the government with business– supported by bankers and industrialists– most political support in the Northeast

1896 Election Results

• McKinley won the election– carried more populated northeastern states

End of Populism

• Populist Party disbanded after Election of 1896– by 1900 new reform movement began that was

based on many Populist reforms– new reform movement called “Progressivism”

Progressivism