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Declining Profits Thanks to new
technologies, farmers had opened up the Great Plains and were producing a much greater supply of grains
Grain supply ↑ = Grain prices ↓
Farmers were earning LESS
Rising Costs High tariffs +
unionized factory workers = high prices on manufactured goods
Banks were charging high interest on loans
Railroads were charging higher fees for shipping grain to eastern markets
Farmers were paying MORE
The Money SupplyTo fund the Civil
War, US government had flooded the market with paper money (“greenbacks”)
Supply of $↑ = Value of $↓ (inflation)
Government response to inflation
Stopped printing greenbacks
Stopped minting silver coins
Started paying off government bonds to reduce number of bank notes in circulation
Response was too strong and reduced the money supply too greatly
Supply of $↓ = Value of $↑ = Prices ↓ (deflation)
Deflation Hurts Farmers
Decrease in money supply meant loans were harder to get and interest rates were higher
Farmers were getting LESS for their crops but paying MORE for mortgages & other loans
“The Crime of ’73”
Farmers believed that greedy banks had pressured government into reducing the money supply
Began to organize and campaign for government to resume printing greenbacks and/or minting silver coins
The Grange “The Patrons of
Husbandry” founded in 1867 by USDA official Oliver H. Kelley
Designed to organize rural farmers; by 1874, the Grange had over 1 million members
The Grange Takes Action
Pressured state legislatures to regulate railroad & warehouse rates
Joined Independent National Party (also called the Greenback Party) a new political party aimed at getting the government to print more paper money
Created farmers’ cooperatives
Farmers’ Cooperatives
Pooled farmers’ crops and held them off the market in order to limit supply and force up prices
By working together, farmers could also negotiate better shipping and warehousing rates
The Grange Fails Greenback Party failed
to win public support – average American didn’t trust paper money
Cooperatives never grew large enough to be effective
Many states did pass laws setting maximum rates for railroads, but ….
Wabash v. Illinois 1886 Supreme Court
ruled that states could not regulate railroads because the railroads were involved in interstate commerce; interstate commerce can only be regulated by federal law
The Farmer’s Alliance
Formed in 1877 in Texas
By 1890 had nearly 3 million members
Also tried to create cooperatives, but failed for many of the same reasons
The People’s Party
Founded in 1890, more commonly called the Populists
Western farmers of the Alliance decided that the changes needed to help farmers required a new political party
Southern farmers opposed a third-party because it might weaken the Democratic Party
The Subtreasury Plan
Southern farmers proposed that the government set up warehouses called subtreasuries where farmers could store their surplus crops
Also wanted government to provide low-interest loans to farmers
Many Democratic politicians won elections in the South after promising to support the Subtreasury Plan, but then reneged
The Sherman Silver Purchase Act of 1890
Congress authorized the US Treasury to purchase 4.5 million ounces of silver per month to put more money into circulation
Still, it wasn’t enough to ease deflation, so it didn’t help farmers
The Omaha Platform
Called for unlimited coinage of silver at a ratio of 16 oz. of silver = 1 oz. of gold (bimetallism)
Called for federal takeover of railroads
Called for a graduated income tax
Called for tighter government regulation of banking and industries
A Populist Candidate for President
1892, Populists met in Omaha, NE and nominated James B. Weaver to run for President of the United States
Came in a distant 3rd place in the election with only 22 electoral votes, but still a strong showing for a 3rd party candidate
Panic of 1893 2 large railroad
companies were forced into bankruptcy, triggering a collapse of the banks who had loaned the railroads money
Worst economic crisis US had experienced to that point
18% unemployment
Treasury Crisis Panic of 1893 caused
investors to cash in their government bonds for gold, draining the US gold reserve
Congress responded by repealing the Sherman Silver Purchase Act to stop people from trading in silver for gold
Goldbugs vs. Silverites Repeal of the Sherman
Silver Purchase Act split the Democratic Party
Goldbugs believed that US currency should be backed exclusively with gold
Silverites believed that coining unlimited silver would ease the economic crisis
Election of 1896 Populists wanted to
nominate a candidate who supported silver, but Democrats beat them to the punch
Faced with either supporting the Democratic candidate and giving up their 3rd party status or nominating their own candidate and splitting the pro-silver vote, the Populists chose to support the Democrats
William Jennings Bryan Only 36 when
Democrats & Populists nominated him for president
Powerful speaker who won nomination with his pro-silver “Cross of Gold” speech
The “Cross of Gold” Speech
“Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand 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.”
Bryan’s Campaign Toured the country for
weeks, giving hundreds of speeches
Strongly supported in the West and South, but not by city-dwellers (who didn’t care about the silver issue) or Catholic immigrants (who didn’t like his Protestant minister style speeches)
William McKinley’s“Front Porch” Campaign
Republican candidate McKinley refused to
travel and speak, opting instead to stay home in Ohio and let visitors come to him
Republican Party had local Republicans campaign for McKinley instead
Won support of urban workers and big business
William McKinley 1843 – 1901 25th President
(1897-1901) Republican Expansionist who
oversaw the Spanish-American War
Assassinated in 1901
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