After the Civil War Southerners produced more and more cotton. They produced even more after the Civil War than they had produced BEFORE the Civil War. But the production of cotton on the world market soared. Egypt, India, everyone was producing cotton. This created a global situation of a glut. There was overproduction of cotton and a disastrous fall in the price. This was great for the textile manufacturers in the North and Europe, but terrible for cotton producers. The South in 1873 produced 9,350,000 acres of cotton. The price was 14 cents a pound. By 1894 Southern cotton production doubled, to 23.6 million acres of cotton. But the price fell to 4.6 cents a pound. Southerners were producing more and more cotton, but were glutting the market. The more they produced, the lower the price fell. This decline in prices was DISASTROUS. White Southerners suspected that somehow the abolition of slavery was to blame. But in fact the South was producing MORE cotton after the end of slavery, not less.
To add to the misery, the same pattern was occurring with wheat and corn. In 1874-77, corn sold for 40 cents a bushel. In 1894-97, it sold for 29 cents a bushel. Agriculture was in crisis.
The consequence was that Southern farmers, regardless of whether they were black or white, were becoming impoverished. By 1900, three-fourths of all black Southerners were poor landless sharecroppers. In 1900, in Mississippi, one-third of the whites in the agricultural sector had also lost their farms and been reduced to sharecropping.
This economic situation, which became more apparent after the Depression of 1873-77, gave rise to a political protest movement called Populism. Eventually, by the 1890s. it took the form of a third political party, alongside the Democrats and Republicans, called the People’s Party or the Populist Party. This phenomenon is also called Populism or the Populist Movement. Fundamentally, it was an expression of agrarian discontent with the excesses of free market capitalism, or a form of agrarian "radicalism." I should add that the Populists looked back to a romantic past in which the vast majority of the people were small yeomen farmers. In the mind of the Populists, the farmers ARE the people. The American people ARE the farmers.
Populism grew out of the Farmer’s alliance, in Texas, in 1875 (notice that it is born during the Depression of 1873-1877). It is a response to economic frustration and grievances. By 1888 the Farmer’s Alliance had 1 million members. In 1886 the Colored Farmer’s Alliance was established at Houston, TX. Generally speaking, the Farmer’s Alliance was FOR the farmers and agricultural interests. They felt robbed, gouged, exploited and taken advantage of by MIDDLEMEN, the railroads and the banks (capitalists) whom they characterized as greedy and predatory. The farmers referred to these extortionists as "trusts," and used that word the way that we today use the word monopolies. The farmers were angry that the merchants charged them high prices; the banks charged them high interest rates for loans or refused them loans at all; the railroads and fertilizer companies charged them exorbitant prices for freight and other services. To simplify, it was the farmers against money (merchants, railroads, banks, fertilizer companies, warehouses, grain silo owners, etc).
The constitution of the Farmer’s Alliance permitted membership for farmers, farm laborers, country mechanics (someone who works for a wage), country school teachers, country physicians, country ministers, and editors of agricultural journals. The constitution of the Farmer’s alliance excluded from membership, as "obnoxious to the constitution," bankers, bank employees, railroad employees, lawyers, brokers, real estate dealers, cotton buyers, warehouse owners and operators, and "especially any person who keeps a store, who buys and sells for gain." The farmers perceived these people as their enemies, who were ripping them off with high prices. It was the farmers against commercial interests and "Wall Street."
Initially the farmers wanted state regulatory commissions to regulate the prices (rates) that railroads could charge, and the rates that the owners of warehouses that stored cotton and grain (grain silos or elevators) could charge.
Western farmers also flirted with Populism, and wanted state regulatory commissions.
THE OCALA PLATFORM
In 1890 the Farmer’s Alliance held its national convention at Ocala, Florida. There, they adopted the Ocala Platform. It was a list of demands. The five major goals were:
The subtreasury plan was a proposal that in every county in the US that produced over $1 million in farm products per year, the Federal Government should establish warehouses or grain silos (elevators). The farmers could then store their commodities (cotton, wheat, tobacco, corn, etc) in the warehouse. The Government would issue a certificate of deposit. This certificate of deposit certified that the farmer had a crop, as an asset or collateral, on deposit in the federal warehouse. And this certificate was supposed to entitle the farmer to a loan, for one year, in legal tender notes, from the Government, equal to 80% of the market value of the crop on deposit. This is the concept of what we today call a commodity crop loan. In a way the loan is an advance against the value of the crop which is in the warehouse and will be sold. There would be an interest rate of 1% plus a small charge for handling and storing the crop.
The farmers wanted this because it would give them an alternative source of money apart from the cotton buyers or grain buyers who tried to give them the lowest price possible. It would also allow the producers to hold their crop off the market in a publicly-owned warehouse, thereby giving competition to private warehouses and forcing down their prices. And the farmers could hold their crop off the market and wait for prices to rise, to sell at a better time. In the 1890s the farmers had to sell their crops right away in the fall or pay storage costs. The price would rise in the spring, but the farmers could not afford to pay the storage cost in the meantime.
In the 19th century land was taxed. Homes were taxed, as real estate. But there was no tax on income, which is to say money in the bank. And corporate taxes were low. So the little guy with a farm of 50 acres had to pay taxes on his land. The millionaire with millions in money did not pay taxes on his cash. The people thought this was unfair. It seemed as if the rich got richer and the poor got poorer.
The term populist (little p) means generically someone who is "for the people" or the little guy or the common people or the "Average Joe," against the rich, powerful interests (David vs. Goliath) and the privileged, elite snobs.
Congress ignored the Ocala Platform, and ridiculed the Populists as ignorant, crazy farmers. By 1892 the Populists concluded that neither the Democrats nor the Republicans would help them. So they decided to create a third political party (Enduring Vision, 676). They hoped to elect Congressmen and a president who would implement the Ocala Platform. In the South most Populists were former Democrats, so the defection of the farmers in he South hurt the Democrats much more than it did Republicans (who were strong in the North, Midwest and Far West).
THOMAS E. WATSON
The greatest of the Populist leaders was Thomas E. Watson of Georgia. He was elected to Congress in 1890 and 1892, and after 1900 became the perennial presidential candidate of the Populists. He was a white farmer. Watson scandalized the white South in the 1890s by calling for a political or electoral alliance or coalition between poor white farmers and poor black farmers and sharecroppers, because both were being "fleeced" or robbed an dripped off by the wealthy merchants, banks and railroads. This was economic class solidarity rather than racial solidarity. He said "You [blacks and whites] are kept apart in order that you may be separately fleeced of your earnings [by greedy capitalists.] However Watson was not advocating SOCIAL equality. In Populist meetings and campaign events, blacks sat on one side, white son the other; or if it was a barbecue, whites on one side of the field, blacks on the other. They did not have to mingle together to cooperate politically and economically. However Watson’s critics accused him of "race mixing," and this damaged the populist cause among some whites. On one occasion Watson saved the life of a black Populist speaker who was threatened with being lynched by white opponents.
The peak of Populist strength came between 1892 and 1896, during the Depression of 1893. In 1894 the public blamed the party in office, which was Grover Cleveland and the Democrats, for the Depression. In America the party in power at the time of a depression always gets the blame (In 1874, on the heels of the Depression of 1873, Grant and the Republicans were blamed. In 1933, Hoover and the Republicans were blamed; in the downturn of 1992 George Bush, the Elder, was blamed, and Bill Clinton won election ). In the Congressional elections of 1894 the Republicans won a majority in BOTH houses of Congress, and retained control for 16 years (1894-1910). In 24 states in 1894, not one single Democrat was elected to Congress. It was a crushing repudiation.
The Democrats felt that they could no longer ignore Populism. So they tried to "steal its thunder." This means to steal someone else’s ideas and embrace them as if they were one’s own, without acknowledging the source. As the presidential election of 1896 approached, the Democrats were desperate to woo Southern and Western farmers back to the Democratic fold, and cast themselves as the dearest friends of the farmers. The Democrats cast aside their incumbent president, Grover Cleveland. Instead, the nomination went to a Democrat from Nebraska (a Western farm state), named William Jennings Bryan. He promoted an in idea called silver coinage, or bi-metalism. The scheme was to back up the currency with BOTH silver and gold, rather than only gold as bankers and Republicans liked, and mint silver at a ratio of 16:1 (the ratio of silver to gold). In his famous speech, he declared "You will not crucify mankind on a cross of gold."
William McKinley, backed by the banks, campaigned as the champion of the gold standard. The Republicans painted the Democrats and Populists as crazy people who would wreck the economy with funny money.
The result was:
Candidate Electoral Votes Popular
McKinley 271 7.1 million
Bryan 176 6.5 million
McKinley carried the North, Midwest, Kentucky, West Virginia, Maryland, North Dakota, Oregon and California.
Bryan carried the South, Missouri, South Dakota, Kansas, Montana, the Rocky Mountain states (Idaho, Wyoming, Nevada, Utah) and Washington State. Of course, silver is mined in the Rocky mountain states and they supported the idea of silver coinage.
In 1896 the Populist went down to defeat. In 1900 the Republicans pushed through the Currency Act, which crated a permanent gold reserve equivalent to $150 million to back up the currency.
But although the Populist Party was defeated and eventually vanished, the Populist ideas and agenda lived on. Eventually, in one form or another, the ideas of the Ocala Platform were adopted. Some of the Populist ideas of the 1890s would be picked up by the Progressives, and the Progressives would enact a federal graduated income tax and direct election of US Senators in 1913. The Populism of the 1890s also prefigures the New Deal of Franklin Delano Roosevelt, and in the 1930s the subtreasury would be implemented in watered down form as a commodity crop loan program. Today farmers routinely get loans as advances against their crops, on deposit in warehouses, and receive federal commodity crop loans and loan guarantees. Some of the deepest and oldest roots of the New Deal are to be found in the Populist movement of the 1890s. Populism was a predecessor or forerunner to the New Deal.
The Populists were defeated. But their ideas lived on and eventually prevailed. The Populists were simply ahead of their time, and in many respects history has vindicated them. The Progressives and the New Deal of FDR would implement much of what the Populists started. And we should also note that the father of Lyndon Johnson was a Populist, and Lyndon Johnson would carry his Populist heritage into the White House to give us the Great Society of the 1960s. It is important to acknowledge the power and the legacy of the Populist idea in American history