Don't 'Occupy the Democratic Party' -- Four Lessons From the Populist Movement
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All the necessities of farming, from the grain elevators to farm implements to the railroads were run by monopolies that squeezed the farmers dry. To compound these problems, the U.S. money supply was limited to a fixed quantity of gold, as demanded by Wall Street. This insured that as the population grew, the money supply would remain fixed, leading to enormous downward pressures on farm prices. It was a continuous rural depression as black and white farmers drifted into peonage. (Will rising student loans do something similar to the next generation? Will all of us be indebted to a handful of Wall Street banks?)
Yet, even in this state of misery, farmers’ alliances formed to build cooperatives designed to get them out from under the monopoly structures. They eventually linked together into the National Farmers Alliance that developed “sub-alliances” in thousands of counties in the South and Midwest. At great peril, black farmers also organized and joined in the movement.
To aid in the organizing, the Alliance sent out over 4,000 “lecturers” who held give and take sessions about how to build cooperatives and how to reform the economy. But after nearly a decade of organizing, it became clear that the farmer cooperatives could not succeed, because the monopolies deliberately denied them badly needed credit, and because the money supply was enormously constricted by Wall Street. (There was no Federal Reserve to do the dirty work for them.)
This led the populist movement to develop its most radical and original idea — the creation of a democratized monetary system independent of Wall Street. In their plan, farmers could bring their crops to federally sponsored warehouses and get federal paper currency as credit until their crops were sold at decent prices. This “sub-treasury” system, as they called it, would dramatically inflate the money supply, making it easier for farmers to retire their debts. It also would totally undermine the hard metal monetary system that was owned and operated by a handful of Wall Street banks. If ever there was a battle between the 99 percent and the 1 percent, this was it. (Contrary to popular lore, the Populist movement was not about “free silver.” That was an import from liberal Democratic politicians like William Jennings Bryan, who rejected the more radical Populist platform, including the sub-treasury system.)
By 1890, after a decade of grass roots organizing, the Farmers Alliance realized that it must engage directly in politics in order to keep its cooperatives and their farms from ruin. The South, at the time, was dominated by white Bourbon Democrats — the merchants, planters, and other elites who used terror and ballot stuffing to maintain their racist grip on post-Reconstruction political power. In the North and West, the Republicans were the party of the gilded elites and maintained their power by “waving the bloody flag” of the Civil War against the Southern Democrats and their Northern Catholic immigrant allies. Both parties were completely in the grip of the new industrial and financial elites.
Out of these conditions grew the People’s Party, one of the most powerful third party alternatives in U.S. history. But it didn’t end well. In 1896 the People’s Party was hijacked by a group of ambitious politicians who rammed through a fusion ticket behind the Democratic presidential nominee, William Jennings Bryan. That retreat, combined with Bryan’s defeat, alienated the farmer base within the National Farmers Alliance. With the failure to achieve political power, the cooperative movement was starved to death due to lack of credit and faded away. More and more small farmers lost their land and slipped into abject poverty as the elites tightened their grip on political power and held it, with few exceptions, until the New Deal. (See Lawrence Goodwin’s The Populist Moment for a definitive account.)