Agricultural Distress
The economic transformation taking place during the Gilded Age created prosperity and new lifestyles for some, but these changes also had a widespread negative impact in areas dominated by farming. Although crop diversification and the greater focus on cotton as a cash crop offered some potential for farmers to get ahead, other forces worked against that success. For instance, while technology greatly increased the amount a farmer could harvest, it also created large surpluses that could not be sold. Farmers struggled due to debt and falling prices. The crop failures of the 1880s greatly exacerbated the situation.
During the late 1880s, a series of droughts devastated the West. To make matters worse, the McKinley Tariff of 1890 was one of the highest the country had ever seen. This was detrimental to American farmers, as it drove up the prices of farm equipment. By 1890, the level of agrarian distress was at an all-time high.
Agrarian Movements
This high level of agricultural distress led to the birth of several farmer movements, including the Grange movement and Farmers' Alliances. The Grange was a secret order founded in 1867 to advance the social and economic needs of farmers. In addition to farming practices, the Grange provided insurance and aid to its members. The association grew swiftly during early years, and at its peak, had approximately 1.5 million members. The original objectives of the Grange were primarily educational, but these were soon de-emphasized in favor of an anti-middleman, cooperative movement. Collectively, Grange agents bought everything from farm machinery to women's dresses, and purchased hundreds of grain elevators, cotton and tobacco warehouses, and even steamboat lines. They also purchased patents to enable the Grange to manufacture its own farm machinery. In some states, these practices led to ruin, and the name, Grange, became a reproach.
The Farmers' Alliances were political organizations with elaborate economic programs. According to one early platform, the alliance's purpose was to, "unite the farmers of America for their protection against class legislation and the encroachments of concentrated capital." Their program also called for the regulation—if not the outright nationalization—of the railroads; currency inflation to provide debt relief; the lowering of the tariff; and the establishment of government-owned storehouses and low-interest lending facilities. These requests were known as the "Ocala Demands." From these elements, a new political party, known as the "Populist Party," emerged.
The Populist Party and the Currency Question
The pragmatic portion of the Populist platform focused on issues of land, railroads, and money, including the unlimited coinage of silver. During the Civil War, the United States switched from bimetallism to a fiat money currency to finance the war. After the war, the government passed the Fourth Coinage Act in 1873 and soon resumed payments without the free and unlimited coinage of silver. This put the United States on a monometallic gold standard. This angered proponents of the free coinage of silver known as the "Silverites."
To understand exactly what is meant by "free coinage of silver," it is necessary to understand the way mints operated in the days of the gold standard. Essentially, anyone who possessed uncoined gold, such as successful prospectors, could bring it to one of the U.S. Mints and trade it for its equivalent in gold coins. Free silver advocates wanted the mints to accept silver on the same principle, so that anyone would be able to deposit silver bullion at a Mint and in return receive nearly its weight in silver dollars and other currency.
The Populists showed impressive strength in the West and South in the 1892 elections. It was the currency question, however, pitting advocates of silver against those who favored gold, that soon overshadowed all other issues. Agrarian spokesmen in the West and South demanded a return to the unlimited coinage of silver. Convinced that their troubles stemmed from a shortage of money in circulation, they argued that increasing the volume of money would indirectly raise prices for farm products and drive up industrial wages, thus allowing debts to be paid with inflated dollars.
Conservative groups and the financial classes, on the other hand, believed that such a policy would be disastrous. They insisted that inflation, once begun, could not be stopped. Railroad bonds, the most important financial instrument of the time, were payable in gold. If fares and freight rates were set in half-price silver dollars, railroads would go bankrupt in weeks, putting hundreds of thousands of men out of work and destroying the industrial economy. They claimed that the gold standard was the only currency that offered stability.
The financial panic of 1893 heightened the tension of this debate. Bank failures abounded in the South and Midwest. Unemployment soared and crop prices fell sharply. The crisis, and President Cleveland's inability to solve it, nearly broke the Democratic Party.
The Democratic Party, which supported silver and free trade, absorbed the remnants of the Populist movement as the presidential elections of 1896 neared. The Democratic convention that year was witness to one of the most famous speeches in U.S. political history. Pleading with the convention not to, "crucify mankind on a cross of gold," William Jennings Bryan, the young Nebraskan champion of silver, won the Democrats' presidential nomination. The remaining Populists also endorsed Bryan, hoping to retain some influence by having a voice inside the Bryan movement. Despite carrying most of the South and West, Bryan lost the more populated, industrial North and East—and the election—to the Republican William McKinley whose campaign slogan was "A Full Dinner Pail."
The following year, the country's finances began to improve, mostly from restored business confidence. Silverites, who did not realize that most transactions were handled by bank checks, not sacks of gold, believed the new prosperity was spurred by the discovery of gold in the Yukon. In 1898, the Spanish-American War drew the nation's attention further away from Populist issues. If the movement was dead, however, its ideas were not. Once the Populists supported an idea, it became so tainted that the vast majority of American politicians rejected it; only years later, after the taint had been forgotten, was it possible to achieve Populist reforms, such as the direct popular election of senators.
Free silver
A 1896 Republican poster warns against free silver. A man holding a baby and a woman carrying a basket of food read "Vote for Free Silver" posters outside the Democratic Campaign Headquarters. They carry out the following conversation: "'What awful poor wages they have in all those free silver countries, John!' 'That's so, wife, but the politicians say it will be different in America.' 'I wouldn't take any chances on it, John, It's easy to lower wages and hard to raise them. Politicians will tell you anything. We know there was good wages when we had protection. We could never buy clothes for the children on what they given in free silver countries, could we?"