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Evidence Supports Farmers’ Grievances During the Populist Movement

*Disclaimer: This Paper is the property of Cara Marshall.


‘Populism’, or the ‘farm-protest movement’ is the term which encompasses the historical period in America from 1865 - 1897. This movement came about because of a need for political and social reform. Farmers and laborers chose delegates to come together in Omaha in 1892 and form the Populist party. Their platform called for reform which they believed would put an end to the recessions, unemployment, low wholesale farm prices, and deflation that existed in this period. Many of the proposals that they suggested were unsuccessful in their time but were adopted later in history.

Farmers felt oppressed by the growing industrial world. They were being forced to borrow at high interest rates and felt violated by the North and the East. The farmers felt that banks and other industries were using monopoly power to regulate prices. In order to survive, the farmers tended to rely on collectivism. Since agriculture can be a vulnerable way of life, collectivism benefited the farmers as a whole. Also, by working together the farmers could purchase farming equipment and supplies at closer - to - wholesale prices. Even today, a form of agricultural collectivism exists through the federal assistance programs that our government offers to farmers.

During the farm-protest movement of the late nineteenth century, the farmers had many reasons for discontent. During this period, the velocity of money was declining. This is a unique trend which existed only during this period of American economic history. The effects of this trend were reflected in other aspects of the economy.

The money supply was not growing fast enough, i.e. there was not enough money in circulation, to accommodate the growth of real output combined with the decline of the velocity of money. Thus, deflation occurred throughout this period. This deflation affected the entire country, but the devastation that arose from it targeted the farmers. Since this was a period of deflation, people held onto their money (because it would be worth more later). This is evident in the decline of the velocity of money.

During this period, the unemployment rate was also high, as was the cost of railroad transportation, and farm wholesale prices were falling faster than prices in general. All of these factors combined made it almost unbearable for the farmers to live, let alone pay the debts that most of them owed.

"Interest rates reflected the risks of farming on the Great Plains in the 1880’s and were thus higher than rates on gilt-edged securities" (Lee & Passell 198). Farmers during the populist movement were haunted by debt and low income. Due to the deflation, debt repayments didn’t fall as nominal income and prices fell, so the total amount owed was actually worth more at the time it was paid, than at the original time of the loan. Also, interest rates were high, since the money supply was decreasing. This was a cycle in which the poor became poorer. Also, during this time, many of the farmers did not own their land, while today, most farmers earn capital gains on their land.

"Mortgages are obligations fixed in money terms, not in real value terms. Hence in a period of declining prices, like the first three postwar decades, mortgage rates were paid back in increasingly valuable dollars by property owners whose incomes were not necessarily growing apace with the financial obligation" (Lee & Passell 299-300). It is likely that farmers anticipated the future decline in price level and recognized that their future income would not support a mortgage. However, many farmers had no choice but to borrow in their time of need and worry about paying off the debt when the time came. In many cases, foreclosures and cessation of credit extensions left farmers in devastation. Many farmers contributed the high interest and mortgage rates to monopoly power of banks. Evidence seems to dispute this. "Farm mortgage rates, as well as short-term rates were high, especially in the 1870’s, but this appears to have been a product of high lending risks and other causes rather than monopoly power" (Walton & Rockoff 341).

The data shown in the following table support the farmers’ reasons for discontent. These values came from Hugh Rockoff’s table in "The ‘Wizard of Oz’ as a Monetary Allegory". I adjusted the values, indexing them in 1882, in order to graph them on the same axes.


By dividing the farm wholesale prices by the price level, one can also interpret the farmers’ worsening terms of trade. The declining terms of trade can be translated into decreasing purchasing power for the farmers, as compared to nonfarmers. In "The Puzzle of Farm Discontent" Susan Lee and Peter Passell conclude that, "The terms of trade evidence and the Fogel-Rutner income trend estimates cast doubt on the idea that farmers got the short end of the stick in the late 19th century" (Lee & Passell 297). However, these rates were significantly lower than the rates for nonfarmers. "The rates generally fell short of the 1.6 percent and 1.4 percent average annual gains for the economy as a whole (1849-99)" (Lee & Passell 297).

The following graph depicts five variables: real income, money stock, price level, velocity, and farm wholesale prices from 1882 - 1897. The four recessions that occurred during this period, the slow growth of the money supply, the decline of velocity, and the decline in farm wholesale prices, are easily interpretable from the graph. These variables affect the economy of the nation as a whole. In particular, the farmers were affected by the low farm wholesale prices, when compared to the other variables. Taking this information into account, the graph sheds light on some of the farmers’ grievances.


At the election of 1892, the Populist party elected a presidential candidate, James Baird Weaver, who had previously run for the presidency on the Greenback party ticket. He won more than one million votes, but was defeated by Grover Cleveland. The Populist platform consisted of several remedies to the farmers’ plight. These remedies included: free silver; government ownership and control of banks, railroads, and other industry; eight-hour work days; and an income tax. After Weaver lost the election, the populists found another leader and in four years they would nominate William Jennings Bryan to run for president.

Finally, after the Panic of 1893 and President Cleveland’s repeal of the Sherman Silver Purchase Act, the Democrats’ platform was coinciding with the Populist party’s, so they welcomed William Jennings Bryan into their party. At the 1896 Democratic National Convention he gave his "Cross of Gold" speech and won the Democratic nomination for the presidency. In this, his most famous speech, he included farmers and pioneers in his "definition of a business man". He spoke out against "organized wealth" and advocated protecting the debtors.

Bryan’s speech made a clear distinction between two classes in America: "the idle holders of idle capital" and "the struggling masses". The holders of the capital were, of course, those who had been prosperous during this time. They were those in favor of the gold standard; the Republicans. "The struggling masses" were those in favor of free silver, or the bimetallic standard; the Democrats. Bryan made many clear arguments depicting the oppression that the farmers had been experiencing. Bryan’s speech also has made lasting impressions on how many of us view the differences in the two political parties even today.

The populists felt that a bimetallic standard would bring more money into circulation which, in turn, would create inflation, increasing the velocity of money, and enabling the debtors to pay their debts, bringing the depression to an end. Also, by instituting government control of banks, railroads, and some other industries, the prices of these products and services would remain relatively low. Even if the government only owned one company in a particular industry, the others would have to compete with the lower price that the government set. Farm wholesale prices would rise in relation to price level, making the farmers’ terms of trade rise. Transportation costs would decline. Thus, the farmers would be able to repay their debts and would have a greater purchasing power.

Since it is not uncommon for a farmer to work fourteen - hour days, it is not surprising that the populists supported an eight - hour work day. This was a reform that most workers advocated since it would benefit them by paying overtime and giving them more time to spend with their families.

The populists supported an income tax because they felt that the country needed many improvements in infrastructure, public education, etc.. In order to enact these improvements the populists wanted the funding to come from the federal government. They felt that citizens should pay the federal government an income tax, so that those who could afford to contribute more would, and those who couldn’t afford it would pay less.

Many economic historians do not sympathize with the populists; some, in fact, blatantly disregard the farmers’ suffering. "To a considerable degree of strictly economic sense, the farmer is not as much worse off than the wage earner or the clerk as he thinks. He often has little surplus at the end of the year in addition to good food, a comfortable home, a sense of freedom, and many privileges. A large proportion of the residents of our cities could not say as much. Still, some of the grievances of the farmer are real" (Bemis 213). During this period, most of the country was suffering, so the farmers’ grievances were common to almost everyone. Bemis feels that the farmers were no worse off than anyone else, so they had no reason for their uproar. In short, he disagreed with the farmers’ protest movement.

Anne Mayhew and Douglas North agree that "between 1865 and 1900 railroad rates were falling rapidly" (Mayhew 465). Many historians have examined the data and have similar conclusions, in direct opposition with the farmers’ complaint that railroad rates were high. However, Robert Higgs explains that, "since only the relative price of transportation is meaningful, nominal transport rates must be compared with relative price index. When this comparison is made, periods of increase as well of periods of decline in real freight rates are evident. For the whole period 1867-96 the trend is approximately horizontal; in brief, farmers were not benefiting from lower transportation charges during the three decades before 1897" (Higgs 291). Hence, the populists’ complaint about freight rates was legitimate and economic historians who disagree have been measuring nominal rates instead of relative rates.

The high railroad rates significantly decreased the farmers’ profits. If the government had owned this industry, relative rates would have dropped and farmers would have been able to maintain a greater percentage of their profits. I believe that the populists’ remedy for this grievance would have brought some relief to the farmers.

The Wonderful Wizard of Oz, by L. Frank Baum, is an allegory depicting the populist movement. Baum wrote a direct account of the debtors’ hardships and sympathizes with the farmers. In the novel, there are many references to the bimetallic standard proposal of the populists.

Deflation, being a major grievance of the farmers, needed to be put to an end. The only way to stop this was by increasing the money supply. The populists chose to support a bimetallic monetary standard because the gold standard had been depleted and could not be expanded unless there was a major discovery of gold. If the populists had proposed a policy of fiat money, like we currently have in effect, this would have caused the outcome that the populists wanted without the risk of people hoarding or exporting gold. However, the country was probably not ready for a policy of currency with no backing in commodity, and fiat money at this time may have caused a monetary panic. Consequently, the populists believed that a policy of bimetallism was the best solution at the time.

In "The ‘Wizard of Oz’ as a Monetary Allegory", Hugh Rockoff claims that the populists had reason to believe in a bimetallic standard. "An increase in the stock of money generated by the introduction of large elements of silver would have effects similar to a sudden increase in gold - that prices and real output would both rise - was soundly based on historical experience and an interpretation of the quantity theory of money acceptable to many monetary economists even today" (Rockoff 758). If the bimetallic standard had been enacted, citizens would have seen an increase in the money supply and some temporary inflation. "It is one thing to adopt a bimetallic monetary standard of value and quite another to maintain it. The problem is that the relative values of gold and silver fluctuate" (Walton & Rockoff 259). If the bimetallic standard had been enacted at a ratio of 16:1, gold would have been undervalued, and silver overvalued. People may have held onto their gold and used silver for currency, since the actual, or market, value of silver to gold was much higher then the proposed trading ratio. Since most other countries used a gold standard, another risk would have been people exporting gold to pay for imported goods. This would have depleted all of the nation’s gold reserves. Thus, the populist remedy of creating a bimetallic standard would have succeeded in temporary inflation, or reflation, but in the long run a bimetallic standard would have been very difficult to maintain. Some sort of a floating trade ratio may have been the only way to maintain fair value between the two coins.

In conclusion, I believe that the farmers’ protest movement was rooted in the feeling of exclusion in the industrial growth of this period. The government was not helping relieve the farmers and they were feeling isolated and ignored. I believe the farmers’ grievances to be legitimate. The populists’ remedies, with the possible exception of the bimetallic standard, would have given the farmers relief, had they been enacted at this time. As I stated earlier, many of the populists proposals, or revisions of those, were adopted later in history. Today, we have an income tax, federal aid for farmers (a form of collectivism), the Federal Reserve to control the money supply, fiat money instead of the gold standard, and anti-trust laws to combat the growth of monopolies. If the depression hadn’t ended when it did, I think that some or all of the proposed remedies would have been necessary to boost the economic situation.



Works Cited

Bemis, Edward W., "The Discontent of the Farmer," Journal of Political Economy 1:193-213


Bryan, William Jennings, "’Cross of Gold’ Speech". In Daniel Boorstin, ed., An American

Primer. New York: Meridian Classic, 1985, pp. 593-604.

Higgs, Robert, "Railroad Rates and the Populist Uprising," Agricultural History 44:291-297,


Lee, Susan & Peter Passell, "The Puzzle of Farm Discontent," A New Economic View of

American History. New York: W.W. Norton, 1979, pp. 292-301.

Mayhew, Anne, "A Reappraisal of the Causes of the Farm Protest in the United States

1870-1900," Journal of Economic History 32:464-475 (1972).

Rockoff, Hugh, "The ‘Wizard of Oz’ as a Monetary Allegory", Journal of Political Economy

739-760 (1990).

Walton, Gary M., & Hugh Rockoff, History of the American Economy. The Dryden Press.