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Topic #4.

What were the the problems that American farmers faced in the late 1800s?

(1) Declining status, prestige, and influence; (2) Declining prices for farm goods sold; (3) Debt; (4) Middlemen; (5) Railroads.

Who, from the farmers' perspective, were the "middlemen" of the late 1800s, and what was the farmer's attitude toward them?

Middlemen were canners, packers, processors (etc.) who purchase their crops, package, process, then sell to consumers. Middlemen benefit at the farmers' expense.

Farmers do not like middlemen; feel exploited. Form farmers' cooperatives.

(They create farmers' cooperatives to can, process their own products and buy farm equipment on wholesale basis.)

What was happening to the value of money in the late 1800s? What term applies to money in such a situation--inflation or deflation?

Deflation=money increases in value

What, at least according to the farmers, was causing money to act in this manner (deflation)?

Decision to stop buying silver in 1873, gold standard, and decreasing amount of money per person in circulation.

(Golden standard (i.e. all money must be backed by gold). Money increases in value because the population is increasing more than the gold supply is. GOLD IS getting increasingly SCARCE.)

Most farmers of the late 1800s were debtors, i.e., owed money. How and why was this an important factor when considering the value of money in the late 1800s?

They were hurt by deflation because it means that their debt must be paid in money worth more than the money borrowed. This money is difficult to acquire b/c farmer receives less for that which he produces. To earn more money, farmers must plant and harvest more crops--which increases overproduction of farm goods; drives prices down.

The Sherman Antitrust Act and the Interstate Commerce Act are significant for their practical impact, but they are significant for a larger reason as well. What does the passage of these acts say about the changing role of government in the economy? (Topic 3: Industrialization?)

Represents first step away from laissez faire (with regard to regulation of economy--gov't had long involved itself in providing assistance to private businesss); marks step toward involvement in business regulation; is saying, in effect, must follow certain rules.

(End of Topic 3 outline)

Farmers were particularly angry at the monopolistic practices of the RRs in the late 1800s. What railroad practices made the farmers particularly angry?

(1) Pooling arrangements (i.e. arrangements in which RRs agree to use each other's tracks, rolling stock, etc., as though it were one large railroad)--agreed on common rates; (2) Long haul-short haul rates (RRs compete on long runs where farmers can choose from several competing RRs, barges, other forms of transportation that charge competitive rates. Set different (much higher rate) on short hauls, where only one railroad available to farmers; (3) Rebates (kickbacks) to favored customers, high-volume shippers. Charge all same price--then return part of price to those favored.

During the 1870s and 1880s, the farmers turned to the Grange to solve some of their problems, and, at least initially, the Grange was able to help by persuading state legislatures to pass "Granger laws." What industry did the Granger laws regulate?

Railroads

(Laws prohibits aforementioned practices which angered farmers, i.e. pooling arrangements, long haul-short haul rates, rebates.)

How and why did the U.S. Supreme Court invalidate the Granger laws?

Granger laws are STATE laws regulating RRs. But most RRs cross state lines, thus involved in INTERSTATE commerce. State laws can (by US Const.) only regulate INTRASTATE trade (i.e. trade involving commerce within a state).

(Result: 1880s; court declares most Granger laws unconstitutional; thus laws not valid.)

What was the principal purpose of the Interstate Commerce Act of 1887? What gov't body--at what level--passed this act?

Purpose was to prohibit the RRs' monopolistic practices, now that Granger laws not valid. Farmers pressure reps in the U.S. Congress to act on RR problem; result is Interstate Commerce Act. Act (i) declares RR monopolistic practices illegal (ii) req's RRs to publicly post all shipping rates and (iii) creates Interstate Commerce Commision.

*CONGRESS (answer?) passed this act.

NOTE: a significant first step toward federal regulation of economic activity.

Approximately, when was the Populist Party formed? What were the principal planks in the PP platform?

Organizes 1890/91; 1892, writes party platform and nominates pres/vp candidates (etc.)

Key issues:
(1) Currency: free silver, (2) low tariff, (3) graduated income tax, (4) want gov't to regulate economy (gov't must protect "little man" against power of "big business").

Complete platform/demands:
(1) Gov't ownership of RRs, telephone, telegraph (2) Graduated federal income tax (3) Direct election of U.S. senators (4) Secret ballot (5) Direct primaries (6) Initiative, referendum and recall (want tools for more direct participation in gov't) (7) FREE & UNLIMITED COINAGE OF SILVER AT RATIO OF 16 TO 1 (8) Eight-hour work day (in class, not in outline).

What is a "graduated" income tax?

Tax that increases not only money-wise, but percentage wise as well. Good for middle class, but not the wealthy (they end up paying more).

10,000 x 10% = 1,000
10,000 x 40% = 40,000

How it works: People who make more money must pay more taxes.

Why did the farmers demand the "free and unlimited coinage of silver" (i.e. how did they hope to benefit from this demand)?

Demand "free silver" so that money supply can be expanded, thus bringing degree of inflation to ease farmers' problems. (i.e. according to law of supply/demand, if more money available, value of money will drop.)

What, according to the farmers, was the "Crime of '73?"

Going to the Gold Standard (no more silver)

What was the name of he person chosen by both the Populists & Democrats as their presidential candidate in 1896?

William Jennings Bryan

(aka "silver tongued orator" b/c of commitment to "free silver")

What was the name of the winner of the presidential election of 1896 (year that Pop/Dem had same pres candidate)? Which political party?

William McKinley, Republican.

(favored by industry, business, commerce)

Had you been a Populist or Democrat (and an white adult male in the South), how would you have voted on each of the following issues? Why? (a) Money--gold standard or "free silver" (b)tariff--high or low (c) income tax--yes or no; (d) gov't regulation of the economy--more or less? How would you have voted on each of the issues were you a Republican?

[can refer to CHART]

Pop/Dem:
-free silver
-low tariff
-yes, income tax (graduated)
-more gov't regulation of econ

Repub:
-gold standard
-high tariff
-no, income tax (b/c they were wealthier and knew they'd have to pay more taxes)
-less gov't regulation (want to maintain "laissez faire" philosophy/"free enterprise")

The Populist Party achieved almost none of its immediate demands, but still played a very significant role in the development of the U.S. Why, if they achieved few of their goals, were their demands so significant?

Demands become part of political debate; will be take up by Progressives, early 1900s.

(By beginning of WWI (1914), almost all demands will have, to greater or lesser extent, become law. Gov't regulatory laws will fill some demands; 16th and 17th Amendments will meet demands concerning federal income tax & direct election of U.S. senators.)

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