The People’s Party: How the South Gave Birth to Populism

Populist Platform 1892

Episode 19: Farmers and the Rise of Populism

A New History of the American South

Dr Edward Ayers (2018)

Film Review

Following Reconstruction, the majority of southern farming communities fell into deep economic crisis stemming from the Long Depression (1873-1876).

Ayers links the Long Depression to US banks’ demand for a return to the gold standard (after years on relying on government-issued Greenbacks). However he fails to make clear that this move was accompanied by bank lobbying to withdraw Lincoln’s Civil War greenbacks from circulation. This, in essence, returned the function of money creation to private banks.* They, in turn, responded by drastically shrinking the money supply, sinking the country into deep depression.

Ayers also describes how farmers (nationwide) began organizing in the 1870s to try to improve their living conditions. The first groups they formed were greenbackers groups and farming cooperatives. The latter allowed them to buy seed, animals and equipment in bulk, and to cut out middlemen by running their own gins, stores, and warehouses.

America’s first populist movement started in Texas in 1878 as the Farmers Alliance, which sent out farmer-lecturers throughout Texas and other parts of the South, Midwest and West to educate farmers and workers about bank corruption. When banks, railroads, grain elevators and supply merchants secretly conspired to bankrupt the farmers cooperatives, the Alliance formed the People’s Party.

Although Ayers neglects to mention it, the main platform of the People’s Party was a call to end the ability of private banks to create money.

In 1892, the Populist candidate for president won 1 million votes. In the 1894 election, the party elected state officials in a number of states, including South Carolina.

In 1896, the Populist Party essentially self-destructed by joining with the Democratic Party to support Free Silver candidate William Jennings Bryan. He was defeated by William McKinley.

*Contrary to popular belief, money used to run the global economy isn’t issued by governments but by private banks. Although most people think banks only loan out money they hold on deposit, loans are actually  created out of thin air via a bookkeeping entry.  Because this is where roughly 97% of money comes from, private banks have ultimate control over the amount of money in circulation. They exert enormous political power by shrinking the money supply to cause depression and expanding it to cause inflation. See How Banks Invent Money Out of Thin Air, Stripping Banks of Their Power to Issue Money and 97% Owned
**Free silver advocates called for expanding the money supply by through unlimited production of silver coinage (by the government), reducing the monopoly private banks enjoyed via money creation. Even before the world went off the gold standard in 1971, banks generally issued far more money than they held in gold reserves (by law, they issued $9 for every $1 they held in gold).

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Who were the First Populists?

Populist Party - The BodyProud Initiative

A Skeptics View of American History

Episode 11 Misconceptions About the Original Populists

By Gerald Stoler PhD (2012)

Film Review

In this lecture (in my view the least accurate), Stoler traces the history of America’s original populists, ie The People’s Party (aka The Populist Party). The latter flourished in the 1890s.

Stoler incorrectly states the Populists’ primary demand during the 1892 presidential election was to increase the money supply via unlimited silver coinage. According to Lawrence Goodwyn in The Populist Moment, this was only a secondary campaign issue. According to Goodwyn, the Populists main demand was to end the creation of money by private banks by abolishing the national banks created under the National Banking Acts of 1863 and 1864.*

Had they captured the presidency and congress, they would have directed the US Treasury (as stipulated in the US Constitution) to take over from private banks in issuing legal tender treasury notes.

The Populist Party grew out of a period in which most of the US population still lived on farms, and in which most farmers borrowed in the spring to pay for fertilizer, seed and farm machinery and repaid their loans after the fall harvest. The 1880s and 1890s were a period of severe deflation (ie inadequate money in circulation), in which a drop in crop prices made it extremely difficult for farmers to repay their debts.

Stoler also fails to correctly identify the cause of this historic deflation, namely a sudden contraction of the money supply triggered by a demand from Eastern banks that the post Civil War government retire $450 million in treasury notes that Lincoln issued to pay for the Civil War.

The Populist Party received one million popular votes in the 1892 election, as well as capturing numerous senate and congressional seats, governorships and state legislative seats.

In 1896, the Populist Party endorsed the Democrat’s Free Silver candidate William Jennings Bryan for president. Bryan would lose in a landslide to William McKinley.

*These laws allowed private banks to issue paper money backed (and printed) by the US Treasury “proportionate” to capital (usually US Treasury bonds) banks had on deposit with the Comptroller of Currency at the Treasury. As a general rule, these banks were allowed to issue nine times as much money as they held on deposit. This essentially granted them total control of the amount of money in circulation. See (The Populist Moment by Lawrence Goodwyn