1918 KANSAS AND KANSANS The Populist Uprising Part 1

I - INTRODUCTION, II - CAUSES OF ECONOMIC UNREST

THE POPULIST UPRISING

By ELIZABETH N. BARR

I

INTRODUCTION

It has been a quarter of a century since the high tide of Populism swept over the country. We are now able to see the events of those times in the perspective, and in their proper relation not only to similar preceding movements, but to the underlying economic causes which occasioned the general unrest subsequent to 1870. We cannot attribute this unrest to a spirit of anarchy, as did the old party speakers and writers of that time. It was not confined to a few individuals or localities. It was widespread and deep seated, affecting the general masses of normally industrious and contented people. It had both cause and purpose, the former an untenable economic condition, the latter the overthrow of monopolistic oppression of all kinds.

The genesis of the movement which culminated in the People's Party, goes back to the year 1862. It was in this period that the system was inaugurated which gave rise to two classes of citizens hitherto unknown in this country - millionaires and tramps. The larger the fortunes of the rich became, the more widespread the poverty of the producing classes. They felt it and rebelled, fixing the responsibility on the financial policy of the government, on the unwarranted advantages taken by the railroads and other corporations, particularly those controlling public service, natural resources, and the great labor saving inventions of the day; on the policy of protecting the manufacturers and leaving the producers without means of safeguarding their interests; on the swindling of stock gamblers, banks and boards of trade; and on the various forms of usury, rent, profits and dividends.

With these things in mind organizations began to be formed among laborers and farmers. These societies grew rapidly in strength and soon entered upon political action in the hope of correcting existing evils. This political action was invariably the downfall of the particular organization back of it, but a new movement would spring up in its place which followed the same course, until several distinct third parties had their successive rise and fall, before, the whole effect culminated in the People's party, which had its birth in Kansas in 1890.

Some of the more sentimental writers of a later date have hailed the Populist movement of Kansas as a distinct departure in political life, as a hitherto unheard of phenomenon. A comparative study of the platform of the third parties subsequent to the Civil War shows the Populist doctrine to be essentially the same as the Liberal, Independent Reform, Greenback, Anti-Monopoly, and other parties preceding it. In fact, it was but a part of a great world movement - a movement in progress at that time in every civilized country on the globe, in the interests of the producing masses against organized and privileged wealth. It was not Populism that distinguished Kansas, but Kansas that distinguished Populism. Neither the conditions nor the proposed remedy was new, but the Kansas method of handling them was novel. It was the Kansas manner of reacting upon the situation that makes the story worth telling.

Senator W. A. Peffer

SENATOR W. A. PEFFER

[From Photograph Owned by William E. Connelley]

The spectacular character of some of the Kansas leaders gave ample opportunity for the opposition press to ridicule the whole Populist cause - an opportunity which they hastened to improve in every way possible. The motives of all the leaders were called in question, and they were denounced as demagogues and anarchists. Their personal character was often maliciously assailed in an effort to discredit the party. On the other hand the leaders of the old parties and the Congresses and public officials of the two decades just passed, were denounced by the Populist writers as grafters and traitors. The whole era of upheaval was marked by the inability of either side to discuss the problems of the clay without recourse to abuse and vilification.

It may fairly be taken for granted that aside from the usual number of self-seeking politicians, both sides were honestly striving to put into effect those policies which they believed to be best for the country, although acting in accordance with widely differing viewpoints. It seems that the statesmen of the old school considered the bankers, manufacturers, and corporate interests of all kinds, to be the country, and thought that any legislation in their interests must of necessity be the very best thing for the people at large. On the other hand the farmers considered themselves to be a part of the country, and began demanding laws which would enable them to retain their homes, to market their produce at a profit and pay their debts and live.

Corporate interests were surprised and alarmed at this audacity on the part of the farmers, and every means was taken to bluff and shame them out of it. In no other nation had there ever been any such thing as individual ownership of land to the extent that it then existed in this country, and the money power did not intend that there should be. The farmers were told that the people had never made a success of owning land of their own, and articles appeared in the papers to prepare the minds of the people for the landlord system. The farmers were desperate, and out of this desperation came the Populist Uprising. As a political movement it is vindicated, not so much by what it accomplished in the way of legislation at the time, but by the way in which its doctrines have permeated the whole mechanism of politics. Its educational value can hardly be overestimated. Many of the measures advanced in the Populist propaganda have one by one been enacted into law, while others are still live issues, which indicates that whatever the weakness of the movement may have been, it was not in the justice of the cause or the merit of the program.

II

CAUSES OF ECONOMIC UNREST

The underlying causes of the unrest pervading the industrial and agricultural classes in the two decades leading up to the Populist Uprising may be summed up in one word, INTEREST. At the time of the Civil War, and for ten years after it closed, the government was involved in a financial policy in the stress and urgency of a national crisis, that gnawed at the vitals of the people long after the rebellion had been successfully quelled. The producing classes yielded up their substance year after year to the financiers in payment of interest on public and private debts at ruinous rates, and under such circumstances and restrictions as made it practically out of the question to pay the principal and free themselves of debt. For from the standpoint of the money power a heavy indebtedness on the part of the people is the ideal condition, and no pains is spared to perpetuate it, and to create a market for money at good prices.

The loss of economic equality in this country and growth of extreme wealth and poverty began when the government drafted men to the defense of the country and failed to draft money in the same cause. The men were not only compelled to fight the nation's battles and give their lives comparatively without recompense, but those that were left were compelled to spend the remainder of their lives in paying tribute to the money power for a little temporary accommodation, leaving the debt itself to be paid by their children. In justice, there should be no obligation to those who furnish the money, any more than to those who furnished their lives. In a national crisis, money and men should both be drafted into the service and both take their chances. If a poor man gives up his job and his living, a rich man should give up his bonds and his bank, without any obligation on the part of the government to return either investment. A system of this kind, would not only do away with the slavery of interest, but might put a stop to civilized warfare, for under our present system, war is a thing to be devoutly hoped for on the part of the financiers, as it furnishes a market for money at a high rate of interest and is a potent agency in the concentration of wealth.

The money to prosecute the Civil War was obtained in two ways, by the issue of greenbacks which the people were compelled to accept at face value, with no interest, and by the issue of interest-bearing government bonds which the bankers were asked to buy. The bankers refused to buy these bonds except on certain terms, and instead of compelling the banks to buy, as the people were compelled to fight, the government very foolishly acceded to the banker's terms and paid interest on these bonds, "in advance" and "in gold." The government was compelled to secure this gold from some source, and in hopes to draw it from France and England, a law was made that import duties must be paid in gold. This restriction on the greenback as legal tender caused a rapid decline in value as compared with gold, and in a few months, the people's dollar would only buy half as much goods as the banker's dollar. The government had limited the rate of interest to 7% on bonds, but as this interest was payable in high priced gold, the effect was to double the interest realized by the bankers. Thus while the producing classes were sacrificing their lives and receiving half pay, the financial interests were sacrificing nothing and reaping a double reward.

The next financial move was the establishing of National Banks of issue, in 1863. It has been said that while this system has its faults, yet it was the best suited to the great financial agencies. It seems to have been devised to suit the convenience of the great financial agencies and without regard to the interests of the people. The National Bank Act provided for the forming of banking associations which were authorized to issue circulating notes in the following manner. Each bank organized under the law was required to deposit with the government interest-bearing government bonds of the United States to the amount of not less than one-third of its capital stock. The government then returned to the bank circulating notes to the amount of 90% of these bonded securities. These circulating notes were then loaned out by the banks at 10% to 12% interest to business men and farmers, while at the same time the banks drew 7% interest in gold on the government bonds, amounting to 14% in greenbacks. As the bonds and the circulating bank notes represented the same investment, the banks were realizing about 24% on their money, all of which in the end had to be paid by the laboring classes, who were at this time too busy lighting the war to look after their own interests.

That Lincoln did not approve of these acts is well known to the older generation who have some recollection of the events of that period. That he saw trouble ahead is evident from the following extract from a letter written to the Hon. W. R. Ellis, of Chicago, at the close of the war:

We may all congratulate ourselves that this cruel war is nearing a close. It has cost a vast amount of blood and treasure. The best blood of the flower of American youth has been freely offered upon our country's altar that the nation might live. It has been indeed a trying hour for the Republic, but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow. The money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in few hands and the Republic is destroyed. I feel at this moment more anxiety for my country than ever before, even in the midst of war. God grant that my suspicions may prove groundless.

That this is precisely what happened, we shall see by the consideration of subsequent events. At the close of the Civil War the people generally owned their homes and farms, and were practically free from debt except for the war bonds. This in itself was menace enough to the prosperity of the country on account of the ruinous terms which the government had entered into with the banks, which raised the bankers' money to a high premium and depreciated that of the people, and which exacted the principal over and over again in interest.

But the bankers were not content with cutting the value of the people's money in half. The next step was to take it away from them entirely, in order that they might loan the farmers and business men their money at a high rate of interest, and compel the people to either cease to transact business at all or pay tribute to the banks for a circulating medium. The people did both, to their ruin. The process by which the people were deprived of their own circulating medium to make a market for that of the bankers was called the contraction of currency.

The first step in the contraction of currency was taken early in 1866, when an act was passed to provide for redeeming greenbacks in interest bearing government bonds of the denomination of $1,000. This policy operated against the producer both in agricultural and manufacturing pursuits as a two edged sword, withdrawing from circulation the money which should have been invested in the channels of trade, and at the same time burdening him with additional interest to be paid. Although a slight money stringency was felt in some quarters as a result of this act, and the number of business failures doubled the next year, on the whole the effect was not seriously felt for some years.

The next step, (and one of the most pernicious in the whole financial policy) was the Credit Strengthening Act of 1869. By this act the bonds which had been bought with greenbacks were to be paid back in gold. There was considerable objection to this measure on the part of the leaders of the people, but these objectors were cried down as "repudiators," and the finger of scorn was pointed at all who dared speak up in behalf of justice. It was stated by Oliver P. Morton in a speech, that the government had sold many of these bonds for 60c on the dollar in greenbacks, and that it would be rank injustice to the people to enter into a new contract to pay them in their face value in gold. However, the money power did just what Lincoln said it would. A great hue and cry was raised to the effect that our government would be in disgrace if it refused to pay its debts in the best money there was. English policy was pointed to with pride. It was pictured as a good thing for the country to make itself solid with the moneyed people, and so the act was passed and an additional burden amounting to hundreds of millions was loaded upon the people. It also had the effect of still further enhancing the value of gold to the detriment of all other circulating mediums.

The contraction of currency continued year after year, and by 1872 began to have a decided effect on the prosperity of the country. There were an unprecedented number of business failures. Wages were low and the laboring classes were beginning to organize and talk of striking. The farmers found that the "honest dollar" they had been voting for was getting very elusive, that it took more and more wheat every year to get it, but that it did not pay any more taxes or interest than the greenback did. As wages lowered the market for produce was curtailed, and the farmers being unable to buy the product of the laboring man, nor the laboring man the produce of the farmer, a paralysis of industry followed; and in 1873 the country was plunged into one of the worst panics of its history. Business was at a standstill. Half a million men were out of work and tramping the country. Wages went lower and lower, and many of the trades organizations struck only to find themselves out of work entirely instead of getting more pay. The market prices of farm produce went far below the cost of production. But taxes had to be paid, and the necessities of life provided if possible. Those who had farms, homes or chattels were obliged to mortgage them at a high rate of interest. So the interest parasite took a second hold on the vitals of the nation. The people now had not only the national debt to pay but private debts on their homes and chattels at such exorbitant rates of interest that it was almost out of the question to pay the principal.

Congress evidently thought the money god was angry and must be appeased, for instead of repealing the laws that had brought about this condition, the statesmen of '73 said the financiers had "lost confidence" and that the only way to restore this confidence was to demonetize silver and further enhance the power of gold. This was done, and the legal tender value of silver coin was limited to $5,00. This was a serious blow to the already battered fortunes of the laboring and agricultural classes. There was no real money now but gold, and no gold except in the banks, but interest and debt must be paid in gold and so the only thing that could he done was to borrow more. The circulating medium, which under the greenback system had been based upon credit, was now based on debt, the interest on which could be paid only by incurring more debt. It was held by the advocates of demonetization that this measure was necessary to insure money against a possible fluctuation in value. However, no provision was even thought of to protect labor and its products from a fluctuation in value. In fact every advantage had been given by by those in power to the speculators and gamblers to enable them to make the value of produce fluctuate in any way that would make the most money for them.

The final act in the contraction policy was the resumption of specie payments, provided for by the Sherman act of 1875, to take effect January 1, 1879. The entire amount of paper money in circulation at that time was $777,176,250, while of gold there was only about $100,000,000. The resumption of specie payments meant the redeeming of this paper in gold coin. As there was not enough gold coin to do this, the act involved the issuing of more interest bearing bonds, increasing the public debt and further limiting the circulating. medium. In an effort to secure the repeal of this act, the Hon. D. C. Haskell of Kansas, summed up the situation as follows:

We have sixty millions less of currency in circulation than we had two and a half years ago, counting National Bank notes and legal tenders. During the five years immediately preceding the resumption of the Bank of England in 1821, the contraction amounted to one hundred and two millions. It very nearly ruined English industries, and yet we, in two and a half years, have accomplished an equal contraction, and that too through the operations of a law that was intended to relieve our industries by a slight increase in currency. . . . I am satisfied that if any other important law than this resumption act was found to be as uncertain and indefinite in its provisions, it would be snatched from the Statute book within an hour. We ask that Wall street, the Rothschilds and the Barings shall no longer have control of our financial legislation; and when I charge that our legislation has been in the interest of the capitalist and the dealer in money, I charge that which I can prove from the record, and I challenge successful contradiction.

That the financial policy of the country had been formed for the benefit of English capital was denied by its sponsors, but that it was patterned after the English system was openly boasted. Our statesmen who thought we needed such a system evidently overlooked the fact that this system in Great Britain had separated the population into two classes - one of extreme wealth and one of extreme poverty; that the agricultural classes had been reduced to serfdom from which they sought relief by a general exodus from their native land. Similar results might well have been expected in this country. The circulating medium which was $52 per capita in 1866, had been cut down to $12.28 by 1877, and before the Populist Uprising came to a head it had been reduced to less than $5.00.

Another prolific cause of unrest was the oppression of the transportation corporations. In 1862 there was not a mile of railroad in Kansas. Ten years later there were over two thousand miles, and in the next two decades building proceeded on a large scale. Instead of the people building the necessary arteries of distribution the privilege was delegated by the government to private corporations and individuals who used their power to perpetrate the most flagrant injustices upon the people dependent on them for a means of marketing their produce and securing supplies. The greed of these corporations knew no bounds. In the first place, the national and state governments realizing that railroads were essential to the development of the country, especially the vast areas beyond the reach of the waterways, gave immense grants of land outright to these corporations. The companies then required the citizens of the localities through which the road was to be built to vote vast sums in bonds, in most cases more than the road would cost. Sometimes the people were given stock for this money, but if they were, the company always reorganized and cheated them out of it later. The next step was to sell "watered stock" for several times the worth of the road, and then charge the people a tariff for service, high enough to pay big dividends on this inflated valuation. But not content with these injustices they made discriminating freight rates in such a way that they had complete control of the distribution of products and had the industries of the people at their mercy. It had the effect of working the ruin of hundreds of independent salt producers in Kansas, as well as producers of oil and minerals, and took the natural resources of the state from the hands of the people and gave them over to the trusts and combines. It was one of the greatest obstacles in the way of successful farming. It was the ruin of the cattle men, as the large packing houses were given such heavy rebates that the independent shipper stood no chance in the market. The people attempted to relieve the situation by offering inducements to rival lines, but once this supposed competitor had a road built on the people's money, they found they had burdened themselves with bonds in vain, as all railroad corporations were alike.

These railroad corporations were privileged characters. They avoided taxation, secured any legislation they happened to want, and made and unmade public officials. All public officials and state and national legislators, as well as newspaper men, rode around on free passes and charged their mileage up to the people. It was not without justification that Jerry Simpson on the day of the triumph of the Populist party, stood on the south steps of the State-house before a large crowd and said: "Fellow citizens, we have come to-day to remove the seat of the government of Kansas from the Santa Fe offices, back to the State-house where it belongs. "

But the transportation companies, not content with extortion from the people, oppressed their laborers beyond endurance. According to the Kansas Bureau of Labor for the year 1886, the railroads did not pay a living wage on which a family could subsist comfortably while employment lasted, to say nothing of saving for periods of enforced idleness. In 1885, the Knights of Labor were well enough organized in Kansas that they declared a strike on the Gould lines. It was a protest that cost dearly, for the corporations had everything their own way at that time.

In the development of the vast natural resources of the country, powerful manufacturing monopolies had grown up under government favor and protection until they became more powerful than the government itself. They bought raw material at their own price, sold the finished product at any figure they wished to ask, and rewarded labor as they saw fit.

Another great grievance was the operations of speculators in farm produce. In the latter eighties and early nineties the farmers sold their corn, which, according to the agricultural reports, cost 21c per bushel to produce, for ten to fifteen cents per bushel. The grain speculator received forty-five to sixty cents per bushel for the same corn, and before it reached the laboring man who must buy it for food, the price was considerably higher. It was so with all farm products. The farmer felt that he was playing against a fixed game. The banks had control over the currency and could withdraw their notes from circulation at will, making money scarce and produce cheap just at the time the farmer must have cash for interest and taxes. Then they could make money plentiful and manufactured articles high in the winter and spring when the farmer had nothing to sell, but was forced to buy the necessaries of life.

These were the combinations against which the farmers of Kansas struggled in the People's Movement, while at the same time they were endeavoring to bring wild land under cultivation, pay off bonds and mortgages, and provide homes and higher education for their children.

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A Standard History of Kansas and Kansans, written and compiled by William E. Connelley, transcribed by Carolyn Ward, 2000.

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