Railroads and farmers had what type of relationship

The Economics of American Farm Unrest,

railroads and farmers had what type of relationship

The Populist Movement was organized by farmers who had been suffering from low crop prices, high transportation costs and high debt. In short, the American farmer produced far too much for his own good. new farming techniques, and the spreading of the railroads (which made areas . thus legally obligated to continue the relationship the next year to pay off the debt . that a rural and agricultural America dominated by farmers had given way to an. Led by oil, steel, and other manufacturing industries, the United States had Like their national counterparts, Mississippi farmers believed that railroads, banks.

Photo courtesy of the Mississippi Department of Archives and History. The pro-farmer administration of James K. Vardaman, governor of Mississippi from topassed into law many demands of Mississippi farmers. McCarty In the late s, the United States experienced a tremendous growth in industrialization.

The value of American exports tripled from to as America went from a debtor to a creditor nation. National wealth and national income skyrocketed. It was the age that amassed fortunes for John D.

The Industrial Economy: Crash Course US History #23

Harriman, to name a few. Before there were few millionaires in the United States, but by there were more than four thousand. Yet in the midst of all this industrial growth and production of wealth, almost ten million Americans, or about one out of eight people, lived in poverty. Among the Americans left out of the prosperity were the farmers who experienced difficult economic times.

An article in the April 28,edition of the Progressive Farmer magazine accurately summed up the attitude of farmers: There is something radically wrong in our industrial system. There is a screw loose. The wheels have dropped out of balance.

"Agricultural Problems and Gilded Age Politics"

The railroads have never been so prosperous, and yet agriculture languishes. The banks have never done a better or more profitable business, and yet agriculture languishes. Manufacturing enterprises never made more money or were in a more flourishing condition, and yet agriculture languishes.

Salaries and fees were never so temptingly high and desirable, and yet agriculture languishes. Farmers believed that their economic demise resulted from the low prices which they received for their produce. Statistics validate their belief as the price of agricultural produce did fall drastically during the closing decades of the 19th century. According to the U.

Most of the time farmers received even less for their produce. Farmers refused to admit it, but the primary cause of their problem was overproduction caused by increases in acreage of farm land and increased yields per acre due to improved farming methods generated by newly created agricultural colleges.

Thus, farmers produced more than consumer demand, and prices fell to a point that farmers barely made a profit. Farmers, however, came to believe that their chief problem was not the market dynamics of supply and demand but that they sold goods in a free market and purchased goods in a protected and monopolistic market.

They primarily zeroed in on two villains — banks and railroads. In their view banks charged outrageous interest rates, and monopolistic railroads not only charged outrageous rates but their rates were unfair and arbitrary in that the railroads charged farmers higher rates than they charged fellow industrialists. Farmers organize In an attempt to improve their condition, farmers in the s decided to organize.

Working within existing political parties, farmers attempted to bring about political change. They managed to gain control of several state legislatures and to enact state laws which regulated railroads. At first the U.

Supreme Court in Munn v. Illinois upheld these laws of railroad regulation, but in the late s the court reversed itself and either declared state regulatory laws unconstitutional or took most of the starch out of them. Frustrated by the reversal of the court and their inability to get either major political party to adopt their agenda, farmers in decided to field candidates for state and national offices under diverse party labels. Farm leaders surprised themselves by gaining partial or complete control of twelve state legislatures and by electing six governors, three senators, and approximately fifty congressmen.

Populist Party is created Elated over their success, the agrarian leaders decided it was time to create a national farm and labor party. Accordingly in Julythey held a convention in Omaha, Nebraska.

railroads and farmers had what type of relationship

Weaver for president and James G. Field for vice president. The Omaha platform of concisely documented the grievances and demands of farmers. It was also one of the most radical platforms to this point in American history.

Among other things, it called for government ownership and operation of the railroad, telephone, and telegraph systems. Third parties have never won national elections and the Populist Party was no exception.

railroads and farmers had what type of relationship

Grover Cleveland, the Democratic candidate inwon the presidency, but Weaver did poll more than a million popular votes and twenty-two electoral votes. In the presidential election, the Democratic Party nominated William Jennings Bryan and adopted a platform that included several planks from the Populist platform. After much discussion, Populist leaders decided to support Bryan and in so doing, signed the death warrant of the Populist Party.

Bryan lost three presidential elections as the nominee of the Democratic Party. Mississippi farmers blame Bourbons Like the rest of the nation, Mississippi farmers languished in economic distress during the late s.

Its main goal was to increase the amount of money in circulation and thus to lower the costs of credit to farmers. Its members practiced cooperative marketing and lobbied the government for various kinds of business and banking regulation.

Although farmers in every region of the country had cause for agitation, unrest was probably greatest in the northern prairie and Plains states. A series of droughts there between and created recurring hardships, and Midwestern grain farmers faced growing price competition from producers abroad. Farmers in the South also revolted, but their protests were muted by racism.

Black farmers were excluded from most farm groups, and many white farmers were reluctant to join the attack on established politics and business for fear of undermining the system of social control that kept blacks inferior to whites Goodwyn, The Debate about the Causes of Farm Unrest For a long time, a debate raged about the causes of farm unrest.

Historians could not reconcile the complaints of farmers with evidence about the agricultural terms of trade— the prices farmers received for their output, especially relative to the prices of other goods and services farmers purchased such as transportation, credit, and manufactures. Now, however, there appears to be some consensus. Before exploring the basis for this consensus, it will be useful to examine briefly the complaints of farmers. What were farmers so upset about?

Why did they feel so threatened? The Complaints of Farmers The complaints of farmers are well documented Buck, ; Hicks, and relatively uncontroversial. First, farmers claimed that farm prices were falling and, as a consequence, so were their incomes.

They generally blamed low prices on over-production. Second, farmers alleged that monopolistic railroads and grain elevators charged unfair prices for their services. Third, there was a perceived shortage of credit and money. Farmers believed that interest rates were too high because of monopolistic lenders, and the money supply was inadequate, producing deflation.

A falling price level increased the real burden of debt, as farmers repaid loans with dollars worth significantly more than those they had borrowed. Farmers demanded ceilings on interest rates, public boards to mediate foreclosure proceedings, and the U.

Treasury to coin silver freely to increase the money supply. Finally, farmers complained about the political influence of the railroads, big business, and money lenders.

These interests had undue influence over policy making in the state legislatures and U. In short, farmers felt their economic and political interests were being shortchanged by a gang of greedy railroads, creditors, and industrialists. The Puzzle of Farm Unrest Economic historians have subjected the complaints of farmers to rigorous statistical testing.

Miners, Ranchers, Farmers, Railroads by Lauren Casteen on Prezi

Each claim has been found inconsistent to some extent with the available evidence about the terms of trade. Farm prices were falling, along with the prices of most other goods during this period. This does not imply, however, that farm incomes were also falling. First, real prices farm prices relative to the general price level are a better measure of the value that farmers were receiving for their output. When real prices over the post-Civil War period are examined, there is an approximately horizontal trend North, Moreover, even if real farm prices had been falling, farmers were not necessarily worse off Fogel and Rutner, Rising farm productivity could have offset the negative effects of falling real prices on incomes.

Finally, direct evidence about the incomes of farmers is scarce, but estimates suggest that farm incomes were not falling Bowman, Some regions experienced periods of distress—Iowa and Illinois in the s and Kansas and Nebraska in the s, for instance—but there was no general agricultural depression.

If anything, data on wages, land rents, and returns to capital suggest that land in the West was opened to settlement too slowly Fogel and Rutner, It is true that interest rates on the frontier were high, averaging two to three percentage points more than those in the Northeast. Naturally, frontier farmers complained bitterly about paying so much for credit. Lenders, however, may have been well justified in the rates they charged.

The susceptibility of the frontier to drought and the financial insecurity of many settlers created above average lending risks for which creditors had to be compensated Bogue, For instance, borrowers often defaulted, leaving land worth only a fraction of the loan as security. This story casts doubt on the exploitation hypothesis. Furthermore, when the claims of farmers were subjected to rigorous statistical testing, there was little evidence to substantiate the monopoly hypothesis Eichengreen, Instead, consistent with the unique features of the frontier mortgage market, high rates of interest appear to have been compensation for the inherent risks of lending to frontier farmers.

railroads and farmers had what type of relationship

Finally, regarding the burden on borrowers of a falling price level, deflation may have been not as onerous as farmers alleged. The typical mortgage had a short term, less than five years, implying that lenders and borrowers could often anticipate changes in the price level North, These appear to have the most merit.

As Robert Higgs shows, however, gains in productivity in rail shipping did not necessarily translate into lower rates for farmers and thus higher farm gate prices. Real rates railroad rates relative to the prices farmers received for their output were highly variable between and More important, over the whole period, there was little decrease in rail rates relative to farm prices.

Employing different data, Aldrich finds a downward trend in railroad rates before but then no trend or an increasing trend thereafter. The Causes of Farm Unrest Many of the complaints of farmers are weakly supported or even contradicted by the available evidence, leaving questions about the true causes of farm unrest.

Most economic historians now believe that agrarian unrest reflected the growing risks and uncertainties of agriculture after the Civil War. Uncertainty or risk can be thought of as an economic force that reduces welfare. Today, farmers use sophisticated production technologies and agricultural futures markets to reduce their exposure to environmental and economic uncertainty at little cost.

Get the Job

In the late s, the avoidance of risk was much more costly. As a result, increases in risk and uncertainty made farmers worse off. These uncertainties and risks appear to have been particularly severe for farmers on the frontier. What were the sources of risk? First, agriculture had become more commercial after the Civil War Mayhew, Formerly self-sufficient farmers were now dependent on creditors, merchants, and railroads for their livelihoods.

These relationships created opportunities for economic gain but also obligations, hardships, and risks that many farmers did not welcome. Second, world grain markets were becoming ever more integrated, creating competition in markets abroad once dominated by U. Third, agriculture was now occurring in the semi-arid region of the United States.