11.8 Economic Hardships for Farmers

Economic Hardships for Farmers

Factors Leading to Economic Hardships for Farmers

• Bumper Crops and Initial Prosperity:
  • Farmers successfully cultivated the Great Plains, producing abundant crops.
  • In 1881, wheat sold for $1.19$ per bushel.
  • Farms expanded to maximize wheat production, with farmers borrowing money for land and equipment.
• Falling Wheat Prices:
  • By 1891, wheat prices plummeted to $0.49$ per bushel, causing financial losses for farmers.
  • Farmers attempted to compensate by acquiring more land and increasing wheat production, supported by bank loans and mortgages.
• Bank Foreclosures:
  • Farmers were unable to repay loans, leading to bank foreclosures and land confiscation.
  • Southern farmers faced similar issues with falling cotton prices due to overproduction.
• Railroad Issues:
  • High Transportation Rates: Railroad rates increased disproportionately to wheat prices and remained high even as wheat prices fell.
  • Monopolies: Railroads monopolized routes, charging excessive rates, with transport costs sometimes exceeding the value of the wheat itself (e.g., Dakotas to Minneapolis vs. Chicago to England).
  • Middlemen Influence: Railroads employed middlemen, grain merchants, and brokers to manipulate market prices.
  • Storage Fees: Railroads charged exorbitant fees for storing grain in granaries, essential for farmers awaiting shipment to Eastern markets, particularly as farmers hoped for price increases through storage.
• McKinley Tariff:
  • The McKinley Tariff increased the cost of imported goods, raising prices on necessary items for farmers and depleting their limited financial resources.
  • American manufacturers could charge high prices due to the tariff on foreign goods, further exacerbating farmers' financial difficulties.

Farmers' Support for Silver-Backed Money

• Deflation:
  • The period after the Civil War was marked by deflation, decreasing the money supply and increasing the value of each dollar.
  • While beneficial for consumers, deflation reduced crop prices, negatively impacting farmers.
• Proposed Solution:
  • Farmers advocated for increasing the money supply to induce inflation, which would raise the prices of goods and services.
  • Inflation was seen as a way to alleviate debt, as farmers could repay loans with cheaper currency than they borrowed.
• Attempts to Increase Money Supply:
  • Initially, farmers sought to increase the money supply by printing more greenbacks, but the government refused.
  • They then demanded unlimited coinage of silver to increase the money supply, which also proved unsuccessful.
• Bland-Allison Act (1874):
  • The Bland-Allison Act mandated the circulation of ${2,000,000}$ to ${4,000,000}$ in silver monthly, which fell short of meeting the farmers' demands for cheap money.
• 1896 Presidential Election:
  • The free coinage of silver became a key issue.
  • Republicans favored the gold standard, while populists supported bimetallism (gold and silver).
  • Republican victory effectively ended the push for silver-backed currency.

Farmers' Reactions and Organizations

• National Grange Movement (1870s):
  • Initially a social movement, the Grange evolved into a political force.
  • Railroad Regulation: The Grange advocated for state laws regulating railroad rates and storage fees.
  • Munn v. Illinois: The Supreme Court upheld the right of state governments to regulate railroads as public services.
  • Cooperatives: Grangers formed cooperatives to purchase supplies in bulk at wholesale prices and built cooperative grain storehouses for affordable storage.
• Farmers' Alliance (1880s):
  • Composed of diverse groups sympathizing with farmers, including teachers, preachers, and writers.
  • Advocacy: The Alliance disseminated information on railroad rates and tariffs.
  • Populist Party: The Alliance and Grange members formed the Populist Party to further their political goals.
• Farmer Alliances:
  • Significant political and social organizations with over $4,000,000$ members.
  • Southern Counterparts: The Southern Alliance and the Colored Farmers' National Alliance.
• Mary Elizabeth Lease:
  • A Farmers' Alliance member who advocated for farmers' rights through speeches.
  • "Raise less corn and more hell."

Check Your Understanding

• In 1881, wheat was selling for ${1.19}$ per bushel.