Populism, Farmers’ Alliance, and the Ocala Demands

Background: Post–Civil-War Farming Environment

• After the Civil War, U.S. agriculture shifted from dispersed family farms to consolidated, corporate-owned holdings.
• Key driver: rapid technological change combined with aggressive business practices by large firms.

Mechanization of Agriculture

• Catalyst inventions:
  • Cyrus McCormick’s Mechanical Reaper (pre-war, but widely adopted after 1865).
  • Successive waves of harvesters, steel plows, seed drills, threshers, and steam/traction engines.
• Effects on labor demand
  • In 1800, 85\% of the American labor force worked in agriculture.
  • By 1900, that share fell to 50\% due to labor-saving machinery.
• Competitive pressure:
  • Mechanization lowered per-unit costs for large operators who could afford equipment, squeezing smaller farmers that relied on manual labor or animal power.

Corporate Consolidation & Its Impact

• Corporations purchased neighboring family plots, creating large, mechanized “bonanza farms.”
• Market power allowed big firms to:
  • Negotiate cheaper railroad freight rates.
  • Obtain bulk pricing on seed, fertilizer, and equipment.
  • Influence credit terms through ties with national banks.
• Small farmers faced:
  • Rising fixed costs (machinery, storage) with limited capital access.
  • Volatile commodity prices set in distant markets.
  • High interest rates on seasonal loans.

Grass-Roots Farmer Organizations

• The Grange (founded 1867)
  • Social/educational network; later pushed for railroad regulation (“Granger Laws”).
• Farmers’ Alliance (gained strength in 1880s)
  • Sought collective economic action for white farmers in the South and Great Plains.
  • Emphasized cooperative buying of supplies and cooperative marketing of crops.
  • Criticized a “market system” tilted toward railroads, grain elevators, and big banks.

The Ocala Demands (1890)

• Drafted by Farmers’ Alliance delegates in Ocala, Florida.
• Core reform planks:
  1. Cheap, Accessible Credit
  • Abolish private national banks.
  • Create regional U.S. Treasury “sub-treasuries” to lend directly to farmers at below-market interest.
  1. Monetary Expansion via “Free Silver”
  • Unlimited coinage of silver alongside gold.
  • Intended to increase money supply ⇒ higher crop prices & easier debt repayment.
  • Inflation logic: If debt is D and the general price level rises by factor I>1, the real burden becomes \frac{D}{I}.
  1. Federal Regulation of Railroads
  • Government-set freight rates to curb discriminatory pricing and monopolistic overcharges.
  1. Graduated (Progressive) Income Tax
  • Shift federal tax burden away from lower-income farmers toward wealthier individuals and corporations.

Economic & Political Concepts Explained

• Inflation vs. Debt
  • Debtors benefit when each future dollar repaid is worth less in real terms.
• Market Power & Monopolies
  • Railroads acted as natural monopolies in many rural areas, setting high rates.
• Cooperative Action
  • Pooling demand (for inputs) and supply (of crops) creates bargaining leverage similar to economies of scale.

Birth of the Populist (People’s) Party

• Formed early 1890s to serve as the political arm of the Farmers’ Alliance.
• Platform mirrored the Ocala Demands plus:
  • Direct election of U.S. Senators.
  • Secret ballot.
  • Eight-hour workday (seeking labor alliance).
• Electoral performance
  • Modest: few congressional seats, no presidency.
  • Demonstrated substantial regional support (South & West).

Long-Term Influence & Legacy

• Many Populist ideas later adopted by the Democratic Party and/or mainstream politics:
  • Federal income tax (16th Amendment, 1913) implements a graduated rate structure.
  • Direct election of Senators (17th Amendment, 1913).
  • Federal Reserve System (1913) partly answered calls for distributed credit facilities, though under different architecture than sub-treasuries.
  • Railroad regulation crystalized in the Interstate Commerce Act and subsequent legislation.
• Broader implications
  • Showed potency of third-party movements in forcing major parties to absorb reform agendas.
  • Highlighted urban–rural economic divides that continue in American political culture.