Populism, the Grange Movement, and Monetary Policy

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How did the Populist movement aim to assist farmers?

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An important populist cause from the 1870s to 1900, when Republicans instituted the Gold Standard Act, was the Free Silver Movement.

Farmers in this period were often crushed with debt and could not easily repay it because they could not make enough profit on their crops. The years from 1870s-1890s were a period of economic instability which hurt farmers, especially as the country was hit with two major financial "panics" or depressions.

Farmers knew that if the government bought more silver and minted more silver coins, more money would be in circulation. With more money available, the farmers believed, people would be able to pay more for crops. A larger money supply would also ease credit and lower interest rates.

The farmers (at this time a much larger percentage of people than today earned their living farming) for a time used their clout to have legislation passed that required the government to buy more silver and, therefore, put more silver coins into circulation. For example, in 1890, Congress passed the Sherman Silver Currency Act which required the US government to buy fifty percent more silver. This use of silver to expand the money supply ended, however, when the Gold Standard Act made gold the sole currency standard.

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The Populist Movement developed from groups of agrarian reformers after the different groups realized their failure in addressing their issues at the national level. Farmers were generally faced with myriad challenges that saw them make meager returns from their farming activities. Among their concerns were the issue of failing crops, poor marketing of their produce, poor prices, and inadequate access to credit facilities.

The Populist Movement campaigned for favorable income tax policies. The movement also championed government ownership of the railroad in order to break the private monopoly. In addition, the movement wanted to improve the prices of farm produce. In order to achieve this goal, they pushed for the unlimited increase of circulating currency by minting more silver coins and printing more paper money. To address the issue of credit facilities, the Populist Movement tried to campaign for the abolition of national banks. However, political blunders and the party’s inability to appeal to wage earners led to its dissolution after the 1896 election.

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The Populist movement tried to help farmers. When farmers were unable to resolve the problems they faced with groups such as the Grange and Farmers’ Alliances, they created a political party to try to achieve their goals.

Farmers faced many financial problems. One of the problems they faced was the money supply. Farmers wanted a money supply based on both gold and silver. This would increase the money supply and lead to higher prices for farm crops. Also, since farmers were in debt, a period of inflation helped those who are in debt. Another financial problem farmers faced was interest rates. Banks were charging farmers interest rates that were really high. If the money supply increased, interest rates should drop. The Populist Party worked to increase the money supply and get lower interest rates for farmers.

Farmers were also upset with the railroad companies. Railroad companies gave rebates to some businesses that did a lot of shipping. However, the railroad companies wouldn’t do this for the farmers.  The Populist Party supporting the idea of having tighter control over the railroad companies. 

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