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Farmers' Alliance

Agrarian economic movement in late 19th century America

  • 19 min read
  • 6 chapters

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Through Economics, Great Plains and American Civil War

One of the goals of the organization was to end the adverse effects of the crop-lien system on farmers in the period following the American Civil War. The alliance also generally supported the government regulation of the transportation industry, establishment of an income tax in order to restrict speculative profits, and the adoption of an inflationary relaxation of the nation's money supply as a means of easing the burden of repayment of loans by debtors. The Farmers' Alliance moved into politics in the early 1890s under the banner of the People's Party, commonly known as the "Populists."

Background

Agricultural crisis in the Midwest and Plains

The quest to achieve a first transcontinental railroad across the U.S. was delayed somewhat by the American Civil War before being finally completed in May 1869. There followed a rush to complete additional railway lines to open up new frontier areas for economic development, a situation in which the United States government and the great railroad companies of the day maintained a common interest. Rather than directly undertaking railroad construction as a public works project of the federal government, Congress granted cash loans and grants of public land to subsidize construction. Some 129 million acres (52.2 million hectares) of public land was ultimately transferred from public ownership to the privately owned railways as part of this process.

A great part of this massive stockpile of land needed to be converted into cash by the railways to finance their building activities, since railroad construction was a costly undertaking. New settlement had to be attracted to the virgin lands west of the Missouri River, which had been previously regarded by the public as worthless to the needs of agriculture due to insufficiencies of the soil as well as the arid climate. Millions of advertising dollars were spent by the railway companies promoting the agricultural development of the land which they had to sell. This effort was to be rewarded, particularly after the Panic of 1873 left many unemployed and seeking a new start. Settlers began to flood into the Midwest and Northern Great Plains in response to the railway companies' blandishments.

Populations skyrocketed. Kansas grew from a population of just under 365,000 to nearly a million people during the 1870s. The number of inhabitants in Nebraska nearly tripled, rising to nearly half a million. Iowa, Minnesota, and the Dakota Territory showed parallel population gains. New counties, villages, and towns sprang up by the hundreds throughout the region, and a speculative bubble emerged around the buying and selling of farmland and urban lots. Population continued to surge throughout the region well into the 1880s.

Unfortunately for those who chose to attempt to farm new lands in such places as Kansas, Nebraska, the Dakotas, and eastern Colorado, the unusually rainy years of the early 1880s which had buoyed land prices gave way to a protracted drought beginning in the summer of 1887, bringing an end to the giddy, speculative boom. With crops failing, artificially inflated land prices plummeted; eastern capital began to withdraw from the region; banks collapsed, and credit dried up; a decade of hard times followed, marked by the abandonment of entire communities. A sense of deep discontent with the current state of affairs was felt by the farmers who remained.

Agricultural crisis in the southeast

The agrarian and plantation-based economy of the Southern United States was virtually destroyed by the Civil War. Those who had their fortunes invested in Confederate bonds and currency saw them lost, as did those whose wealth was tied up in the ownership of African American slaves. Great landed estates were broken up or rendered unworkable by the lack of a free labor supply, and the flood of land sold on the market depressed prices and reduced the economic possibilities of those who counted their dollars in acres.

The region faced enormous costs to replace the buildings destroyed in the war and the factories looted. The capacity of the gutted financial market to make loans was grossly insufficient for the needs of the region, exemplified by the 123 counties in Georgia with no banks whatsoever even in 1895. Merchants, finding a sellers' market, extracted extraordinary profits through inflated prices and usurious credit terms.

A new mode of production replaced the slave-based large-scale agriculture of the pre-war years. Now it would be small-scale agrarian enterprise that would proliferate and the emergence of the so-called "share system" or "cropping system," in which non-landowners paid rent for the use of the land they farmed in the form of a fixed percentage of the output generated. This system in theory served the needs of landowners and poor farmers alike, as the sharecroppers would have the incentive to produce more and benefit from increased output while landowners would be provided with a labor source to produce upon the land they held without the necessity of paying cash wages.

In practice, however, a system of virtual slavery emerged, in which poor whites and freed blacks became enmeshed in the usury of merchants and landowners providing essential supplies on credit. A crop-lien system emerged in which future crops would be mortgaged to merchants or landowners (often one and the same) in exchange for credit for current purchases. Written contracts made these loans legally enforceable and those so enmeshed frequently found themselves forced to pay inflated prices at high rates of interest. If the value of the credit exceeded the cash value of the crop, the arrangement was automatically rolled over for another year and a never-ending cycle amounting to a condition of perpetual servitude resulted.

Moreover, this crop-lien system contributed to the establishment of a cotton monoculture, as merchants demanded this easily storable, readily marketable commodity to be produced for the satisfaction of debt. Not accidentally, the requirement by merchants for cotton production made production of adequate food and fodder for sustenance virtually impossible, further deepening the debt of the farmer to his merchant-creditor. A sense of deep discontent with the current state of affairs was felt by the small-holding and tenant farmers of the South.

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