THE quarter-century between the panic of 1873 that rudely disturbed the revelry of the Great Barbecue, and the campaign of 1896 that broke the agrarian opposition to capitalism, was marked by a fierce agrarian attempt to nullify in America the law of concentration. The silent drift toward plutocracy was too evident to escape comment even in the Gilded Age, and the ideal of plutocracy was too repugnant to a people drenched in Jeffersonian and Jacksonian prejudices to escape bitter hostility. The pursuit of wealth was an accepted democratic right, but it was assumed to be a fair race and no favors. The use of the political state by greater wealth to lay handicaps on lesser wealth had not been in the reckoning, and the law of progress that diminished the number of beneficiaries from the national policy of preemption and exploitation had not been so interpreted. Something was wrong with a progress that augmented poverty as it increased wealth, and with the alarmist cry in their ears --- the rich are growing richer and the poor poorer --- the untutored democracy of the seventies and the eighties turned to question the drift of tendency that quite evidently was transforming a democratic people into a vast engulfing plutocracy. An older agrarian America was confronted by a younger capitalistic one, and the conflict of ideals and purposes was certain to bring on a bitter debate.

In the fierce struggle that turmoiled the politics of three decades the democracy went into battle as ill-equipped intellectually as it had been a hundred years before in the struggle over the Constitution. It was reaping the harvest of the long Jacksonian slackness that, content with the vote, had given no thought to the ultimate program of democracy but had suffered the lawyers to have their way. The Enlightenment had long since been submerged by Whiggish ambitions, and since the days of the Abolition Movement there had been no serious consideration of political theory. The success of the Jacksonian revolution had brought about its undoing. The abstract principle of democracy having won common acceptance, it was assumed to be competent to shift for itself. But unfortunately a supposedly democratic state was functioning under a Constitution designed to thwart democracy, and, interpreted by lawyers, it buttressed the rights of property far more securely than the rights of man. Within this fundamental law capitalism had long been entrenching itself. Its stronghold could not be taken by frontal attack and its flanks were protected by the courts that had assumed the high prerogative of voiding statutory enactments by judicial decree. As a result in no other country was capitalism so safeguarded from hostile attack; it plowed its fields and gathered its harvests secure from disturbance.

Unfortunately the political state did not realize that it was not in reality the democracy it professed to be. The most intelligent liberalism of the times, failing to take into account the economic basis of politics, was satisfied to spend its energy in Civil Service Reform and similar tinkering with the political machinery, convinced that it was only necessary to recover the old aristocratic sense of responsibility in political agents to perfect a democratic government. Not till another generation did liberalism come to understand that the democratic program was still largely unfulfilled, and set about in all earnestness to complete it; but that did not happen till the philosophy of democracy had been far more adequately explored and the simple faith of Jacksonianism had been instructed by the experience of other lands. Popular discon­tent with the drift toward plutocracy was intensified by the suc­cessive economic crises that marked the transition from agrarianism to capitalism. The gospel of progress, it seems, had not taken due account of the price that must be paid in social disturbances, and the breakdowns of 1873-1879 and 1887-1896 with their harsh dislocations aroused a spirit of revolt that issued in broad popular movements. Those movements spun the thread of liberalism that runs through the years from the Gilded Age to the World War --- a thread woven of the earlier liberalism that came from the frontier, and the new collectivistic theories that came from Europe. In the eighties and nineties it was still largely native agrarian, but in the early years of the new century it drew heavily on the proletarian philosophies of Europe --- seeking to apply old­world experience to American problems. Through it all runs increasingly a note of sobering realism. After a hundred years political romanticism was slowly dying in America.






THE Middle Border was the first to recover from the heady romanticisms of Whiggery. The malady of preemption and exploitation quickly ran its course there and after the first enthusiasm of settlement had subsided --- the staking of claims, the scramble over town­sites, the bidding for railway lines --- the farmer settled down amidst his corn and wheat and cattle and hogs to learn what sort of living the prairies might provide. With his feet on the sobering earth he was no middle-class adventurer, no buccaneer lying in wait for the golden argosies of Spain, but a sober realist kept sane by wind and weather and kept honest by his daily occupation of tilling and reaping.

As the first wave of settlers spread over the prairies a mood of buoyant hopefulness colored their dreams. The earlier conquest of the Inland Empire had entailed exhausting labor in preliminary clearings, and the stumpage from great forests remained for years to obstruct clean tillage; but here in the Middle Border were tree-less fields of black soil, level, uncluttered by stones, inviting the plow. For ages the prairie grass had been growing there, tall as a horseman in the bottoms and plentiful on the uplands; and as the unmarked seasons passed, the potash from the decaying vegetation added a richer fertility to the soil. In natural productiveness it was the fairest portion of America, and as the land-hungry settlers made their pitch there, filing on broad homesteads and building their cabins, a mood of buoyant expectation filled the land. It was not the flamboyant spirit of the Gilded Age, but the hopefulness of those who within a few short years were to transform a wilderness into the world's granary. In his wistful account of the glamour that lay upon the prairies in those first pioneer years --- a glamour that soon passed like the morning dews --- Hamlin Garland was no frontier romantic but a sober historian.

But as the seventies gave place to the eighties a subtle change came over the mood of the Middle Border. Disappointment and disillusion settled upon a land that before had smiled in the spring sunshine. The harvest was not fulfilling the expectations of the seedtime. The changed mood came in part from the harsh toil and meager living that were the necessary price the frontiersman must pay for his small winnings. It is no holiday job to subdue an untamed land and wrest abundance and comfort from a virgin soil. Only for the young who can project their hopes into the future is it endurable; for the middle-aged and the old it is a heart-breaking task. The history of the western frontier is a long drab story of hardship and privation and thwarted hopes, of men and women broken by the endless toil, the windows of their dreams shuttered by poverty and the doors to an abundant life closed and barred by narrow opportunity. It is true that the prairies took no such toll as the forests had taken; the mean and squalid poverty through which Lincoln passed was not so common in the Middle Border as it had been along the earlier frontier. Nevertheless a fierce climate and a depressing isolation added their discomforts to a bleak existence. The winds were restless on the flat plains, and the flimsy wooden houses, stark and mean, unprotected by trees and unrelieved by shrubbery, were an ill defense against their prying fingers. In winter the blizzards swept out of the North to overmaster the land, and in summer the hot winds came up from the Southwest to sear the countrysides that were rustling with great fields of corn. Other enemies appeared, as it were, out of a void. Endless flights of grasshoppers descended like a plague of locusts, and when they passed the earth was bare and brown where the young wheat had stood. Armies of chinch-bugs came from nobody knew where, and swarming up the tender cornstalks left them sucked dry and yellow. It is nature's way, to destroy with one hand what it creates with the other; and for years the western farmers were fighting plagues that had possessed the prairies before the settlers came.

The disillusion of the Middle Border deepened into gloom as the widespread economic depression of the times added its discouragements. A period of falling prices was curtailing industry and forcing down the market values of all produce. From such depressions a debtor community always suffers most severely, for falling produce-prices mean rising money-values and a shifting standard of value for deferred payments. The farms of the Middle Border were heavily encumbered to provide tools and livestock and buildings, and the earnings were consumed by the interest that went East to the mortgage-holders. Debt was a luxury the farmer could ill afford, and when the debt was silently augmenting by the rising value of the dollar he was forced to consider his situation. The plight into which he had fallen was graphically summed up in the phrase "ten-cent corn and ten per cent interest" --- a phrase that was to become a spark to all the tinder that was gathering from frontier hardships and disappointments. Falling market-values were at the bottom of his troubles. The prices of his staples were sinking below the cost of production. With four-cent eggs, five­cent butter, ten-cent corn, and fifty-cent wheat, with more hogs and cattle than the stockyards would take, and with debts contracted at interest-rates fixed by a higher scale of values, the economic position of the Middle Border was becoming desperate, and in the later eighties a sullen bitterness took possession of the land. As the farmer sat by the kitchen stove and stoked the fire with great ears of corn that were cheaper than coal, he had ample time to contemplate his lot. Ungathered crops for which there was no market would not pay interest. There was coming to be "too much hog in the dollar," as one commentator remarked quaintly. The Middle Border, all too clearly, was strangling from its own productiveness.

It was easy for newspaper critics, armed with the wisdom of the Board of Trade, to point out that overproduction was the trouble with the western farmer, and that so vast a development of staple crops resulting from sowing the prairie states to corn and wheat was certain to bring on disastrous market slumps. It was true. Production had outrun consumption; quantity output had brought on a glut. But it was also true --- as the armchair critics were not so careful to point out --- that other causes contributed equally to the deflation of the western farmer, the result of which was to despoil him of the last moiety of his earnings. He was in the grip of a complex middleman organization that gouged him at every turn. The gap between producer and consumer was widening to a chasm. The railways charged twenty cents a bushel cartage for wheat from the Mississippi to Chicago, and fifty-two and a half cents to the Atlantic seaboard. The elevator companies fixed monopoly tolls, swindled the farmer in their grain-gradings, and combined to force down the market price at harvest time and raise it after the crop came under their control. The "Livestock Ring," managed by the railways, controlled the Union Stock Yards at Chicago and squeezed the marginal profits from the farmer's cattle and hogs.1 When on the other hand he bought implements or groceries or household goods he was at the mercy of a non-competitive market, protected by patent-rights and tariffs, to which were added extortionate transportation and middleman charges.

It was his own fault, of course. Due to his own political slackness the farmer had allowed himself to become the common drudge of society. All the exploiting classes had their hands in his pockets. His was the only considerable economic group that exerted no organized pressure to control the price he sold for or the price he paid. While capitalism had been perfecting its machinery of exploitation he had remained indifferent to the fact that he himself was the fattest goose that capitalism was to pluck. He had helped indeed to provide the rope for his own hanging. He had voted away the public domain to railways that were now fleecing him; he took pride in the county-seat towns that lived off his earnings; he sent city lawyers to represent him in legislatures and in Congress; he read middle-class newspapers and listened to bankers and politicians and cast his votes for the policy of Whiggery that could have no other outcome than his own despoiling. And now in the middle eighties he began to feel the rope about his neck, and realized the predicament he was in. It was not alone the local middlemen, or even the railways --- he had come to believe --- that were to blame. It was the money-power of the East, the grip of Wall Street, that was strangling him --- a power that controlled the government at Washington, that manipulated the currency system, and that was engaged in a scheme to augment its holdings by forcing up the value of the dollar and automatically increasing the value of the indebtedness it had gathered in its vaults. Clearly it was high time for the deflated farmer to get into politics on his own account if he were to save himself from beggary, and so during the Gilded Age began a great agrarian revolt against capitalism that was to turmoil the next quarter of a century --- a revolt that was to mark the last effective organization of the farmers to combat the new order, the last flare-up of an old-fashioned agrarian America before it was submerged by the middle class.



By the early seventies it was becoming clear to the Middle Border that the policy of Whiggery took no account of the needs of the farmer. Government was indifferent to him, whether at the capital of his state or at Washington, and governmental programs --- whether in the matter of protective tariffs and land-grants, in its unconcern at monopoly extortion, or in the contraction of the currency with a view to the resumption of specie payments --- ran so counter to his interests that the dullest began to question the fairness of the state. It had ceased to concern itself with the welfare of the whole. The combination of paternalism and laissez faire that marked the Whiggery of the times could be interpreted by the suspicious farmer, indeed, only as a surrender of government to capitalism. It had lost all pretense of fairness in the distribution of governmental favors, and withheld or granted aid with the single objective of furthering the interests of powerful groups. It sanctioned the use of the state by business interests for purposes of exploitation, and declined to exercise its power in the interests of the consumer. It granted tariffs and subsidies, yet refused to regulate the monopoly power it had created. It was no longer a government of the people but a government of business, concerned for the interests of exploitation, and if the farmer were to gain a hearing he must first make himself feared.

Of necessity, therefore, the agrarian program entailed a political struggle of great bitterness. There would be no adequate relief granted until the farmers had wrested control of government from the class that was exploiting them. The battle between agrarianism and capitalism, in consequence, from the outset was a struggle for control of the political state, that beginning in single commonwealths was eventually carried to the federal government. Hope of effective aid from state governments quickly proved illusory, for when the Illinois farmers passed a law to curb the railways the federal courts set aside their enactment and bade the farmers --- to use a later phrase --- go home and slop the hogs. They must not meddle with matters beyond their comprehension. In consequence of such slaps in the face the farmers fell to perfecting their organizations and arousing class consciousness until there issued from the long debates of the Grange and the Farmers' Alliance the great movement of Populism that proposed to reach as far as Washington, install there the representatives of the producing classes, and refashion the political state in accordance with the democratic needs of the plain people.

So ambitious a program needed time, not only for the farmers to organize but to clarify their policy. They were ill equipped for a serious struggle. With the rise of capitalism agriculture had been steadily falling in social prestige. As a result of the decline of the landed squirearchy in the North and the overthrow of the plantation economy in the South, agriculture had lost its traditional leaders who had furnished the brains and supplied the spokesmen in earlier political struggles. In the seventies agriculture was no longer reckoned a pursuit peculiarly suitable to gentlemen. The business man had risen in social prestige as the farmer declined, and instead of being recruited from the natural leaders of society agriculture suffered a draining-off of the more energetic and capable to the cities, leaving the farms in the hands of the less ambitious, who were supplemented in the seventies and eighties by European peasants who settled great portions of the Middle Border. With this loss of social prestige came a new urban contempt for farm life that expressed itself in "Hayseed" cartoons, and in the heedlessness of politicians who were quick to transfer allegiance from a decaying to a rising order.

The farmers of the Middle Border, drawn from many commonwealths and with a high percentage of aliens, were far from a homogeneous class-conscious group like the southern planters. Race, language, and cultural antecedents held them apart, intensifying the aloofness that was a common characteristic of the frontier. Week-days they stuck to their plows and Sundays, unlike the New England farmer, they were little given to church­going. The landholdings were commonly a homestead of a hundred and sixty acres, often running to an entire section of six hundred and forty acres. Much land was held idle by speculators, with the result that the isolation of the farmer --- dwelling convenient to his fields rather than to neighbors --- deepened the suspicious individualism that was an obsession of the agrarian mind, and unfitted him for effective cooperative effort. No political or social philosophy answerable to his needs was at hand, no intellectual leaders like Jefferson or John Taylor to adapt old-world theory to the conditions of the Middle Border, no commanding figure like Old Hickory to marshal the scattered hosts. The Physiocratic theory with its prestige of distinguished advocates and its elaborate social economics had never taken root in the Middle Border; although certain of its prejudices --- that the farmer is the sole producer and the sterile middleman must somehow be got rid of --- had taken possession of the western mind and largely influenced the ultimate program. But if the western farmer inherited no ready-made philosophy he was daily prodded by harsh reality. He got up and went to bed under the prick of economic necessity, and this made of him a realist and an opportunist, eager to apply homely remedies to homely ills. With the discipline got from hard times he was not easily gulled by bright young city lawyers with their handbooks of capitalistic economics. The new agrarianism of the prairies, in consequence, was a hard-headed, homespun theory, fashioned on the farms, intended to serve the producer rather than the middle man. It had behind it none of the high authority of the schools, and naturally it was mocked and scoffed at by all the spokesmen­editors, lawyers, bankers, scholars, intellectuals --- of the prosperous middle class. The farmer had to make his way against the embattled prejudices and contempt of the rest of America.

But before he could become a power in political councils he must organize and use his voting strength as a unit; and as early as the late sixties the work of organization was got under way. It began as a social movement with the Grange that spread widely through the South and Middle West and even gained foothold in the East, bringing together in social groups the farmer families of the neighborhood. It professed to stand outside politics and strove to awaken an interest in cooperative buying and selling, but the community gatherings were certain to find politics waiting for them at the schoolhouse door, and after the program of cooperation had been discussed the talk ran easily into political debate. From the Grange issued in the eighties the Farmers' Alliance, more consciously political in its objective, active in arousing the farmers to political action; and with the hard times that came with the turn of the decade the different groups merged in the broad movement of Populism --- a militant political uprising with a definite party program and organization. The flare-up came swiftly and in the first years of the nineties the prairies were aflame and even the cotton-fields of the South were fired. Populism swept from township to township, a militant agrarian movement, providing its own leaders --- Tom Watson in Georgia, General Weaver in Iowa, Ignatius Donnelly in Minnesota, sockless Jerry Simpson in Kansas, with Hamlin Garland, and B. O. Flower, and other intellectuals rallying to the farmers' standard. It set up the banner of agrarian democracy, summoned its followers and drilled them for the battles that lay ahead. Huge meetings gathered of the farmers of a county and day-long they listened to speeches that came straight from the hay-fields and the corn-rows, speeches that were an echo of the daily experience of the farmer and the farmer's wife.

It was Mary Ellen Lease of Kansas who struck from the common bitterness a phrase that embodied the militant spirit of Populism. Week after week she traveled the prairie country urging the farmers to "raise less corn and more hell," and at her call the sunburned faces settled into grim purpose. The farmers had become class­conscious. They were enlisted in a class struggle. They used the vocabulary of realism, and the unctuous political platitudes and sophistries of county-seat politicians rolled off their minds like water from a duck's back. They were fighting a great battle they believed --- against Wall Street and the eastern money-power; they were bent on saving America from the plutocracy; and they swept over the county-seat towns, burying the old machine politicians under an avalanche of votes, capturing state legislatures, electing Congressmen and Senators, and looking forward to greater power. In 1896 Populism gained control of the Democratic party and entered on its great campaign to establish the principle of democracy at Washington. It was the last mortal struggle between agrarianism and capitalism, and to understand it one must turn back to the long agitation over the money question.



If in the early nineties the currency question had come to over­shadow the questions of the tariff and railway regulation, it was because that problem lay at the heart of the struggle between the rival agrarian and capitalistic economies. The control of the national monetary system by the bankers was vital to the smooth functioning of a capitalistic order, and to assure such control it was desirable that monetary standards and emissions of currency be removed from the sphere of political action and lodged in the hands of business. The problem was difficult, for the right to "coin money and to regulate the value thereof" were functions of sovereignty specifically recognized in the Constitution; and it was a series of moves designed to transfer such functions to private groups that brought on a long political debate over systems of currency.

The intellectual background against which the struggle was set may be sketched briefly. Despite the long battle over the Bank in Jackson's time, little serious thinking on the principles of money and currency had been done in America. Financiers and economists alike followed the current English school, and since the appearance of the famous Bullion Report of 1811 that school had adhered to the intrinsic-value theory of money. While accepting banknotes as a useful medium of exchange, the English classical economists held that only coin is real money, and that the issue of notes must bear a definite ratio to the amount of coin and bullion in the vaults. Money is not a creature of the law. Government cannot create it. Rather it is a convenient token of labor done, and the stamp of the mint is only a certification of weight and fineness. There are but two ways, indeed, in which government can acquire money --- through taxation and by borrowing. The "natural operation of the specie standard" was reckoned one of the fundamental "laws of trade," and for government to tamper with it --- setting aside the intrinsic-value principle by the emission of irredeemable paper money --- was to violate the sanctity of contracts, cheat creditors, increase prices, and disorder business. The law of supply and demand answered all the needs of money regulation.

This was no more than the application of the current theory of laissez faire to the problem of currency. But between the Bullion Report of 1811 and the Parliamentary Bank Act of 1844, English theory and practice had undergone two important modifications: the vast development of credit had suggested a free use of bank­notes based on securities other than coin or bullion, and the bimetallic standard had been superseded by the gold standard. By the terms of the Act of 1844 all banknotes were to be issued against securities and gold and silver coin and bullion in the bank vaults. The margin of issue was fixed at fourteen million pounds sterling. The total amount of banknotes thus "issued on the Credit of such Securities, Coin and Bullion," might not be increased, but within the limits set the Bank was free to increase or decrease issues at will. The Act further provided that "whereas it is necessary to limit the Amount of Silver Bullion on which it shall be lawful . . . to issue Bank of England notes," it should "not be lawful for the Bank of England to retain in . . . said Bank at any time an Amount of Silver Bullion exceeding One Fourth Part of the Gold Coin and Bullion." . . . 2 That gold should eventually have thrust silver aside was natural. In addition to its convenience as a commodity for international shipment, it was less in quantity, not widely dispersed or popularly held, and therefore more easily controlled by the money-brokers. With the function of government restricted to coining such gold as came to the mint, the whole business of currency emissions, with the attendant power of inflation and deflation of credit, would lie in the hands of the bankers who became the custodians of the national monetary system.

During the bitter discussions of currency policies that followed the dislocations of the Civil War, the two most authoritative spokesmen in America on the subject were Senator John Sherman of Ohio, for years Chairman of the Senate Committee on Finance, and David A. Wells, statistician, special Commissioner of the Revenue Bureau, and a scholar deservedly distinguished as an economist. In their views on the currency question both were followers of the classical English school. In two speeches in the Senate, of January 27, 1869, and January 24, 1870 the former stated his position definitely. "Let us," he said, "recognize as an axiom that nothing but coin is real money before we undertake to deal with the currency"; and in another place, narrowing his definition in terms of the English Bank Act, he asserted, "We must . . . recognize the immutable law of currency; and that is, there is but one true standard, and that standard is gold."3 The weakness of paper money, he believed, was its instability; the ratio of exchange with gold fluctuates too greatly to make it a safe or convenient medium of business. "Last year the fluctuation in paper money amounted to forty-five per cent. Gold, however, remained as stable as the eternal hills, because it was not only the product of labor, but it was labor and value itself."4 One may make of such an assertion what one will, but it is clear that John Sherman thought ill of the green­backs, and wanted substituted for them a system of banknotes.

It is impossible [he argued] to give a currency issued by a Government the flexibility to meet the movement of the exchanges. . . . It must have a flexibility which will enable it to be increased in certain periods of the year, and to flow back again into the vaults of the bank at others. I am convinced . . . that in time it will be wise to retire our United States notes and all forms of Government circulation, and depend upon notes issued by private corporations.5

Brief as these passages are, they suffice to make clear Sherman's position. He accepted without question the English theory and practice, and he wished to shape American legislation in conformity with them. The experience of the Civil War, and-shall we add --- his intimate connections with Wall Street,6 had confirmed him in his preference for a laissez-faire policy in currency matters. He would establish the gold standard, encourage the issue of bank­notes, and turn over the custodianship of the national currency to private interests.

The position of David A. Wells was essentially similar. Wells wrote much and skillfully and he seems to have been the chief authority on whom such intellectuals as Godkin and Dana relied for materials for their editorials on the currency question. Indirectly, therefore, through the medium of editors and newspaper writers his opinions came to have wide influence. During the discussion of resumption of specie payments in the seventies his pen was particularly active. Amongst other things he then wrote The Cremation Theory of Specie Resumption, in which he advocated a policy of progressive contraction by the expedient of burning annually a fixed sum in greenbacks; Robinson Crusoe's Money, an exposition of the bullion theory of money for popular reading, illustrated by Nast and containing some witty thrusts at such well-known expansionists as Ben Butler, Wendell Phillips, Henry C. Carey, and Senator O. P. Morton; Contraction, in which he defended the thesis, "He who is not in favor of contracting the currency is not in favor of paying it, and he who is not in favor of paying it is a repudiator"; and certain other papers later gathered into his Practical Economics (1885).

Wells was an uncompromising bullionist and his theory of money is as simple as the doctrine of laissez faire on which it rests. Honest money represents labor and therefore possesses intrinsic value. The experience of the ages has demonstrated that of all commodities gold and silver are the most convenient for the purpose and in consequence they have come to be accepted universally as real money. Every dollar's worth of gold represents a dollar's worth of labor, always and everywhere, measured by the test of the world's needs. It is foolish for politicians and theorists to worry their poor heads over the supply of money, or attempt to predetermine the quantity best suited to the needs of business. The amount of money in circulation will always be regulated by the law of supply and demand. There is limitless gold locked up in the treasure-house of nature, and just so much is unlocked by human labor as the immediate needs of the world require. Gold can neither be inflated nor deflated, for, "There is one and the same law governing alike the supply of gold and of wheelbarrows. They are both tools or commodities, and the country will have and use all of either that it can use profitably."7 Let government keep its hands off and money will regulate itself. "The value of the gold dollar is fixed and cannot be altered. The value of the paper dollar is constantly fluctuating."8 That busines conditions would be seriously affected by the withdrawal of the greenbacks, or that injustice would be done to debtors, Wells refused to believe. When the poison is withdrawn from the system a state of health reestablishes itself. "I also count as an absurdity the idea that the business of the country is likely to be unfavorably affected by a deficiency of currency consequent upon contraction in the manner proposed."9 The gold to take its place would be provided automatically by the infallible law of supply and demand. Thus triply armed with the logic of economic theory Wells pronounced for deflation, immediate and drastic:

I desire the federal government to get out of and abandon forever and as soon as possible this whole business of creating and issuing paper money, be it redeemable or irredeemable, for I believe as long as the federal government continues to recognize anything as money except hard matter-of-fact "labor representing" gold and silver, just so long the country will not have [a] stable and unfluctuating currency. . . .10

Such neat logic was out of date on the day that Wells penned it. The needs of business had outgrown the bullion theory of money and credit was taking the place of a metallic currency. The fiction of a gold standard would be adhered to till another seismic dislocation proved its utter inadequacy to a world in confusion and it would be unofficially abandoned. Yet it was such logic that prevailed in America in post-war days, bringing acute distress upon the country as a whole and particular hardship to the Middle Border; and it prevailed because the banking interests followed a selfish and narrow policy marked out for them by the English theory and practice.

The financing of the war had been wasteful and slovenly beyond all precedent, and it had been fiercely criticized by the agrarians. It was a system, said the militant Greenbacker, Thaddeus Stevens, the like of which "no human folly had ever before witnessed."11 When the war was over and the reorganization of the public finances was up for settlement, the bankers were shrewd enough to make the confusion serve their interests. Their great objective was to get back once more the control of the national credit that the war had taken from them. The National Bank Act of 1863 --- foolishly opposed by shortsighted statebank advocates who were jealous of local rights --- had been the first great step. By the provisions of the act the national banks were permitted to issue currency on the security of government bonds, in such quantities as they chose, on highly favorable terms, and the result was to drive out of circulation the wild-cat issues of state banks. But the crux of the problem was the question of the greenbacks that the necessities of the war had forced upon the government. The greenbacks were reckoned political money, the control of issues of which lay wholly with Congress. At any moment, responding to popular demand, Congress might deflate the bankers by the emission of new bills. At the time of first issue the financial interests had succeeded in vitiating the greenbacks by writing into the bill a repudiation of the issue by the government itself, and no sooner was the war over than they set about the business of retiring them. Their objective was the same end that English bankers had reached in 1844.

In the reorganization three broad policies were insisted upon by the banking interests: the speedy retirement of the greenbacks, in order to take government out of the credit market, the refunding of all debts on a gold basis, and an immediate return to specie payments. The result was a drastic policy of deflation that brought further turmoil to the country. In ten years the money in circulation was reduced from somewhat over $2,100,000,000 to a little over a billion, or from fifty-eight dollars per capita in 1865 to seventeen dollars per capita in 1876.12 The inevitable results followed, a swift appreciation in the value of the dollar and the automatic increase in the debt of the country, both public and private, with the fall of commodity prices. Within a decade, measured in commodity values, the liabilities of the American people were nearly doubled by the simple device of changing the standard of deferred payments. Gold might remain as stable as the eternal hills, but somehow all other commodities were shrinking daily. "Them steers," Solon Chase indeed said aptly, "while they grew well, shrank in value as fast as they grew." This remarkable result was brought about, it is well to remember, by the plea for honest money and the plighted faith of the nation. Keeping the public faith, it would seem, meant permitting the creditors to change the terms of their payments after the contract was made. "Who are these reasoners," cried Thaddeus Stevens, in disgust, "who talk so learnedly of the laws of finance and the morality of human dealings, whose consciences are so raw and stick out so far from their excited coverings that no pharmaceutist can heal their inward wound ?"13

As a debtor community the Middle Border felt the pinch of deflation acutely, and in consequence the money question was thrust sternly upon agrarian attention. On this issue it came finally to fight its great battle, pitting its homespun experience against the authority of the bankers and the teaching of the schools. To the bankers' argument that note issues should be taken out of politics and lodged in the hands of business men, it replied that the issue of currency was a function of sovereignty, and to surrender it to private corporations, as was done by the National Bank Act, was undemocratic. The monetary system of the nation must not become the football of class interests. To the argument of the bullionists that gold was the only fixed and stable standard for deferred payments, it replied that the gold standard was too narrow a base on which to erect a monetary system for an expanding country, that it was notoriously susceptible to manipulation, and that it had been devised by Lombard Street in the interests of capitalism. Since the days of the great struggle over the Bank a remarkable change had come over the agrarian mind in its thinking on monetary affairs. In their distrust of all banks and bank-issues Jackson and Benton had swung sharply back to the bullion theory of money. They were militant hard-money men. But in the intervening years a new and revolutionary conception had been slowly making its way to recognition. In the minds of obscure economists the quantitative theory of money had risen to challenge the bullion theory. In unorthodox pamphlets and newspaper discussion it was being pointed out that the value of money is dependent on the amount in circulation, that gold and silver are commodities fluctuating in value like other commodities, and that it is the plain duty of the state to regulate the per capita circulation in accordance with business needs. To allow the bankers to erect a monetary system on gold is to subject the producer to the money-broker and measure deferred payments by a yardstick that lengthens or shortens from year to year. The only safe and rational currency is a national currency based on the national credit, sponsored by the state, flexible, and controlled in the interests of the people as a whole.14

By far the most suggestive of these obscure pamphleteers was Eleazar Lord, a New York banker, who for thirty-five years was a propagandist for a new currency system and who watched the bungling of the war finance with acute concern.15 With the un­democratic nature of banknotes he was not concerned. As a banker he accepted them as desirable and wished to establish them on a sound national basis. He was in ardent sympathy with the patriotic nationalism of Henry C. Carey. The loose system of state-bank issues seemed to him chaotic and he was earnest in espousal of a common national system. Lord was an acute and stimulating thinker on monetary matters. He was one of the first Americans to understand the significance of credit, and he was realist enough to foresee that the system of the future would be a credit system. This was the clue to his dissatisfaction with the bullion theory of money, which he attacked with vigor, and to his acceptance of the quantitative theory.16 He had the scantest respect for Sherman's dogma that gold is as stable as the eternal hills because it is "labor and value itself," or for Wells's belief that the law of supply and demand automatically produces gold enough to meet the needs of business. He would treat gold and silver as commodities varying in price with supply and demand, and make no attempt to relate the money scale to their fluctuations. For years, he said, America accepted the English "standard of currency, their aristocratic definition of wealth, and their distinction between capital and credit," to its disaster.

The so-called specie basis, whenever there is a foreign demand for coin, proves to be a mere fiction, a practical humbug; and whenever, by an excess of imports, this pretended basis is exported to pay foreign debts, the bank-notes are withdrawn from circulation or become worthless, the currency for the time is annihilated, prices fall, business is suspended, debts remain unpaid, panic and distress ensue, men in active business fail, bankruptcy, ruin, and disgrace reign.17

To provide a safe, flexible, and convenient currency, Lord proposed a system of national banknotes, based on the wealth of the country and responsive to the needs of a business world founded on credit.

Necessity must teach us whether we can and must have a currency of purely representative value, wholly disconnected from the precious metals, as a basis and standard, or prolong the conflict between coin and paper, commerce and exchange. The existing theory on the subject is too firmly fixed by education, prescription, prejudice and interest, to be over-thrown. . . . Such words as safe, secured, national, uniform, economical, inalienable, when predicated of any thing but gold as currency, are to the specie-paying theorist mere sounds devoid of significance. . . Credit must triumph. Can any one blame the well-meaning theorist if he manifests some degree of doubt and alarm in view of the extent to which the actual use of credit, and of the confidence in the use of credit, has already attained?18

In the writings of these obscure economists are to be found the seeds of the later agrarian program. Some of them were clear­headed and able men, but they underestimated the power of the banking group. They failed to realize that in a capitalistic society no monetary system would be tolerated that was not to the bankers' liking, and that if it were to their liking they would easily convince the public that it was the only honest and just system. It was this lesson that the Greenbackers and Free Silver men were to learn. No sooner was the issue joined between paper money and the gold standard than a scurrilous hue and cry was raised by the "sound­money" men. The bitter dispute that marked American politics for more than a score of years is a classic example of the distortion of fact for partisan ends that seems to be an inevitable consequence of referring a matter of policy to a democratic electorate. Denunciation took the place of exposition, and hysteria of argument; and in this revel of demagoguery the so-called educated classes --- lawyers and editors and business men --- were perhaps the most shameless purveyors of humbuggery. Stripped of all hypocrisy the main issue was this: Should the control of currency issues --- with the delegated power of inflation and deflation --- lie in the hands of private citizens or with the elected representatives of the people? It is a question on which wide disagreement may well exist, for it involves important differences of social and political theory. But the significant thing is that throughout the years when the subject was debated in every newspaper and on every stump the real issue was rarely presented for consideration. The bankers did not dare to present it, for too much was at stake and once it was clearly understood by a suspicious electorate their case was lost. Hence the strategy of the money group was to obscure the issue, an end they achieved by dwelling on the single point of inflation and charging the agrarians with a dishonest policy of repudiation.

Certainly in the minds of many conscientious men the fear of repudiation was very real and acute, and their fears made timid souls panicky. The newspapers took their cue from this bogey and beat the drums so loudly in the cause of "honest money" that all hope of calm discussion was lost. The issue became so distorted from class feeling that later historians find it difficult to view the question dispassionately. So late as 1916 Joseph Gilpin Pyle in his Life of James J. Hill could still speak of the Greenback movement as a vicious scheme of "inflation, the boon of the demagogue and the dream of the great debtor class in this new country," who "increased . . . by the opening up of the West on borrowed capital, welcomed any measure that might give them a specious justification for discharging their obligations with something worth less than what they had promised to pay." Describing the genesis of the free silver movement, he said:

Hence grew up a formidable coalition between mine owners, debtors unable or unwilling to pay, ambitious politicians, honest theorists led captive by barren and unpractical abstractions, and a host of men too ignorant to inform themselves, too impassioned by what they heard to wish to know the truth.l9

Obviously it was not so simple --- or so wicked --- as that. To determine the justice of the charge of repudiation certain facts must be borne in mind. The gist of the money problem pressing so heavily on the Middle Border was the question of stabilizing the currency with a view to stabilizing prices. Under the prick of war --- necessities a sharp inflation of prices had taken place. With the drastic contraction of the currency following the war, prices fell as sharply. From 1873 to 1896 a world-wide appreciation in the value of gold, aggravated by recurrent economic crises, further depressed the market values of commodities, rendering the question of the solvency of the Middle Border increasingly doubtful. Falling prices are only the obverse of rising money-values, and to stop the one it was proposed to cheapen the other, either through the issue of greenbacks as proposed by the Greenback party, or through the free coinage of silver as proposed in the plank of the Democratic platform of 1896. It was not a question of repudiation in favor of debtors, but a question of correcting an unjust deflation that favored the creditor class.



The opposition to the program and methods of the rising plutocracy was not confined to the farmers of the Middle Border. It was nourished by a widespread distrust of banks and bank­currencies that was a heritage of the Jacksonian struggle. Amongst the leaders of the Greenback movement were many eastern men, some of wide industrial experience, whose economic views and prejudices were a hold-over from the days of John Taylor, and who discovered in the post-war finances the same class manipulations of public credit that marked the funding operations of Washington's administration. Men as dissimilar as Horace Greeley, Thaddeus Stevens, Wendell Phillips, Henry C. Carey, and Peter Cooper, made common cause with the western farmers in seeking to wrest control of government from the bankers, and establish what they conceived to be a just democratic economy. Picturesque militants grown old in warfare, they were of an earlier generation, inheritors of the ideals of simpler times before production for consumption had been superseded by consumption for profit, ardent equalitarians who would not see their hopes frustrated and America become a plutocracy without a struggle. Greeley, Carey, and Phillips have been considered elsewhere; Stevens was the last of the rugged equalitarians who followed their principles to the bitter end; and Peter Cooper was an unregenerate Jeffersonian who dedicated his last years to combating Wall Street, accepting in 1876, at the age of 85, nomination for the presidency by the National Independent Party, commonly called the Greenback Party.

Like Thaddeus Stevens an ironmaster, grown wealthy by a long life of useful and adventurous industry, builder of the first American locomotive that made possible the success of the Baltimore and Ohio railway, Peter Cooper was the most picturesque figure in New York City in the seventies. With Bryant he shared the distinction of being the patriarch of Broadway. Bred up amidst stern and harsh conditions, at a period when, he said, within his "own recollection unmarried white men could be sold for debt in the State of Connecticut,"20 he was not hardened by the struggle for subsistence. A tender social conscience mellowed an old-fashioned probity and gave character and dignity to a simple rugged nature. Transparently honest, with a certain innate austerity softened by a homely courtesy, he was not a reed to sway in every vagrant breeze, but a great oak with fibers toughened by the storms of years. Like Horace Greeley, whom he much resembled in honest kindliness, he carried the burdens of his country on his heart, and in the midst of abundant prosperity still reckoned himself his brother's keeper. By "nature and temperament a radical reformer," his strongest instinct was a quick sense of justice. He was oppressed by the poverty and misery he saw about him, and he gave so generously to all good causes that he was known to his generation as "the greatest philanthropist in the world." His chief accomplishment was the founding of Cooper Union for free instruction in "practical art and science," on which he expended a fortune. 21 But he was not one to salve his conscience with a gift of superfluous wealth. His heart was as open as his pocketbook, and he must explore to its hidden sources the infection that was breeding social injustice in the new world. His private interests never blinded him to his larger duties, but he gave his time and strength as readily as his money to whatever cause he espoused.

Such a man was morally incapable of the buccaneering exploitation that marked the Gilded Age. Between Peter Cooper and Jim Fisk was an impassable gulf; they were products of different worlds and different economies. The speculative middleman who thrust himself between the producer and the consumer, with no sense of responsibility to either, but concerned only with immediate profit, was a figure to excite the wrath of an older-fashioned industrialist who had been taught that the only just reward is the reward that comes from productive labor; and in the days of the great barbecue Peter Cooper became deeply concerned for the future of America. It was the new breed of bankers with their control of the money system that were to blame, he came to believe, and he would have reckoned himself false to the obligations of citizenship if he failed to protest against their selfish manipulation of the public credit. He had watched the callous juggling of the national finances by the money-lenders during the Civil War, and had seen a debt of some three billions nearly doubled in the decade after Appomattox by the bond-holders. The new system of National Banks that issued from the emergencies of war had come to control the financial policy of the country, and to Peter Cooper it seemed that their purpose was to perpetuate a debt that enabled them to tax the productive labor of America and to squeeze wealth from a calculating expansion and contraction of the currency. To surrender to such mercenaries the sovereign power of issuing and regulating money seemed to him the abdication of sovereignty, and in so far as he could he felt called in honor to prevent it.

It needed rare courage and complete self-sacrifice to take up the gage of battle and in his old age to renew the war that Andrew Jackson had engaged in forty years before. His good name and his honorable career could not save him from the gibes of politicians or the caustic criticism of honest men. It was a losing fight at best. The struggle had been venomous in Jackson's day when the money­power was in its infancy; and now that the banking interests had grown mighty it was as hopeless as the charge of the Light Brigade. The cause had been lost on the day when Congress wrote into the bill establishing a legal tender for war purposes the single word "except," thereby invalidating the greenback for interest payments on bonds and duties on imports --- an act that "drew tears from the eyes of Thaddeus Stevens"; and the bankers who could assert their control in war times had no intention a dozen years later of suffering that control to pass from hands that had grown enormously stronger.

Yet Peter Cooper refused to consider the outlook hopeless. With all the resources he could command he threw himself into the struggle. He scattered "more than a million of documents" broadcast --- most of the matter of which he wrote; he appealed to Congress and the President, he challenged candidates, he cited the opinions of the Fathers, and when he was buried under an avalanche of votes --- as Horace Greeley had been four years before --- he preserved his faith in the "people's cause" and to the last day of his life kept up the great battle. "I always have been, am, and ever shall be with the poor toilers and producers; therefore I desire Congress to legislate for the poor as well as for the rich, who can take care of themselves,"22 he wrote in his ninety-second year, and the spirit that stirred in his old veins appears from such a comment as this:

I consider the persistent class legislation of Congress since the war, a worse despotism than that of Great Britain before the Revolution; because it reduces the laboring classes to periodic distress and starvation, that are worse than any despotism ever was; for monopolizing corporations, whether in the shape of banks or railroads, have no soul.23

Peter Cooper's political philosophy was simple and transparent. His teachers were Albert Gallatin, Henry C. Carey, and George William Curtis, and from them he drew three major ideas that had emerged from three generations of American experience: the need for a national monetary system based on legal tender; the necessity for a protective tariff; and the need for an effective civil service. The first was an adaptation of the old agrarian dislike of bank­notes; the second came out of Clay's American System as it had been elaborated by Henry C. Carey in the fifties; and the third issued from the Civil Service Reform movement of the seventies. The exigencies of the political situation, however, thrust into the foreground the money question, and nine-tenths of his writings deal with that pregnant issue. As an ardent Jacksonian he was deeply suspicious of the rising money-power, with its corporations and monopolies, its land-grants and railways and banks, for behind them he saw the specter of aristocracy. "In America," he said in 1882, "we have no aristocrats except those who have sprung up in a night --- as toad-stools do in a dung-hill."24 But class legislation must end in creating classes, and at another time he said, "There is fast forming in this country an aristocracy of wealth --- the worst form of aristocracy that can curse the prosperity of any country. . . Such an aristocracy is without soul and without patriotism. Let us save our country from this, its most potent, and, as I hope, its last enemy."25

His deep interest in political measures was quickened by an anxious concern at the hard times that resulted from the policy of drastic currency deflation. That matters were going ill in America during the middle seventies every fool knew, and Peter Cooper was only giving expression to the common knowledge in describing to President Hayes, in a letter dated August 6, 1876, the "appalling" economic situation. That it was equally bad in England he did not point out.

More than two hundred thousand men, within the last few weeks, have joined in "strikes" on the various railroad lines, the workshops and the mines of the country, on account of the further reduction in their wages, already reduced to the living point. That some of these strikes have been attended with lawless and unjustifiable violence, only shows the intensity of the evils complained of, and the despair of the sufferers. For four years past, since the "panic of 1873," millions of men and women, in this hitherto rich and prosperous country, have been thrown out of employment, or living on precarious and inadequate wages, have felt embittered with a lot, in which neither economy nor industry, nor a cheerful willingness to work hard, can bring any alleviation. Is it to be wondered at, that enforced idleness has made tramps of so many of our laboring population, or induced them to join the criminal and dangerous classes?26

After pointing out the disastrous effects of such hard times on mining, railways, real estate, and the western farmers, he asserted that the bankers, although they also were embarrassed, were "very patient with their troubles. . . for they know, that money is appreciating in value all the time." He then uncovers the kernel of his thought --- that it is a sovereign duty of government to provide an adequate national currency.

This bondage has its manifold centre and its secret force in more than two thousand banks, that are scattered through the country. All these banks, are organized expressly to loan out their own money and the money of all those, who will entrust them with deposits. These loans are made to men, whose business-lives will soon become dependent on money, borrowed from corporations, that have a special interest of their own. Such a power of wealth, under the control of the selfish instincts of mankind, will always be able to control the action of our Government, unless that Government is directed by strict principles of justice and of the public welfare. The banks will favor a course of special and partial legislation, in order to increase their power . . . they will never cease to ask for more, as long as there is more, that can be wrung from the toiling masses of the American people.

Such a power should never be allowed to go out from the entire and complete control of the people's Government. The struggle with this money-power, intrenched in the special privileges of banks, has been going on from the beginning of the history of this country. It has engaged the attention of our wisest and most patriotic statesmen. Franklin, Jefferson, Webster, Calhoun, Jackson, have all spoken of the danger of such a power and the necessity of guarding against it.27

The solution he offered for the vexing monetary problem accorded with that of the Greenback Party,28 namely, refusal to recharter those banks "deceitfully styled national" and the retirement of all bank currency; the abandonment of the policy of currency contraction; the issue of legal-tender notes to the amount last found necessary for the functions of industry and business; the rejection of a specie basis, the notes to be interconvertible with government bonds bearing interest at 3.65 per cent; issued on demand in any amount in exchange for legal-tender notes; and the establishment of a Postal Savings Bank. No man ever believed more ardently in the sufficiency of his program than Peter Cooper. It was a suggestive proposal, that only a knave would call the visionary scheme of a fool. He was tireless in explanation and argument, the quality of which may be judged from the following passage from a letter to Hayes and Tilden written during the campaign of 1876:

The worth or exchangeable value of gold is as uncertain as other products of human labor, such as wheat or cotton. The exchangeable value of anything depends on its convertibility into something else that has value at the option of the individual. This rule applies to paper money as to anything else. But how shall Government give an exchangeable value to a paper currency? Can it be done by a standard which is beyond its control and which naturally fluctuates, while the sign of exchange indicated by the paper remains the same? . . .

. . . we must trust our Government with this whole function of providing the standards and measures of exchange, as we trust it with the weights and measures of trade. . . . We must require the Government to make this currency, at all times, and, at the option of the individual, convertible. But the currency must be convertible into something over which the Government has entire control, and to which it can give a definite as well as a permanent value. This is its own interest-bearing bonds. These are, in fact, a mortgage upon the embodied wealth of the whole country. The reality of their value is as sound and as permanent as the Government itself, and the degree of their value can be determined exactly by the rate of interest the Government may think proper to fix.29

The Jeffersonianism of Peter Cooper, like the Jeffersonianism of the Middle Border, had taken a bias from the confident nationalism that during the fifties so deeply colored American thought. To assure an adequate national economy, superior in its self-sufficiency to European --- and especially English --- policies, was a persuasive program that Henry C. Carey devoted his later life to formulating, and that men like Horace Greeley and Peter Cooper disseminated amongst their wide agrarian following. That such a program implied a paternalistic government did not trouble them. Peter Cooper accepted paternalism as a necessary governmental function. He would have the state build and own the great western railway systems; he would use the national domain for the benefit of the settler; he would not turn over the state to plunderers nor the resources of the nation to speculators. An honest man with a sensitive social conscience, he would have no hand in the great barbecue that wasted more than it consumed; but the times were heedless of the counsels of honest men, and he was loved and laughed at and ignored. Like Franklin in the Constitutional Convention, he had outlived his generation and was thrust aside by the new economy that was taking over the custodianship of America.*

1 See Nevins, The Emergence of Modern America, pp. 163-164.

2 The Statutes at Large: 7 & 8 Victoriae, Vol. 84, pp. 188-189.

3 Speeches and Reports on Finance and Taxation, pp. 188, 190.

4 Ibid., p. 233.

5 "Speech of January 24, 1870," ibid., pp. 225-226.

6This laid him open to frequent and often bitter attack. See, among many, Mrs. Marion Todd, Pizzaro and John Sherman Chicago, 1891.

7 Practical Economics, p. 54.

8 The Cremation Theory of Specie Resumption, p. 10.

9 Ibid., p. 10.

10 Ibid., p. 13.

11 J. A. Woodburn, The Life of Thaddeus Stevens, p. 573.

12 Ibid., p. 573.

13 Ibid., pp. 573-574.

14 See, amongst many, Homo's Letters on a National Currency, Washington, 1817; Currency Explosions, their Cause and Cure, New York, 1858; Our Currency: Some of Its Evils, and the Remedies for them, by a Citizen of North Corolina, Raleigh, 1861.

15 His titles are: Credit, Currency and Banking, New York, 1828; A Letter on the National Currency, New York, 1861; Six Letters on the Necessity and Practicability of a National Currency, etc., New York, 1862; and National Currency: A Review of the National Banking Law, New York, 1863.

16 From what source Lord, and the other amateur economists, derived their theory is not clear. It is possible, of course, to assume that it was from Ricardo and the English economists. For an analysis and rejection of the quantity theory, see J. Lawrence Laughlin, The Principles of Money, Chapter VIII.

17 A Review of the National Banking Law, p. 8.

18 Ibid., p. 34.

19 Vol. I, p. 485.

20 Ideas for a Science of Good Government, p. iii.

21 Political and Financial Opinions of Peter Cooper, p. 23.

22 Ideas for a Science of Good Government, p. 272.

23 Ibid., p. 271.

24 Ibid., p. 261.

25 Ibid., p. 123.

26 Ibid., pp. 117-118.

27 Ibid., pp. 109-110

28 See Ibid., pp. 59-60

29 The Political and Financial Opinions of Peter Cooper, pp. 22-23.

*In his original plan Professor Parrington included here a discussion entitled "Bimetallism: A heritage of Jacksonian democracy; Ignatius Donnelly, 'Coin' Harvey," but from the references in the next chapter it seems evident that as he worked out his plan he decided to omit this. ---Publisher.