Controversies over the Role of Government in the Gilded Age in two minutes
- President Cleveland, a laissez-faire Democrat, vetoed a Texas drought seed bill in 1887, yet government already aided business with land grants and tariffs such as the McKinley Tariff of 1890.
- After Wabash v. Illinois (1886) barred states from setting interstate rates, Congress passed the Interstate Commerce Act of 1887, creating the first federal regulatory agency, and the Sherman Antitrust Act of 1890.
- In 1895 the Court narrowed the Sherman Act in E. C. Knight, backed an injunction against the Pullman boycott in In re Debs, and struck down the income tax in Pollock.
- Falling prices made debts heavier, so farmers and silver miners demanded free silver at sixteen to one, and Congress compromised with the Bland-Allison Act (1878) and Sherman Silver Purchase Act (1890).
- The People's Party, formed at Omaha in 1892, demanded a graduated income tax, direct election of senators, a secret ballot, and government ownership of railroads, and James Weaver won 22 electoral votes.
- After the Panic of 1893, Democrats split over gold and silver, Bryan's Cross of Gold speech won the 1896 nomination, and McKinley beat him 271 to 176 with Mark Hanna's corporate money.
- On the exam: expect questions on the role of government in the economy and the 1896 election; Progressives later enacted many Populist demands, such as the income tax.
Topic 6.12 key terms
- Free silver
The demand that the Mint coin all the silver anyone brought in, at 16 ounces of silver to 1 of gold. Farmers and silver miners backed it, expecting more money in circulation, higher prices and easier debts.
- Laissez-faire
The belief that the economy does best when government leaves it alone, even in hard times. Cleveland applied it to disaster relief; most Gilded Age business leaders applied it to regulation.
- McKinley Tariff (1890)
A Republican law that raised import taxes to about 50 percent on many goods. It protected U.S. factories from foreign competition, and it raised prices for buyers.
- Wabash v. Illinois (1886)
The Supreme Court ruled that states cannot regulate railroad rates on shipments that cross state lines. Only Congress can. It left farmers with no rate regulator at all.
- Interstate Commerce Commission (ICC)
The first federal regulatory agency, created by the Interstate Commerce Act of 1887 to oversee railroad rates. It could ask for fair rates but had little power to enforce them.
- Sherman Antitrust Act (1890)
The first federal law against monopolies. It banned any 'combination in the form of trust or otherwise' that restrained trade. Courts enforced it weakly at first, and used it against labor unions.
- Contextualization
Connecting a document or event to the wider events, conditions and ideas of its time.
- Alaska Purchase
Seward's 1867 treaty bought Alaska from Russia for $7.2 million, giving the U.S. a foothold in the North Pacific.
- Coaling station
A port stocked with coal so steamships could refuel. The Navy needed a chain of them to cross the Pacific.
- Pan-American Conference (1889)
Blaine's meeting of Western Hemisphere nations in Washington. Delegates refused a customs union but created a trade bureau, ancestor of the Organization of American States.
- Deflation
A broad fall in prices. Each dollar buys more, so debts get harder to pay off. After the Civil War, farms grew far more wheat while the supply of dollars stayed small, so farm prices fell.
- Hard money vs. soft money
Hard (sound) money is backed by gold and holds its value; bankers and creditors wanted it. Soft (easy) money is a bigger supply, such as greenbacks or silver; debtors and farmers wanted it.
- Specie Resumption Act
1875 law promising that from January 1, 1879 the government would trade greenbacks for gold coin (“specie”), and cutting the number of greenbacks in circulation. A win for creditors and hard money.
- “Crime of ’73”
The name silver supporters gave the Coinage Act of 1873, which dropped the silver dollar. They charged it was slipped through in secret and shrank the money supply, just as the silver price fell.
- Bland–Allison Act
1878 compromise, passed over President Hayes’s veto: the Treasury had to buy $2–4 million of silver a month and coin it. More silver money than before, far short of free coinage.
- Sherman Silver Purchase Act
Named for Senator John Sherman. The Treasury had to buy 4.5 million ounces of silver a month, paying in Treasury notes. It bought more silver than Bland–Allison but still fell short of free coinage.
- People's (Populist) Party
The third party that farmers and labor reformers founded in 1892, built on the Farmers' Alliances. It wanted a much bigger government role in the economy: public ownership of the railroads, a graduated income tax, and more money in circulation. Newspapers called its members Populists.
- Omaha Platform
The People's Party's program, adopted at Omaha on July 4, 1892. It called for free silver, a graduated income tax, government ownership of the railroads, a secret ballot and direct election of senators, so that government would answer to ordinary people instead of big business.
- Graduated income tax
A tax whose rate rises as income rises, so the rich pay a bigger share. Populists demanded one. Congress passed one in 1894, the Supreme Court struck it down in 1895, and the 16th Amendment (1913) made it constitutional.
- Direct election of senators
Before 1913, state legislatures chose U.S. senators. Populists wanted voters to elect them directly. The 17th Amendment made that the rule in 1913.
- Panic of 1893
A stock crash and run on the banks that began a depression lasting until about 1897. Overbuilt railroads failed, and frightened investors rushed to swap paper money for gold, draining the Treasury's gold reserve.
- Coxey's Army
A march of jobless men to Washington in 1894, led by Ohio businessman Jacob Coxey. They demanded federal public-works jobs paid for with new paper money. Its leaders were arrested, but the idea returned in the New Deal.
- Wilson–Gorman Tariff (1894)
Lowered tariff rates modestly and created the first peacetime federal income tax: 2% on incomes over $4,000. It became law without Cleveland's signature, and the Supreme Court struck the tax down in 1895.
- United States v. E. C. Knight Co. (1895)
The Court ruled that manufacturing is not interstate commerce, so the Sherman Antitrust Act could not break up a sugar trust that controlled nearly all U.S. refining. It weakened the government's main weapon against monopolies.
- Pollock v. Farmers' Loan & Trust Co. (1895)
The Court ruled the federal income tax a 'direct tax' that had to be split among the states by population, so it was unconstitutional. The 16th Amendment (1913) later overturned this.
- In re Debs (1895)
The Court upheld the injunction against the Pullman strike and Debs's jail term for defying it, ruling that the federal government could act to keep interstate commerce and the mail moving. It ended a major weapon of the strike.
- Coin's Financial School (1894)
A best-selling pamphlet by William Harvey that argued for free silver in simple lectures and cartoons, told by a fictional boy financier. It turned silver from a money question into a popular crusade.
- Silver Republicans
Western Republicans, mostly from silver-mining states, who wanted the free coinage of silver. Many walked out of the 1896 convention when their party chose gold, and some backed Bryan in the fall.
- Gold Bugs
Supporters of the gold standard in 1896: mostly Republicans and Eastern business men, plus the Democrats loyal to President Cleveland. Some wore a small gold-bug pin.
- Claims and evidence
Skill 3.D on the AP exam: explain how a piece of evidence supports, modifies (complicates), or refutes a source’s argument. Ask what backs the claim, what qualifies it, and what could disprove it.
- Fusion
When a smaller party backs another party’s candidate instead of running its own. In 1896 the Populists fused with the Democrats behind Bryan.
- Front-porch campaign
A campaign run from the candidate's home: delegations travel to him, he speaks to each from the porch, and party newspapers and pamphlets carry his words. McKinley used it in 1896 while Bryan toured the country by train.
- Mark Hanna
Cleveland businessman who managed McKinley's 1896 campaign as head of the Republican National Committee. He raised millions from business and spent them on a national campaign of pamphlets and speakers.
- Election of 1896
McKinley beat Bryan, 271 electoral votes to 176, in a campaign fought over gold and silver. It gave Republicans a lasting hold on the Northeast and Midwest, and the People's Party never recovered.
- Realignment
A lasting shift in which large groups of voters change parties, creating a new majority coalition. After 1896, Republicans held business, the cities and much of the industrial North for a generation.
- Gold Standard Act (1900)
Law of March 14, 1900 that made the gold dollar the standard of value and required the Treasury to keep every kind of U.S. money redeemable at that value. It closed the silver question for good.
Transcript
Quotes are from the historical record and name their source. Lines marked Dramatized are reconstructions.
Though the People Support the Government
1886–1890
Key terms: Laissez-faire, McKinley Tariff (1890), Wabash v. Illinois (1886), Interstate Commerce Commission (ICC), Sherman Antitrust Act (1890)
In 1886 a drought left Texas farmers with no seed to plant. Congress voted ten thousand dollars. Cleveland vetoed it.
Grover Cleveland
I can find no warrant for such an appropriation in the Constitution…
Grover Cleveland
…the lesson should be constantly enforced that though the people support the Government the Government should not support the people.
Congress already spent a hundred thousand dollars mailing free seed to voters. He suggested sending that to Texas.
He vetoed 414 bills in one term.
Government was never hands-off. It picked sides. It gave railroads land, factories tariffs, and lenders a dollar tied to gold.
Cleveland gave his 1887 message to cutting the tariff.
Grover Cleveland
It is a condition which confronts us, not a theory.
He lost in 1888. In 1890 the McKinley Tariff pushed rates near fifty percent.
In 1886 the Supreme Court said only Congress could regulate rates on freight crossing state lines.
So Congress did. The 1887 Interstate Commerce Act demanded “reasonable and just” rates and created the first federal regulatory agency.
Did it work? A railroad president asked his lawyer whether to demand repeal. The lawyer said no.
Richard Olney
It satisfies the popular clamor for a government supervision of railroads, at the same time that that supervision is almost entirely nominal.
Ten weeks later, Olney became attorney general.
In 1890 the Sherman Antitrust Act outlawed any combination “in restraint of trade.”
July 2 · July 14, 1890 Two Sherman laws
Twelve days later came a second Sherman law, about silver. Keep it in your pocket. The courts would decide whether any of it had teeth.
Walrussia
1867–1890
Key terms: Contextualization, Alaska Purchase, Coaling station, Pan-American Conference (1889), New Navy
In 1867 William Seward bought Alaska from Russia for $7.2 million. Under two cents an acre. This is the Treasury's warrant.
The war was over, Europe was grabbing colonies, and American farms needed buyers. Reading a document against that bigger story is called contextualization.
Critics jeered at “Walrussia” and “Johnson's Polar Bear Garden.” Most papers backed the deal. The Tlingit, who lived there, weren't asked.
Steamships needed coal, so the Navy claimed Midway in 1867. Rights to Pago Pago in Samoa and Pearl Harbor in Hawaii followed.
In 1889, American and German warships faced off at Samoa. A cyclone wrecked both squadrons. More than fifty Americans and about ninety Germans died.
In 1889 James Blaine hosted the first Pan-American Conference. He wanted Latin American markets. Delegates refused a customs union but opened a trade bureau.
In 1883 Congress began paying for a steel navy: the four ABCD ships. Where they sailed is the next unit's story.
Sixteen to One
1862–1890
Key terms: Deflation, Hard money vs. soft money, Specie Resumption Act, “Crime of ’73”, Free silver, Bland–Allison Act, Sherman Silver Purchase Act
In 1870 this Kansas family borrows a thousand dollars. Wheat sells for about a dollar a bushel.
By 1894 wheat brings forty-nine cents. The debt is still a thousand dollars. In 1870 the debt was 960 bushels. Now it’s 2,000. That’s deflation.
Part of the cause: dollars were scarce. Per American: about thirty-four dollars in 1865, twenty in 1875.
Civil War greenbacks were paper backed by nothing but trust. Bankers wanted hard money, backed by gold. Debtors wanted soft money: plenty of it.
In 1875 Congress promised gold for greenbacks and began pulling them in. The Greenback Party of debtors won about a million votes in 1878.
In 1873 Congress quietly stopped coining silver dollars. Hardly anyone noticed.
Then Western miners struck silver by the mountain-load, and its price fell. Silver men called the 1873 law “the Crime of ’73.”
Their fix was free silver, at sixteen to one. The Mint would coin all the silver anyone brought in.
By 1896 an ounce of gold bought about thirty ounces of silver. Free silver meant more dollars, each worth less. That was the point.
Borrowers wanted cheaper dollars. Lenders and savers wanted dollars that held their value. So did many city workers, who feared prices would rise faster than their pay.
Congress split the difference. Bland–Allison, in 1878, had the Treasury buy and coin silver every month. The engraver, George T. Morgan, was no relation to the banker J. P. Morgan.
In 1890 Western silver senators made a trade with Eastern tariff men. The West got the Sherman Silver Purchase Act. The East got the McKinley Tariff.
It wasn’t enough. By 1894 cotton brought less than five cents a pound. Farmers stopped waiting for either old party to fix it.
Tramps and Millionaires
1890–1892
Key terms: People's (Populist) Party, Omaha Platform, Graduated income tax, Direct election of senators
By 1890 the Farmers' Alliances had about a million members and were winning elections. Kansas sent 'Sockless Jerry' Simpson to Congress. He wore socks.
Newspapers said Mary Lease told Kansas farmers to 'raise less corn and more hell.' She denied it. Later she said it was good advice.
On the Fourth of July, 1892, they met in Omaha as a new national party: the People's Party.
Ignatius Donnelly wrote their preamble. He'd also written a best-seller about Atlantis.
Reading clerk, People's Party convention
From the same prolific womb of governmental injustice we breed the two great classes—tramps and millionaires.
Here's their list. You're a delegate. The real convention adopted the platform whole, not plank by plank.
When it passed, the hall roared for forty-one minutes, by one reform paper's clock. The Minnesota men beat both heads out of a bass drum.
The ticket: James Weaver, a Union general, and James Field, a Confederate who'd lost a leg. That was the argument: farmers North and South had more in common than the war that split them.
In Georgia, Tom Watson took that argument across the color line.
Thomas E. Watson
You are kept apart that you may be separately fleeced of your earnings.
H. S. Doyle, a young Black preacher, made sixty-three speeches for Watson. When a mob threatened him, Watson took him in. By one count, two thousand armed farmers stood guard.
In Texas, John B. Rayner, born enslaved, organized Black voters for the People's Party.
Georgia's Democrats answered with fraud, intimidation and murder. In Augusta the count ran to about twice the legal voters. By one estimate, fifteen Black Georgians were killed.
Within a decade, Southern states had taken the vote from most Black men. Watson later became one of the country's most vicious racists and antisemites. In 1915 his newspaper helped incite the mob that lynched Leo Frank.
Weaver won more than a million votes and 22 electoral votes, all in the West. Cleveland won back the White House.
Hard Times
1893–1895
Key terms: Panic of 1893, Coxey's Army, Wilson–Gorman Tariff (1894), United States v. E. C. Knight Co. (1895), Pollock v. Farmers' Loan & Trust Co. (1895), In re Debs (1895), Coin's Financial School (1894)
Cleveland had been president again for two months when Wall Street came apart.
In the Panic of 1893, overbuilt railroads went bankrupt, the Union Pacific among them. Hundreds of banks closed. It was the worst depression the country had yet seen.
By 1894, somewhere between one worker in eight and nearly one in five had no job. Nobody knows which. The government wasn't counting.
Investors swapped paper dollars for gold. The Treasury's gold reserve fell under a hundred million. Cleveland got Congress to repeal the silver purchases. The drain went on.
In February 1895 the Treasury sold bonds to J. P. Morgan's syndicate for sixty-five million in gold. It saved the gold standard. Many farmers decided Washington answered to Wall Street.
Jacob Coxey, an Ohio quarry owner, wanted jobless men hired to build roads, paid with new paper money. Five hundred million dollars of it. Newspapers called his marchers Coxey's Army.
Coxey set out from Massillon on Easter Sunday, 1894. His baby son was named Legal Tender.
On May 1, 1894, about five hundred marchers reached the Capitol. Police arrested Coxey for walking on the grass, before he could give his speech.
Jacob S. Coxey
Up these steps the lobbyists of trusts and corporations have passed unchallenged…
Forty years later, in another depression, Washington hired millions of jobless Americans to build roads and schools.
That July, over the Illinois governor's objection, Cleveland sent federal troops into Chicago to break the Pullman strike.
Congress did pass one thing farmers wanted: an income tax. Two percent, on incomes over four thousand dollars. Almost nobody earned that much.
Between January and May 1895, the Supreme Court ruled three times. One company refined nearly all of America's sugar. The Court called refining manufacturing, not commerce, and left it alone.
In May it struck down the income tax, then upheld Eugene Debs's jail term. The Sherman Act had failed against sugar but backed the Pullman injunction. Workers and farmers saw a pattern.
Coin's Financial School sold hundreds of thousands. In it, a boy lectures Chicago's bankers on silver. Many readers thought the lectures were real. Some pictures blamed the Rothschilds, recycling an old hatred of Jewish bankers.
By 1896 the silver men didn't need a third party. They were about to take over one of the old ones.
Cross of Gold
June–July 1896
Key terms: Silver Republicans, Gold Bugs, Claims and evidence, Fusion
In June, Republicans nominated William McKinley of Ohio, the tariff man, on a platform for gold. Silver Republicans from the West walked out.
In July the Democrats met in Chicago, and the silver men had the votes. Cleveland’s gold delegates sat and watched their party leave them.
The debate over the platform ended with a thirty-six-year-old from Nebraska.
William Jennings Bryan
The man who is employed for wages is as much a business man as his employer.
Later, the cheering got so loud he had to ask for quiet.
William Jennings Bryan
I have only ten minutes left, and I ask you to let me occupy that time.
William Jennings Bryan
I tell you that the great cities rest upon these broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic.
William Jennings Bryan
But destroy our farms and the grass will grow in the streets of every city in this country.
William Jennings Bryan
Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns.
William Jennings Bryan
You shall not crucify mankind upon a cross of gold.
The next day they nominated him for president, on the fifth ballot. About a hundred and sixty delegates, mostly gold men, sat out the vote.
Test his claim the way the AP exam will ask you to. Support: in 1890, about three-quarters of what America sold abroad came from farms.
Complicate it: by the mid-1880s, American factories were producing more value than American farms. Refute it? Wait for November.
The Populists were trapped. Run their own candidate and split the silver vote, or back Bryan and disappear into the Democrats.
They backed Bryan, but not his running mate, Arthur Sewall, a Maine shipbuilder and banker. They named Tom Watson instead. Bryan ran with two.
The Front Porch
1896–1900 (→ 1913)
Key terms: Front-porch campaign, Mark Hanna, Election of 1896, Realignment, Gold Standard Act (1900)
Bryan campaigned like no candidate before him. He covered about eighteen thousand miles by train and gave more than six hundred speeches.
McKinley stayed home in Canton, Ohio, and let the country come to him. Cheap railroad excursions brought some 750,000 visitors. Souvenir hunters carried off his fence in pieces.
His manager, Mark Hanna, raised millions from bankers and corporations that feared free silver. Hanna spent it on pamphlets and speakers across the country.
Some employers told their workers the plant would close if Bryan won. That fall the price of wheat rose, and Bryan's best argument got harder to make.
McKinley won, 271 electoral votes to 176. He took the Northeast, the Midwest and nearly every big city. Bryan had said the cities rest on the prairies. The cities outvoted them.
Republicans won seven of the nine presidential elections from 1896 through 1928. The People's Party faded within a few years.
Then the money question settled itself. Strikes in South Africa and the Klondike more than doubled the world's gold output in the 1890s.
Prices rose. The farmers got their inflation after all, from gold. In 1900, Congress made gold the official standard.
But look at the list they wrote in Omaha. A federal income tax. Senators elected by voters. A secret ballot.
Postal savings. Regulated railroads. An eight-hour day. The Populists lost the election. Within a generation, reformers called Progressives had passed much of their list.
Whichever badge you pinned in Chicago: gold won the vote, and silver got its rising prices anyway. Since 1971 the dollar hasn't been backed by gold or silver. It's backed by the government.
The fight over metal was a fight over whether government should act for the people who were losing. After 1896, that question never left American politics.