The news media has discovered a “resurgence of American populism” in the wake of the financial meltdown.” Read a newspaper, open a magazine, turn on the TV news, it’s the same story: “Populist Outburst,” “Anger-fed Populism,” “Populist Backlash,” and “Populist Rage.” Many Americans are asking tough questions about the corporate executives who drove the economy off the cliff. And a politics of professed outrage spins a cable news cycle featuring a tax hating, government fearing, “Joe Six Pack.” Why either of these phenomena deserve the title populist is not explained. The underlying assumption is that populism represents the politics of the gut rather than the mind –sharpened pitchforks rather than deliberate judgment.
But what, if anything, did the original Populists of the 1890s share in common with these 21st century incarnations? And what might those Populists of the past tell us about financial meltdowns and hard times?
In the early 1890s, a coalition of farmers’ alliances, labor organizations, and middle class activists put together a political party known as the People’s Party or Populist Party, from which we get the term populism. The Populists scored electoral successes unmatched by any third party since the 1850s. But more than that Populism represented a powerful social movement that rocked the corporate establishment.
Gilded Age Americans experienced wrenching changes wrought by globalization, technological innovation, and the growth of corporate organization. The advent of telecommunications made the world a much smaller place, facilitating economic centralization and corporate power. The rich amassed great fortunes while hard times pressed on most everyone else. The economy lurched from speculative boom to spectacular bust, including the terrible depression of the 1890s.
The Populists sought to make sense of it all. They believed that if only the citizenry had a better understanding of the mechanisms of modern government, finance, and economics, they could retool these mechanisms to create a more just and prosperous society. At its root, Populism was a vast movement of rural education. From Texas to the Dakotas, from North Carolina to California, men and women came off their farms to attend meetings and listen to lectures about political economy, history, and science. Far from the stereotypes of unreasoned rage and sharpened pitchforks, the Populists were known as a “reading party” and a “talking party.” More than anything else, they read and talked about ways to lift themselves and the country out of a financial and economic rut.
In the 1880s and 90s, the railroads seemed to represent all that was wrong with the prevailing laissez-faire corporate model. Federal and state governments provided corporations with millions of acres of land grants and other subsidies to build rail systems. Jay Gould and other financial wizards conjured up vast wealth speculating on these systems. They cooked up toxic financial instruments known as “watered stock,” the direct ancestors of today’s mortgage “derivatives.” And when over-extended railroads went belly-up, financiers sought shelter in federal receivership. Much as with today’s corporate bailouts, laissez-faire it wasn’t.
In the Populist view this pattern of corporate plunder of the public interest could only be broken with government ownership of the railroads. They studied closely the state-owned systems in Europe and liked what they saw in terms of low cost and improved transport. To the charge that public ownership meant centralization, the Atlanta Peoples’ Party Paper responded that the European system was “the kind of centralization we need in this country” as “it centralizes bread and meat into the mouths of the workingman’s children and clothes on their backs.”
The Populists also looked to the example of the U.S. Post Office. At the time, the Post Office Department was the only branch of the federal government to which most Americans had any connection. For the Populists, the US mail served as a model of inexpensive and equitable service. If the business of government was the peoples’ business, why shouldn’t the government run the railroads, the telegraph, and other essential services on the same model?
As the Populists put it in their celebrated Omaha Platform of 1892: “We believe that the powers of government – in other words, of the people – should be expanded (as in the case of the postal service) as rapidly and as far as the good sense of an intelligent people and the teachings of experience shall justify.”
In the 21st century, the postal service is the brunt of ridicule. On the topic of health care, for example, the nastiest insult that cable news populists can hurl at the idea of a single-payer system is that it would resemble the postal service. Yet, despite decades of neglect and scorn, the postal service still moves billions of pieces of mail at unmatched low cost and efficiency. Just ask the high tech masterminds at Netflix.
In the current financial meltdown, much is being said about frozen credit markets. The Treasury Department is showering hundreds of billions of dollars on the Wall Street banks in a vain effort to encourage the lending needed for businesses to run. In the 1890s, frozen credit markets similarly afflicted much of the country. The banks withheld credit from much of the rural heartland, and when they did lend they did so at usurious rates. The Populists believed that the only solution was to centralize credit and banking in Washington.
In a bold response, the Populists proposed a federal credit program known as the subtreasury system. In this system the federal government would warehouse the crops of the nation’s farmers, and farmers would draw 2% loans against their stored crops. The beauty of the subtreasury in the eyes of the Populists was that it would cut out the middlemen – loan sharks, merchants, and grain speculators – while pumping life-giving credit directly into the arteries of a distressed economy.
Today’s self-styled populists are outraged about federal funding for volcano detection and studies of honey bees. Yesterday’s Populists argued that such matters defined the very purpose of government. They pushed for a civilian National Weather Service, an expanded U.S. Bureau of the Census, federally-funded research stations to apply the latest in science and technology to agricultural pursuits, as well as a “Good Roads” bill to put the unemployed to work and improve the national infrastructure. Of all the public needs, Populists viewed public education as the most essential. Perhaps their most enduring legacy was improvements to the common schools, teachers’ colleges, and land-grant universities.
Despite the reasoned and constructive nature of their reform agenda, the specter of Populism terrified upper class Americans. Corporate leaders, political bosses, and university professors all convinced themselves that the Populists were driven by blind grievance and destructive rage. The corporate elite believed that their corporate model of modern development was the only possible model; to challenge that model was primitive madness. Today’s corporate elite make similarly exclusive claims to modernity.
In the lead up to the present financial meltdown, when the Wall Street lobbyists pushed through bank deregulation, they tellingly called it “The Financial Services Modernization Act.” Those who criticized the fantastic compensation packages, speculative risks, and deregulatory mania were marginalized as so yesterday, so stuck in the past. And now that the financial sector has imploded, the pundits have tagged sober questioning about why it happened and who is responsible with the label of “populist rage.”
The Populists of the 1890s were neither primitive nor pre-modern. They believed in the possibilities of an alternative, more just and equitable, capitalist model. They believed that either an enlightened citizenry would take hold of the levers of modern systems, or the fateful decisions about the nation’s financial and economic life would be left to the whim of bank and railroad executives.
The Populist experience offers a rich resource for grappling with the current crisis. To make use of it, however, means setting aside nonsense about “sharpened pitchforks,” and learning from a vital historical movement of citizen education and political mobilization.
Mr. Postel teaches history at San Francisco State University and is the author of: The Populist Vision (Oxford University Press, paperback 2009).
Republished with permission from the History News Network.