Gotham_ A History of New York City to 1898 - Edwin G. Burrows [956]
POPULISTS AND GOLDBUGS
TR’s job switch was made possible by the Republican Party’s having emerged victorious from a titanic struggle with populism, a triumph that owed much to Teddy and his New York City colleagues.
The depression had provided an opportunity for Republicans to take on the regnant Democratic administration of Grover Cleveland. But the presidential election of 1896 proved to be far more than a conventional political contest. To contemporaries it seemed a cosmic clash, worthy of the Book of Revelation, pitting West against East, silver against gold, and populists against plutocrats in a battle for the soul of the republic.
Over the previous decade, as the world marketplace flooded with agricultural products, farmers in the South and West found that wheat, which had sold for a dollar a bushel in 1870, now fetched anywhere from sixty cents to a dime. Loath to blame the market itself, they attacked those they believed took unfair advantage of them: the great railroad companies, mercantile middlemen, land speculators, commodity brokers, local bankers, and behind and above all these the “Money Kings of Wall Street” who controlled the nation’s credit and currency systems.
In the 1880s and early 1890s, agriculturalists in the cotton South and wheatfield Midwest established a cooperative movement—the Farmers Alliance—dedicated to bypassing the corporate world headquartered in New York City. Pushing to develop alternative systems of distribution, credit, and exchange, the farmers called for government ownership of the railroads, granaries, banks, and telegraph companies and demanded that government regulate privately owned companies to outlaw monopoly, collusion, and price-fixing. Seeking nothing less than to transform the United States into a “cooperative commonwealth,” the mass movement entered politics in 1892 and organized the People’s Party (becoming known as “populists”).
In response, the western wing of the Democratic Party, while sidestepping most People’s Party demands as too radical, fastened on one small piece of the populists’ currency program: the call for “free silver.” A global shortage of gold, coupled with a rising demand for its use, had driven up its value and that of currencies pegged to it. This forced borrowers to repay loans in ever more valuable currency. Debtors reasoned that if silver were made an official U.S. currency alongside gold and coined in unlimited quantities, the resulting inflation would raise depressed prices and profits. Rocky Mountain silver-mine owners liked this idea and backed Democratic politicians who promoted it—men like the silver-tongued Nebraskan William Jennings Bryan.
New York City became the stronghold of the opposing “goldbug” forces. When the Panic of 1893 led holders of greenbacks and bonds to cash in their paper for gold, draining the federal government’s specie reserves, Wall Streeters got newly reelected President Cleveland, whose campaign J. P. Morgan and others had funded, to replenish the federal strongbox by repeatedly selling bonds for fresh supplies of gold. Syndicates organized by Morgan and August Belmont Jr. sold the bonds to European investors (notably the English Rothschilds) and to local capitalists (notably New York banks, trust companies, and life insurance companies). In each case, however, the treasury’s gold swiftly flowed right back out again, sometimes to be used again in the next round of bond purchases, a highly profitable loop.
Populists and western Democrats denounced the bond sales as short-term ripoffs—“A Wicked Deal. Rothschilds, Morgan, and Belmont Skin the Country,” squawked the Atlanta Constitution—and as part of a long-term conspiracy to prop up the gold standard. At the 1896 Democratic convention in Chicago, silverites challenged New York goldbug control of the party. Bryan denounced the attempt to crucify Americans on a cross of gold and issued his famous antiurban philippic: “You come to us and tell us that the great cities are in favor of the gold