While the country attempted to readjust to the new sociopolitical and socioeconomic landscape, out of the blight that followed The Civil War emerged a period of upheaval characterized by partisanship and corruption. Reconstruction, The North’s attempts to re-absorb The South while protecting the rights of blacks, was distinguished by intermittent successes overshadowed by ultimate failure. Laws that extended suffrage to black voters were coupled with laws that disenfranchised varying (often large) percentages of the white Southern population, a policy enforced by Union troops stationed in the former Confederate States. The political machine was born. Republican partisans and opportunists, many of whom abused positions of power for personal gain, were the benefactors of political arm twisting. Where the values of civil reformers overlapped with the interests of political operators, gains were made to advance civil rights legislation, extend public education and grant suffrage to black Americans, yet many of these reforms were dismantled by vindictive Southern politicians called “Redeemers.” The most lasting contribution of Republican idealism during Reconstruction were the fourteenth and fifteenth amendments, which extended citizenship to “all persons born or naturalized in the United States” and guaranteed those persons the vote, yet in spite of these provisions, state legislatures across The South would disenfranchise black Americans and segregate schools and communities until 1965.
The first Democrat elected into office after The Civil War was Grover Cleveland, the former governor of New York, who ran on an anti-corruption platform in 1885 and won despite having elicited an annual salary of what would today be $400,000 dollars per annum from The State of Pennsylvania after he was elected sheriff of Erie County, and having negotiated with party insiders to guarantee him the Democratic nomination for the Buffalo mayoral election. Grover Cleveland represented the interests of wealthy Democrats and former slave-owners who espoused an economic policy of “limited government,” low taxes and low tariffs. Multiple vetoes of bills guaranteeing veteran pensions and relief for drought-stricken farmers in Texas threatened to embroil the working-class in financial distress. Despite the severity of the drought and The General Welfare clause of The Constitution, in his veto message of The Texas Seed Bill, Cleveland maintained the following.
“I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit.”
In 1890, during his second term, Cleveland reduced the amount of currency in circulation by capitalizing on several bankruptcies and bank runs caused by rampant speculation in the railroad industry, a decision that further stifled lending and wages. The resulting depression plunged on average 18 percent of the population in unemployment, which reached 25 percent in Pennsylvania, 35 percent in New York and 43 percent in Michigan. The people bartered, worked for food and women prostituted themselves to feed their families. Cleveland’s deflationary pro-gold policies lead to massive layoffs in the silver-mining industry. Strikes swept across the Midwest, culminating in the Pullman Strike, which halted railroad production across the country. 30 men were murdered and 57 wounded after The President ordered the militia to march on the protesters.
A growing faction of farmers and laborers in The Midwest, Democrat and Republican, rallied for silver-baked notes to create a buoyant, robust currency and incentivize lending. These “Silverites” emerged 25 years prior to Cleveland’s second term, amidst political opposition to The Contraction Act of 1865, which began the process of dismantling the nation’s elastic national currency, the greenback. The foremost proponent of maintaining the nation’s unbacked paper currency was Peter Cooper, the owner of a successful adhesives manufacture, inventor of America’s first steam locomotive and founder of Cooper Union.
“The whole question of currency and money arises from the necessity of trade, or exchanges among men in the products of their industry, and the causes and methods that make these exchanges fair, just and beneficial to all concerned, or a means of tyranny and injustice, and an occasion for the exercise of greed and selfishness.”
“In order to secure a real result of the exchange of values, which at first, are the subject of promise and record merely, there must be some reasonable or assumed ability on the part of the one, who makes the promise, that he can and will make that promise good. This is the origin of paper money.”
“Banks evaded the law by issuing paper they were unable to redeem, when it was not wanted. The reason of this lay in the fact that the demand for currency at times was far in excess of the quantity that could be reabsorbed in gold, when the currency was no longer needed.”
President Grant’s administration would later pass The Coinage Act of 1873 and The Specie Payment Resumption Act of 1875, which contracted the money supply by demonetizing silver and switching to a gold standard. Adherents of the elastic currency deliberated and began to organize and exhort their lawmakers to adopt silver in addition to gold. Silverites were many and varied, and went by various names - The Greenback Party, Independent Party, Labor Party, People’s Party, Populist Party - but they shared the same concerns: decreasing wages, decreasing property values, massive layoffs, income inequality, unavailable credit, poor working conditions and abusive business practices that decreased competition and counteracted any foreseeable benefit of a deflationary currency. Chief amongst their complaints were the immediate effects of a deflated currency, which caused a spike in interest rates, placing debtors at increased risk of default, a point that was made with great effect in William Jennings Bryan’s “Cross of Gold Speech” 23 years after The Coinage Act was passed.
“The gentleman from New York says that he will propose an amendment to the platform providing that the proposed change in our monetary system shall not affect contracts already made. Let me remind you that there is no intention of affecting those contracts which according to present laws are made payable in gold; but if he means to say that we cannot change our monetary system without protecting those who have loaned money before the change was made, I desire to ask him where, in law or in morals, he can find justification for not protecting the debtors when the act of 1873 was passed, if he now insists that we must protect the creditors.”
Despite their growing relevance in American politics throughout the latter half of the nineteenth century and the beginning of the next, despite their convergence upon a set of remedies for America’s societal ills, which included women’s suffrage, the eight-hour work day, a graduated income tax, free public education, child labor laws, services for the poor, conservationism, trust-busting and the regulation of trade (foreign and domestic), despite their connection to the working class (or because of it), the silverites, populists and progressives achieved few political victories. The disparate composition of the movement, which consisted of various third parties and minority groups within the dominant political system, provided an opportunity for Democrat and Republican leaders to leverage working-class discontent to their advantage. James Weaver, the Populist Party presidential candidate in 1892, split The Republican ticket in the West, which resulted in a victory for Grover Cleveland, who was less attentive to the concerns of the working class than his Republican rival, Benjamin Harrison. Having realized the strength of the movement and the strategic advantages and disadvantages of his political war chest, Weaver threw his support behind The Democratic nominee in the 1896 presidential election, William Bryan Jennings, yet when Jennings chose an East Coast industrialist as his running-mate, he lost Populist support and the election to William McKinley.
Populism, progressivism - whatever you want to call it - this demand for fair wages, a 40-hour work week, reasonable working conditions, a buoyant currency and government accountability erupted during the first half of the twentieth century and levied its criticisms squarely upon the monopolization of money, or “the money trust,” and a proposal for a national bank. Lead by Charles August Lindbergh Sr., progressives, Republican and Democrat, the majority of whom had reached political maturity during the swell of populist sentiment at the end of the nineteenth century, stymied a plan designed to establish a central bank for five years. The National Monetary Commission, spearheaded by Senator Nelson Aldrich in 1908, was charged with investigating the causes of the 1907 stock market crash and four years later, The Commission arrived at the indelible conclusion that the country should forfeit the nation’s money supply to a banking cartel granted the price-fixing power to manipulate market forces, an idea that had last been proposed a century earlier by such mendacious and tyrannical personalities as Henry Clay and John C. Calhoun, Democrat-Republicans who willingly and purposefully betrayed the principles upon which the party of Jefferson was founded, principles rooted in an opposition to Hamilton’s economic and political philosophies: centralized power, a loose interpretation of The Constitution, high tariffs to subsidize corporate monopolies and the formation of a central bank.
The proposal for a central bank fomented so much anger amongst the people, Democrats adopted opposition to “the so-called Aldrich Bill for the establishment of a central bank” as a major tenant of their party plank in the 1912 presidential election, yet as a result of political subterfuge during the nomination process, Woodrow Wilson, the racist son of a slave-owner, president of Princeton University and a perpetual disbeliever in the separation of powers, would be minted The Democratic contender for The Executive. Theodore Roosevelt, who lead the progressive opposition in his own party, split The Republican ticket, and as a consequence, handed Woodrow Wilson the presidency, and the new President would negotiate with opportunists in Congress to pass “the so-called Aldrich Bill” under a different name: The Federal Reserve Act of 1913. In return for the privatized banking cartel known as The Federal Reserve, progressives were offered an elastic currency, and by accepting this bargain, they betrayed the spirit of The Progressive movement, which lay embedded in history, in the words and ideas of its progenitor, Peter Cooper, who viewed an elastic currency as nothing more than a means with which to realize equality, liberty and justice, the principles upon which The Republic was built.
“I think you will agree with me in opinion that General Jackson was right in doing all that was possible to put an end to an institution that was building up a moneyed aristocracy on the ruin of the best and most enterprising men of the nation.”
The Federal Reserve Act is a quintessential example of the bait-and-switch con. The reason Peter Cooper, the reason farmers, laborers and silver-miners wanted to preserve the greenback and clamored to recover it after it was lost, then appealed to their representatives to inflate America’s currency with silver, was to allow trade and commerce to prosper in those corners of the country, in those strata of society where money was scarce. With the passage of The Federal Reserve Act, although money was plentiful, it would remain unavailable to the vast majority of people. Unimaginable sums would be handed directly to the wealthiest individuals in the country. Inflation would skyrocket and prices would soar while wages struggled to keep pace with the excess of cheap money. If the country went into debt, The Federal Reserve and its shareholders, the biggest banks in the country, would not hesitate to loan The United States its own money (with interest). The Federal Reserve Act is the foremost piece of legislation responsible for higher prices, inequality, debts and taxes in The United States in the last one hundred years. Peter Cooper summed it up succinctly.
“If crime is to be measured by the misery it produces, the act of taking from the people their money, and converting it into a national debt, must rank as one of the most unjust and cruel acts ever known to any civilized legislation . . . The claims of common humanity, with all that can move the manhood of the American citizen, demand of our government the return to the people of their currency.”
There may appear to be a dramatic contrast between the banking system before and the banking system after The Federal Reserve Act of 1913, but such distinctions are superficial at best. The banking system prior to 1913 was composed of large banks in possession of the money supply, which was supposedly backed by gold. Money was valuable but largely unavailable to the average citizen, loans were difficult to obtain, prices were low, wages were lower and property considered cheap by a wealthy elite was expensive for the average American. The banking system after 1913 was composed of the same large banks, yet instead of being separate institutions, they were incorporated into a single corporation, a private banking cartel in possession of an elastic currency, legal tender backed by nothing short of the integrity of the banking system. Money would be cheap and plentiful but largely unavailable to the average citizen, wages would experience irregular and modest gains while property values and prices appreciated at a constant rate of inflation. For the average individual, nothing had changed.
The most significant and lasting contributions that farmers, laborers and the statesmen who represented them would leave generations that followed are the sixteenth amendment, which established the legal precedent for a graduated income tax, The Clayton Anti-trust Act, which was instrumental in the prevention of mergers and protection of laborers’ bargaining rights, and the only public bank in The United States, The Bank of North Dakota. Founded by The Non-Partisan League (the last vestiges of The Progressive Movement), The Bank of North Dakota weathered the storms of economic slumps and escaped unscathed. With the exception of these three major accomplishments, many progressive reforms would not be realized until after FDR was elected into office in 1933.
New Deal reforms included - but were not limited to - repeal of the Tariff Act of 1930, which increased trade and productivity, passage of The Glass–Steagall Act, which divorced speculation from commercial banking, separation from the gold standard, which created monetary stability, passage of The Securities Act of 1933, which created transparency in the banking industry and provided government with a means to perform audits, establishment of The U.S. Securities & Exchange Commission, the end of prohibition, social security, unemployment insurance, The Wagner Act, which provided laborers who collectively bargain with additional leverage, The Fair Labor Standards Act of 1938, which set a maximum work week, a minimum wage, the outlaw of child labor, The Rural Electrification Administration, which brought electricity to rural areas without power, The Federal Writer’s Project, which provided jobs for writers across the country, The Works Progress Administration, which created civil programs and jobs for low-skilled workers when the private sector couldn't, and The Public Works Administration, which supported private enterprise to produce public works projects like Hoover Dam, The Lincoln Tunnel, The Robert F. Kennedy Bridge, LaGuardia Airport, The Overseas Highway and San Francisco – Oakland Bay Bridge.
FDR did all of this without adding a cent to the national debt or deficit, and he did so by bypassing The Fed, pulling approximately 3 billion, 3 hundred million dollars straight from The Treasury. Adjusted for inflation, that amount would equal 57,750,128,919.97 dollars today - 57 trillion, 750 billion, 129 million dollars - or approximately four times The United State’s GDP. Despite progressive gains in the aftermath of The Great Depression, FDR’s largesse wasn’t without its consequences. Large sums of money would be handed over to businesses that formed monopolies and cartels under the direction of public agencies like The Agricultural Adjustment Administration, which displaced millions of farmers in The Midwest and parts of The South, the same farmers who had lobbied for fair labor laws and domestic economic policies since the aftermath of The Civil War. Their relocation would undue almost 60 years of political maneuvering by America’s farm-and-labor coalition.
https://medium.com/...