The agricultural economy of the United States faced a series of challenges and opportunities in the middle of the nineteenth century that fundamentally reconstructed the experience of farmers in the republic. Some changes, such as the Homestead Act and the expansion of the agricultural frontier to new territory in the Great Plains and the Far West, provided the prospect for the creation of a prosperous agrarian republic. The collapse of the slave-based plantation economy provided the same hope for small farmers in the South. The promise of an agrarian republic, however, did not match the reality. Industrialization and the rise of corporate America created a series of structures that effectively curtailed the development of an agrarian republic and created an agricultural system beholden to the distant markets, capital flows, and the interests of corporate America.
After the Civil War, the national business environment worsened for agricultural interests. The war had been paid for in inflated paper currency that was not pinned to the gold standard. Banking and bondholding interests wanted a deflationary monetary policy that would increase the value of their holdings and create a “hard money” currency backed by and redeemable in gold. The federal government complied. Farmers in both the North and South were hurt by this decision because as the value of each dollar increased, it became more difficult for debtors to pay their loans. The hard money policy coincided with the increased influence of railroads and other technological advances in agriculture that made farmers more dependent on credit, distant markets, and access to capital than their ancestors.
The Homestead Act of 1862 mandated that federal lands in the Great Plains and the West were to be divided into 160-acre holdings that would be virtually given to settlers for establishing family farms on the frontier. The promise of free land did not remove all expenses for farmers. The Department of Agriculture recommended that new farmers possess at least $1,000 to cover the costs of equipment, seed, and other necessities. Despite the promise provided by the act, the ideal of an expanding republic of small freeholders fell prey to other land-distribution systems that granted lands to railroads. Railroad companies used land grants to maintain right-of-ways and earn profits off of settlers who in turn used the railroad for shipping and receiving goods. Corruption also hindered the agrarian republic. Scholars estimate that half of all homesteads were fraudulently held by absentee landowners or corporations.
The presence of the railroad spurred settlement along railroad corridors that promised an easy connection to eastern markets for agricultural goods. The advantage brought by the railroads did not benefit many farmers. Often it cost half of the value of each crop to ship products to the market. One standard railroad practice was to charge “transit fees” that charged each shipper the same rate to transport goods on the railroad regardless of the actual distance from the market. Farmers, especially in the Great Plains, lacked alternatives to railroad transportation, leading many to call for national ownership of the railroad system as a cure for economic exploitation.
The efficiency of the railroad as a means of transporting goods also allowed for the specialization and centralization of markets for agricultural produce. During and after the Civil War, much of the agricultural produce of the Great Plains and Midwest was shipped to Chicago. This concentration of economic influence offended the sensibilities of many farmers who felt that they had no influence upon the market for their products. One example of this alienation was the grain grading system. This legislation permitted a private organization known as the Board of Trade in Chicago to judge the quality, and therefore the value, of all grain shipments into the city's marketplace. The grain grading system was enshrined into Illinois law in 1859. Thus the value of a farmer's crop was dependent upon this judgment from a private organization in which the farmer had no voice and no guarantee of an honest appraisal of the crop.
The Civil War destroyed the plantation economy based on slave labor, but it did not destroy the plantation. The end of slavery did not create an egalitarian political or economic structure for African Americans or poor southern whites. In theory, freed slaves were to be settled on lands abandoned by plantation owners as yeoman freeholders. This subdivision of land to individual farmers was rare. In practice, African Americans were compelled by economic need, the lack of skills, and even the federal government to labor on plantations as contract laborers with little hope of ever owning land. Under the contract system, agricultural laborers were only paid at the end of each growing season or paid a proportion of the value of the crop after harvest. As the fervor for Reconstruction waned in the 1870s, sharecropping became a primary form of agricultural labor in the South as it combined a disciplined and affordable labor force with the Civil War mandate for abolition.
Much like the farmers of the Far West and the Great Plains, southern farmers faced an exploitive economic structure that favored those with access to outside capital. Merchants with access to northern capital resources established the crop lien system. Unlike plantation slavery, there was not a disciplined system of directly coercive labor; these furnishing agents, however, controlled the only access to seeds, household goods, food, plows, and other resources farmers required to subsist. These goods were furnished on credit at usurious rates of interest, which were repaid with proceeds gained from the sale of the crop. Many farmers were unable to repay their entire debt for the year at the end of the season. In an effort to increase farm profits, many landowners required the planting of cotton to the exclusion of all other crops, including food. Sharecroppers had few options until the two world wars demanded labor in the North and West. In time, the accumulated debt and the inability to gain a profit from agriculture forced many farmers to immigrate west or to remain in the South as landless tenant farmers.
After the Civil War, many farmers throughout the United States organized in protest against the abuses of the postwar economy. Deflationary monetary policies, abusive credit terms, and the lack of access to the economic and political system led farmers to demand a new course for the American economy and society that more closely reflected the needs and desires of rural Americans. Many of the ideas proposed by farmers would be incorporated into the Populist and later the Progressive movements, but the agrarian uprising was doomed by the lack of resources.
See also: Colored Farmers’ Alliance (CFA) ; Gold Standard/Free Silver ; Homestead Act (1862) ; Long-Haul/Short-Haul Discrimination ; Northern Alliance ; Peonage ; Populism ; Progressivism ; Subtreasury Plan ; Western Alliance
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Goodwyn, Lawrence. The Populist Moment: A Short History of the Agrarian Revolt in America. New York: Oxford University Press, 1978.
Hine, Robert V., and John Mack Faragher. The American West: A New Interpretive History. New Haven, CT: Yale University Press, 2000.