Populist Conspiracies
By 
Richard Hofstadter was a very influential historian but he was also a tremendous snob whose personal proclivities would not make him look positively at a bunch of poor southern farmers. In The Age of Reform, Hofstadter notably dismissed the Populists’ claims that monetary policy was part of an east coast conspiracy to keep them down. That view of the Populists remained powerful for a long time and has never really totally gone away.
But what if the Populists were right about a conspiracy? This is the subject of a 2011 article by Yale political scientist Samuel DeCanio in Studies in American Political Development. It is worth delineating his argument to a broader public in order to beat back the Hofstadter view of the Populists and to shine a light on how politics worked in the Gilded Age (and potentially in the New Gilded Age).
The core problem with monetary policy in the Gilded Age, from the perspective of the farmers who organized into the Farmers Alliance and eventually the Populist Party, was the Coinage Act of 1873. This was the law that demonetized silver in the U.S., among other things. By the 1890s, the Populists corrected identified this as the law that had made their lives so difficult. But DeCanio shows not only that the passage of this law absolutely was a conspiracy, but the people who created the idea of an East Coast conspiracy did so precisely to cover up their own role in the law’s passage.
The Coinage Act of 1873 passed because of the desires of one man: William Ralston. Ralston was the head of the Bank of California and the owner of most of the Comstock mines in Nevada that produced a huge amount of silver. He was concerned that Europe, which was also demonetizing silver, would dump all their silver on the American market and thus lower its value, making him poorer. He hoped that demonetizing American silver and then using his silver to serve as an unofficial trade currency in China would make him a lot of money (which did not work and he eventually lost control over the mines). He knew that he couldn’t openly lobby for this. So instead he simply bribed Harry Linederman, director of the U.S. Mint, to write the bill for him. Ralston then used his already existing allies in Congress from California and Nevada to protect the Coinage Act from amendments that would harm him. Linderman actually told Ralston he would “not be able to give my services without compensation.” And that was fair enough for the capitalist.
Ralston, like most capitalists of his generation, openly engaged in bribery and shady dealing with what Richard White would identify as “friends,” or the people you may or may not personally like but who you needed to work with to bilk all the lesser people involved in your world so you could get rich. Ralson and Nevada senator William Stewart were very close and each helped each other. When Stewart became a senator, he sold his mansion to his law partner who was Ralston’s friend. Stewart then got his law partner named ambassador to Japan. The new ambassador then sold the house to Ralston’s brother for a reduced rate. Everyone was happy. Linderman set up a meeting between Ralston and the most corrupt person ever to hold the presidency in U.S. history, James Garfield, after the Coinage Act passed. Immediately after the meeting, the future president purchased thousands of dollars of Comstock mine stocks.
He was able to do this because nobody understands monetary policy. John Sherman, one of the Gilded Age’s most powerful senators and a major player on economic issues, didn’t really understand the Coinage Act either. Since Linderman supported it, Sherman and everyone else figured, well, he’s the expert. And therefore, silver coinage was demonetized and the lives of farmers plummeted with the tight currency market. DeCanio is clear to make connections to the present and how the complexities of monetary policy not only leaves regular citizens confused but also politicians, noting how easy this ignorance can be to manipulate.
Once the problems with the law became well-known, the politicians who supported the Coinage Act got scared of voter backlash. So William Stewart claimed that he had nothing to do with it and it was evil east coast bankers and European financiers responsible for a criminal act!!! By this time, both Linderman and Ralston were dead so they couldn’t tell. Stewart was free to create his own story.
Populists knew that someone had conspired against them but they didn’t have the information to find out who. In the end, they believed the politicians who made the claims, never suspecting that those politicians themselves were hugely culpable. The Populists were wrong about who was responsible for the conspiracy affecting their lives. But they were absolutely not wrong about the conspiracy itself. It was Hofstadter who was wrong in so blithely dismissing the Populists.