Life in the 1880's: The Economy of the 1880s
Author: Dorothy W. Hartman
Overall, the period following the Civil War and Reconstruction was marked by expansion on all fronts of the economy. Up to 1880, agriculture was the principal source of wealth in the U.S, but that was about to change. Immigration, primarily from Europe, and internal migration west, supplied the human capital for constructing railroads, and building and operating industries of unprecedented scale. This growth also gave rise to the new middle class, made a few very wealthy, and trapped masses of immigrants and unskilled laborers in lives of poverty.
Two philosophies of the day underscored and, to some extent, justified the accumulation of wealth and monopolization of certain sectors of the economy. The first was the long-held American belief in equal opportunity - that if one worked hard enough and applied his energies and talents in the marketplace, he would be successful. The ‘rags to riches’ fiction of Horatio Alger drew inspiration from this belief. The second belief, touted by capitalists and used politically to deter government regulation, derived from contemporary scientific theory of the day - Darwin’s Origin of Species. Darwin’s theory of the biological survival of the fittest was taken under the wing of capitalists and emerged as ‘laissez faire,’ the philosophy that, in a market left unfettered by government intervention and regulation, those corporations best suited to compete would thrive and others would fall away, thus strengthening the economy as a whole. At the same time, however, the very same industrial and financial leaders who used this platform to argue against regulation were the same men who sought and got government subsidies and other special treatment for railroad construction and other industrial infrastructure.
The age was also marked with the kinds of practical inventions that impacted everyday life - kerosene, the light bulb, the tin can, breakfast cereal and others. The population changed from a society of producers to one of consumers of mass marketed products churned out in factories far from home and marketed through new mail order catalogs.
Farm production was impacted by the introduction machines capable of plowing, planting and reaping thousands of times more that human labor could ever accomplish. As a result, more and more acres west of the Mississippi River came into large scale production and farming elsewhere became increasingly specialized and more commercial. Increasing production and decreasing demand for farm commodities caused prices to fall in the 1870s and 1880s in the face of rising costs associated with transportation and borrowing for land purchases, improvements and equipment. During this period, American farmers also became part of the growing global economy as countries like Australia, Argentina and Russia added their agricultural products to the market and therefore affecting prices on a world-wide basis.
Although the last quarter of the nineteenth century was generally considered to be one of continual, but rocky expansion, it was not without setbacks. Three economic declines, in 1873, 1884 and 1893, some more severe than others, marked the swings of the economic cycle. Prices in general trended downward after 1873, and lasted until 1896 or 1897. This deflation, resulting mostly from the failure of the money supply to keep pace with the rapid increase in the volume of goods produced, affected agricultural goods as well as manufactures. During 1883, at the start of that particular economic slowdown, 10, 299 businesses closed their doors. Not until 1886, after a slow but steady improvement, did economic conditions in general recover. Many citizens felt like they were living through a "great depression," even though production expanded nearly continuously until 1893, when a true depression hit the country.
Hallmark of the Age—Industrial Expansion
At the beginning of the Civil War, the United State’s industrial output, while increasing, did not come close to that of major European nations. By the end of the century, though, this country had become the leader in manufacturing. The value of American manufactured products rose from $1.8 billion in 1859 to over $13 billion in 1899. Some modern economists estimate that the gross national product, or GNP, increased by 44 percent between 1874 and 1883 alone, and continued to expand. Between 1850 and 1900, the geographical center for manufacturing moved westward from Harrisburg, Pennsylvania to Columbus, Indiana. By 1890, Illinois, Indiana and Ohio turned out more than 30 percent of all American manufactured goods. Indiana was an increasingly urban state, with a population density in 1880 of 55 people per square mile, though the majority of Hoosiers still lived in rural areas.
Economists and historians cite a number of conditions which contributed to the rapid industrial transformation in this country. Natural resources, previously untapped, were exploited and, with advances in production technique, developed into new products. The growth of the country, both in settled areas and population, added to the size of the national market while protective tariffs shielded this market from foreign industrial competition. Foreign capital to finance this expansion entered the market freely, while European immigration, 2.5 million in the 1870s and twice that in the 1880s, provided the labor needed by industry.
This period also saw rapid advances in basic science and technology which created a wealth of new machinery, new processes and new power sources that increased productivity in existing industry and created new industries as well. This practical application of technology and science, so indicative of the age, affected some aspect of daily life in every community. In 1880, 13,000 patents were issued and that number continued to grow, totaling 218,000 by the end of the century. Only a few examples of the new inventions and patented devices were dynamite, oleomargarine, phonographs, cash registers and typewriters.
On a national scale, though, the emergence of large-scale heavy industry - mining, iron and steel production, and the exploitation and refining of crude oil - marked this period of history. These industries, coupled with the expansion of the railroad system, defined’ big business,’ created enormous wealth, gave rise to the labor movement, and influenced future government decisions regarding regulation.
Railroads and big business
Most historians credit the phenomenal growth of the railroad system as the common linking factor in the country’s economic expansion after the Civil War. Transcontinental and feeder lines brought raw materials to industrial centers, agricultural goods and finished products to cities across the country and to coastal ports for overseas shipment. They carried settlers into territories west of the Mississippi River, passengers through to California and the West Coast, and mail to every corner of the nation and its territories.
Railroads’ impact on the economy was threefold, according to historian Albro Martin. First, the railroad industry reduced the real cost of transportation to a fraction of what it had been. Secondly, it brought all sections of the country into the national economy, making regional specialization on a grand scale possible. Finally, it gave birth to a host of other industries for which it became an indispensable input or from which it derived the huge quantities of materials and equipment called for by railroad investment.
Competition for business was steep, however, and cut heavily into company profits, leading one commentator to note that a person trying to run a railroad honestly would be like Don Quixote tilting at a windmill. (Charles F. Adams, Jr., in Railroads: The Origin and Problems, 1879). The cost of shipping 100 pounds of goods from Chicago to New York fell from a high of $2.15 in 1865 to between 35 cents and 75 cents in 1888. To stay in business, ruthless railroad owners charges higher rates on the short feeder lines where there was little or no competition, circumvented ‘official’ rate schedules by giving rebates to large customers and otherwise undercut smaller competitors until they failed. By 1879, 65 lines were bankrupt. During the 1880s, the surviving major rail lines responded by building or buying lines in order to create interregional systems. In that decade, more than 70,000 miles of line were built, with 164,000 miles in operation by 1890, most of it in the trans-Mississippi West. (See: Transportation)
In the face of competition and falling rates, the railroads developed a method, called ‘pooling,’ that established standard rates. Pooling was an agreement among rail companies operating in the same market to set and maintain rates at a certain level. Revenues were then ‘pooled’ and distributed among the lines. For example, in 1877, officials of the New York Central, Erie, Pennsylvania and the Baltimore and Ohio made a rate agreement for freight from New York to Chicago and St. Louis, putting the proceeds in a common pool to be divided between the lines on a 33, 33, 25 and 9 per cent basis respectively. At the same time, they also agreed to reduce the wages of their workforce by 10 per cent, leading, some say, to the great railroad strike of 1877. Pools became a ‘hot topic’ politically, leading ultimately to the Interstate Commerce Act of 1887, which outlawed the practice.
One of the most vociferous groups to speak out against the railroads were farmers. Already besieged by falling prices for their goods, they also faced higher shipping costs on the smaller feeder lines that faced little or no competition and thus could demand higher rates. It was often more costly to ship items short distances that it was to ship them between regions. The Granger movement of the 1870s and the Agrarian movements in the South and Great Plains during the same decade and into the 1880s adopted the railroad rate problem as one of their platforms. ( See: Politics)
Heavy Industry and Big Business
With railroads as the catalyst and advances in technology as the tools, heavy industry made huge strides in production, capitalization and consolidation. The steel industry and the oil industry are two major examples dominating the world of big business during the period.
Iron and Steel
The demands of a geographically expanding nation coupled with the need to build industrial infrastructure made the iron and steel industry of paramount importance in the last quarter of the nineteenth century. Competition was steep, though, and led ultimately to consolidation and integration among the competing companies. Technological advances, namely the Bessemer and open hearth processes for manufacturing steel, greatly improved efficiency and productivity. Huge fields of iron ore discovered in Minnesota and Michigan, and mined commercially in the 1870s and 1880s, fed the growing number of furnaces, just as the combination of rail and Great Lakes shipping made connecting raw materials to manufacturing centers easier. This conjoining of events and advancements gave the industry the critical mass necessary to become a major economic factor.
In 1880, there were about 792 iron and steel manufactures in the country. Making farm implements alone required approximately $62,000,000 in capital. Although Pittsburgh was considered the center of steel production, there were also multimillion dollar facilities in Illinois, Alabama and Colorado. These producers of iron and steel made the raw material for other industries making metal products large and small, from locomotives to agricultural and industrial machinery to knives. In 1885, the nation produced just under 5 million tons of pig iron and about 6.5 million tons of steel. In 1886, the corresponding numbers were approximately 6.5 million tons of pig iron and about 9 million tons of steel.
Andrew Carnegie was considered by most to be the kingpin of the steel industry. His rise from poor, immigrant bobbin boy in a textile mill to multimillion dollar industrialist was the stuff of legend. When others expanded their operations in good times, he instead chose to expand in lean time at less cost. He practices what became known as ‘horizontal integration,’ which meant he bought up his competitors ( again, in lean times) to control the market in one product.
Oil and Energy
With the discovery of oil in northwest Pennsylvania in 1859, the United States entered a new era of energy, one in which it is still entwined. This emerging industry had one advantage held by no other at the time - the US was the only source of commercially available crude oil in the world and consequently faced no foreign competition for its products. Speculation ran wild and the hills of Pennsylvania took on the frenzy of the California gold rush of a decade before. Production rose dramatically, from 10 million barrels a year in 1873 to 20 million barrels in 1880.
Before the invention of the gasoline engine, kerosene was the most important product. In the early years in Pennsylvania, hundreds of small refineries, reminiscent of the stills of neighboring moonshiners, produced kerosene under dangerously explosive conditions. By the 1870s, refining had been improved and the volume of crude being pumped caused prices to fall. Refineries became larger and more efficient. By the 1870s, the chief oil-refining centers were Cleveland, Pittsburgh, Baltimore and the New York City area. Of these, Cleveland was the fastest growing, due to advantages in rail and water transport.
Rockefeller and the Trust
The Standard Oil Company of Cleveland, led by John D. Rockefeller, emerged as the largest oil refining business in the country. By 1879, Rockefeller controlled 90 per cent of the nation’s oil refining capacity, plus a network of oil pipelines and reserves of petroleum still in the ground. Because of this monopoly and the expansion of the industry in general, the company attracted much attention in the late 19th century. By means fair and foul, Rockefeller and his associates cornered the market, driving prices down to destroy competitors, demanding and getting rebates from railroad companies for shipping, and employing spies and bribery to attract customers from competing companies.
As Rockefeller began to buy up companies in other states, and this brought him into conflict with Ohio law, which prohibited owning plants in other states or holding stock in out-of-state corporations. To circumvent this restriction, Rockefeller, with the help of lawyer Samuel C.T. Dodd, developed the "trust," in which the stock of Standard Oil of Ohio and all the other companies Rockefeller purchased was vested and placed under the control of nine trustees. The result was that competition nearly disappeared, and by 1892, Rockefeller was worth $800 million. The Trust’s complete control of the industry was soon synonymous with monopoly in the eyes of the public. Trusts became a vehicle in other industries, too. At one point the Sugar Trust, run by the American Sugar Refining Company, controlled 98% of sugar refining in the United States. In response, the government passed the Sherman Anti-Trust Act in 1890, which had mixed success in controlling these monopolies.
Labor’s Response to Big Business
The demandfor labor brought on by increased industrialization brought increasing numbers of rural migrants, women, children and newly arrived immigrants into the workforce after the Civil War. In the 1880s, more than 5 million immigrants arrived in this county, the majority of them from England, Ireland and Germany. 1882 marked a new high, with 788, 992 arrivals - more than 2, 100 per day. Additionally, falling agricultural prices during that decade caused many young men from farming communities to move to cities or migrate west. Those who found work in factories, mines or railroads had to bend to the demands of a new schedule, tied to machine and time clock. For some, this proved too onerous, and they turned to organized resistance.
Many historians note the railroad strike of 1877 as a watershed in the late nineteenth- century labor movement. In the economic downturn that followed the Panic of 1873, railroad managers cut wages, increased workloads and laid off workers, particularly those who belonged to unions. In July a series of strikes broke out among unionized workers who were protesting wage cuts. Violence spread from Pennsylvania into the Midwest. At one point, nearly two thirds of the railway mileage in the country was shut down. Private police - the Pinkertons - and state militia were called in by company owners to control the strikers. The courts issues injunctions against the strikers, citing conspiracy to obstruct the U.S. mail in some cases. In August that year, a judge in Indianapolis gave railroad strikers who had violated his injunction short jail sentence for contempt of court. After a month of unprecedented carnage, President Hayes sent in federal troops to end the strikes.
Craft unions dated from the early nineteenth century, but their narrow focus kept them from broad support and power. The National Labor Union, founded in 1866, failed to survive the hard times of the 1870s. Only the Knights of Labor, a broad based labor organization founded in 1860, survived the depression of 1873. The Knights, at first associated with garment cutters, opened its membership to other workers in the 1870s. Knights membership peaked in 1886, at 730,000. Unlike the narrowly focused trade unions at the time, which excluded everyone except workers in particular crafts, the Knights welcomed women, African-Americans, immigrants and all unskilled and semi-skilled workers. The Knights believed they could eliminate conflict by establishing a cooperative society in which laborers worked for themselves. "There is no good reason, " stated Grand Master Terence V. Powderly, "why labor cannot, through cooperation, own and operate mines, factories, and railroads." Most Knights leaders opposed strikes, but the failure of negotiations with Jay Gould in 1886 during a dispute over wages and union recognition for railroads in the Southwest caused militant crafts unions to break away. Membership in the Knights dwindled.
Once economic conditions improved in the early 1880s, labor groups began to campaign for an eight-hour work day. This renewed effort by laborers to regain control of their work gathered steam in Chicago, where radical anarchists - who believed that voluntary cooperation should replace government - and trade unionists promoted the cause. On May 1, 1886, mass strikes and the largest spontaneous labor demonstration in the nation’s history took place, with about 100,000 workers participating. Police mobilized, especially around the large McCormick reaper factory. The day passed calmly, but two days later, police stormed an area near the McCormick factory where striking union members and nonunion strikebreakers were battling. Police shot and killed two unionists and wounded a few others. Labor groups rallied the next evening at Haymarket Square, near downtown Chicago, to protest police brutality. As police approached the rally, a bomb was thrown and exploded near them, killing seven and injuring sixty-seven. Mass arrests followed, including eight anarchists, who were tried and convicted of the bombing, even though the evidence against them was questionable. Four were executed, one committed suicide in prison and the remaining three were pardoned in 1893. The identity of the bomber was never clearly established.
Out of this upheaval, the American Federation of Labor emerged as the preeminent worker’s organization. The AFL originated in a movement which arose in Terre Haute, Indiana and Pittsburgh in 1881, when Samuel Gompers, Adolph Strasser and Peter J. McGuire formed the Federation of Organized Trades and Labor Unions of the United States and Canada. Samuel L. Leffingwell of the Indianapolis Trades Assembly became the second president of the organization in 1882. By 1886, the organization had transformed into the AFL, which at that time had a membership of about 140,000. Gompers became the president, and remained in power well into the twentieth century.
The AFL avoided the idealistic rhetoric of the Knights of Labor and instead promoted concrete goals - higher wages, shorter hours, and collective bargaining rights. As a federation, member unions retained autonomy in their own areas of interest. However, since unions were organized by craft rather than by workplace, they had little interest in recruiting unskilled workers into membership. And, unlike the Knights, the AFL was openly hostile to women. Many unions affiliated with the AFL also had exclusionary policies when it came to immigrants and blacks. These prejudices were reinforced when blacks and immigrants worked as strikebreakers, who may have found the lure of employment too great to resist even as they faced militant strikers.
The business of agriculture changed in fundamental ways after the Civil War. Never had there been a greater expansion than between 1870 and 1900. Hundreds of thousands of acres of land came under cultivation west of the Mississippi, mostly in grain, causing other areas of the country to switch to and specialize in other farm products. The extensive network of rail lines facilitated moving products to markets, although not without significant cost. Mechanized farm equipment improved efficiency. Scientific methods were introduced through agencies like the Department of Agriculture, founded in 1862, and state experiment stations, established by the Hatch Act in 1887. Paradoxically, this expansion was accompanied by a steady price decline beginning with the Depression of 1873. This decline was fueled in part by overproduction and competition from other countries, thrusting American farmers into a global economy.
Farmers faced a number of economic issues between 1870 and 1897. The first was a steady downward trend in the price received for output coupled with chronic overproduction. Price declines were, in part, due to falling costs of production as new areas around the world came into production and as more progressive farmers continued the trend toward mechanization that began before the Civil War. And, in order to compensate for falling prices, farmers increased production as much as possible, hoping to make up in volume what was lost in falling prices.
Although prices declined in nearly all areas of the economy during the same period, the farmer faced other obstacles that reinforced the belief that other classes, especially the rising industrial and financial classes, were receiving a better deal from political institutions than they were. This feeling was more widespread in the newly opened areas of the plains, where the difficulties of initial cultivation and problems of isolated farm life fueled discontent. During the post-Civil War era, farm productivity did not grow as much as non-farm productivity. Therefore, when relative prices were approximately unchanged, the average farmer’s income grew at a slower rate than that of the average non-farmer. Farmers in the older and more favorably situated areas did, however, provide a counterbalance to the agrarian radicalism of the west and south.
Farmers in general also faced a the shortage of both short and long term credit. Because nationally chartered banks had been forbidden to engage in farm mortgage financing, farmers had to resort to state banks and private mortgage bankers who only lent on short term (five to seven years) at high rates of interest (8, 10 or 12 percent before 1887, 18 to 24 percent afterwards, in some cases), on mortgages that always seemed to come due when crops were bringing less than ever. Farmers borrowed money for start-up costs, to buy more land and to purchase livestock and equipment.
Railroad rates were another concern. Railroad companies, faced with stiff competition on trunk lines, often raised rates on the feeder lines where there competition was less - or non-existent - to compensate. Much of the concern over rates came from the newly opened areas on the Great Plains. A survey of rail rates in 1886 reveals that it cost between 54 cents and 76 cents per ton mile to ship goods east of Chicago, but as much as $2.04 per ton mile west of the Missouri River. At one point, it was cheaper for farmers on the plains to burn corn for heat than to ship it east to market.
Finally, unlike other producers, farmers were not protected by tariff legislation. Their products competed in the world market without the protection of import tariffs. (See: Politics of the 1870s and 1880s) And, in 1879, Italy declared U.S. pork "unwholesome," and banned its import. Portugal, Spain, France, Germany and Austria-Hungary soon followed. Exports of wheat, rye and their flours suffered even more after 1880. Meanwhile, manufactured goods were protected by U.S. tariff laws, thus keeping the price paid for those goods artificially high. Consequently, farmers were forced to sell their goods in a purely competitive world market, while buying in a protected one.
During this period, the percentage of Americans who worked in farming was declining, even though the total number of persons engaged in farming was increasing. In 1870, 6,850,000 persons were farming. In 1880, that number was 8,585,000 and in 1900, 10,912,000. Corresponding U.S. population for those years was (1870) 39,905,000, (1880) 50,262,000, (1900) 76,094,000. By the 1880s, the center of outward population migration was the Old Northwest, which had a loss of 1,087,000 out of 1,363,000 nationwide. Nearly all the moving population came from Midwestern farms and settled in mining camps and towns rather than on the land.
Statistics also reveal that the gross product per farm worker increased within the same period. Calculated in 1910-1914 dollars, the value increased from $362 in 1870, to $439 in 1880 and $526 in 1900.
Once the wheat belt moved to the central plains, the Old Northwest became the corn and hog belt, although wheat continued to be a major crop. Of the twelve highest producing states for wheat in 1880, Indiana was second. Also in 1880, Indianapolis was second only to Chicago in the number of hogs handled at packing houses. Around the same time, 4/5 of the corn produced in the U.S. came from ten states; Indiana was fourth on the list.
It is difficult to categorize the economic state of farmers in general during this period. The consensus of historians seems to indicate that the more radical strain of farmers came from the South and newly opened Great Plains. Farmers in both these regions faced enormous start-up costs, the South recovering from the war and Reconstruction and the Plains just opening up to cultivation. In other areas of the country, falling incomes and return on investment coupled with the lure of the west and new opportunities in urban areas drew labor from the farm to these new opportunities. It took until the early twentieth century for supply and demand to level out, as farm population stabilized and new waves of immigration increased the food needs of the country. It is evident, however, that the last quarter of the nineteenth century was a major transition period for agriculture, just as it was for other sectors of the economy.
Some general statistics for Indiana, taken from the 1880 U.S. Census:
329,614 males were employed in farming; 118,221 as laborers, 209,297 as farmers and planters. Of these 186,894 were between the ages of 16 and 59, 22, 403 were over 60 years old. Of the total, 186,894 were native born. The next largest group was German born, totaling 13, 462 One thousand six hundred twenty-six women were employed in agriculture out of 51,422 women employed in all sectors statewide. Of those employed in agriculture, 526 were laborers and 982 were farmers and planters.
The number of farms in Indiana in 1870 was 161,289; that number was 194,013 in 1880, a 20% increase. Slightly over 76% of the farms were owner operated. Acres in farming in 1880 totaled 20,420,983 or 88.9% of the total land, second only to Ohio, in a state that had an average of 55 people per square mile.
In 1880, Indiana produced 115,482,300 bushels of corn, 47,284,853 bushels of wheat and 15,599,518 bushels of oats. The comparable figures for the entire U.S. were 1,754,591,675 in corn, 459,483,137 in wheat and 407,858,999 in oats. The export prices per bushel in 1870 were 92.5 cents for corn, $1.298 for wheat and 63 cents for oats. Nine years later those prices were 47.1 cents for corn, $1.068 for wheat and 29.7 cents for oats, reflecting a relatively steep decline.
Mass Production and the Consumer Economy
A number of factors worked to bring rural residents into a world of consumer culture that emerged after the Civil War. As railroads spread, so did the availability of goods now massed produced in urban factories. Refrigerated rail cars, first patented in 1868, now brought heretofore unavailable produce, like oranges, to remote corners of the country. Purchases that once occurred by bargaining with the local storekeeper were now transacted with distant purveyors through mail order catalogs. Department stores, mail order catalogs and the new the 5 and 10 cent store were places of ‘awakened desire,’ as one historian put it. While the large retail emporiums and the 5 and 10 cent stores quenched the desires of city residents, rural families relied on the Montgomery Ward and Sears catalogs to keep them abreast on the latest conveniences, machinery, and fashion styles.
The Montgomery Ward catalog first arrived on the scene in 1872. That year, from a small rented loft in Chicago, Aaron Montgomery Ward sent out a single price sheet listing items for sale and explaining how to place an order. Twelve years later, the catalog numbered 240 pages and listed nearly ten thousand items for sale. Unlike a face-to-face purchase from the local storekeeper, the mail order business depended on the confidence of a buyer in a seller he or she had never seen. Ward built his business on his hope for a revolution in farmers’ buying habits. At first, Ward’s had the advantage of being the official supply house of the Grange. From 1872 through the 1880s, Ward’s described itself as " The Original Grange Supply House" and offered Grangers special privileges. Ward’s products also carried an ironclad guarantee - all goods were sent "subject to examination," and any item found to be unsatisfactory could be returned to the company, which paid the postage both ways. Ward’s apparently succeeded in personalizing these otherwise remote transactions, for correspondence soon included hundreds of men writing annually seeking a wife and letters from a few women looking for husbands.
Sears, Roebuck and Company appeared on the scene a bit later. In 1886, Richard Warren Sears set up the R.W. Sears Watch Company in Minneapolis, leaving his railroad station agent’s job after making about $5,000 by selling watches "on the side." A year later, he moved to Chicago and took a partner, Alvah Curtis Roebuck, a watchmaker. He sold this watch business in 1889 for $70,000,but was back in the retail business in a couple of years. By 1893, the firm of Sears, Roebuck and Company had expanded into a wide range of merchandise.
Some of the factors that precipitated the availability of mass goods arose from the Civil War. Standardized clothing sizes, developed first to clothe soldiers, transferred to the civilian population after the war. By the 1880s, retailers advertised " every size clothes for every sized man." Standard sizes for women took a bit longer to develop and become popular. The standardization and mass production of shoes followed a similar path.
Barter was still sometimes used as a means of transaction in rural areas. But, increasingly, the emergence of mail order catalogs and urban department stores, both with fixed prices, changed the way in which people acquired and paid for goods. The wide availability of relatively affordable consumer goods also changed how individuals and families defined "necessities" as advertising, a new medium, enticed folks to indulge in a variety of ‘new and improved’ commodities. The fixed price policy democratized the marketplace, in which items were judged not by their quality or function but by their price.
General storekeepers and other small merchants protested against the large retailers and their fixed prices. They cited unfair competition and the impersonal nature of ‘trading’ with the far-away retailers. In rural towns across the country, local residents still relied on the barter system and a bit of negotiating, but, increasingly, consumerism became a national phenomenon, encouraged by an expanding transportation system, relentless advertising and the growing availability of mass produced products.
The expansion and contraction of the money supply was of great concern to the farmers in the late 19th century. Prices were falling and interest rates rising, trapping farmers (and others) between the two. Some historians note, however, that even though farm prices were falling, so were other prices, so the total economic picture may not have been as bad as some say. Even so, farmers felt the pinch, especially in the newly opened areas west of the Mississippi, where start-up cost drove many into high interest, short term debt. Farmers in other regions faces similar challenges to raise production or increase specialization, and often took on debt to purchase new mechanized farm equipment or additional land. Finally, with the tight money supply, it was never certain whether hard currency would be available when it came time to sell crops after harvest.
One of the biggest issues surround the increase in the money supply was that of silver currency. In 1873, the government had dropped the provision for minting silver dollars in legislation governing the mint. This action attracted little attention at the time, since greenbacks and national bank notes were the only forms of currency in circulation. But as the money supply tightened, there was agitation to re-mint silver dollars. The government responded with the Bland-Allison Act of 1878, providing for the purchase of silver by the treasury in a specified amount and for its coinage into silver dollars. Provision was also made for the issuance of silver certificates in denominations of $10 and up. (In 1877, the Department of the Treasury’s Bureau of Engraving and Printing started printing all U.S. currency.) Experience proved that it was impossible to keep silver dollars in circulation and, by 1886 it became necessary to reduce the denomination of silver certificates to one dollar. It was in this form that most of the silver purchased went into circulation. Consequently, money in circulation around 1886 consisted of greenbacks, national bank notes and silver certificates - with an occasional silver dollar turning up.
On late nineteenth century economy in general, including discussions of agriculture see:
Barnes, James A. Wealth of the American People. New York: Prentice Hall, 1949.
Bogart, Ernest L. The Economic History of the United States. New York: Longmans, Green and Company, 1917.
Bruchey, Stuart. Enterprise: The Dynamic Economy of a Free People. Cambridge, Massachusetts: Harvard University Press, 1990.
Chandler, Arthur. The Changing Economic Order: Readings in American Business and Economic History. New York: Harcourt, Brace and World, Inc. 1968.
Degler, Carl N. The Age of Economic Revolution, 1876-1900. Glenview, Illinois: Scott, Foresman and Company, 1977.
Garraty, John A. The American Nation: A History of the United States Since 1865. New York: Harper and Row, 1983.
Greenleaf, William. American Economic Development Since 1860. Columbia: University of South Carolina Press, 1968.
Gunderson, Gerald. A New Economic History of America. New York: McGraw Hill, 1976.
Higgs, Robert. The Transformation of the American Economy, 1865-1914: An Essay in Interpretation. New York: John Wiley & Sons, 1971.
Hoftstader, Richard and Beatrice Hofstader. Great Issues in American History: From Reconstruction to the Present Day, 1864-1981. New York: Vintage Books, 1982. (See Part III Agrarian Reform, No. 1 Resolution of the Meeting of the Illinois State Farmer’s Association, April 1873.)
Licht, Walter. Industrializing America: the Nineteenth Century. Baltimore: Johns Hopkins Press, 1995.
Martin, Albro. "Economy from Reconstruction to 1914." in Porter, Glenn, ed. Encyclopedia of American Economic History. New York: Charles Scribner Sons, 1980.
Shannon, Fred. The Centennial Years: A Political and Economic History of America from the Late 1873s to the Early 1890s. Garden City, New York: Doubleday & Company, 1967.
Shields, Roger Elwood. Economic Growth with Price Deflation, 1873-1896. Dissertations in American Economic History, University of Virginia, August 1969.
For discussions of consumerism, see:
Boorstin, Daniel. The Americans: The Democratic Experience. New York: Random House, 1973.
Schlereth, Thomas J. Victorian America: Transformations in Everyday Life 1876 1915. New York: Harper-Collins, 1991.
Dirks, Scott. The Value of A Dollar: Prices and Incomes in the United States, 1860 1989. Lakeville, Connecticut: Grey Publishing House, 1999.
On the roots of the silver issue, see:
Weinstein, Allen. Prelude to Populism: Origins of the Silver Issue, 1867-1878. New Haven: Yale University Press, 1970.
For a focus on farmers and agriculture, see:
Danhof, Clarence H. " Agriculture in the North and West." in Porter, Glenn, ed. Encyclopedia of American Economic History. New York: Charles Scribner Sons, 1980.
Shannon, Fred A. The Farmer’s Last Frontier: Agriculture 1860-1897. Farrar & Rinehart, Inc., 1945.