Why Bank Rage Is Not Populism

Does the widespread public fury over AIG bonuses constitute a populist rebellion, and signal a major shift in American political culture? That's what the mainstream media seems to be pondering this week. The Newsweek cover that hit the stands yesterday reads “The Thinking Man’s Guide to Populist Rage.” Eye-catching hyperbole is the stuff of newsweekly covers. (Six weeks ago, Newsweek’s cover line was “We Are All Socialists Now.”) But the issue is filled with serious essays on the subject, by Michael Kazin, Eliot Spitzer, and others. And in yesterday's New York Times, John Harwood makes similar claims, painting people’s anger at Wall Street as part of a populist resurgence. Harwood’s most prominent source is, of all people, Ed Rollins, the Republican strategist whose credentials on the subject consist of working on the campaign of faux-populist Ross Perot.

One person not quoted in these pieces is the original, and still unequaled, historian of populism, Lawrence Goodwyn. He identified the first populist movement—-the agrarian revolt of the 1890s—as the greatest mass movement in American history. It posed a genuine challenge to the dominant power structures, especially the banking system. It was also largely an unfulfilled dream. Goodwyn’s 1978 book The Populist Moment is still in print and well worth reading, both for its stirring history and its insights into what is going on today—-and what isn’t going on.

Goodwyn traces the Populist Movement to its origins in the rural depression after the Civil War, when Southern and Western farmers formed clubs that fought the monopolistic railroad rates. By the 1870s these clubs had grown in number and size, forming themselves into Farmers Alliances, which engaged in all sorts of cooperative action, from catching horse thieves to buying supplies. By the 1890s, the alliances had a combined membership of more than one million people and were in the thick of politics. Georgia populist leader Tom Watson accused the Democrats of sacrificing “the liberty and prosperity of the country…to Plutocratic greed,” and the Republicans of serving the interests of “monopolists, gamblers, gigantic corporations, bondholders, [and] bankers.” He said that big business didn’t care about ordinary Americans “except as raw material served up for the twin gods of production and profit.”

Most significantly, in relation to today’s economic crisis, they demanded paper money and an end to the gold standard---changes they believed would help wrest control of credit, and of the money supply in general, from the hands of bankers and other blood-sucking plutocrats, and place it in the hands of the farmers and laborers who were the real producers of wealth. As an alternative, the populists proposed what they called the “sub-treasury plan,” under which a new monetary system would be created and operated “in the name of the whole people,” and credit would be freely extended to farmers, small producers, and other ordinary citizens.

In the election of 1890 the movement emerged with substantial blocs—52 congressmen, state legislatures, a handful of senators and governors–-and by 1892, the alliance leaders had created the foundations of a new People’s Party. They got more than one million votes in the elections that year. Cleveland won, and in 1893, rural America fell into deep depression. The populists gained favor, and in 1896, the Democratic Party’s nomination of William Jennings Bryan (who also opposed the gold standard) represented an effort to pull in the People’s Party. 

Kingfisher Reformer (Oklahoma), November 29, 1894

But the revolt collapsed, for a myriad of reasons: It failed in its efforts to build alliances with industrial labor unions and with black farmers in the South. And it was deprived of its driving force when economic conditions improved. Some rebellious farmers went home to the Republican Party; others splintered off into generally futile local movements. Certain populist ideas were gradually worked into the overall economy-—railroad regulation, some banking reform, direct election of senators, postal savings banks, initiatives and referendums, and an expanded concept of currency.

But in fact, the movement’s co-optation into the mainstream politics of the Progressive Era was what cemented its demise. Goodwyn sees these reforms as “skin-deep parodies of the original ideals.” As he puts it, what happened was “a consolidation of our current political culture, framed by the narrow aspirations of ‘reform,’—-falling within the labels of ‘progressive’ or `liberal.’ No one would ever again challenge the basic structures of the political economy.” As for the farmers, “the noose tightened, with smallholders being swallowed by big enterprises.” It marked the beginning of the movement toward agribusiness, as well as an affirmation of the power of the industrialists, the insurance companies, and above all the banks. The public would push back at that power structure in bad financial times such as the Great Depression, but would never again pose it any serious threat.

What’s going on today bears little resemblance to the great surge of political organizing that began in and spread through the South and West in the 1890s. To begin with, it isn’t now, nor is it likely to become, part of any larger mass movement. It’s directed at the worst excesses of the system, not at the system itself. And it doesn’t offer an alternative vision, beyond a few more progressive “reforms.” (Contrary to what Rush Limbaugh and Newsweek may say, we are definitely not all socialists now.)

Some reforms are being earnestly pursued by the Obama Administration and some members of Congress. But it is clear that they have no intention of taking the change any deeper. And even some of the less tepid reforms may fail. As Robert Reich wrote on his blog last week:

When the public isn't looking, Congress reverts to its old ways. The Obama-supported plan to allow distressed homeowners to renegotiate their mortgages under the protection of bankruptcy has run into a Wall Street wall....Obama's plan to limit itemized deductions for the richest 1.2 percent of taxpayers (including the top 1.9 percent of small business owners) to 28 percent, starting in 2011, is also in trouble on the Hill. Wealthy contributors and friends of congressional leaders involved in setting tax policy have balked. So Congress is telling the White House to look elsewhere for the $320 billion it needs over ten years to finance half of the tab for health care reform. Congressional leaders have also informed the White House that they don't have the votes to pass Obama's proposal for treating the earnings of hedge-fund and private-equity managers as income rather than capital gains.

Angry populism thrives on stories about the rich and privileged who use their influence to get cushy deals for themselves at the expense of the rest of us....It's too bad the same populist outrage doesn't extend to issues involving far more money, affecting many more people, and entailing far more insidious abuses of power.

Even if its worst abuses are reined in, the system will survive largely intact and the society it dominates will remain wildly unequal---a far cry from the dreams of those farmers who gathered in barns and grange halls when the nation was much younger than it is today.

Anthony Weekly Bulletin (Kansas), May 4, 1894. Cartoons from web site on Populism created by Worth Robert Miller, Department of History, Missouri State University.