Third Parties: The Greenback Party
During the post-bellum period of the 19th century, another grass-roots political movement formed, breaking away from the two major political parties over the issue of currency. The Greenback Party would also be known as the Independent Party, the National Independent Party, and the Greenback Labor Party over the course of history. It was a party that was opposed to monopolies and to the gold-backed monetary system. It was active between 1874 and 1889 and ran candidates for president in the elections of 1876, 1880, and 1884.
The party took its name from the non-gold backed paper money, called "greenbacks", issued by the North during the Civil War. The Greenback party was opposed to the lowering of prices paid to producers that took place when the nation returned to a bullion-based monetary system after the war, a policy favored by the dominant Republican Party. The Greenbacks felt that the continued use of unbacked currency would be healthier for business and would help farmers by raising prices and making debts easier to pay off.
The Civil War had a dramatic impact on the financial system of the United States. Not only were significant new war-related expenditures created, but tax revenue from the Confederate States were gone. This led to a severe business panic in the North when the government's initial illusions of a quick military victory proved incorrect and in the wake of early Southern victories, the federal government found it increasingly difficult to sell the government bonds necessary to finance the war. At first, two 1861 bond sales of $50 million each, sold through private banks, were successful, but bankers found the market for the 7.3% securities soft for a third bond issue. The fear was that the country's gold supply was inadequate and that the nation have to leave the gold standard. This led to runs on deposits in New York City in December of 1861, forcing banks there to disburse a substantial portion of their hard metal reserves. On December 30, 1861, New York banks suspended the redemption of their banknotes with gold. This action was followed by banks in other states and the U.S. Treasury itself soon suspended redemption of its own Treasury notes. The gold standard was effectively on hold at this time.
Abraham Lincoln's Treasury Secretary Salmon P. Chase saw this coming. To address the problem, he called for the establishment of a system of national banks, each empowered to issue banknotes backed with federal bonds rather than gold. In December 1861 Chase's proposal was initially ignored by Congress. Instead, in February 1862, Congress passed the First Legal Tender Act. This authorized the production of no more than $150 million in legal tender United States Notes (nicknamed "Greenbacks"). The name "greenbacks" came from the green ink used on the reverse side of the bill. The nation had a dual currency system, as greenbacks circulated at the same time as gold-backed currency and gold coin. Two subsequent issues of Greenbacks occurred in June 1862 and January 1863, and by the end of the war some $450 million of this non-gold-backed currency was in circulation.
Congress finally enacted Chase's National Bank plan in January 1863, creating a yet another form of currency, also backed by government bonds rather than gold and redeemable in United States Notes. This non-gold-based currency became the functional equivalent of greenbacks in circulation, further expanding the money supply. All of this led to the value of greenbacks being discounted in trade. By 1864, the value of a gold dollar bought $1.85 in greenback currency.
During the war, many factories shifted from the production of consumer goods into wartime production. Because of the lack of availability of many consumer goods, and also because of the expansion of the money supply, the United States experienced a period of protracted inflation during the War. From 1860 and 1865, the cost of living nearly doubled. In March 1865, Chase's successor as Secretary of the Treasury Hugh McCulloch announced that the resumption of gold payments was his primary goal. In December 1865 McCulloch asked Congress to retire the greenback currency from circulation, a necessary step in order to restore the gold standard. Congress passed the Contraction Act, calling for the withdrawal of $10 million in United States Notes within the first 6 months and an addition $4 million per month thereafter. This led to substantial contraction of the physical money supply. About $44 million in greenback currency was successfully withdrawn from circulation.
In 1867, a recession led to opposition in Congress to the redemption program and in February 1868 Congress terminated the Contraction Act. It was unclear where things stood, as Congress refused to either formally leave the gold standard or to redeem its non-gold currency in circulation. Ulysses Grant's Secretary of the Treasury, George S. Boutwell, formally abandoned the contraction policy.
Currency policy became a hot topic in national politics. Farmers organizations and representatives of the national trade union movement supported the greenback currency because they saw it as a way of breaking the control on the national economy held by banks and wealthy industrialists. The chief supporters of "Greenbackism" was the National Labor Union (NLU), an organization established in 1866. The NLU, along with other groups, began to turn to political action in 1870 in an effort to advance their political agenda. In August 1870 they held a convention calling for the establishment of the National Labor Reform Party.
Joining organized labor were a farmers' groups formally called the Patrons of Husbandry, but better known as the "Grange". Established in 1867, the Grange formed to fight the monopoly power held by railroads, which used various aggressive pricing for its own benefit against the farmers who shipped commodities by rail. When the Grangers turned their minds to politics in the early 1870s, railroad price reform was its number one issue. This group believed that currency reform would make it easier for debtors to repay their loans.
The Greenback Party formed out of an alliance of organized labor and farmers uniting against industrial- and banking-oriented Republican Party which ruled the North during the Reconstruction period. The late 1860s and early 1870s had been a time of considerable railway construction and this brought with it land speculation. Congress left the construction of railroad lines to be guided by market forces, rather than by any master plan. Congress tried to spur the growth of the industry through the grant of enormous tracts of public lands to privately owned railway companies. In May 1869 the First Transcontinental Railroad across the North American continent was completed, creating a national market for many products. The rush to complete additional railway lines to open up new frontier areas for development followed. In an effort to speed such development, Congress granted cash loans and some 129 million acres of publicly owned land to railways to subsidize this construction.
Railroads sold the land to finance their construction, something that was not cheap. They attracted new settlements to the lands west of the Missouri River, which had been previously seen as worthless because of its poor soil and arid climate. Millions of dollars were spent by the railway companies promoting the agricultural development of this land. Populations in these regions grew as the lands were sold and settled. But in 1873 the economic bubble burst. The Panic began when the brokerage house Jay Cooke & Company found itself unable to sell enough Northern Pacific Railroad bonds to meet its financial obligations, leading to a default on loans. This caused runs on banks, leading to a series of bank failures. In turn, many manufacturers closed production, laying off workers. Dozens of marginal railroads went bankrupt while unemployment skyrocketed. A lengthy depression continued through 1878.
The financial crisis awakened the erstwhile dormant debate over currency as Congress, passed an Inflation Bill calling for a $46 million increase in output of National Bank notes, raising the ceiling on unbacked currency back to $400 million, in order to prop up the banks. This legislation was vetoed by President Grant on April 22, 1874. The next Congress moved in the other direction, with the passage of the Specie Resumption Act of 1875. Under this plan the government would accumulate a sufficient gold reserve over the next several years through the sale of interest-bearing bonds for gold, using the accumulated metal to redeem the greenback currency on January 1, 1879. This move only served to further tighten the already contracting economy.
The Democratic Party was still discredited in the minds of many Northerners for its pro-Southern orientation. But many in the public also saw the Republican Party as dominated by pro-gold interests. Conditions were right for the emergence of a new political organization. And so the Greenback Party emerged, from a consolidation of like-minded state-level political organizations. The Greenback Party is said to have began in the state of Indiana, where early in 1873 a group of reform-minded farmers and political activists declared themselves free of the established parties and called themselves the "Independent Party." The group nominated a slate for statewide office, running on a platform which called for expansion of the national currency. In Wisconsin in the same year, a group known as the "Reform Party", also called Liberal Reform Party or People's Reform Party, formed from a coalition of Democrats, reform-minded Republicans, and Grangers. They were successful in getting William Robert Taylor elected as Governor of Wisconsin for a two-year term, as well as a number of state legislators, but it never formed a coherent organization.
The Indiana Independent organization called for a convention in August 1874, in which it urged all "greenback men" to assemble at Indianapolis that November to form a new national political party. The result was a gathering of individuals held in November in Indianapolis. No new party was formally established, but a governing Executive Committee was named for the prospective "National Independent Party," tasked with writing a declaration of principles and issuing another call for a formal founding convention. Several regional conventions took place in 1875. Most of those attending these initial gatherings were farmers or lawyers, with few urban wage workers or trade union officials (though the Panic of 1873 had dealt a blow to the labor movement at the time).
A convention was held in Indianapolis, Indiana in May 1876, at which the new party nominated its first candidates for President and Vice-President. Peter Cooper was nominated for president with 352 votes to 119 for three other contenders. The convention nominated anti-monopolist Senator Newton Booth of California for vice-president; after Booth declined to run, the national committee chose Samuel Fenton Cary as his replacement on the ticket. The party's platform focused upon repeal of the Specie Resumption Act of 1875 and the renewed use of non-gold-backed United States Notes in an effort to restore prosperity through an expanded money supply.
The Greenback Party of 1876 drew the support almost exclusively from farmers. It received 83,726 votes nationally, less than 1% of the popular vote, and no electoral votes. But in the summer of 1877, a strike movement erupted across the country, leading to the suppression of local strike actions by Federal troops and a radicalization of workers. A number of local political organizations sprung up around the country, concentrated in the states of Ohio, Pennsylvania, and New York. In the late 1870s, the party fortunes grew as it controlled local government in a number of industrial and mining communities and contributed to the election of 21 members in the United States Congress. The movement found particular success in Wisconsin, California, Iowa and Kansas.
The Greenbackers condemned the National Banking System, created by the National Banking Act of 1863, the harmonization of the silver dollar (the Coinage Act of 1873) and the Resumption Act of 1875, which had returned the nation to the gold standard in 1879. In 1880 the Greenback Party broadened its platform to include support for an income tax, an eight hour day, and allowing women the right to vote.
A leading spokesmen in the party was former Union General Thomas Ewing, Jr. who had once been a Republican, who turned Democrat after the Grant Administration. His national debates on Greenback Monetary policy, led the party's growth. Ewing served in Congress from 1877 to 1881 during the Hayes administration as a leading spokesman for those national politicians who wanted the nation's money supply used to expand commerce. He argued that the repayment in gold the interest on civil war bonds to Eastern bankers was harmful to the nation because those bankers antebellum lending practices to the South had helped slavery flourish.
In 1880 the party ran a slate of James B. Weaver of Iowa for President and Barzillai J. Chambers of Texas for Vice-President. They received 308,649 votes nationally, increasing the party's share of the popular vote to 3.35%. In 1884, the party nominated Benjamin F. Butler of Massachusetts for president and Absolom M. West of Mississippi was nominated unanimously for vice-president. Party support in the general election fell to 134,294 votes (1.33%). Butler was the party's last presidential nominee.
The Greenback Party seemed to reach a peak during the Republican administrations of the 1870s and early 1880s, but it saw its popularity decline when Democrat Grover Cleveland came to power. In the election of 1884, the party failed to win any House seats outright. Many of the party's former supporters endorsed Democratic candidates, who were now seen as more politically palatable. In the election of 1886, only two dozen Greenback candidates ran for the House, along with another six who ran on fusion tickets.
In early 1888, it was not clear if the Greenback Party would hold another national convention. The 4th Greenback Party National Convention assembled in Cincinnati, Ohio, on May 16, 1888, but there were so few delegates who attended that no actions were taken. On August 16, 1888, George O. Jones, chairman of the national committee, called a second session of the national convention. The second session of the national convention met in Cincinnati on September 12, 1888. Only seven delegates attended. Chairman Jones issued an address criticizing the two major parties, and the delegates made no nominations. With the failure of the convention, the Greenback Party ceased to exist.
Many Greenback activists, including the party's 1880 Presidential nominee James B. Weaver, later joined the Populist Party. By the middle of the 1880s, Greenback Labor nationally was losing its labor-based support, as man of its members defected to the Democratic Party. The Greenback Party's main policy issue was taken over by the Democratic Party, when the latter began to call for a looser monetary policy and an ultimate abandonment of the gold standard.
The party took its name from the non-gold backed paper money, called "greenbacks", issued by the North during the Civil War. The Greenback party was opposed to the lowering of prices paid to producers that took place when the nation returned to a bullion-based monetary system after the war, a policy favored by the dominant Republican Party. The Greenbacks felt that the continued use of unbacked currency would be healthier for business and would help farmers by raising prices and making debts easier to pay off.
The Civil War had a dramatic impact on the financial system of the United States. Not only were significant new war-related expenditures created, but tax revenue from the Confederate States were gone. This led to a severe business panic in the North when the government's initial illusions of a quick military victory proved incorrect and in the wake of early Southern victories, the federal government found it increasingly difficult to sell the government bonds necessary to finance the war. At first, two 1861 bond sales of $50 million each, sold through private banks, were successful, but bankers found the market for the 7.3% securities soft for a third bond issue. The fear was that the country's gold supply was inadequate and that the nation have to leave the gold standard. This led to runs on deposits in New York City in December of 1861, forcing banks there to disburse a substantial portion of their hard metal reserves. On December 30, 1861, New York banks suspended the redemption of their banknotes with gold. This action was followed by banks in other states and the U.S. Treasury itself soon suspended redemption of its own Treasury notes. The gold standard was effectively on hold at this time.
Abraham Lincoln's Treasury Secretary Salmon P. Chase saw this coming. To address the problem, he called for the establishment of a system of national banks, each empowered to issue banknotes backed with federal bonds rather than gold. In December 1861 Chase's proposal was initially ignored by Congress. Instead, in February 1862, Congress passed the First Legal Tender Act. This authorized the production of no more than $150 million in legal tender United States Notes (nicknamed "Greenbacks"). The name "greenbacks" came from the green ink used on the reverse side of the bill. The nation had a dual currency system, as greenbacks circulated at the same time as gold-backed currency and gold coin. Two subsequent issues of Greenbacks occurred in June 1862 and January 1863, and by the end of the war some $450 million of this non-gold-backed currency was in circulation.
Congress finally enacted Chase's National Bank plan in January 1863, creating a yet another form of currency, also backed by government bonds rather than gold and redeemable in United States Notes. This non-gold-based currency became the functional equivalent of greenbacks in circulation, further expanding the money supply. All of this led to the value of greenbacks being discounted in trade. By 1864, the value of a gold dollar bought $1.85 in greenback currency.
During the war, many factories shifted from the production of consumer goods into wartime production. Because of the lack of availability of many consumer goods, and also because of the expansion of the money supply, the United States experienced a period of protracted inflation during the War. From 1860 and 1865, the cost of living nearly doubled. In March 1865, Chase's successor as Secretary of the Treasury Hugh McCulloch announced that the resumption of gold payments was his primary goal. In December 1865 McCulloch asked Congress to retire the greenback currency from circulation, a necessary step in order to restore the gold standard. Congress passed the Contraction Act, calling for the withdrawal of $10 million in United States Notes within the first 6 months and an addition $4 million per month thereafter. This led to substantial contraction of the physical money supply. About $44 million in greenback currency was successfully withdrawn from circulation.
In 1867, a recession led to opposition in Congress to the redemption program and in February 1868 Congress terminated the Contraction Act. It was unclear where things stood, as Congress refused to either formally leave the gold standard or to redeem its non-gold currency in circulation. Ulysses Grant's Secretary of the Treasury, George S. Boutwell, formally abandoned the contraction policy.
Currency policy became a hot topic in national politics. Farmers organizations and representatives of the national trade union movement supported the greenback currency because they saw it as a way of breaking the control on the national economy held by banks and wealthy industrialists. The chief supporters of "Greenbackism" was the National Labor Union (NLU), an organization established in 1866. The NLU, along with other groups, began to turn to political action in 1870 in an effort to advance their political agenda. In August 1870 they held a convention calling for the establishment of the National Labor Reform Party.
Joining organized labor were a farmers' groups formally called the Patrons of Husbandry, but better known as the "Grange". Established in 1867, the Grange formed to fight the monopoly power held by railroads, which used various aggressive pricing for its own benefit against the farmers who shipped commodities by rail. When the Grangers turned their minds to politics in the early 1870s, railroad price reform was its number one issue. This group believed that currency reform would make it easier for debtors to repay their loans.
The Greenback Party formed out of an alliance of organized labor and farmers uniting against industrial- and banking-oriented Republican Party which ruled the North during the Reconstruction period. The late 1860s and early 1870s had been a time of considerable railway construction and this brought with it land speculation. Congress left the construction of railroad lines to be guided by market forces, rather than by any master plan. Congress tried to spur the growth of the industry through the grant of enormous tracts of public lands to privately owned railway companies. In May 1869 the First Transcontinental Railroad across the North American continent was completed, creating a national market for many products. The rush to complete additional railway lines to open up new frontier areas for development followed. In an effort to speed such development, Congress granted cash loans and some 129 million acres of publicly owned land to railways to subsidize this construction.
Railroads sold the land to finance their construction, something that was not cheap. They attracted new settlements to the lands west of the Missouri River, which had been previously seen as worthless because of its poor soil and arid climate. Millions of dollars were spent by the railway companies promoting the agricultural development of this land. Populations in these regions grew as the lands were sold and settled. But in 1873 the economic bubble burst. The Panic began when the brokerage house Jay Cooke & Company found itself unable to sell enough Northern Pacific Railroad bonds to meet its financial obligations, leading to a default on loans. This caused runs on banks, leading to a series of bank failures. In turn, many manufacturers closed production, laying off workers. Dozens of marginal railroads went bankrupt while unemployment skyrocketed. A lengthy depression continued through 1878.
The financial crisis awakened the erstwhile dormant debate over currency as Congress, passed an Inflation Bill calling for a $46 million increase in output of National Bank notes, raising the ceiling on unbacked currency back to $400 million, in order to prop up the banks. This legislation was vetoed by President Grant on April 22, 1874. The next Congress moved in the other direction, with the passage of the Specie Resumption Act of 1875. Under this plan the government would accumulate a sufficient gold reserve over the next several years through the sale of interest-bearing bonds for gold, using the accumulated metal to redeem the greenback currency on January 1, 1879. This move only served to further tighten the already contracting economy.
The Democratic Party was still discredited in the minds of many Northerners for its pro-Southern orientation. But many in the public also saw the Republican Party as dominated by pro-gold interests. Conditions were right for the emergence of a new political organization. And so the Greenback Party emerged, from a consolidation of like-minded state-level political organizations. The Greenback Party is said to have began in the state of Indiana, where early in 1873 a group of reform-minded farmers and political activists declared themselves free of the established parties and called themselves the "Independent Party." The group nominated a slate for statewide office, running on a platform which called for expansion of the national currency. In Wisconsin in the same year, a group known as the "Reform Party", also called Liberal Reform Party or People's Reform Party, formed from a coalition of Democrats, reform-minded Republicans, and Grangers. They were successful in getting William Robert Taylor elected as Governor of Wisconsin for a two-year term, as well as a number of state legislators, but it never formed a coherent organization.
The Indiana Independent organization called for a convention in August 1874, in which it urged all "greenback men" to assemble at Indianapolis that November to form a new national political party. The result was a gathering of individuals held in November in Indianapolis. No new party was formally established, but a governing Executive Committee was named for the prospective "National Independent Party," tasked with writing a declaration of principles and issuing another call for a formal founding convention. Several regional conventions took place in 1875. Most of those attending these initial gatherings were farmers or lawyers, with few urban wage workers or trade union officials (though the Panic of 1873 had dealt a blow to the labor movement at the time).
A convention was held in Indianapolis, Indiana in May 1876, at which the new party nominated its first candidates for President and Vice-President. Peter Cooper was nominated for president with 352 votes to 119 for three other contenders. The convention nominated anti-monopolist Senator Newton Booth of California for vice-president; after Booth declined to run, the national committee chose Samuel Fenton Cary as his replacement on the ticket. The party's platform focused upon repeal of the Specie Resumption Act of 1875 and the renewed use of non-gold-backed United States Notes in an effort to restore prosperity through an expanded money supply.
The Greenback Party of 1876 drew the support almost exclusively from farmers. It received 83,726 votes nationally, less than 1% of the popular vote, and no electoral votes. But in the summer of 1877, a strike movement erupted across the country, leading to the suppression of local strike actions by Federal troops and a radicalization of workers. A number of local political organizations sprung up around the country, concentrated in the states of Ohio, Pennsylvania, and New York. In the late 1870s, the party fortunes grew as it controlled local government in a number of industrial and mining communities and contributed to the election of 21 members in the United States Congress. The movement found particular success in Wisconsin, California, Iowa and Kansas.
The Greenbackers condemned the National Banking System, created by the National Banking Act of 1863, the harmonization of the silver dollar (the Coinage Act of 1873) and the Resumption Act of 1875, which had returned the nation to the gold standard in 1879. In 1880 the Greenback Party broadened its platform to include support for an income tax, an eight hour day, and allowing women the right to vote.
A leading spokesmen in the party was former Union General Thomas Ewing, Jr. who had once been a Republican, who turned Democrat after the Grant Administration. His national debates on Greenback Monetary policy, led the party's growth. Ewing served in Congress from 1877 to 1881 during the Hayes administration as a leading spokesman for those national politicians who wanted the nation's money supply used to expand commerce. He argued that the repayment in gold the interest on civil war bonds to Eastern bankers was harmful to the nation because those bankers antebellum lending practices to the South had helped slavery flourish.
In 1880 the party ran a slate of James B. Weaver of Iowa for President and Barzillai J. Chambers of Texas for Vice-President. They received 308,649 votes nationally, increasing the party's share of the popular vote to 3.35%. In 1884, the party nominated Benjamin F. Butler of Massachusetts for president and Absolom M. West of Mississippi was nominated unanimously for vice-president. Party support in the general election fell to 134,294 votes (1.33%). Butler was the party's last presidential nominee.
The Greenback Party seemed to reach a peak during the Republican administrations of the 1870s and early 1880s, but it saw its popularity decline when Democrat Grover Cleveland came to power. In the election of 1884, the party failed to win any House seats outright. Many of the party's former supporters endorsed Democratic candidates, who were now seen as more politically palatable. In the election of 1886, only two dozen Greenback candidates ran for the House, along with another six who ran on fusion tickets.
In early 1888, it was not clear if the Greenback Party would hold another national convention. The 4th Greenback Party National Convention assembled in Cincinnati, Ohio, on May 16, 1888, but there were so few delegates who attended that no actions were taken. On August 16, 1888, George O. Jones, chairman of the national committee, called a second session of the national convention. The second session of the national convention met in Cincinnati on September 12, 1888. Only seven delegates attended. Chairman Jones issued an address criticizing the two major parties, and the delegates made no nominations. With the failure of the convention, the Greenback Party ceased to exist.
Many Greenback activists, including the party's 1880 Presidential nominee James B. Weaver, later joined the Populist Party. By the middle of the 1880s, Greenback Labor nationally was losing its labor-based support, as man of its members defected to the Democratic Party. The Greenback Party's main policy issue was taken over by the Democratic Party, when the latter began to call for a looser monetary policy and an ultimate abandonment of the gold standard.