By the mid-1890s a new idea of the role of government had taken hold in America. Not surprisingly, given the reliance of the Founding Fathers on the importance of private property and the divisive issue of slavery, the new concept of the role of the State was rooted in the decision in Scott v. Sandford that defended slavery, and the Slaughterhouse Cases that nullified the 14th Amendment that was, as William Crosskey pointed out, clearly intended to overturn Scott v. Sandford.
Also not surprisingly, the new concept of government was a direct result of the spread of propertylessness in America. Since the Civil War most Americans had been shut out of the opportunity to participate in ownership of the new commercial and industrial capital. Only the Homestead Act made it possible for ordinary citizens to acquire landed capital. By 1893, however, most of the land available under the Homestead Act had been taken, and Frederick Jackson Turner could announce the closing of the American frontier in a paper presented at the Columbian Exhibition in Chicago.
Even less surprising, by 1893 the disconnect between America's productive capacity and the country's capacity to consume had again reached a critical stage. A number of companies failed, and the country went into a depression — known as "the Great Depression" until that of the 1930s.
In previous economic downturns, the only people who suffered (by and large) were the wealthy who got caught up in whatever speculative fever had gripped the country, and the people who depended on them for wage income. This had not been a significant percentage of the population before the Civil War. "Hard Times" of the 1830s had left the small businessman and the subsistence farmers who were his customer base pretty much alone. Even the depression of the 1870s that followed the Panic of 1873 affected far fewer people than we of today might expect when cataloguing the number of business failures. A determinant number of people still relied on farming and small business, not wages, for their subsistence.
By 1893 all that had changed. The generation following the Panic of 1873 saw large numbers of people leaving farming and small business, and vast numbers of immigrants, all going to work for wages in the new commercial and industrial enterprises. The United States had shifted from a nation of owners, to a nation predominantly proletarian. Populism, that had offered such promise in the 1870s and 1880s, had now, stripped of its emphasis on private property, become just one more form of socialism.
People now began looking to the State, especially the federal government, to solve economic problems directly, rather than provide for the general welfare by ensuring a level playing field and equal access to the means to enjoy life, liberty and property. This, of course, also undermined the pursuit of happiness by inhibiting or preventing acquiring and developing virtue through the exercise of these natural rights. Nowhere was this shift more apparent than in the transformation of populism.
We can take two things as epitomizing what populism had now become, and how many people now perceived the role of the State: Coxey's Army, and the presidential campaign of William Jennings Bryan.
Coxey's Army was a protest march by unemployed workers led by the populist businessman Jacob Coxey. They marched on Washington D.C. in 1894 from all across the United States. The official name of the group was "The Army of the Commonweal in Christ," which is hardly remembered today. Among the demands of the group was inflation of the currency and more government debt to finance infrastructure jobs for the unemployed, and greater control of business by the federal government.
While Coxey was honest and sincere in his efforts, a number of people used the march for their own ends. "The Great Unknown," for example, was supposed to be an unemployed factory worker kept anonymous to represent everyman, but who turned out to be an actor hired for the purpose by one of Coxey's lieutenants. Vagrants also swelled the ranks in the hope of free food, especially in the first wave when the marchers had great sympathy from the people along the way — a sympathy that faded rapidly as successive waves of hungry marchers kept showing up for handouts of food and money.
Dissension and official suspicion of the march watered down the effect of the demonstration staged in Washington. Coxey was arrested when he tried to give a speech in front of the Capitol when he walked on the lawn after being ejected from the steps. This made "Keep Off the Grass" a populist protest slogan that persisted for many years, even, e.g., appearing in some Warner Brothers' cartoons as late as the 1940s.
The effort petered out, with contingents camping out for months around Washington until evicted by the authorities after complaints by local residents. "As ragged/dirty as Coxey's Army" and "Enough food to feed Coxey's Army" are relicts of the march.
The presidential campaign of 1896 was a much more effective effort by the populists. Under the leadership of William Jennings Bryan, the movement shifted its emphasis to "free silver." The idea was to get away from the rigidity imposed on the economy by having an inelastic currency based on gold and a fixed amount of government debt under the National Bank system, and allow unlimited coinage of cheap silver and an increase in government debt to provide sufficient money to run the economy and get out from under the burden of personal debt that plagued farmers and small businessmen.
The populists were opposed not only by conservative Republicans, but by moderate Republicans and Democrats who feared that inflation would destroy the country. The real problem with what became known as Bryan's "silver socialism," however, was that it diverted attention away from the serious need for fundamental reform of the financial system. Faced with the choice of a sound, if inelastic currency, and an inflationary and unsound elastic currency, anyone recognizing the importance of a stable and uniform currency for both political and economic stability was forced into the capitalist camp — and thus to be controlled by the financial interests in New York City, meaning the Rockefellers, the Morgans and the Aldrichs.
It also meant that the legitimate demands of the moderates in both parties for social and financial reform, as well as of the populists and socialists, were shunted aside and labeled as socialism, whether or not that was actually the case.
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