Greenbacks Rebelled Against the Power of Banks—Sound Familiar?

Handbill for 1876 candidate Peter Cooper.

Note—This post first ran one year ago today but still seems like a timely reminder of a long struggle in this country against the power of banks.

On November 25, 1874 a new political party was born at a convention held in Indianapolis, Indiana.  They called themselves the Independent Party.  In some states they would first appear on the ballot as the National Party.  But within months the new party was widely known as the Greenbacks as they grew at an astonishing rate challenging the entrenched Republican and Democratic Parties.

The Party was formed out of frustration with both major parties as major eastern banking interests demanded that the Federal Government stop issuing paper money and return the issuance of currency to the banks.  Federal paper money, popularly known as greenbacks, had been first issued under Secretary of the Treasury Salmon P. Chase to help finance the Civil War.  Inflation had been an inevitable result.

The banks and conservative hard money politicians in both parties, wanted not only to stop the government printing presses, they wanted to require that bills be redeemed in specie--gold.  This would create instant deflation.  But farmers and others who took out loans in inflated dollars would be required to repay the full face value of the loan plus interest in the much more expensive new currency or gold.  This alone would wipe out many farmers and small businesses.  It was also a blow at western mining interests by demonetizing silver coinage.  Silver coins would continue to circulate, but notes—printed currency—would have to be paid in gold.

The banks got their way with the passage of the Coinage Act of 1873.  Facing ruin, borrowers and their soft money supporters in both parties, organized to challenge the banking oligarch of the Gilded Age.

Within months the new party was established and running under different names in most states.  Although its greatest strength was in the Mid-West and West, it also found support among small farmers in the South, and Northeast.  In fact, with Democrats and Republicans fracturing mainly along the lines of the Civil War, it looked for a time like the Greenbacks were the only truly national party.

The Species Payment Restoration Act of 1875 completed what the Coinage Act had begun.  It limited remaining Greenbacks in circulation to $300 million and The Secretary of the Treasury was directed to ‘redeem, in coin” legal-tender notes presented for redemption 1 January 1, 1879.

In 1876 the new party nominated the distinguished, but eccentric 85 year old Peter Cooper as its candidate for President.  Cooper was an industrialist who had built the first practical railroad in the U.S.; a philanthropist who had founded Cooper Union, a college open to students of all economic, religious, racial, and ethnic backgrounds; and a leading liberal voice in New York City politics.  The party knew it had no chance to win the presidency, but the prestige of Cooper led to success in getting on the ballot in most states and helping elect local office holders.

The Greenbacks crested in the off-presidential year of 1876 when they elected 13 members of Congress. Thomas Ewing, Jr. of Ohio a pre war Kansas Free Soil leader and post war soft money Democrat, was the leading spokesman for the party in Congress and the most widely known and influential public figure.

In 1880 the party broadened its base and attracted new support from industrial workers in the Northeast, especially the politically savvy Irish, by adopting a staunchly pro-labor platform advocating a progressive income tax and the eight hour day.  It also made a bid for the support of middle class reformers, previously primarily Republican, by endorsing women’s suffrage.  The rise of the Grange Movement mirrored Greenback popularity among its original farmer base.

The 1880 Presidential Candidate was Iowa’s James B. Weaver. He received 305,997 popular votes, 3.3% of the total and the high water mark of the Greenbacks in Presidential elections.

Despite the continued popularity of their core demand—the return to a system of government issued currency detached from gold—in some areas, the party began a decline.  Those middle class reformers never did abandon the Republicans in any significant degree.  Southern Democrats gained in popularity as Reconstruction ended and they seized state governments from Black Republicans and fusion or pro-union whites leading to the Jim Crow Era.

Meanwhile the Knights of Labor largely collapsed following the Great Railroad Strike of 1877 and the rising craft union movement was both conservative and actually hostile to mass industrial workers greatly weakening their political power and influence.  The Irish returned to the traditional Democratic loyalties in most big cities.

Back in Indianapolis the 1884 Party convention nominated Benjamin F. Butler for President.  Butler had also received the nomination of an even smaller Anti-Monopoly Party.  The sitting Governor of Massachusetts, Butler was a polarizing figure in American politics.  A pre-war Democrat, Butler was a political general famous for his occupation command of New Orleans and the order to treat “disrespectful” ladies as “women of the streets plying their trade.”  He had a later command of the Department of Virginia where he refused to return runaway slaves that reached his lines to their owners, declaring the “contraband of war.”  He was also widely suspected of corruption.  Elected to Congress after the war he became a leading Radical Republican and one of the managers of the President Andrew Johnson’s unsuccessful impeachment trial before the Senate.  Back in his home state of Massachusetts he ran three times for Governor, finally winning in 1882 on a Democrat-Greenback fusion ticket. 

Butler’s presence on the ticket, despite a Mississippi running mate, virtually killed the Greenbacks in the South.  As head of the ticket he won only 177,096 popular votes, just 1.7% of the total.  The party was also reduced to just two seats in Congress, one of them taken by former Presidential candidate Weaver.

By 1888 local party apparatus around the country had collapsed.  Only 8 delegates showed up for a nominating convention.  They gave up and went home.  The party was essentially dead.  But not its ideas.

In the 1890’s the new Populist Party took up most of its core platform.  The Populists’ first Presidential Candidate in 1892 was the last Greenback in Congress—James B. Weaver.  In 1896 fiery Nebraska orator William Jennings Bryan got the nomination of both the Populists and Democrats, campaigning on the old Greenback demand of the free coinage of silver and end to the de-facto gold standard.