Lecture 30 of 64 · A History of Money and Banking in the United States Before the Twentieth Century
30. 1896: The Transformation of the American Party System
30. 1896: The Transformation of the American Party System by Murray N. Rothbard is a free audio lecture (17:34) at freecapitalists.org, part of the 64-lecture series A History of Money and Banking in the United States Before the Twentieth Century.
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0:001896. The Transformation of the American Party System. Orthodox economic historians attribute the triumph of William Jennings Bryan in the Democratic Convention of 1896 and his later renominations for president to a righteous rising up of the people demanding inflation over the interests holding out for gold. Friedman and Schwartz attribute the rise of Bryanism to a price contraction of the last three decades of the 19th century, and the triumph of gold Gold and Disappearance of the quote money issue to the price rise after 1896. This conventional analysis overlooks several problems. First, if Brian represented the people versus the interests, why did Brian lose and lose soundly not once but three times?
0:47Why did gold triumph long before any price inflation became obvious, in fact at the depths of price contraction in 1896? But the main neglect of the conventional analysis is the disregard of the highly illuminating insights provided in the past 15 years by the quote, new political history of 19th century American politics and its political culture. The new political history began by going beyond national political issues, largely economic, and investigating state and local political contests. It also dug into the actual voting records of individual parishes, wards and counties and discovered how people voted and why they voted the way they did. The work of the new political history is truly interdisciplinary, for its methods range from sophisticated techniques for voting analysis to illuminating insights into American ethnic religious history.
1:40In the following pages, we shall present a summary of the findings of the new political history on the American party structure of the late 19th century and after, and on the transformation of 1896 in particular. First, the history of American political parties is one of successive, quote, party systems. Each party system lasts several decades, with each particular party having a certain central character. In many cases, the name of the party can remain the same, but its essential character can drastically change in the so-called, quote, critical elections. In the 19th century, the nation's second party system, the Whigs vs. Democrats, lasting lasting from about 1832 to 1854, was succeeded by the third system, the Republicans vs. Democrats, lasting from 1854 to 1896.
2:29Characteristic of both party systems was that each party was committed to a distinctive ideology clashing with the other, and these conflicting worldviews made for fierce and close contests. Elections were particularly hard fought. Interest was high since the parties offered a quote choice, not an echo, and so the turnout was remarkably high, often reaching 80% to 90% of eligible voters. More remarkably, candidates did not, as we are used to in the 20th century, fuzz their ideology during campaigns in order to appeal to a floating, ideologically different, independent voter. There were very few independent voters. The way to win elections, therefore, was to bring out your vote, and the way to do that was to intensify and strengthen your ideology during campaigns. Any fuzzing over would lead the Republican or Democratic constituents to stay home in disgust and the election would be lost.
3:22Very rarely would there be a crossover to the other hated party. One problem that strikes anyone interested in 19th century political history is, how come the average person exhibited such great and intense interest in such arcane economic topics as banking, gold and silver, and tariffs? Thousands of half-literate people wrote embattled tracks on these topics and voters were intensely interested, attributing the answer to inflation or depression to seemingly economic interests as do Marxists and other economic determinists simply won't do. The far greater depressions and inflations of the 20th century have not induced nearly as much mass interest in economics as did the milder economic crises of the past century.
4:07Only the findings of the new political historians have cleared up this puzzle. It turns out that the mass of the public was not necessarily interested in what the elites or national politicians were talking about. The most intense and direct interest of the voters was applied to local and state issues, and on these local levels the two parties waged an intense and furious political struggle that lasted from the 1830s to the 1890s. The beginning of the century-long struggle began with the profound transformation of of American Protestantism in the 1830s. This transformation swept like wildfire across the Northern States, particularly Yankee territory during the 1830s, leaving the South virtually untouched. The transformation found particular root among Yankee culture with its aggressive and domineering spirit.
4:55This new Protestantism called pietism was born in the fires of Charles Finney and the great revival movement of the 1830s. Its credo was roughly as follows. Each individual is responsible for his own salvation, and it must come in an emotional moment of being, quote, born again. Each person can achieve salvation. Each person must do his best to save everyone else. This compulsion to save others was more than simple missionary work. It meant that one would go to hell unless he did his best to save others. But since each person is alone and facing the temptation to sin, This role can only be done by the use of the state. The role of the state was to stamp out sin and create a new Jerusalem on earth. The pietists defined sin very broadly.
5:41In particular, the most important politically was, quote, demon rum, which clouded men's minds and therefore robbed them of their theological free will. In the 1830s, the evangelical pietists launched a determined and indefatigable prohibitionist Second was any activity on Sunday except going to church, which led to a drive for sabbatarian blue laws. Drinking on Sunday was of course a double sin and hence was particularly heinous. Another vital thrust of the new Yankee Pietism was to try to extirpate Roman Catholicism, which robs communicants of their theological free will by subjecting them to the dictates of priests who are agents of the Vatican. If Roman Catholics could not be prohibited per se, their immigration could be slowed down or stopped.
6:31And since their adults were irrevocably steeped in sin, it became vital for crusading pietists to try to establish public schools as compulsory forces for Protestantizing society or, as the pietists like to put it, to quote, Christianize the Catholics. If the adults are hopeless, the children must be saved by the public school and compulsory attendance laws. First was the political program of Yankee pietism. Not all immigrants were scorned. British, Norwegian, or other immigrants who belonged to pietist churches, whether nominally Calvinist or Lutheran or not, were welcomed as, quote, true Americans. The Northern pietists found their home almost to a man, first in the Whig Party and then in the Republican Party. And they did so, too, among the Greenback and Populist parties, as we shall see further below.
7:18There came to this country during the century an increasing number of Catholic and Lutheran The Catholics and High Lutherans, who have been called, quote, ritualists or liturgicals, had a very different kind of religious culture. Each person is not responsible for his own salvation directly. If he is to be saved, he joins the church and obeys its liturgy and sacraments. In a profound sense, then, the church is responsible for one's salvation, and there was no need for the state to stamp out temptation. These churches then, especially the Lutheran, had a laissez-faire attitude toward the state and morality. Furthermore, their definitions of sin were not nearly as broad as the pietists. Liquor is fine in moderation, and drinking beer with the family in beer parlors on Sunday after church was a cherished German tradition, Catholic and Lutheran. And parochial schools were vital in transmitting religious values to their children in a country where they They Were in a Minority Virtually to a man, Catholics and high Lutherans found their home during the 19th century in
8:21the Democratic Party. It is no wonder that the Republicans gloried in calling themselves throughout the period quote the party of great moral ideas, while the Democrats declared themselves to be quote the party of personal liberty. For nearly a century, the bemused liturgical Democrats fought a defensive struggle against people whom they considered pietist fanatics, constantly swooping down trying to outlaw How did all this relate to the economic issues of the day? Simply that the leaders of each party went to their voting constituents and raised their consciousness to get them vitally interested in national economic questions. Thus, the Republican leaders would go to their rank and file and say, just as we need big paternalistic government on the local and state level to stamp out sin and compelled Morality, so we need big government on the national level to increase everyone's purchasing power through inflation, keeping out cheap foreign goods through tariffs, or keeping out cheap foreign labor through immigration restrictions.
9:23And for their part, the Democratic leaders would go to their constituents and say, just as the Republican fanatics are trying to take away your liquor, your beer parlors and your parochial schools, so the same people are trying to keep out cheap foreign goods through So, stateism and libertarianism were expanded to other issues and other levels. Each side infused its economic issues with a moral fervor and passion stemming from deeply held religious values. The mystery of the passionate interest of Americans in economic issues in the epic is solved. Both in the second and third party systems, however, the Whigs and then the Republicans had a grave problem.
10:10Partly because of demographics, greater immigration, and higher birth rates, the Democratic liturgicals were slowly but surely becoming the majority party in the country. The Democrats were split asunder by the slavery question in the 1840s and 1850s. But now, by 1890, the Republicans saw the handwriting on the wall. The Democratic victory in the Congressional races in 1890, followed by the unprecedented landslide victory of Grover Cleveland carrying both houses of Congress in 1892, indicated to the Republicans that they were becoming doomed to be a permanent minority. To remedy the problem, the Republicans, in the early 1890s, led by Ohio Republicans William McKinley and Mark Hanna, launched a shrewd campaign of reconstruction. In particular, in state after state, they ditched the prohibitionists, who were becoming In an embarrassment and losing the Republicans large numbers of German Lutheran votes, also they modified their hostility to immigration.
11:07By the mid 1890s, the Republicans had moved rapidly toward the center, toward fuzzing over their political pietism. In the meanwhile, an upheaval was beginning to occur in the Democratic Party. The South, by now a one-party Democratic region, was having its own pietism transformed by the 1890s. The quiet pietists were now becoming evangelical, and southern Protestant organizations began to call for prohibition. Then the new, sparsely settled mountain states, many of them with silver mines, were largely pietists. Moreover, a power vacuum, which would ordinarily have been temporary, had been created in the National Democratic Party. For Grover Cleveland, a hard-money laissez-faire Democrat was blamed for the Panic of 1893, and many leading Cleveland Democrats lost their gubernatorial and senatorial posts in the 1894 elections.
11:56The Cleveland Democrats were temporarily weak and the Southern Mountain Coalition was ready to hand. Seeing this opportunity, William Jennings Bryan and his pietist coalition seized control of the Democratic Party at the momentous convention of 1896. The Democratic Party was never to be the same again. The Catholics, Lutherans and laissez-faire Cleveland Democrats were in mortal shock. The quote, party of our fathers was lost. The Republicans who had been moderating their stance anyway, saw the opportunity of a lifetime. At the Republican convention, representative Henry Cabot Lodge, representing the Morgans and the pro gold standard Boston financial interests, told McKinley and Hannah, pledge yourself to the gold standard, the basic Cleveland economic issue, and drop your silver right and greenback tendencies, and we will all back you, refuse, and we will support Brian or a third party.
12:50McKinley struck the deal, and from then on, the Republicans, in 19th century terms, were a centrist party. Their principles were now high tariffs and the gold standard, and prohibition was quietly forgotten. What would the poor liturgicals do? Many of them stayed home in droves, and indeed the election of 1896 marks the beginning of the great slide downward in voter turnout rates that continues to the present day. Some of them, in anguish at the pietist, inflationist, and prohibitionist brianites, actually conquered their anguish and voted Republican for the first time in their lives. The Republicans, after all, had dropped the hated prohibitionists and adopted gold. The election of 1896 inaugurated the fourth party system in America. From the third party system of closely fought, seesawing races between a pious status Republican party versus a liturgical libertarian Democratic party, A charming anecdote told to us by Richard Jensen sums up much of the 1896 election.
14:14The heavily German city of Milwaukee had been mainly democratic for years. The German Lutherans and Catholics in America were devoted, in particular, to the gold standard and were bitter enemies of inflation. The Democratic nomination for Congress in Milwaukee had been obtained by a populist Democrat, Richard Schilling. Sounding for all the world like modern monetarists or Keynesians, Schilling tried to explain to the assembled Germans of Milwaukee in a campaign speech that it didn't really matter what commodity was chosen as money, that gold, silver, copper, paper, sauerkraut or sausages would do equally well as money. At that point, the German masses of Milwaukee laughed Schilling off the stage and the shrewdly opportunistic Republicans adopted as their campaign slogan Schilling and Sauerkraut and swept Milwaukee.
15:04The Greenbackers and later the pro-silver inflationist Brianite populist party were not quote agrarian parties. There were collections of pietists aiming to stamp out personal and political sin. Thus, as Kleppner points out, quote, The Greenback Party was less an amalgamation of economic pressure groups than an ad hoc coalition of true believers. Ideologues who launched their party is a quasi-religious movement that bore the indelible hallmark of a transfiguring faith, end quote. The Greenbackers perceived their movement as the quote, religion of the master in motion among men, end quote. And the populists described their 1890 free silver contest in Kansas not as a political campaign but as quote, a religious revival, a crusade, a pentecost of politics in which a tongue of flame sat upon every man and each spake as the spirit gave him utterance, end quote.
15:57The people had quote, heard the word and could preach the gospel of populism. It was no accident we see now that the Greenbackers almost invariably endorsed prohibition, compulsory The Transformation of 1896 and the death of the third party system meant the end of America's great laissez-faire, hard-money libertarian party. The Democratic Party was no longer the party of Jefferson, Jackson and Cleveland. With no further political embodiment for laissez-faire in existence and with both parties offering quote an echo, not a choice, public interest in politics steadily declined.
16:44A power vacuum was left in American politics for the new corporate statist ideology of progressivism which swept both parties and created a short-lived progressive party in America after 1900. The progressive era of 1900 to 1918 fastened a welfare warfare state on America which has to set the mold for the rest of the 20th century. Statism arrived after 1900 not because of inflation or deflation, but because a unique set of conditions had destroyed the Democrats as a laissez-faire party and left a power vacuum for the triumph of the new ideology of compulsory cartelization through a partnership of Big Government, Business, Unions, Technocrats and Intellectuals.
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Speakers: Murray N. Rothbard.
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