The Republic for Which It Stands: The United States during Reconstruction and the Gilded Age, 1865-1896 (Oxford History of the United States)

by Richard White

The Grangers, as farmers and consumers, were predictably antitariff, and initially some were hard-money men in favor of the gold standard. But Grangers never embraced laissez-faire. They demanded state regulation of railroads and grain elevators, and they attacked the banking system as favoring the East.

By 1872 antimonopolists in Congress had halted the granting of new federal subsidies to railroad corporations, although efforts to obtain them persisted and states and localities continued to give aid.

What happened on one side of the Atlantic would eventually wash up on the other. On May 9, 1873, the stock exchange in Vienna crashed. The financial carnage in Vienna spread to Berlin, because Germans had helped create the Austrian boom by investing gold that had flowed as reparations from Paris to Berlin following the Franco-Prussian War.

Gold was one commodity circuit; wheat formed another. It connected Vienna to London and ultimately to New York and Chicago and the prairies beyond.

The Austro-Hungarian economy depended on its exports of wheat to Britain. Around 1871, however, British grain purchases tilted toward North America

American wheat, produced by men such as Dick Garland, poured from the prairies into the grain elevators of Chicago, where it was loaded onto rail cars and carried by the great trunk lines to the eastern seaboard for export. Additional grain arrived in Europe from California by ship. As harvests increased and transportation costs fell, American wheat displaced more expensive grain from central and Eastern Europe. This endangered Austrian banks, which were heavily invested in the export trade in cattle and wheat that the Americans were undercutting.

Investors were already worried about American railroads even before the Vienna crash. Nervous Europeans were bad for American railroads. Americans funded the bulk of their railroad expansion, but the British, as well as the Germans and Dutch, had also invested heavily.

As long as investors reinvested the interest from the railroad bonds in new bonds, the railroads could use new investments to pay interest on existing loans. Once worried investors could get better and safer returns in England, however, money began to flow back across the Atlantic and trouble loomed.

American railroads lacked the revenue to pay both expenses and interest, and without access to fresh capital, they would fall into receivership.

The weakness of the railroads threatened the bankers who financed them. It particularly endangered Jay Cooke & Company, which had in 1870 taken on responsibility for financing the Northern Pacific Railroad.

Cooke had promised to limit his bank’s advances to the railroad to $500,000, but by the summer of 1873 they had reached $7 million. The Northern Pacific was sucking him dry, and its unmarketable bonds constituted the only security for its loans.

In January 1873 Congress voted to demonetize silver, except for minor coins. Only Senate and Treasury insiders and William Ralston, the California banker, noted the bill’s passage.

bimetallism was over. Largely ignored at the time, the law would eventually be damned as the “Crime of ’73.” It reverberated through American politics for the remainder of the century.

The act demonetized silver, thus preventing a rush of European silver into American markets, but it also created a government market for American silver by authorizing silver trade dollars to be used in the China trade. These would be produced at the San Francisco Mint, giving Comstock silver an immense price advantage over silver that had to be shipped from Europe.

The Panic of 1873 was the financial crisis that erupted in the United States in the fall. Secretary Richardson responded timidly. He released some greenbacks, but mostly he substituted gold standard homilies for the cash Cooke and other bankers and financiers were desperately trying to raise.

On September 18, 1873—another Black Friday and only a few days after Jay Cooke had entertained Grant at his estate outside Philadelphia—the New York branch of Jay Cooke & Company shut its doors. The other branches followed, triggering the Panic of 1873.

On September 20, the New York Stock Exchange closed for the first time in its history. Banks called in loans, businesses collapsed, and the United States slid into a depression, which would last until 1879.

The federal response was tepid and inadequate: the Treasury bought bonds to inject greenbacks into the system and then began reissuing a limited number of greenbacks to inflate the currency. It proved too little, too late.

By 1876 roughly half of the railroad companies had gone into receivership. Railroad stocks lost 60 percent of their value between 1873 and 1878.

Because farmers responded to lower prices by producing more, agricultural output did not shrink. But more crops on the market led to falling prices and deflation, which meant the farmers would pay back the cheap dollars they had borrowed with more expensive dollars. Here was fuel for agricultural rebellion.

The Society for Improving the Condition of the Poor estimated that 25 percent of New York City’s workers were unemployed during the winter following the Panic. The next winter, their estimate was one-third.

When the Panic of 1873 struck, not only did many of these wageworkers lose their jobs, but independent producers also failed and were thrown into the ranks of laborers.

The tramps, the urban unemployed, and business failures became visible social sores, the signs of an underlying disease that seemed to be destroying free labor’s promise. With the onset of the depression in 1873, Americans had entered what economists have come to call the long depression of the late nineteenth century. It was marked by deflation, downward pressure on wages, declining returns on capital, and wild fluctuations in farm income.

The American growth rate after 1870 was actually lower than it had been between 1820 and 1870. In part the American economy was growing because the United States was growing. Its population would double from 31.4 million to 62.9 million in the thirty years following 1860. The United States grew steadily but, at least compared with nations that industrialized in the twentieth and twenty-first centuries, unspectacularly over the course of the nineteenth century.

Because so much of the growth came from capital rather than consumer goods, the economy did not gain as much as it would have from increased consumption.

The political ramifications of the Panic of 1873 fell hardest on the Republican Party. The second Grant administration became synonymous with both scandal and economic failure.

Rarely has an American political party suffered a defeat on the scale that the Republican Party did in the congressional elections of 1874. In the House they went from a 70 percent majority to a 37 percent minority in a single election.

The Republicans lost in the South, but the more critical losses were in the Midwest and Mid-Atlantic states.

Henry George, emerging as the country’s leading antimonopolist intellectual and a Democrat, demonstrated how this worked. George cast black men in the South and Chinese in the West as tools of the corporations and the rich, and as threats to white manhood.

George took the Redeemers’ rhetoric of the South, substituted Chinese for black people, and let his audience draw their own conclusions.

The Panic of 1873 undercut both Republicans and moderate Democrats and fed a resurgent white supremacy.

In large swaths of the Deep South, Republicans could win with black votes alone. With free and honest elections, Louisiana, Mississippi, South Carolina, and Florida promised to remain largely Republican. The Democrats’ solution was a return to violence. This time, however, the violence would be calibrated: enough to repress black people but not so much as to invite Northern intervention.

In the wake of the 1872 elections, competing groups of officeholders laid claim to the Colfax courthouse. In April 1873 the Radicals were in control when about 140 whites, well-armed and equipped with an artillery piece, marched on the town.

The black defenders of Colfax were more numerous, but they were short of ammunition. On Easter Sunday the attackers overwhelmed them, set the courthouse on fire, and forced them to surrender. People on each side knew each other; what followed was personal as well as political. Whites lined up their prisoners and then called black men out of line by name, sometimes one, sometimes more. They shot some, slit the throats of others, and hanged a few. The total number killed in the fighting and executed afterwards was somewhere between 70 and 165.

The Colfax Massacre became a rallying point for both sides. President Grant declared parts of Louisiana to be in a state of insurrection and imposed martial law. More elements of the Seventh Cavalry were sent to the South, but not in sufficient numbers to overawe the nightriders. The federal government, using the Enforcement Acts of 1870 and 1871, which had proved effective against the Klan, put nine of the perpetrators of the Colfax massacre on trial, but only three were convicted, and not for murder but the lesser charge of conspiracy.

The collapse of the Republican economic program after the Panic of 1873 and the renewal of violence set the stage for the 1874 election in the South. In much of the upper South the Republicans hemorrhaged white voters, and this was enough for Democrats to carry the election.

Elsewhere violence proved necessary. White supremacists organized White Leagues across the Louisiana. In Grant Parish the new newspaper was called the Caucasian. Whites murdered blacks and threatened and intimidated Republican officials, who resigned in many parishes.

in New Orleans eight thousand armed men invaded the city in September 1874 to overthrow the Republican government headed by Gov. William Pitt Kellogg. At the Battle of Canal Street they overwhelmed the police; seized the city hall, statehouse, and arsenal; and forced Kellogg to retreat to the Custom House.

Kellogg was saved by the arrival of six regiments of federal troops in the city.

Grant, after warning Southerners not to test him, dispatched Philip Sheridan to investigate the violence, and Sheridan made himself as popular among white Louisianans as he had been among white Texans. He denounced the White Leagues as banditti and claimed twenty-five hundred political murders since the end of the war. Sheridan wanted habeas corpus suspended and nightriders tried before military tribunals.

Grant would not go as far as Sheridan, but he justified federal intervention in Louisiana. Some

A Congressional delegation eventually negotiated the so-called Wheeler Settlement, which left Kellogg as governor but gave the Democrats the lower chamber of the legislature.

After the 1874 elections, the Republicans held on only in Mississippi and South Carolina, and more precariously in Louisiana and Florida.

Grant wanted an end to federal intervention, which he saw as imposing an unacceptable political cost on the Republicans.

Miller’s decision was ultimately conservative. Except for the unspecified protections extended to black people, the Supreme Court thought that the Civil War had not significantly changed the fundamental nature of the Union. It sought to try to make the legal relationship between states and the federal government closer to what it had been before the war.

The Supreme Court eventually addressed the Colfax Massacre in U.S. v. Cruikshank et al. (1875). The federal government had used the Enforcement Acts to prosecute William Cruikshank and the other defendants who had killed the black militiamen at Colfax. The Enforcement Acts depended on the Fifteenth Amendment prohibition of denying or abridging the right to vote “by the United States or by any state on account of race, color, or previous condition of servitude.” The government also accused the defendants of violating the First Amendment right of black people to assemble and their Second Amendment right to bear arms. The court settled the question of three convictions under the Enforcement Acts by ruling that the prosecutors had not supplied enough evidence to prove that the killings were an attempt to suppress African American political rights protected under the Fifteenth Amendment.

The Supreme Court, however, went further, ruling on the meaning of the First and Second Amendments, and by implication the entire Bill of Rights, and the Fourteenth Amendment.

The Bill of Rights, the justices declared, did not actually bestow the right of assembly, the right to bear arms, or other rights. The amendments only declared that Congress could not abridge them. The rights to assemble and bear arms were not among the “privileges and immunities” of citizens. Citizens had protection only from congressional interference; any further protection depended on the states.

The ruling vitiated the Fourteenth and Fifteenth Amendments insofar as they applied to political rights.

On the same day in 1875, the Supreme Court ruled in U.S. v. Reese that attempts by county officials in Kentucky to prevent blacks from voting could not be prosecuted under the Enforcement Acts.