|Railroads and a Cross of Gold
US History/Napp Name: __________________
“Farmers were especially disturbed by what they viewed as railroad corruption. The Grangers – members of the Grange, a farmers’ organization founded in 1867 – began demanding governmental control over the railroad industry. Farmers were angry with railroad companies for a host of reasons. They were upset by misuse of government land grants, which the railroads sold to other businesses rather than to settlers, as the government intended. The railroads also entered into formal agreements to fix prices, which helped keep farmers in their debt. In addition, they charged different customers different rates, often demanding more for short hauls –for which there was no alternative carrier – than they did for long hauls.
In response to these abuses by the railroads, the Grangers took political action. They sponsored state and local political candidates, elected legislators, and successfully pressed for laws to protect their interests. In 1871 Illinois authorized a commission “to establish maximum freight and passenger rates and prohibit discrimination.” Grangers throughout the West, Midwest, and Southeast convinced state legislators to pass similar laws, called Granger laws. The railroads fought back, challenging the constitutionality of the regulatory laws. In 1877, however, in the case of Munn v. Illinois, the Supreme Court upheld the Granger laws by a vote of seven to two. The states thus won the right to regulate the railroads for the benefit of farmers and consumers. The Grangers also helped establish an important principle – the federal government’s right to regulate private industry to serve the public interest.
The Grangers’ triumph was short-lived, however. In 1886, the Supreme Court ruled that a state could not set rates on interstate commerce – railroad traffic that either came from or was going to another state. In response to public outrage, Congress passed the Interstate Commerce Act in 1887. This act established the right of the federal government to supervise railroad activities and established a five-member Interstate Commerce Commission (ICC) for that purpose. The ICC had difficulty regulating railroad rates because of a long legal process and resistance from the railroads. The final blow to the commission came in 1897, when the Supreme Court ruled that it could not set maximum railroad rates. Not until 1906, under President Theodore Roosevelt, did the ICC gain the power it needed to be effective.” ~ The American Vision
1. In the late 1800s, the Granger movement tried to improve conditions for farmers by
(1) lowering the rate of inflation
(2) strengthening the gold standard
(3) forcing railroads to lower their rates
(4) making labor unions stronger
2. Granger laws were designed to regulate
(A) Child labor.
(B) The export of farm crops.
(C) Railroad and warehouse rates.
(D) Minimum wages and maximum hours.
3. Which idea led to the creation of the Interstate Commerce Commission, the Federal Trade Commission, and the Food and Drug Administration?
(1) Business activity must sometimes be regulated in the public interest.
(2) Workers should be allowed to bargain with owners for working conditions.
(3) Domestic industry should be protected from foreign competition.
(4) The economy works best without government regulation.
Munn v. Illinois (1877)
Wabash v. Illinois (1886)
The Illinois legislature had set the maximum rates that private companies could charge for the storage and transport of agricultural products
The Chicago grain warehouse firm of Munn and Scott was subsequently found guilty of violating the law but appealed the conviction on the grounds that the Illinois regulation was unconstitutional
The Court ruled grain storage facilities were devoted to public use; thus their rates were subject to public regulation
The Wabash, St. Louis and Pacific Railway Company challenged the intervention of the state of Illinois in its business
The state of Illinois had passed a law penalizing railroads if they charged the same or more for shipping freight for shorter distances than for longer distances
The Supreme Court declared that states could not regulate commerce that went beyond their boundaries
The Court ruled that only Congress could regulate rates on interstate commerce
In 1887, Congress passed the Interstate Commerce Act; prohibiting railroads for charging different rates to customers shipping goods the same distance; also banned the charging of more for short hauls than for long hauls over the same route
1- What had the Illinois legislature set? ______________________________________________________________________________
2- Why did the Chicago grain warehouse firm of Munn and Scott appeal? ______________________________________________________________________________
3- What did the Court rule? ______________________________________________________________________________
4- What did the railroads challenge in Wabash v. Illinois? ______________________________________________________________________________
5- What did the Court rule? ______________________________________________________________________________
6- What did Congress do immediately following the ruling? ______________________________________________________________________________
Critical Thinking Question:
The federal government gave land and made loans to the railroad companies. Why was the government so eager to promote the growth of railroads?
The Grange Movement:
* Blamed the railroads for many of difficulties facing farmers
* Elected candidates to state legislatures who promised to regulate the railroads
* When the Supreme Court decision in Wabash ended state regulation of railroads; turned to Congress
* Congress passed the Interstate Commerce Act; the first step towards having the federal government regulate unfair business practices
~ The Key to Understanding U.S. History and Government
* 1891 – 1896
* In 1892, farmers gave their support to the Populist Party, a new national political party representing laborers, farmers, and industrial workers in the struggle against banking and railroad interests
- Unlimited coinage of silver to raise farm prices and make loan repayments easier
- Direct election of Senators instead of by state legislatures
- Secret ballot to protect voters from intimidation
- Immigration Restrictions with quotas
- Graduated Income Tax to tax wealthy individuals at a higher rate
- Eight hour work day
- Government Ownership of railroads, telegraphs, and telephones
Election of 1896:
* The Democratic Party nominated William Jennings Bryan for President after he delivered a speech at the convention
- “Cross of Gold” Speech praised farmers and denounced bankers for “crucifying mankind on a cross of gold”
- But lost to Republican William McKinley
Who did Grangers blame for their problems? ________________________________________________________________________
How did the Grangers influence U.S. History? ________________________________________________________________________
Identify two significant characteristics of the Populist Party: ________________________________________________________________________
List several goals of the Populist Party: ________________________________________________________________________
The Populist Party demonstrates how a third party can influence American politics. What goals of the Populist Party have been adopted in the United States? ________________________________________________________________________________________________________________________________________________
Who was William Jennings Bryan? ________________________________________________________________________
What was the main idea of his “Cross of Gold” speech? ________________________________________________________________________
Which reform idea was a common goal of the Populists?
(1) restoration of the nation’s cities
(2) expansion of opportunities for immigrants
(3) improvement in the status of African Americans
(4) greater control of government by the people
Supporters of a graduated national income tax argued that it was the fairest type of tax because the
(1) rate of taxation was the same for all persons
(2) rate of taxation increased as incomes rose
(3) income tax provided the most revenue for the government
(4) income tax replaced state and local government taxes
Both the Interstate Commerce Act and the Sherman Antitrust Act were
(1) inspired by the effectiveness of earlier state laws
(2) designed to protect business from foreign competition
(3) declared unconstitutional by the Supreme Court in the late 1800s
(4) passed by the federal government to regulate big business
“A suggestion for the 53-cent dollar.”
This cartoon from the 1896 presidential election
campaign attacked William Jennings Bryan’s
(1) free coinage of silver
(2) lower tariffs on farm goods
(3) strengthening the gold standard
(4) government regulation of the railroads
“While the railroads captured the imagination of most 19th-century Americans, there were those who didn’t get on the bandwagon. The writer Herman Melville raged against the smoke-belching iron horse and the waves of change it set in motion as vehemently as his character Captain Ahab raged against the white whale and the sea in Moby-Dick. ‘Hark! Here comes that old dragon again – that gigantic gadfly…snort! puff! scream! Great improvements of the age,’ Melville fumed. ‘Who wants to travel so fast? My grandfather did not, and he was no fool.’” ~ The Americans