October 01, 2008

In 1890, the brand-new Kansas People’s Party (later to become the national Populist Party) routed the Republican state establishment in the fall elections, winning control of both the state government and the state’s congressional delegation.  The race that best typified the mood of the day was the U.S. House contest pitting People’s Party candidate Jerry Simpson, the marshal of Medicine Lodge and a former Greenbacker, against Colonel James R. Hallowell, coifed and cosseted member of the GOP elite.

Hallowell, a former legislator, was so respected that, without irony, he went by the name “€œPrince Hal.”€  During one encounter, Simpson mocked Hallowell’s fine clothes and silk stockings, to which Prince Hal wrinkled his nose and said silk was preferable to dirty men who wore no socks at all.  From that point forward Simpson campaigned as “€œSockless Jerry,”€ spinning his lack of hosiery into the elusive political gold of authenticity. 

The Topeka Capital Journal described the race as one pitting sober adults against a childish mob.  “€œThe opposing candidates are opposites in every way.  Colonel Hallowell is a brilliant, experienced and competent man who would add strength to the Kansas delegation; Jerry Simpson is an ignorant, inexperienced lunkhead … who would disgrace the state in congress; scarcely able to read and write, unacquainted with public affairs, without experience as a legislator, raw, boorish, [and] fanatical with the fanaticism of sheer ignorance.”€

Fanatical or not, Sockless Jerry really was a man of the people.  Dirt-man and long-time third (or forth) party activist, the sockless one stood poised to strike a blow for home and hearth and against the monied interest.  Simpson likewise shared the gallows humor of a people who”€”by virtue of scratching a living from the earth”€”understood the principles of scarcity and solidarity.  During one debate, upon hearing that Prince Hal was a man experienced with laws, Simpson reached for a statute book and pointing to a law imposing a tax upon dogs said something to the effect that if Hal’s laws tax bitches, they ought to also tax sons of bitches, for the People’s Party “€œbelieves in equal and exact justice to all!”€  It brought the house down.

Noted Kansas newspaperman William Allen White, contrary to the Journal’s description, also described Simpson as a man of deep learning and understanding.  White wrote that Sockless Jerry “€œhas read more widely that I,”€ regularly quoting Carlyle and various 17th Century poets, and “€œeven persuaded me to try Thackeray, whom I had rejected until then.”€  While the record does not bear out the establishment’s characterization of the People’s Party as spoiled and ignorant children, the real difference highlighted was one of class.  Prince Hal and his ilk believed rule was their birthright, and urged the masses to “€œleave it to the grownups”€ to address complex issues such as monetary policy. 

For it was the money supply that was at the heart of the prairie populist revolt of 1890.  The sturdy agrarian class of the prairie were labor and land rich, but cash poor.  They were also deeply in hock to the central banks and railroads, in the form of both public debt (and the resultant tax burden) and private mortgage debt.  Sockless Jerry and the rest of the People’s Party railed against the centralized control of the money supply by eastern interests. 

Simpson was convinced that the people were wealthy”€”they were largely self-sufficient and were the greatest agrarian producer class the world had yet seen”€”but “€œwere without a medium [of exchange].”€  In fact, there was less than ten dollars per capita in circulation.  In such a deflationary economy, wage and commodity prices were held down while interest, taxes, and transportation costs were breaking the backs of farmers everywhere.  With a loosened money supply and the resulting inflation, wages and commodity prices would rise and debts would become easier to repay.

There are fascinating parallels between the political and economic situation in Kansas in 1890 and today.  Though of course, they come with the standard caveat that history doesn”€™t repeat, it rhymes.  

The failure of Congress to pass legislation bailing out the credit markets by absorbing up to $700 billion of bad debt has been widely described as a populist revolt against the elite managers of our society and economy.  David Brooks suggested that the House Republicans voting “€œno”€ were “€œnihilists”€ who “€œlistened to the loudest and angriest voices in their Party.”€ 

Instead of this, Brooks pleads for the reassertion of an adult elite; the firm hand of authority and legitimacy; the sort “€œwielded … by rich men in private clubs.”€  Brooks envisions a future of stability premised not on constitutional legitimacy or even democratic legitimacy, but on the “€œwisdom and public spiritedness of those in charge.”€  While watching the markets tank after the failure of the bailout bill on Monday, Ross Douthat echoed Brooks, writing that: “€œIf the defeat of the bailout is a victory for liberty, it’s a victory whose costs [to stability and order] I”€™m not prepared to bear.”€

There are many directions the discussion can go from here.  Is liberty a necessary precondition to order (the position I would argue for), or must order come first?  What kind of stability is most conducive to the conservative ideal of free and self-sufficient men”€”spontaneous order or managed order?  Again, I would argue for the former.  Is legitimacy itself a virtue worth defending, and is it fatally undermined by what has been called the “€œillegitimacy of failure“€?

But for my purposes here I want to look just at the eerie similarities to 1890.  For once again, the debate circles around the difficult question of money supply.  The experts tell us that what we are suffering through is a “€œliquidity crisis”€ or a “€œcredit crisis.”€  There’s not enough money out there and banks are clamming up.  The doomsayers predict a death spiral roughly along these lines: no credit; failed businesses; lost jobs; further reduced spending; bank failures; bank runs; more failures; higher unemployment; etc.  And once again, the debate has squarely pitted the establishment centralized manager class against the “€œpopulist”€ man-on-the-street.

The difference is that this time around, it is the managerial class agitating for looser money supply and nationalization of large sectors of the economy while the managed class largely views this as an inflationary move that shifts the burden of bad debt from irresponsible fat cats onto hard working Joe Camel whose real wages will now dramatically decline. 

This seemingly incongruent historical reversal can best be understood by the fact that today’s monied classes are now the sellers (or middlemen) in a consumer rather than a producer economy.  The prairie populists of 1890 were likewise the sellers, but in a producer economy.  A loose money supply tends to benefit producers and middlemen (largely farmers in 1890, and global producers teamed with American delivery systems today), especially those who must take on debt to provide capital necessary to meeting demand.  It also feeds the cycle of economic bubble and burst.

One lesson that might be drawn from this is that the populist classes have largely lost the moral authority (not to mention the economic leverage) of being producers rather than consumers.  But the most important lesson is perhaps that while the arguments have changed, the central feature of the debate”€”that of class”€”has not. 

In fact, class consciousness is reasserting itself with a somewhat distracted vengeance in America.  Vengeful, because there is real and palpable anger in America against the managerial elites; distracted (and therefore dangerously malleable) because this anger is rudderless and directionless, largely as a result of the fact that it represents no real economic constituency”€”not labor, not agrarian, not small business.  The “€œbuy American”€ constituency comes the closest, but even this is not sufficient to create a coherent and genuinely healthy populism as opposed to a merely angry mob (dubbed the “€œlumpenleisure“€ class).

The defeat of the bailout in Congress is a good example.  The bill was clearly opposed by a left-right alliance that fed off of anger on the street but articulated its opposition in mutually exclusive terms.  Democratic opposition came from those wanting greater federal control and management over perceived wrongdoers while Republican opposition came from those suggesting market correctives and fearful of encroaching socialism.  Daniel Larison has pointed out the painful fact that this kind of “€œcrisis populism“€ has no future.

What can be done?  There really is a bubble waiting to burst.  Or rather, several bubbles.  We are in the middle of the bursting of the housing and credit bubbles.  The entitlement bubble looms.  And the mother of all bubbles”€”peak oil”€”silently grows while we mostly turn away because to watch is just too painful.  The overriding mission of the managerial class is obviously now to keep people in line and dutifully turned away”€”to disallow discussion of the obvious and keep the bubble intact as long as possible, pushing the ultimate consequences of a massive burst off on our children or our children’s children.

The only clear political cause the anti-bailout coalition could coherently rally around is the Anti-Federalist one.  A platform of localism and “€œopting out”€ of the federal system could take many forms, but it would require that the left give up its dreams of an egalitarian utopia and of running everything by federal fiat and it would require the right to give up its dream of a Christian nation with social control and corporate giveaways.  Both would have to retrench for fights and discussions on the local level which can only happen if and when the leviathan is put back in the cage.  The development of an economic constituency is perhaps even more difficult and would require the turning of consumers into local producers in a local economy.  What flag might this party fly?  I suggest this one.


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