attractive.
PRICES, REVENUE, AND THE PERCEIVED PROBLEM OF MIDDLEMEN
Farm prices did indeed fall in the first half of the 1870s, and initially they fell faster than other prices, as figure 1.11 shows. Perhaps surprisingly, farm prices actually started rising just about the time the Grange was enrolling members at a furious rate, whereas other prices continued falling. The relative volatility of agricultural prices was substantial, however, making planning difficult for farmers, especially because of the time lag between planting and harvesting.
Still, the total value of farm output rose throughout the nineteenth century, even adjusting for price changes over time. A measure that may shed more light on farmers’ position is the size of farm output relative to the size of total output in the economy. Because farm population declined over time as a proportion of total population, standardization is necessary to ascertain the relative position of farmers. Figure 1.12 shows this: one line indicates the real output per capita economy-wide, whereas the other shows the same figure just for farmers.
Figure 1.12 indicates that, during the nineteenth century, both farm and overall productivity grew, but the growth rate for farm productivity stalled after the Civil War. The loss of so many able-bodied men in the war was a contributing factor. In the South, the end of slavery was also an element. Although plantation agriculture continued, the disappearance of the master-slave relationship meant less coercive power over workers, which was a factor that affected agricultural productivity. Black men continued to work hard, certainly, but many black women and children withdrew from the labor force.33 The proportion of the population living on farms fell by 27 percent from 1860 to 1900, but the proportion of output attributable to farms dropped by 51 percent. These figures show that postbellum farmers were correct in thinking that as a whole they weren’t enjoying the fruits of economic growth as much as others.
Figure 1.11. Midwestern Farm Prices and Consumer Price Index, 1870–1900. Sources: Bowman and Keehn (1974); Carter et al. (2006, Series Cc2)
Figure 1.12. Farm and Economy-Wide Productivity, 1800–1900. Sources: Carter et al. (2006, Series Ba817, Ca11, Da28, Da1285)
What is more, many Grangers thought that farmers did not get their fair share of profit because middlemen seemed to skim so much off the top. As the Declaration of Purposes put it, “Their surplus and their exactions diminish our profits.” Brokers, warehousemen, grain elevator operators, and other sorts of businessmen who stood between the farmer and the ultimate consumer seemed to be parasites that produced nothing of real value but appeared to make a lot of money, at least according to Oliver Kelley. In his column in the Sauk Rapids (MN) Frontiersman, Kelley said that the agriculture problem was the antagonism between the producing farmers and the speculating middlemen. Kelley’s followers agreed: the Minnehaha Grange on 19 May 1883 had a less-than-flattering discussion of middlemen, with Sister Yancy suggesting they all be “laid under the table.” One of Kelley’s dreams was to establish farmer cooperatives that would take the place of middlemen.34 Chapter 3 discusses more fully how these establishments fared.
EXPENSES
Transportation Costs. For farmers the single largest change to the American landscape in the latter half of the 1800s was the railroad. Just over 21,000 new miles of track came into operation from 1851 to 1860, and a little more than 22,000 additional miles opened up between 1861 and 1870. But the next decade nearly matched the total of the previous two, with 40,340 miles of new track. Over 13,000 miles of new track came into use in the two-year period 1870–71 alone. Many of the miles added in the decade and a half after the Civil War were in the Midwest, particularly the Granger states of Illinois, Iowa, Wisconsin, and Minnesota.35
Farmers had complicated reactions to this enormous growth. Some had lost out personally in the Panic of 1857 (and thereafter) from worthless railroad stock or bankrupt roads that failed to pay off their bonds. Oliver Kelley fanned the flame by publishing newspaper articles about stock watering, in which companies diluted the value of existing stock by issuing new shares to the public. University of Minnesota Professor William Folwell suggested that Minnesota politician and Granger Ignatius Donnelly made farmers believe that watered stock robbed them by leading to high passenger and freight rates, whether it actually did or not. Many resented the sweet deals obtained by incipient roads: land grants from the federal and state government, tax exemption, and cash outlays from local governments to entice railroads to pass through their communities. Special rates for large shippers and free passes for public officials especially irked the smaller farmers.36
Yet farmers, like other Americans, recognized that transportation by rail for both people and products was often far more efficient than earlier forms of transport such as wagons. This was a double-edged sword: railroads potentially expanded the market that any one farmer could serve, but they also meant more rivals for each farmer. Farm values increased when railroads were built nearby, but this meant little to farmers who intended to stay on their land, especially because higher assessed farm value also meant higher property taxes.37
How a particular farmer felt—and how likely he was to embrace the Grange—depended in part on the presence of nearby railroads. No access to railroads typically meant more expensive modes of transporting goods and livestock to market, unless one lived close to a serviceable waterway. Consequently, farmers living in areas without railroads eagerly welcomed the possibility of the opening of a new line and were reluctant to engage in activities that would discourage railroad construction. Yet, once a road was built, its owners could charge monopoly prices until rivals entered the same market. With the entry of multiple railroads connecting one community to another, farmers more likely faced competitive rates and fares along that route.
The Grangers were particularly vocal about the “short-haul, long-haul” issue: farmers shipping their products to nearby locales often paid a much higher charge per mile than farmers whose goods traveled longer distances. In Minnesota, for instance, Rochester farmers paid 15 cents per mile to transport crops 45 miles to Winona, but Owatonna farmers paid only 10 cents per mile for a 92-mile trip.38 (Note that these are the variable costs of transport and do not include the costs of loading and unloading, paperwork, and the like.) On 5 April 1884, members of the Minnehaha Grange asserted that farmers had proof of being cheated 30 cents per bushel on shipping and suggest that they would have to quit raising wheat unless an organized effort could change what they called an oppressive practice.
The difference in rates illustrates the classic economic power of a monopoly: the shorter the distance, the less likely a particular railroad had competitors for the route.39 All else equal, a firm without rivals can charge more than firms that operate in competitive markets where consumers have more choices. This practice of charging two sets of rates fanned interest in finding ways to give collective voice to farmer frustration on the short-haul routes—fertile ground for the Grangers. As an editorial in the Duluth (MN) Tribune on 7 September 1883 provocatively phrased it, the railroads faced cut-throat rivalry and little profit on the through lines but then made it up with “extortionate charges for way shipments.” The Tribune article applauded the “wholesome reform” suggested by the farm movement.
The Grange had a harder time gaining a foothold in areas with numerous well-established railroads. The Philadelphia Evening Bulletin suggested that New Englanders
