The Transformation of the American Party System

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This article
is excerpted from A
History of Money and Banking in the United States
, part
1, "The History of Money and Banking Before the 20th Century"
(2002).

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 the price contraction
of the last three decades of the 19th century, and the triumph
of gold and disappearance of the "money" issue to the
price rise after 1896.

This conventional
analysis overlooks several problems. First, if Bryan represented
the "people" versus the "interests," why did
Bryan lose and lose soundly, not once but three times? Why 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 "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.

In 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 "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 "critical
elections." In the 19th century the nation’s second party
system (Whigs v. Democrats), lasting from about 1832 to 1854,
was succeeded by the third system (Republicans v. Democrats),
lasting from 1854 to 1896.

Characteristic
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 "choice,
not an echo," and so the turnout rate was remarkably high,
often reaching 80 to 90 percent 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 indifferent, "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. Very 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
tracts 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 educed nearly as much mass interest
in economics as did the milder economic crises of the past century.

Only 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 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.

This 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
"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. In particular, the most important politically
was "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
crusade on the state and local level that lasted a century. 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. And 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 liked to
put it, to "Christianize the Catholics." If the adults
are hopeless, the children must be saved by the public school
and compulsory-attendance laws.

Such 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 "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.

There came
to this country during the century an increasing number of Catholic
and Lutheran immigrants, especially from Ireland and Germany.
The Catholics and High Lutherans, who have been called "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 (Catholic and Lutheran) tradition;
and parochial schools were vital in transmitting religious values
to their children in a country where they were in a minority.

Virtually
to a man, Catholics and High Lutherans found their home during
the 19th century in the Democratic Party. It is no wonder that
the Republicans gloried in calling themselves throughout this
period "the party of great moral ideas," while the Democrats
declared themselves to be "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 their liquor, their
Sunday beer parlors, and their parochial schools.

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 compel
morality, so we need Big Government on the national level to increase
everyone’s purchasing power through inflation, keeping out cheap
foreign goods (tariffs), or keeping out cheap foreign labor (immigration
restrictions)."

And 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
(tariffs), and trying to destroy the value of your savings through
inflation. Paternalistic government on the federal level is just
as evil as it is at home."

So statism
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 epoch is solved.

Both in the
second and third party systems, however, the Whigs and then the
Republicans had a grave problem. Partly 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 ’50s. 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 an embarrassment
and losing the Republicans large numbers of German Lutheran votes.
Also, they modified their hostility to immigration. By 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. 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 also largely pietist. Moreover,
a power vacuum, which would ordinarily have been temporary, had
been created in the national Democratic Party. Poor 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.
The 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 "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 Hanna, Pledge
yourself to the gold standard – the basic Cleveland economic
issue – and drop your silverite and greenback tendencies,
and we will all back you. Refuse, and we will support Bryan or
a third party. McKinley 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 Bryanites, 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 a
third party system of closely fought, seesawing races between
a pietist-statist Republican Party and a liturgical-libertarian
Democratic Party, the fourth party system consisted of a majority
centrist Republican Party as against a minority pietist Democratic
Party. After a few years, the Democrats lost their pietist nature,
and they too became a centrist (though usually minority) party,
with a moderately statist ideology scarcely distinguishable from
the Republicans. So went the fourth party system until 1932.

A charming
anecdote, told us by Richard Jensen, sums up much of the 1896
election. The 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.

The Greenbackers
and later the pro-silver, inflationist, Bryanite Populist Party
were not "agrarian parties"; they were collections of
pietists aiming to stamp out personal and political sin. Thus,
as Kleppner points out,

The Greenback Party was less an amalgamation of economic pressure
groups than an ad hoc coalition of "True Believers,"
"ideologues," who launched their party as a "quasi-religious"
movement that bore the indelible hallmark of "a transfiguring
faith."

The Greenbackers
perceived their movement as the "religion of the Master in
motion among men." And the Populists described their 1890
free-silver contest in Kansas not as a "political campaign,"
but as "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."

The people
had "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 public schooling, and crushing
of parochial schools. Or that Populists in many states "declared
unequivocally for prohibition" or entered various forms of
fusion with the Prohibition Party.

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 "an
echo not a choice," public interest in politics steadily
declined. A 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 1900–1918 fastened a welfare-warfare state on America
that has 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.

Reprinted
from Mises.org.

Murray
N. Rothbard
(1926–1995) was dean of the Austrian
School, founder of modern libertarianism, and chief academic
officer of the Mises Institute.
He was also editor — with Lew Rockwell — of The
Rothbard-Rockwell Report
, and appointed Lew as his
literary executor. See
his books.

The
Best of Murray Rothbard

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