. . . There are, in principle, three things which the farmer can do to offset his weakness in bargaining power. He can seek to build countervailing power in the market—in the tradition of the Virginia tobacco planters. Or he can seek to dissolve the original power of those to whom he sells or from whom he buys. Finally, he can attempt to get the advantages of the enhanced market power that are associated with changes in demand. To the extent that demand in the economy as a whole can be maintained at strong or inflationary levels, his position as a seller will be strong. This results from the shift of power from buyer to seller under conditions of inflation. . . . Like other producers, the farmer is more disposed to emphasize his role as a seller than as a buyer and there are very good reasons why he should do so.
American farmers have tried all three methods of buttressing their market power. Under agrarian pressure the northern colonies, especially before the middle of the eighteenth century, were inveterately inflationist. The colonies of the Middle Atlantic were considerably less given to inflation but only, apparently, because stronger governors prevented the issue of paper money. The southern colonies, with some exceptions such as South Carolina, had comparatively stable currencies. In these latter colonies, which depended heavily on their export trade in staples, there was no appreciable advantage to the farmers in inflation. The English sterling prices of tobacco and goods were what counted; these were beyond the reach of colonial monetary policy.
During much of the nineteenth century—successfully when Jackson was his candidate, unsuccessfully when it was William Jennings Bryan —the farmer concentrated his efforts on expanding demand. Through the free banking of the Jacksonian era and the free coinage of Bryan, as well as in such shorter-lived episodes as the Greenback Movement in the seventies, he sought to increase the means of payment and therewith to alter the balance of bargaining power in his favor. Historians have all but invariably related this inflationary bias of the nineteenth-century agrarian to his desire to ease the burden of his indebtedness. This explanation, in its neglect of the issue of relative bargaining power, is almost certainly incomplete.
In this century the farmer has largely lost interest in inflation. One reason is that inflation has ceased to be technically practicable by the old methods. With modern banking institutions and modern attitudes of borrowers and lenders, borrowing does not follow automatically when credit is available as it very nearly did in the time of Jackson. The volume of bank borrowing and the resulting movements in money supply have now become consequences, not causes, of other changes. As a result, the possibility of deliberately engineering an old-fashioned credit or currency inflation has largely disappeared. Inflation can still be brought
about through the agency of large budget deficits, but these do not have the aura of easy costlessness of unlimited emissions of banknotes or unlimited coinage of silver. The frustrations of the Bryan campaigns, and the growing suspicion of the green magic of the money doctors, gradually weaned farmers away from their old faith in monetary experiment.
As this happened, they turned to more forthright methods of equalizing their bargaining power.
Initially, this took the form of efforts to break down the market position of those with whom the farmer did business. In the latter part of the nineteenth century and in the early decades of the present century, by far the strongest pressure for the regulation or dissolution of big business came from the farmbelt. The first and most spectacular manifestation of this was the Granger Movement. With almost revolutionary venom, the farmers of the early seventies turned on the railroads, commission merchants, warehousemen, farm machinery companies and merchants with whom they did business. In seeking regulation of these enterprises the Grangers saw, quite clearly, that they possessed market power which the farmer did not have. To quote the historian of the movement, "Just as the price which the farmer received for the commodities he sold seemed to him to be fixed by those to whom he sold, so also, he felt that the price of his supplies was fixed by those from whom he bought." The Granger eruption was short-lived. It flared across Illinois, Iowa, Wisconsin and the Eastern Great Plains, capturing state legislatures and passing laws to bring railroads, warehouses and other enterprises under state control. But it soon succumbed to individualism and inexperience and to corrupt leadership. It was, however, the precursor of a considerably more durable effort to dissolve opposing market power. Farmers, far more than labor, the urban middle class or any other group including the liberal intellectuals of the day, forced the passage of the Sherman AntiTrust Act of 1890. It is perhaps not entirely an accident that meat packers, tobacco companies, the farm-machinery industry, milk distributors and, in the early days, the railroads, all of whom buy from, sell to or serve the farmer, have been prominent targets of this legislation. During its sixty-year history, the strongest regional support for the Sherman Act and its supplementing legislation has come from the farm states. However, this legislation can no longer be considered central in the farmer's strategy for equalizing market power. The Sherman Act and subsequent antitrust legislation still enjoy the support of farm organizations and, generally, of Western congressmen. But it reflects a passive and even somewhat nostalgic interest. Farmers have turned from the reduction of opposing market power to the building of their own.