Times were hard for tobacco farmers in the late 19th Century. Crop prices were falling, partly due to deflation and partly due to the rise of dominant railroad and tobacco manufacturing monopolies. A growing preference for cigarettes over chewing tobacco had rapidly destroyed most of the small plug manufacturers. Then, in 1890 James Duke, who already controlled over half of the cigarette market, bought out most of his remaining competitors and consolidated them into a single entity—the American Tobacco Company—giving him control of over 90% of the market—a virtual monopoly, which allowed him to dictate prices to both farmers and consumers. Meanwhile, elsewhere in the country, cotton and grain farmers in the South and Midwest were being squeezed by the same kind of monetary and monopolistic pressures.Farmers cried foul and gathered into an opposition movement. Across the country they organized into “Farmer’s Alliances,” demanding an increased money supply, lower interest rates, and regulation of the monopolies, known at the time as “trusts.” Just as they were doing all across the South and Midwest, in August 1890, Farmers Alliance delegates from across Virginia gathered at a convention in Lynchburg, where they adopted a lofty “Declaration of Principles,” one of which called for “the destruction of all trusts and the withdrawal of all favors in the shape of subsidies and bounties.” Meanwhile, the Alliances were creating their own newspapers, magazines, and co-operative warehouses.
By 1891, however, the Alliance movement was dying out, as the failure to break into the political mainstream had caused enthusiasm to wane and falling commodity prices had made it increasingly difficult for farmers to pay for their subscriptions to the cooperatives, and the farmer-owned warehouses began to close.
But farmers weren’t ready to give up their fight and many channeled the energy of the Alliances into the creation of a new political party—the People’s Party—which emerged dramatically onto the national scene in the election of 1892, a story for another day.
The image is a People’s Party cartoon from 1892, depicting Farmers Alliances from across the country uniting and tossing “old grudges,” “sectional strife” and “hate” into the “Bloody Chasm.”