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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 were less inclined to form Granges because they had less to complain about. In the first of two articles in July 1874, the newspaper rested its argument on somewhat shaky ground—it claimed that New England railroads were controlled by “moral suasion” and good government. The second article offers a somewhat more plausible explanation, noting the lower rates associated with railroads that faced substantial competition. Transport on the Chicago and Northwestern was 2.47 cents per ton mile against 1.50 cents on the Pennsylvania and the Erie and 1.57 cents on the New York Central. Passenger travel was 3.16 cents per mile in the West, but only 2.48 cents on the Pennsylvania, 2.2 cents on the Erie, and 2 cents on the New York Central. The article also suggested that the higher rates out west were especially annoying because western roads enjoyed heavy public subsidies.

      State- and county-level studies indicate that areas with no railroad service were less likely to support railroad regulation. Southern communities generally seemed more interested in seeing railroads built than worrying about regulating them.⁴⁰ A letter to the editor in the (Macon) Georgia Weekly Telegraph dated 24 February 1874 warned that the “law of supply and demand” regulates prices but “when prices are regulated by artificial means . . . it is bound to work to the injury of some.” It cautioned Georgia farmers that westerners’ desire for cheap transport could in the end hurt southern cotton farmers.

      California offers an intriguing contrast to other states because of different practices in storing and shipping grain: instead of using elevators, farmers placed crops in sacks in the field until ready to sell them. They then exported grain directly to Great Britain on boats out of San Francisco. Grangers in California thus directed their frustration, not at railroads or warehousemen, but at grain dealers who cornered the supply of sacks.⁴¹ Of course, farmers could have avoided the problem by buying their sacks in advance. The lack of planning seems to have been due to ignorance of storage methods among new growers. One could consider the actions of the dealers simply as risk-taking, entrepreneurial activity rather than something more nefarious.

      A look at the establishment of Granges by county in Minnesota in the period 1868–76 is revealing. Figure 1.13 shows that counties with railroads also had greater numbers of subordinate Granges. Some of this was undoubtedly due to denser county populations of agricultural families. The number of subordinates in a county is positively correlated with county population, with a correlation coefficient of 0.67.⁴² Yet the striking success of the Grange where railroads had already been built is notable: people may have been reluctant to support organizations that spoke out against railroads when hoping they could attract one to their county, but didn’t hesitate once the railroads were built. Grange activity—measured as number of subordinates per person in the county—was much stronger in counties with railroads, particularly those with only a single line.⁴³

      Borrowing Costs. Debt is a part of life for most farmers. The lag time between planting and harvesting means that farmers need cash and credit in predictable cycles, although climate and weather issues such as droughts, floods, and windstorms can undermine this predictability. In isolated areas, nineteenth-century farmers relied on local bankers, storekeepers, and farm-implement dealers for credit. These loans naturally carried risk for the lender: bad weather or pests could devastate the entire surrounding area. Risk led to high interest rates; in 1872, for instance, about half the real

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