It is sometimes said that war's legitimate child is revolution and war's
bastard child is inflation. World War I was no exception. The conflict heralded
the emergence of social democracy as a legitimate political institution to
replace monarchism in the Europe. Among the underdeveloped colonial economies
of the world, communism emerged to replace Western imperialistic colonialism.
In Europe, socialism was the platform on which democracy flowered. Outside of
Europe, in the colonized world, communism
was the platform on which nationalism gained state power from the feudal elite
who had become compradors of Western capitalism. Nationalistic communism was
the political weapon with which the oppressed masses used to combat Western
As a result of World War I, two of the world's great nations, Russia and China,
found communism to be the effective vehicle for creating a new society to carry
out the revival of their past glory and to launch a new historical
socio-economic-political development. But in China, Western imperialism
continued to dominated the weakened nation even after the decrepit feudal
monarchy was overthrown in 1911 by a social democratic revolution to establish
a republic patterned after US president Abraham Lincoln's ideal of government
of the people, by the people and for the people, and even as the imperialistic
West evolved into liberal social democracy at home. Western imperialism
continued in republican China for 38 years until Chinese communists gained
state power in 1949, four years after World War II ended in Asia.
Six decades after the founding of the People's Republic of China, communism
failed in the Soviet Union in 1991, while communism with Chinese
characteristics continues to prosper in China. The reason Chinese communism has
not failed is because socialist concepts have always been operative throughout
Chinese history and the import of Marxism from the West did not replace Chinese
socio-political culture of communal harmony derived from prescribed social
rites and hierarchical relations.
Chinese culture has always placed community at its core, in contrast to Western
post-Reformation culture of centering on individualism. The Confucian
philosopher Mencius (372-289 BCE) warned that a nation that operates by profit
motives will endanger its own wellbeing; a better foundation would be renyi,
a Chinese concept with no exact counterpart in the West, loosely translated as
observance of proper human relationship, support for justice, fidelity and
humanity, as embodied in the socialist ideal. Marxism merely adds a
contemporary dimension to indigenous Chinese socialist philosophy of renyi
that enables China to interact with the expansionist capitalism of the West and
to effectively repulse Western imperialism and resist neoliberalism.
The post-Civil War Populist movement
The Civil War was not followed by a union of mutual fraternal forgiveness and
reconciliation, as Lincoln had hoped by his speech: "With malice toward none;
and charity for all." The victorious North treated the defeated South as a
conquered territory more harshly than the victorious US treated defeated
Germany and Japan after World War II. Rather than reconstructing the war
damaged South, Northerners were bent on reconstructing Southern institutions to
keep the South from ever again considering rebellion.
The North was undeniably the aggressor, a role clearly evidenced by the fact
that all of the fighting was on Southern territory. As a result, the Southern
economy was destroyed by war while the Northern economy industrialized and
prospered from war production. War debts issued by the Confederacy became
worthless after the war. Not a single bank in the South was solvent as Southern
savings had been spent on financing the war. After the conflict, the Federal
Treasury ordered the confiscation of Confederate government property but
refused to assume its war debts. Corrupt Northern agents looted the South
indiscriminately. In contrast, Northern war debts were honored by taxing the
whole economy, including the South.
Two years into the Civil War, Congress passed the National Banking Act in 1863.
While its immediate purpose was to sell war bonds to finance military costs for
the North, it served also to create a national paper currency. Banks that
bought war bonds equaling up to one third of their capital were invited to
apply for federal charter. Since the Jacksonian period, bank supervision was
the province of the states. In 1860, more than 1,500 banks issued bank notes,
many of which were accepted only with high discounts.
The new banking regime was far from perfect. The currency it provided was
insufficiently elastic for the needs of the expanding economy. As the federal
government redeemed it war bonds after the war, the quantity of money in
circulation decreased, causing deflation that created hardship for debtors,
such as Southern and Western farmers. Also, money capital tended to be
concentrated in the Northeast. The farming regions in the South and the West
continued to suffer from a chronic scarcity of cash and credit. This situation
continued until the establishment of a central bank in 1913, in the form of the
The one remaining asset the South still possessed was the fertility of its
soil. There was hope that economic recovery could begin with the first harvest
of the cotton crop. But large-scale cotton production was not possible until
the financial system was restored and the liberated former slaves return to
work as paid labor. Hundred of thousands of former slaves had joined the
Northern army and were informed that they were freed by the Civil War. They now
wandered aimlessly in the North and the new territories in the West. They had
interpreted the new freedom to mean they no longer had to work for their former
masters. Many were disappointed that their expectation that the Union
government would grant them free land to farm for themselves was mere fantasy.
Illiterate and totally unprepared for survival as independent workers, many
died of starvation and homeless exposure in the cold early spring of 1865 in
In March, the Federal government set up the Freedmen's Bureau to provide food,
shelter and medical attention to the indigent, but did not provide job
opportunities for workers. White workers in the North did not want competition
from Southern blacks who were willing to work for low wages. Southern attempts
to put the former slaves back to work were interpreted by Northern radicals as
schemes to restore slavery.
The North was divided on policy towards the South, whether to grant the South
its full constitutional state rights or to take measures to prevent the
recurrence of sectional conflict and future attempts of secession. The Northern
radicals wanted to subdue the South permanently by destroying the traditional
power structure of the plantation and by establishing racial equality. Yet
while the constitutional States Rights issue was the cause of the secession, it
was not the cause for the Civil War. In practice, minority sections in the
Northeast, such as New England during the War of 1812, had used state rights
arguments to limit federal power.
The reason for the Southern secession was distinctly different from the reason
the North had for launching the Civil War. The South by its own statement
seceded to maintain the institution of slavery, which was vital to its
socioeconomic structure. Official Southern statements placed secession as a
legitimate response to the North's violation of the rights of Southerners by
excluding them from the new territories, refusing to restore fugitive slaves
and threatening the institution of slavery itself.
The North resorted to prevent secession by force to preserve the Union for
political and economic reasons, not to abolish slavery, even though its
abolition might be the result of the war. Lincoln himself repeatedly made the
distinction, and he personally was not an abolitionist. To Northern industrial
interests, an independent Confederacy closely linked to Britain would deprive
the North of a big part of its protected domestic market.
Congress did not meet until December 1865, nine months after the fighting
ended. Until then, reconstruction was under the exclusive control of the
executive branch. Andrew Johnson succeeded the assassinated Lincoln in April
and continued Lincoln's conciliatory reconstruction program, which was opposed
by the Republican Radicals.
Some radicals were ideologues who saw the Civil War as a war to abolish
slavery. Other radicals were merely using abolition as a pretext to hold on to
Republican political dominance and to strengthen the North's control of the
economy. If the South were to be permitted to return to the Union on Lincoln's
terms, then the pre-war dominance of the Democratic Party would be restored to
win the next election to dislodge Republican control of the federal government.
Northern industries and banks were concerned that the tariff would then be
lowered to allow foreign competition. Free trade would allow the South to sell
more cotton to Britain and form an economic alliance with British capital to
oppose the North. Northerners feared that the national debt held by Northern
banks might be repudiated by a Democratic congress controlled by Southern
politicians the same way Confederate debt was repudiated by the Republican
congress controlled by Northerners. Congress would then be controlled again by
the agrarian South and strip the North of all economic benefits of having won
the war. Electoral politics required Republican support for enfranchising
former slaves in order to win votes in Southern states with large black
Still, despite less than pure moral incentives, the Republican radicals pushed
through the Fourteenth Amendment to the Constitution on July 9, 1868, a year
after the Civil War ended. The amendment provides a broad definition of
citizenship, vacating the Supreme Court decision in Dred Scott v Sandford
(1857), which had excluded slaves and their descendants from possessing
constitutional rights. The relevant question before the court was whether, at
the time the constitution was ratified, former slave Scott could have been
considered a citizen of any state within the meaning of Article III of the
According to the court, the authors of the constitution had viewed the "Negro"
beings of an inferior order, and altogether unfit to associate
with the white race, either in social or political relations, and so far
inferior that they had no rights which the white man was bound to respect.
Thus strict view of the constitution held by Southern Democrats would deny
blacks all constitutional and civil rights despite changing conditions. Later,
Richard Nixon, as Republican president, co-opted the term and concept to
described conservative Republican politics and judicial philosophy.
The amendment's "Due Process Clause" has been used to apply most of the Bill of
Rights to the states. This clause has also been used to recognize substantive
due process rights, such as parental and marriage rights, and procedural due
process rights, which require specific legal steps before a person's right to
life, liberty, or property can be infringed.
The amendment's "Equal Protection Clause" requires states to provide equal
protection under the law to all people within their jurisdictions. This clause
later became the basis for Brown v Board of Education (1954), the Supreme Court
decision that precipitated the dismantling of racial segregation in the United
States and the Civil Rights Bill of 1964.
The agrarian revolt
By the late 1880s, two decades after the Civil War ended, the small farmers of
the South were beginning to organize resistance against the dominance of the
landlords and industrialists from the North. The Southern farmers wanted to
keep more of the wealth they produced from farming to pay for local schools,
roads, and other improvements plus a more democratic political system. Farmer
discontent was caused by Northern financial control and exploitation of the
Southern farming economy, with manipulation of the commodities market causing
cotton prices to fall by half to 5.8 cents per pound during 1894-97.
The National Farmers' Alliance, also known as the Southern Alliance, was formed
in Texas in 1875, a decade after the war ended. It grew quickly to a membership
of over 3 million. A separate organization, the Colored Farmers' National
Alliance, had a membership of over one million. These alliances advocated
measures for the benefit of farmers and sought support from Northern industrial
workers. A People's (Populist) Party was formed from support of the farmer
The populist platform of the People's Party demanded a series of reforms
designed to break the control of political bosses in municipal politics and to
give back to the people effective control of their urban governments. It also
aimed at restoring a more equitable economic system through nationalization of
the railroads and communication networks, a graduated income tax, shorter work
days and work weeks, and a stable currency to ward off inflation that
repeatedly outpaced wage increases.
To address the problem of farm credit, the party platform proposed a
"sub-treasury" plan by which the government would store non-perishable farm
produce in national warehouses and give loans to farmers to whom it belonged up
to but not more than 80% of its value. Populism was essentially a resurgence of
the spirit of Jeffersonian agrarian democracy that had shaped American ideals
and institutions at the founding of the republic.
The currency issue
The issue that aroused the most controversy was that of currency. Southern and
Western farmers were convinced that the main reason for the fall of farm prices
was the policy of deflation adopted by the federal government after the Civil
War to punish Southern debtors. By limiting the quantity of greenbacks and
silver dollars, making them redeemable in gold, the Treasury had increased the
value of money held by Northern money trusts and correspondingly deflated
prices of commodities produced by farmers and miners. Farmers saw the product
of their labor decrease in value while their debts to Northern banks increased
in value. They felt it unfair that they had to repay the loan they took out
earlier when wheat was selling for $1 a bushel with money that could later buy
wheat at 60 cents a bushel.
Many homeowners today also feel unfair that they have to repay loans they took
out two years earlier, before the onset of the 2007-08 financial crisis, when
their homes were selling for $700,000 with money that now can buy the same
homes for $300,000.
The Populists demanded an increase in the quantity of money in the form of
paper currency or unrestricted coinage of silver at the constant ratio of 16:1.
The silver coin proposal received strong support from the silver miners. The
Populists were convinced that the maintenance of the gold standard was a
conspiracy of international financiers, for whom the Northeastern banks were
agents, to impoverish the masses. This attitude was a foundation of
isolationist sentiment in the US, particularly in the rural regions of the
South, the West and the Middle West.