During the Panic of 1873 agricultural prices in the United States began to decline. The economic welfare of farmers suffered badly; many believed that the management of currency was at fault and that the government's currency policy was determined by Eastern bankers and industrialists. After attempts at independent political action failed (see Greenback party), loosely knit confederations called Farmers' Alliances were formed during the 1880s. Separate organizations were founded in the North and South, and Southern blacks organized their own alliances.
The Farmers' Alliances agitated for railroad regulation, tax reform, and unlimited coinage of silver and attempted to influence the established political parties. Growth was so rapid, however, that interest in a third party began to increase; in 1891 delegates from farm and labor organizations met in Cincinnati. No decision was made to form a political party, but when the Republican and Democratic parties both straddled the currency question at the 1892 presidential conventions, a convention was held at Omaha, and the Populist party was formed (1892).
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