Cambridge International AS and A Level History

Component 2: The History of the USA, 1840-1941

The Gilded Age and the Progressive Era, 1870s-1920s

Why were the 1870s and the 1880s decades of rapid industrialization?

The Growth of the Railroads

§It was the explosion of railroad building during and immediately after the Civil War that provided the foundation for industrialization. Thirty thousand miles of track was flung down just in the years from 1866 to 1873. Suddenly, railroads stretched from the Atlantic to the Pacific. Rivers of steel flowing from east to west, from north to south, had created a national economy by 1876.§In the 1860s, the major

industries were regional,servicing an agriculturalsociety. They processedthe farmers’ crops andprovided the farmers withtools, clothing, and othersupplies. The raw materialswere furnished locally, andthe finished goods weresold within their separateregions.

But the fantastic growth of the railroads provided a huge market for industrial producers. Iron, steel, coal, and lumber were in direct demand for the railroads. These industries in turn made it possible for regional specialization to be linked to the national economy. The forests of Michigan, Wisconsin, and Minnesota, of Washington, Oregon, and California, could provide lumber for the whole nation. Minerals from mines of the Rocky Mountains could easily be brought east. So could cattle from Texas and the northern plains and wheat from Minnesota and hogs from Illinois. Factories in Boston, New York, Pittsburgh, Cleveland, Detroit, and Chicago could supply markets in the far reaches of the South and West.§The first transcontinental railroad was built

with blood, sweat, politics and thievery, out of the meeting of the Union Pacific and Central Pacific railroads. The Central Pacific started on the West Coast going east; it spent $200,000 in Washington on bribes to get 9 million acres of free land and $24 million in bonds, and it paid $79 million (an overpayment of $36 million) to a construction company which really was its own.

The construction was done by 3,000 Irish and 10,000 Chinese, over a period of four years, working for one or two dollars a day.§The Union Pacific started

in Nebraska going west. Ithad been given 12 millionacres of free land and $27million in governmentbonds. It created the CreditMobilier Company, paying$94 million for constructionwhen the actual cost was$44 million. Shares weresold cheaply to Congressmento prevent an investigation.This was at the suggestion ofMassachusetts CongressmanOakes Ames, director ofCredit Mobilier and a shovelmanufacturer.

Chinese Central Pacific construction crewsalong the Humboldt Plains in Nevada.

Ames said: “There is no difficulty in getting men to look after their own property.” The Union Pacific used twenty thousand workers—war veterans and Irish immigrants, who laid 5 miles of track a day and died by the hundreds in the heat, the cold, and the battles with Indians opposing the invasion of their territory.§Both railroads used

longer, twisting routes to get subsidies from towns they went through. In 1869, amid music and speeches, the two crooked lines met in Utah.

Oakes Ames

The Growth of Trusts and Corporations

§To hold together a railroad network spread across the country required a new form of organization—the corporation. Railroad companies became the first major private bureaucracies. It took a hierarchical structure comparable to an army to mobilize and utilize efficiently the energies of the tens of thousands of men employed by the railroads. The corporation thus patterned itself on the Union army, the first major public bureaucracy. The company was composed of several major divisions. Under the leadership of a general staff, the heads of the corporate divisions, like the military generals, possessed considerable autonomy. These private divisions were broken down into smaller units comparable to regiments, battalions, companies, and platoons. Each had its own leadership linked in a chain of command up to the president of the company and his staff, the chief company officers and the board of directors.§This first modern private company made a

fetish of Time. The railroads ran by timetables. All railroad employees had their railroad watches synchronized to keep the company schedules. The railroad’s large-scale, professionalized, bureaucratized management established the model for other burgeoning industries.

The Robber Barons who were creating companies to produce for the national market—men like Gustavus Swift in meats, Charles Pillsbury in grain, Henry Havemeyer in sugar, Frederick Weyerhaeuser in

lumber, John D. Rockefeller in oil, AndrewCarnegie in steel, James Duke in tobacco—all divided their business into autonomousdepartments of marketing, processing,purchasing, and accounting, and they alldelegated great authority to the heads ofthese divisions.

Weyerhaeuser

Swift

Pillsbury Havemeyer Rockefeller

Carnegie

Duke

§The idea of a productive national economy, smoothly and efficiently integrating the physical power of the machine with the social power of a machinelike institution, the corporation, served to inspire men like John D. Rockefeller. Rockefeller started as a bookkeeper in Cleveland, became a merchant, accumulated money, and decided that, in the new industry of oil, who controlled the oil refineries controlled the industry. He bought his first oil refinery in 1862, and by 1870 set up Standard Oil Company of Ohio.§Rockefeller rejected the idea of a nation of

free and equal producers, of a marketplace of small and autonomous competitors. He envisioned an America in which a few gigantic corporations dominated production. He saw a marketplace of huge, integrated companies, cooperating to avoid competition. The virtue of this new form of production, for Rockefeller, was its efficiency. The movement to consolidate small companies into large companies, he wrote, “was the origin of the whole system of modern economic administration. It has revolutionized the way of doing business all over the world. The time was ripe for it. It had to come, though all we saw at the moment was the need to save ourselves from wasteful conditions.

The day of combination is here to stay. Individualism has gone, never to return.ӤTo achieve consolidation

in oil, Rockefeller went to war against his competitors. He built pipelines to force railroads to give him rebates if they were to carry his products. With rebates, he could undersell his rivals. Then he set out to eliminate competition: they could sell out to him at his price; they could become his agents; or they could be destroyed. The Panic of 1873 facilitated his effort to buy out or ruin rival companies. Ohio was the scene of his first takeovers, where Rockefeller had begun his refining business. Refiners in New York and Pennsylvania were his next target.

Rockefeller: “The King of the Combinations,” Puck (1901)

§One independent refiner said: “If we did not sell out …. We would be crushed out …. There was only one buyer on the market and we had to sell at their terms.” Memos like this one passed among Standard Oil officials: “Wilkerson & Co. received car of oil Monday 13th …. Please turn another screw.” A rival refinery in Buffalo was rocked by a small explosion arranged by Standard Oil officials with the refinery’s chief mechanic.§By 1880, the superior size and organization of

his militant company made it possible for him to control 90 percent of oil refining in the nation. The victory, he said, came because “we had taken steps of progress that our rivals could not take. They had not the means to build pipelines, bulk ships, tank wagons; they couldn’t have their agents all over the country; couldn’t manufacture their own acid, bungs, wicks, lamps, do their own cooperage—so many other things; it ramified indefinitely. They couldn’t have their own purchasing agents as we did, taking advantage of large buying.”

§The Standard Oil Company, by 1899, was a holding company that controlled the stock of many other companies. The capital was $110 million, the profit was $45 million a year, and John D. Rockefeller’s fortune was estimated at $200 million. Before long he would move into iron, copper, coal, shipping, and banking (Chase Manhattan Bank). Profits would be $81 million a year, and the Rockefeller fortune would total $2 billion.§Small businessmen

approached the state and national governments for help in fighting the new corporate giants. But William Vanderbilt, testifying before a congressional committee in 1879, warned politicians that they could not control them.

Vanderbilt: “The Modern Colossusof (Rail) Roads,” Puck (1901)

“Yes, they are very shrewd men,” Vanderbilt insisted. “I don’t believe that by any legislative enactment or anything else, through any of the states or all of the states, you can keep such men down. You can’t do it! They will be on top all the time.”§Many of the small businessmen threatened by

the Robber Barons saw the problem in a limited way. They did not see the larger, more profound revolution that would place the corporations in control of the economy by 1900. Hence, they did not organize political opposition to stop the trend of monopolization in the key areas of industrial production.§The first economic groups to grasp the full

implications of the corporate revolution were the workers in the craft unions. Organized labor had expanded dramatically immediately before and during the Civil War. Union leaders usually regarded owners of small factories with ten to twenty workers as fellow producers and considered small industry no threat to the open economy. But by 1869, the organizers of the National Labor Union were aware of the danger to their independence if they became industrial soldiers dominated by a rigid hierarchy of managers.

William Sylvis, the president of this new group, saw monopoly, inequality, and plutocracy as the major trends of the day. “So long as we continue to work for wages,” he declared, “so long will we be subjected to small pay, poverty, and all of the evils of which we complain.” His answer then was cooperation. The workers must form producers’ cooperatives and consumers’ cooperatives. They could preserve political and social democracy only if they engaged in economic democracy.§The National Labor Union grew

rapidly until 1873, when a depression andwidespread unemployment made it easyfor employers to ruin them. There was aconstant influx of unskilled labor fromEurope and from rural America, andadvancing technology enabled employersto use unskilled workers to replace theskilled workers who were most likely tobelong to unions.

William Sylvis

Workers despaired at the destruction of their unions and sometimes formed underground organizations, one of which was the “Molly Maguires” in the coalmines. Irish miners used guerilla tactics against their employers, but their organization was infiltrated by company spies. A young Irish immigrant, JamesMcParlan, a Pinkerton detective, becamean official of the Molly Maguires andinformed on his fellows. On McParlan’stestimony, ten were hanged.§Railroad workers rebelled against pay

cuts throughout the country in1877.They rioted in Baltimore, Altoona,Reading, Scranton, Buffalo, Toledo,Louisville, Chicago, St. Louis, and SanFrancisco. Everywhere the authoritiessummoned government troops to endthe riots. In Reading, for example, elevenwere killed in the streets; in Pittsburgh,twenty more were shot down.

Molly Maguire Park(Mahanoy City, Pennsylvania)

§When prosperity returned in the 1880s and full employment gave the workers more bargaining power, there was a dramatic resurgence of union efforts. Two or three hundred thousand workers had joined the National Labor Union. Now almost a million joined the Knights of Labor. The new organization’s president, Terence V. Powderly, announced that its aim was “to make each man his own employer.”

All productive Americans were invited to join the Knights; only parasites, professional gamblers, stockbrokers, prostitutes, lawyers, bankers, and liquor dealers were barred.§By 1890, however, the

position of the worker had not much improved. Factories were growing larger. The majority of industrial workers seemed to be passive wage-earners. Twenty years of labor agitation had failed to create a viable cooperative alternative to the corporation.

Terence V. Powderly

Though some workers considered violentrevolution as the only way to overthrowthe corporation, the establishment provedequally effective in the use of force. In1886, as thousands of workers in Chicagowent on strike for shorter hours, some ofthe union radicals began to act. On 3 May,a bomb exploded in Haymarket Squareduring a confrontation between police andstrikers. The police arrested eight knownanarchists, of whom seven were sentencedto death, although there was no evidenceto link them with the bomb.§In 1893, a major economic crisis again

encouraged employers to slash salaries and reduce the power of unions. When the Pullman Company in Chicago reduced wages, it did not lower the rents it charged in its model town. A strike by the angry Pullman workers expanded rapidly into a major walkout of railroad employees headed by Eugene V. Debs.

The Haymarket Martyrs

President Grover Cleveland then sent federaltroops into Chicago, and the army killed morethan thirty people in a confrontation.§Debs and other strike leaders

were sent toprison for “conspiracy” against the government,and it was then that Debs converted to socialism.He could no longer believe in the restoration ofa pre-Civil War America run by free and equalcapitalist producers. But neither could he acceptthose socialists who called for a violent overthrowof the establishment. Instead, Debs believed thatthe increasing monopolization of the economy bya few large corporations was acceptable because

such centralization would facilitate a peaceful revolution of the economy when socialism had been voted into power by the American people. Debs helped to found the Socialist party, which was based on the belief that political democracy could reform the social and economic patterns.

Eugene V. Debs

§Samuel Gompers agreed with Debs that there could be no violent overthrow of the new corporate order and no restoration of an older and more socially and economically democratic America. As a member of the cigar-makers’ union, Gompers would emerge to lead the American Federation of Labor (AFL). Speaking in 1888, he urged workers to acknowledge the corporate revolution and accept their place within that structure. Gompers said, “The fact is being fast forced upon the consciousness of the wage-workers of thiscontinent that they are a distinct andpractically permanent class of modern societyand, consequently, they have distinct andpermanent common interests.” Like thesocialist Debs, Gompers believed that thegrowth of the large corporation was inevitable.“We are convinced,” Gompers continued,“that the State is not capable of preventing thelegitimate development or naturalconcentration of industry.”

Samuel Gompers

§The future, as Gompers and other leaders of the AFL predicted, was one in which the business leaders would permanently control the means of production. The sole interest of these corporate officers was to increase the profits of their organizations. The interest of the workers, the enlisted men, was simply to organize in unions and bargain for a share of the profits. As Adolph Strasser, another AFL leader, explained, “We have no ultimateend. We are going on from day to day.We are fighting for immediate objectives.”§In launching the AFL, Gompers and

Strasser were seeking to free the craftunions from the anti-corporate ideologythat had characterized organized laborunder the Knights of Labor. Where theKnights appealed to all industrial and farmlaborers, the AFL comprised a loosefederation of craft unions, the unions ofthe skilled workers.

Adolph Strasser

In effect, these elite workers had abandoned any hope for the unionization of the masses of unskilled industrial workers. The failure to generate unity within the total labor force was recognized by union leaders. They were also aware of the union’s inability to solve the problem of white racism. The refusal of white workers to consider unity with black workers did not go unnoticed. “It is useless to deny the fact that there is a great amount of race prejudice still existing among white workers,” Gompers declared, “and it is well to keep this fact in mind. It is useless to be simply trying to ram our heads through stone walls.”§AFL leaders were similarly pessimistic about

reducing friction between white Protestant workers and the newer Catholic and Jewish immigrants. Indeed, there was little unity among Catholics—Irish, German, Slavic, and Italian. In the cities, immigrant workers from the industrial cities of northern Italy were easily unionized, but the immigrant workers from rural areas in southern Italy and Sicily were bewildered and confused by their first contact with industrialism in America.

§Corporate leaders well understood and exploited the ethnic groups within the labor force. They deliberately worked to deepen resentments between them by using blacks as strikebreakers against whites or by using one white ethnic group against another. Explaining why he was hiring Swedes, an employment agent for a Chicago meatpacking plant stated, “Well you see, it is only for this week. Last week we employed Slovaks. We changeabout among the different nationalities andlanguages. It prevents them from gettingtogether. We have the thing systematized.We have a luncheon each week of theemployment managers of the large firmsof the Chicago districts. There we discussour problems and exchange information.”Even more brutal was the assessment ofthe captain of industry Jay Gould: “I canhire one half of the working class to killthe other half.”

Jay Gould

§Some business leaders, represented by the National Association of Manufacturers (NAM), wanted to eliminate the AFL, just as the Knights of Labor and the National Labor Union had been destroyed earlier. Others, however, argued that the AFL should be encouraged because of its apolitical attitudes, its refusal to engage in fundamental social and economic criticism. For millionaires like Senator Mark Hanna of Ohio and financier August Belmont, Jr. of New York, a safe labor movement was preferable to the radicalism that seemed to be surrounding Debs’ Socialist party. These corporate leaders founded the National Civic Federation in 1900 with Hanna as president and Gompers as vice-president to demonstrate the common interests of management and labor within the capitalist system.

Mark Hanna

August Belmont

§President Theodore Roosevelt shared this position and supported conservative labor leader John Mitchell, the president of the United Mine Workers, against the coalmine owners. Roosevelt was particularly angry at coal executive George Baer, because he would not make a distinction between conservative and radical union activity. Writing to Mark Hanna, Roosevelt declared, “From every consideration of public policy and of good morals, they should make some slight concessions.” Ultimately, Roosevelt forced arbitration on Baer.§As the number of large

corporations jumped from twelve in 1893 to 318 in 1904, controlling 5,288 manufacturing plants, the AFL increased its membership from 265,000 to 1,700,000. Accepting cooption by the corporation seemed to guarantee the survival of a limited union movement.

John Mitchell

George Baer

§Meanwhile the corporations were free to mobilize the unskilled and nonunionized workers as they pleased. The International Harvester Corporation taught its Polish workers enough English to carry out their tasks. The major thrust of the lesson was to develop a sense of discipline and time:

I hear the whistle; I must hurry. I hear the five minute whistle, it is time to go into the shop. I take my check from the gate board and hang it on the department board. I change my clothes and get ready to work. The starting whistle blows. I eat my lunch. It is forbidden to eat until then. The whistleblows at five minutes ofstarting time. I get readyto work. I work until thewhistle blows to quit.I leave my place nice andclean. I put all my clothesin the locker. I must gohome.

Day Workers at Twine Works, International Harvester Co., Auburn, NY, 1912

§Hatred of this new discipline of the clock was expressed in poems like this written by an immigrant worker, Morris Rosenfeld:

The clock in the workshop—it rests not a moment;

It points on, and ticks on; eternity time;

Someone told me the clock had a meaning;

In pointing and ticking had reason and rhyme.

At times, when I listen, I hear the clock plainly;

The reason of old—the old meaning—is gone;

The maddening pendulum urges me forward to labor and still labor on.

The tick of the clock is the boss in his anger,

The face of the clock has the eyes of the foe;

The clock—I shudder—Dost hear how it draws me?

It calls me “machine” and it cries to me “sew.”

Morris Rosenfeld

Technological Innovations

§Between the Civil War and 1900, steam and electricity replaced human muscle, iron replaced wood, and steel replaced iron (before the Bessemer process, iron was hardened into steel at the rate of 3 to 5 tons a day; now the same amount could be processed in 15 minutes). Machines could now drive steel tools. Oil could lubricate machines and light homes, streets, factories. People and goods could move by railroad, propelled by steam along steel rails, by 1900 there were 193,000 miles of railroad. The telephone, the typewriter, and the adding machine speeded up the work of business.

§Machines changed farming. Before the Civil War it took 61 hours of labor to produce an acre of wheat. By 1900, it took 3 hours, 19 minutes. Manufactured ice enabled the transport of food over long distances, and the industry of meatpacking was born.

Ohio Works of the Carnegie Steel Co., Youngstown, Ohio, 1910

§Steam drove textile mill spindles; it drove sewing machines. It came from coal. Pneumatic drills now drilled deeper into the earth for coal. In 1860, 14 million tons of coal were mined; by 1884, it was 100 million tons. More coal meant more steel, because coal furnaces converted iron into steel; by 1800 a million tons of steel were being produced; by 1910, 25 million tons. By now electricity was beginning to replace steam. Electrical wire needed copper, of which 30,000 tons were produced in 1880; 500,000 tons by 1910.§To accomplish all this required ingenious

inventors of new processes and new machines, clever organizers and administrators of the new corporations, a country rich with land and minerals, and a huge supply of human beings to do the back-breaking, unhealthful, and dangerous work. Immigrants would come from Europe and China, to make the new labor force. Farmers unable to buy the new machinery or pay the new railroad rates would move to the cities. Between 1860 and 1914, New York grew from 850,000 to 4 million, Chicago from 110,000 to 2 million, Philadelphia from 650,000 to 1½ million.

§In some cases, the inventor himself became the organizer of businesses—like Thomas Edison, inventor of electrical devices. In other cases, the businessman compiled other people’s inventions, like Gustavus Swift, a Chicago butcher who put together the ice-cooled railway car with the ice-cooled warehouse to make the first national meatpacking company in 1885. James Duke used a new cigarette-rolling machine that could roll, paste, and cut tubes of tobacco into 100,000 cigarettes a day; in 1890 he combined the four biggest cigarette producers to form the American Tobacco Company.

§While some multimillionaires started in poverty, most did not. A study of the origins of 303 textile, railroad, and steel executives of the 1870s showed that 90 percent came from middle- or upper-class families. The Horatio Alger stories of “rags to riches” were true for a few men, but mostly a myth, and a useful myth for control.

Thomas Edison

§Most of the fortune building was done legally, with the collaboration of the government and the courts. Sometimes the collaboration had to be paid for. Thomas Edison promised New Jersey politicians $1,000 each in return for favorable legislation. Daniel Drew and Jay Gould spent $1 million to bribe the New York legislature to legalize their issue of $8 million in “watered stock”(stock not representing real value) onthe Erie Railroad.§The wild fraud on the railroads led

to more control of railroad finances bybankers, who wanted more stability—profit by law rather than by theft. By the1890s, most of the country’s railwaymileage was concentrated in six hugesystems. Four of these were completelyor partially controlled by the House ofMorgan, and two others by the bankersKuhn, Loeb, and Company.

Daniel Drew

§J. P. Morgan had started before the Civil War, as the son of a banker who began selling stocks for the railroads for good commissions. During the Civil War he bought five thousand rifles for $3.50 each from an army arsenal, and sold them to a general in the field for $22 each. The rifles were defective and would shoot off the thumbs of the soldiers using them. A congressional committee noted this in the small print of an obscure report, but a federal judge upheld the deal as the fulfillment of a valid legal contract.§Morgan had escaped military

service in the Civil War by paying $300 to a substitute. So did John D. Rockefeller, Andrew Carnegie, Philip Armour, Jay Gould, and James Mellon. Mellon’s father had written to him that “a man may be a patriot without risking his own life or sacrificing his health. There are plenty of lives less valuable.”

J. P. Morgan

§It was the firm of Drexel, Morgan and Company that was given a US government contract to float a bond issue of $260 million. The government could have sold the bonds directly; it chose to pay the bankers $5 million in commission.§On 2 January 1889, as journalist

and historian Gustavus Myers reports: “…a circular marked ‘Private and Confidential’ was issued by the three banking houses of Drexel, Morgan & Company, Brown Brothers & Company, and Kidder, Peabody & Company. The most painstaking care was exercised that this document should not find its way into the press or otherwise become public …. Why this fear? Because the circular was an invitation … to the great railroad magnates to assemble at Morgan’s house, No. 219 Madison Avenue, there to form, in the phrase of the day, an iron-clad combination ….

Philip Armour

Thomas Mellon

…. a compact which would efface competition among certain railroads, and unite those interests in an agreement by which the people of the United States would be bled even more effectively than before.” There was a human cost to this exciting story of financial ingenuity. That year, 1889, records of the Interstate Commerce Commission showed that nearly 22,000 railroad workers were killed or injured. Gustavus Myers

Trade Policies

§In 1895, the gold reserve of the United States was depleted, while twenty-six New York City banks had $129 million in gold in their vaults. A syndicate of bankers headed by J. P. Morgan & Company, August Belmont & Company, the National City Bank, and others offered to give the government gold in exchange for bonds. President Grover Cleveland agreed. The bankers immediately resold the bonds at higher prices, making $18 million profit. A journalist wrote: “If a man wants to buy beef, he must go to the butcher …. If Mr. Cleveland wants much gold, he must go to the big banker.”§While making his fortune, Morgan

brought rationality and organization tothe national economy. He kept thesystem stable. He said: “We do notwant financial convulsions and haveone thing one day and another thinganother day.” He linked railroads toone another, all of them to banks,banks to insurance companies.

Political Cartoon DepictingJ. P. Morgan Rowing Uncle Sam

By 1900, Morgan controlled 100,000 milesof railroad, half the country’s mileage.§Three insurance companies dominated by

the Morgan group had a billion dollars inassets. They had $50 million a year to invest—money given by ordinary people for theirinsurance policies. Louis Brandeis, describingthis in his book Other People’s Money(before he became a Supreme Court justice),wrote: “They control the people through thepeople’s own money.”§Andrew Carnegie was a telegraph clerk at

seventeen, then secretary to the head of thePennsylvania Railroad, then broker in Wall Street selling railroad bonds for huge commissions, and was soon a millionaire. He went to London in 1872, saw the new Bessemer method of producing steel, and returned to the United States to build a million-dollar steel plant.

Louis Brandeis

Foreign competition was kept out by a high tariff conveniently set by Congress, and by 1880 Carnegie was producing 10,000 tons of steel a month, making $1½ million a year in profit. By 1900 he was making $40 million a year, and that year, at a dinner party, he agreed to sell his steel company to J. P. Morgan. He scribbled the price on a note: $492,000,000.§Morgan then formed the US Steel Corporation,

combining Carnegie’s corporation with others. He sold stocks and bonds for $1,300,000,000 (about 400 million more than the combined worth of the companies) and took a fee of 150 million for arranging the consolidation. How could dividends be paid to all those stockholders and bondholders? By making sure Congress passed tariffs keeping out foreign steel; by closing off competition and maintaining the price at $28 a ton; and by working 200,000 men twelve hours a day for wages that barely kept their families alive.§And so it went, in industry after industry—

shrewd, efficient businessmen building empires, choking out competition, maintaining high prices, keeping wages low, using government subsidies.

These industries were the first beneficiaries of the “welfare state.” By the turn of the century, American Telephone and Telegraph had a monopoly of the nation’s telephone system, International Harvester made 85 percent of all farm machinery, and in every other industry resources became concentrated, controlled. The banks had interests in so many of these monopolies as to create an interlocking network of powerful corporations. According to a Senate report of the early twentieth century, Morgan at his peak sat on the board of forty-eight corporations; Rockefeller, thirty-seven corporations.§Meanwhile, the government of the United

States was behaving almost exactly as Karl Marx described a capitalist state: pretending neutrality to maintain order, but serving the interests of the rich. Not that the rich agreed among themselves; they had disputes over politics. But the purpose of the state was to settle upper-class disputes peacefully, control lower-class rebellion, and adopt policies that would further the long-range stability of the system. The arrangement between Democrats and Republicans to elect Rutherford Hayes in 1877 set the tone. Whether Democrats or Republicans won, national policy would not change in any important way.

§When Grover Cleveland, a Democrat, ranfor President in 1884, the general impressionin the country was that he opposed the powerof monopolies and corporations, and that theRepublican Party, whose candidate was JamesBlaine, stood for the wealthy. But whenCleveland defeated Blaine, Jay Gould wiredhim: “I feel … that the vast business interestsof the country will be entirely safe in yourhands.” And he was right.§William Whitney was one of Cleveland’s chief

advisers. Whitney, a millionaire and corporation lawyer, who married into the Standard Oil fortune, was appointed Secretary of the Navy. He immediately set about to create a “steel navy,” buying the steel at artificially high prices from Carnegie’s plants. Cleveland himself assured industrialists that his election should not frighten them: “No harm shall come to any business interest as the result of administrative policy so long as I am President … a transfer of executive control from one party to another does not mean any serious disturbance of existing conditions.”

William Whitney

§The presidential election itself had avoided real issues; there was no clear understanding of which interests would gain and which would lose if certain policies were adopted. It took the usual form of election campaigns, concealing the basic similarity of the parties by dwelling on personalities, gossip, trivialities. Henry Adams, an astute literary commentator on that era, wrote to a friend about the election: “We are here plunged in politics funnier than words can express. Very great issues are involved …. But the amusing thing is that no one talks about real interests. By common consent they agree to let these alone. We are afraid to discuss them. Instead of thisthe press is engaged in a most amusingdispute whether Mr. Cleveland had anillegitimate child and did not live withmore than one mistress.”§In 1887, with a huge surplus in the

treasury, Cleveland vetoed a billappropriating $100,000 to give relief toTexas farmers to help them buy seedgrain during a drought.

Henry Adams

Cleveland said: “Federal aid in such cases … encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character.” But that same year, Cleveland used his gold surplus to pay off wealthy bondholders at $28 above the $100 value of each bond—a gift of $45 million.§The chief reform of the Cleveland

administration gives away the secret of reform legislation in America. The Interstate Commerce Act of 1887 was supposed to regulate the railroads on behalf of the consumers. But Richard Olney, a lawyer for theBoston & Maine and other railroads, and soon tobe Cleveland’s Attorney General, told railroadofficials who complained about the InterstateCommerce Commission that it would not be wiseto abolish the Commission “from a railroad pointof view.” He explained: “The Commission … isor can be made, of great use to the railroads. Itsatisfies the popular clamor for a governmentsupervision of railroads, at the same time that thesupervision is almost entirely nominal ….

Richard Olney

…. The part of wisdom is not to destroy the Commission, but to utilize it.” Cleveland himself, in his 1887 State of the Union message, had made a similar point, adding a warning: “Opportunity for safe, careful, and deliberate reform is now offered; and none of us should be unmindful of a time when an abused and irritated people … may insist upon a radical and sweeping rectification of their wrongs.”§Republican Benjamin Harrison, who succeeded

Cleveland as President from 1889 to 1893, was described by Matthew Josephson, in his colorful study of the post-Civil War years, The Politicos: “Harrison had the exclusive distinction of having served the railway corporations in the dual capacity of lawyer and soldier. He prosecuted the strikers

[of 1877] in the federal courts … and he also organized and commanded a company of soldiers during the strike …. ”§Harrison’s term also saw a

gesture toward reform. The Sherman Anti-Trust Act, passed in 1890, called itself “An Act to protect trade and commerce against unlawful restraints.”

Matthew Josephson

The Sherman Anti-Trust Act made it illegal to form a “combination or conspiracy” to restrain trade in interstate or foreign commerce. Senator John Sherman, author of the Act, explained the need to conciliate the critics of monopoly: “They had monopolies … of old, but never before such giants as in our day. You must heed their appeal or be ready for the socialist, the communist, the nihilist. Society is nowdisturbed by forces neverfelt before …. ”

§When Cleveland was elected President againin 1892, Andrew Carnegie, in Europe, receiveda letter from the manager of his steel plants,Henry Clay Frick: “I am very sorry for PresidentHarrison, but I cannot see that our interests aregoing to be affected one way of the other by thechange in administration.”

John Sherman

Henry Clay Frick

Cleveland, facing the agitation in the countrycaused by the panic and depression of 1893,used troops to break up “Coxey’s Army,” ademonstration of unemployed men who hadcome to Washington, and again to break upthe national strike on the railroads thefollowing year.§Meanwhile, the Supreme Court, despite its

look of somber, black-robed fairness, wasdoing its bit for the ruling elite. How could itbe independent, with its members chosen bythe President and ratified by the Senate? How could it be neutral between rich and poor when its members were often former wealthy lawyers, and almost always came from the upper class? Early in the nineteenth century the Court had laid the legal basis for a nationally regulated economy by establishing federal control over interstate commerce, and the legal basis for corporate capitalism by making the contract sacred.

Jacob Coxey

§In 1895, the Court interpreted the Sherman Act so as to make it harmless. It said a monopoly of sugar refining was a monopoly in manufacturing, not commerce, and so could not be regulated by Congress through the Sherman Act (US v. E. C. Knight Co.). The Court also said the Sherman Act could be used against interstate strikes (the railway strike of 1894) because they were in restraint of trade. It also declared unconstitutional a small attempt by Congress to tax high incomes at a higher rate (Pollock v. Farmers’ Loan & Trust Company). In later years it would refuse to break up the Standard Oil and American Tobacco monopolies, saying the Sherman Act barred only “unreasonable” combinations in restraint of trade.§A New York banker toasted the Supreme Court

in 1895: “I give you, gentlemen, the Supreme Court of the United States—guardian of the dollar, defender of private property, enemy of spoliation, sheet anchor of the Republic.”§Very soon, after the Fourteenth Amendment

became law, the Supreme Court began to demolish it as a protection for blacks, and to develop it as a protection for corporations.

In 1877, however, a Supreme Court decision (Munn v. Illinois) approved state laws regulating the prices charged to farmers for the use of grain elevators. The grain elevator company argued it was a person being deprived of property, thus violating the Fourteenth Amendment’s declaration “nor shall any State deprive any person of life, liberty, or property without due process of law.” The Supreme Court disagreed, saying that grain elevators were not simply private property but were invested with “a public interest” and so could be regulated.§One year after that decision, the American Bar

Association, organized by lawyers accustomed to serving the wealthy, began a national campaign of education to reverse the Court decision. Its presidents said, at different times: “If trusts are a defensive weapon of property interests against the communistic trend, they are desirable.” And: “Monopoly is often a necessity and an advantage.” By 1886, they succeeded. State legislatures, under the pressure of aroused farmers, had passed laws to regulate the rates charged farmers by the railroads. The Supreme Court that year (Wabash v. Illinois) said states could not do this, that this was an intrusion on federal power.

That year alone, the Court did away with 230 state laws that had been passed to regulate corporations.§By this time, the Supreme Court had accepted

the argument that corporations were “persons” and their money was property protected by the due process clause of the Fourteenth Amendment. Supposedly, the Amendment had been passed to protect Negro rights, but of the Fourteenth Amendment cases brought before the Supreme Court between 1890 and 1910, nineteen dealt with the Negro, 288 dealt with corporations.§The justices of the Supreme Court were not

simply interpreters of the Constitution. Theywere men of certain backgrounds, of certaininterests. One of them (Justice Samuel Miller)had said in 1875: “It is vain to contend withJudges who have been at the bar the advocatesfor forty years of railroad companies, and allforms of associated capital …. ”

Samuel Miller

In 1893, Supreme Court Justice David J. Brewer, addressing the New York State Bar Association, said: “It is the unvarying law that the wealth of the community will be in the hands of the few …. The great majority of men are unwilling to endure that long self-denial and saving which makes accumulation possible … and hence it always has been, and until human nature is remodeled always will be true, that the wealth of a nation is in the hands of a few, while the many subsist upon the proceeds of their daily toil.”§This was not just a whim of the 1880s and

1890s—it went back to the Founding Fathers,who had learned their law in the era ofBlackstone’s Commentaries, which said:“So great is the regard of the law for privateproperty, that it will not authorize the leastviolation of it; no, not even for the commongood of the whole community.”

David J. Brewer

§In the election of 1896, William Jennings Bryan, the Democratic candidate, was defeated by William McKinley, for whom the corporations and the press mobilized, in the first massive used of money in an election campaign. The Establishment pulled out all their ammunition, to make sure the Republican candidate won. It was a time, as election times have often been, to consolidate the system after years of protest and rebellion. The black was being kept under control in the South. The Indian was being driven off the western plains for good. It was clear by 1896 that the state stood ready to crush labor strikes, by law if possible, by force if necessary. And always, as a way of drowning out class resentment in a flood of slogans for national unity, there was patriotism. McKinley said, in a rare rhetorical connection between money and flag: “… this year is going to be a year of patriotism and devotion to country. I am glad to know that the people in every part of the country mean to be devoted to one flag, the glorious Stars and Stripes; that the people of this country mean to maintain the financial honor of the country as sacredly as they maintain the honor of the flag.” The supreme act of patriotism was war. Two years later, the United States declared war on Spain.