Capital and Labor
The early Republican Party rejected both slave-labor and what some were already calling the inescapable condition of wage-labor. No one put it better than Abraham Lincoln himself in his first annual message to Congress in 1861:
It is not needed nor fitting here that a general argument should be made in favor of popular institutions, but there is one point, with its connections, not so hackneyed as most others, to which I ask a brief attention. It is the effort to place capital on an equal footing with, if not above, labor in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.
Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.
Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits. The error is in assuming that the whole labor of community exists within that relation. [...]
The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all. No men living are more worthy to be trusted than those who toil up from poverty; none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered will surely be used to close the door of advancement against such as they and to fix new disabilities and burdens upon them till all of liberty shall be lost.
(Abraham Lincoln: "First Annual Message," December 3, 1861. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=29502.)
To Lincoln and other ex-Whig Republicans, no conflict existed between governmental subsidies for "internal improvements," including the transcontinental railroad, which launched America's industrial economy, and the dignity of laborers who neither sell nor rent themselves to capital-holders. Even as undeniably brilliant an observer as Lincoln saw no necessary victims in the march of progress in which, it was thought, everyone could win; no internal contradictions within the pro-growth platform of his new party.
His views, accurately excerpted above, though perhaps surprising to many today, are hardly socialist, let alone Marxist. Rather, they are perhaps best considered closest to the twentieth-century progressive liberalism they helped to form, in which a watchdog state referees the struggle between capital and labor, always selecting for stability and against the destabilizing accumulation of too much power by either side, not that Labor ever threatened to dominate. However, the greater the percentage of the population engaged in industrial production, an economic mode much favored by the Whig-Republicans, the smaller those already disappearing classes of independent artisan or farmers. But the United States' long-noted resistance to socialism may well be mostly explained by the Horatio Alger nature of Lincoln's views, which were (and still are) very widely held: in America, every poor person is merely some degree of luck and pluck (the latter being by far the most important factor) away from riches. And to be fair, in a rapidly expanding economy like that of the late nineteenth century, such feats of social mobility did in fact occur. So, too, however, did their opposites.
The Second Industrial Revolution
This massive "second industrial revolution" had begun before the Civil War, and, encouraged by Lincoln's reformation of the country into a centralized nation-state, exploded after war's end. Now that both the war and what many considered the postwar distraction of Reconstruction were over, the recently acquired continent's resources were ripe for exploitation. Hamilton's ghost was riding high in the land, at least insofar as Republican tariff policy followed his recommendation to incubate infant industry until it was ready to compete with more mature versions abroad. The railroads, though built with private wealth by barons later to celebrate their boot-strapping self-reliance, benefited massively from dirt-cheap grants of land by the government, a subsidy if ever there was one.
Production shifted definitively out of the home and into factories that were themselves increasingly owned by corporate trusts: vertically and/or horizontally integrated mega-corporations that became near-monopolies. Smithian recommendations on the division of labor found a home in the disassembly line of the meat-packing industry in the first frontier boom town of Chicago. Soon, the same ideas were applied to assembly lines by Henry Ford as well see in the next chapter. Economic efficiency required that workers specialize in a small number (sometimes one) of repetitive tasks, and always under the tyranny of the clock as production-time was wages and wages were lost profit. Technological developments such as the spread of coal-fired steam power, and later electricity generation, telephones, airplanes, automobiles, and the rest created both markets and jobs, shifting Americans far from their Puritan roots. A consumer society was at least half-formed by the end of the century.
Incidentally, this second industrial revolution made the nineteenth century, at least in the West, the century that witnessed the biggest change in daily life in human history. In 1800, transportation and communication were no faster than they had been in Roman times. Industrial techniques had barely taken hold in a few areas. By 1900, most of the technologies we live with every day (nuclear energy, bioengineering, and computers and their networking aside), to say nothing of the structure of daily socioeconomic life, had been more or less set up in developed countries. All of this progress was fueled by fossils; it is in the nineteenth century that humanity began, at first innocently, mortgaging its ecological future by burning carbon, a suicidal habit we've yet to break.
Farming, too, centralized and financialized, numbering if not the days then at least the decades of the Jeffersonian family farm, a feature naturally not lost on farmers who would soon flock to a new political party. Increasing mechanization of agriculture increased per capita productivity, and thus supply, which lowered the price of foodstuffs while raising the cost of production. Many of course benefited from this anti-Malthusian development. But farmers, always exposed to the vagaries of the weather, were further exposed to bankers, as profit margins fell and they required loans; to commodity markets that increasingly defined prices; to successive administrations that insisted on paying down the national debt and a "tight money supply" which further squeezed both available credit and lowered prices; to large agricultural corporations, as they bought up smaller farms and centralized production; and to the railroads that had at first opened up new markets but not only charged high freight rates but also integrated American farmers into a world market stuffed with competition. And these were Northern and Western family farmers in a capitalist system; in the South, sharecropping-feudalism yielded worse outcomes for blacks and poor whites alike. The vaunted "New South" -- that is, a less racist society with a more balanced, capitalist economy -- was a long time coming.
Farmers fought back with cooperative farms soon bolstered by the Farmers' Alliance that organized cooperative efforts to provide financing and marketing to farmers as a whole. However, farmers themselves lacked the collective wealth the Alliance needed. Eastern banks were not interested in helping their mostly-debtors (that is, hurting themselves, the creditors), so the Alliance proposed that the federal government provide low-interest loans and also help farmers warehouse excess crops for future sale. Thus the Alliance morphed in 1892 into the Populist Party, a party, it must be noted, that spread throughout rural America via often outdoor meetings the rhetoric of which remind one of the Great Awakenings. This party also began to attract industrial workers of all kinds, thus forming the beginnings of what might have been a European Labor Party, something the United States has always lacked. The Populists demanded looser money under government, not banker, control; freer credit; the right to unionize; the nationalization of the railroads as a kind of public utility; direct election of federal Senators; women's suffrage; and a graduated income tax. By the end of the century, they were on the verge of taking real, national power. Every economic downturn gained them more support. However, the Populists were riven by racial and other divisions, usually widened by conscious effort by their opponents, but ultimately the divergent interests of city and countryside -- higher food prices helped farmers but hurt factory workers -- limited the party's reach. Moreover, the Protestant-revival nature of their rhetoric held little appeal for mostly Catholic urban workers.
Boom and Bust
To be sure, one of the effects of more efficient production was a drop in the cost of goods and services. As long as wages stayed ahead of these lowered costs, standards of living increased. However, wages paid mean profits lost; hence, the long battle between capital and labor over the spoils of their joint efforts, long since begun, took on new importance as the American economy radically shifted toward greater centralization of production. Trusts themselves were a method by which profits were raised: why pay for transfers of products within a supply chain or tolerate profit-reducing competition among producers when one could simply absorb them? No redistributive taxation system existed; the wartime income tax was seen merely as a wartime necessity. Naturally, as wealth concentrated, so did power. Moreover, when the economy contracted, as occurred with regularity as financial panics (one couldn't reinvest all that concentrated wealth into one's own concern, of course) led to depressions, those with power tended to suffer least.
How to deal with these periodic contractions? The ever-popular philosophy of laissez-faire, that government should be studiously non-interventionist in the economy, stood against the desires of Populists and others, including those in the labor movement. (Laissez-faire is yet another example of "kicking away the ladder." As noted, railroad magnates who had been happy to get their government handouts in the form of dirt-cheap land saw no need for others to be helped.) Indeed, the Supreme Court supported a deeply conservative view of government's economic role, even overturning a state law that limited bakers' work weeks to six ten-hour days. This was taken to be a limitation on "freedom." So workers endured sixty-hour-plus work weeks with no pensions, no unemployment insurance, no medical insurance, and no compensation for workplace injuries. Those who lost their jobs starved, essentially -- it was in this period that the tramps soon to be immortalized by Charlie Chaplin became common. Sometimes working people received some little help from corrupt machine politicians in the big cities, people like Boss Tweed who, in order to maintain power, redistributed a little of what they stole from the public back to that part of the public that supported them in elections in the form of social services and parks. With no real countervailing force, and lobbyists in control of state and even to a large extent federal legislatures regardless of which party dominated, the non-rich were left to fend for themselves.
Fend they did, primarily through labor unions, like the Industrial Workers of the World, the Knights of Labor, and others, which went on strike to force better wages and working conditions. Resistance was often bloody: the Rockefellers and Carnegies, known by their enemies as robber barons, hired private armies and non-unionized labor to break strikes. Apocryphal or not, Jay Gould's line -- "I can hire half of the working class to kill the other half." -- certainly obtained in reality if one mostly replaces "kill" with "undermine." The Haymarket Affair of 1886 was emblematic of America's unusually bloody labor history. Essentially, Chicago's city government sided with the McCormick company, which had hired the usual private army and strikebreakers to break a long strike, fighting running street battles with workers. "Sided with" means that the Chicago police department killed four strikers trying to prevent strikebreakers from entering the plant. The following day, someone -- to this day no one knows who -- threw a bomb into a protest in Haymarket Square, killing a policeman. The other policemen panicked and fired into the crowd, killing fellow officers and bystanders alike. The city took advantage of the mayhem to raid labor headquarters and arrest their leaders; the union was destroyed, the strike broken, and labor tarred with the brush of "foreign radicals." Eight anarchists (seven of them foreign-born) were arrested, tried, and despite flimsy evidence, convicted for the bombing. Four were hanged, one committed suicide in prison, and the other three were later freed by a more pro-labor mayor.
Working people did gain some allies in the press. Exposes of appalling urban living conditions did much to open much of the public's eyes to the underside of the second industrial revolution. What probably had even greater impact were photographic essays, like those of Jacob Riis, that depicted just how poorly the other half lived. These interventions helped shape a growing progressive attack on what was called The Gilded Age.
Justifications for and Attacks on a Gilded Age
In 1899, the economist and social critic Thorstein Veblen noted the anthropological value of what seemed to him and many others a wasteful economic system: "Conspicuous consumption of valuable goods is a means of reputability to the gentleman of leisure." As with the storied potlatch ceremony of some Indian tribes, in which social status was determined by which chief could destroy the most of his wealth, so, too, with the nouveau riches of the day. Aside from the ostentation of wealth concentrated in the hands of the few, the basis upon which that ostentation was made possible was itself the subject of widespread moral debate.
On the side of justification were those who preached a perversion of Darwinian evolutionary theory that came to be known as Social Darwinism. Published in 1859, Darwin's Origin of Species was a huge international bestseller. As is usually the case with a classic, different people drew diametrically opposed conclusions from the same book. In Russia, for instance, a land of brutal climatic extremes, "the struggle for existence" was seen to pit organisms against their harsh environment. So leftwing Russian thinkers like Peter Kropotkin felt justified in declaring that cooperation -- or mutual aid -- was the engine of social progress sanctioned by Darwin's invisible hand, natural selection. The very same book, however, when in the hands of British and American captains of industry (and their publicists), interpreted the struggle for existence as that of individuals struggling with each other, both within and between or among species, with the environment as a sort of neutral backdrop, and competition, harsh as it might seem to the short-sighted and soft-hearted, the engine of progress. Neither the left or right forms of Social Darwinism questioned whether a biological theory could be applied without caveat to human society.
This shouldn't be surprising. There has always been much traffic between social and biological theory, and not only with ill effects, as cross-fertilization is often the mother of originality. Both Darwin and Wallace credited the political economist Thomas Malthus's Essay on Population, which was a long argument against any government intervention in the developing market economy of the day, with their identical insight into the behavior of biological populations. Upon its birth, natural selection was then taken (by those that took it that way, which was far from everyone and which strangely enough dovetailed with social position and interest) to be a natural justification for what one might deplore -- mass poverty -- but which one mustn't ameliorate. It was a tidy move -- shuttling a certain kind of economics into biology and then back out to the same kind of economics -- that hardly undermined the biology itself but which was noted by many commenters, including Karl Marx himself who was nevertheless so enamored of Darwin that he asked the great man if he could dedicate his Capital to him. Darwin politely declined.
Social Darwinism fit nicely into the ancient and seemingly ineradicable prejudice that held the poor entirely responsible for their state. After all, hadn't the rich earned their position solely through vigorous bootstrap-pulling? Is that not what Horatio Alger taught? Sanctioned by many Protestants as a kind of "prosperity gospel," the gaining of riches threaded the eye of the moral needle. Many professors of both Protestant religion and the new science of evolution, often at each other's throats, somehow managed to agree on this one point.
But before we get too high-handed in our retrospective irony, let us reflect on a great truism of human existence: most people most of the time and whatever their social or economic position attribute their successes solely to the operation of their unvarnished will, whereas their failures are usually deemed entirely the action of the vagaries of circumstance. From time to time, exceptions to this truism arise, and are even sometimes irreducible to false modesty. But very few happily reverse the truism even in private, and almost no one in public, where wealth, status, and power are at stake.
A more ameliorative vision of society was known as the Gospel of Wealth after an 1889 article by Andrew Carnegie. Carnegie believed in the redistribution of wealth, but crucially by the philanthropic actions of the wealthy, not by government action (with the key exception of a huge estate tax, which he supported and not uncontroversially). He agreed to a large extent with Veblen, decrying conspicuous (to him, wasteful) consumption and urging his wealthy fellows to earn social status (and entrance to heaven) through conspicuous philanthropy instead. To Carnegie, the hard work and character that created wealth shouldn't be allowed to atrophy once wealth was gained; rather, Carnegie urged the continuance of character through the (mostly) voluntary redistribution of great wealth for social benefit. In fact, the Carnegie Foundation still exists, and many public libraries in America owe their existence to Carnegie's philanthropy.
Another, related gospel, the Social Gospel, extended Carnegie's ideas to religious institutions and non-rich individuals. Both Protestant and Catholic (and other) congregations were urged to follow New Testament injunctions to help the poor and downtrodden. There were plenty of opportunities to do so, and many religious organizations allied with labor and other social reformers of the day like Jane Addams to urge progressive action on housing, health, and the ongoing practice of child labor, among other goals. Often paternalistic to a modern eye, such reformers at least tried to reform what they deemed ill-formed. Finally, a real socialist party began to arise in this period, though it would peak a bit later, never thus far to return. Also note that in religion, science, and social thought in general one almost always finds ideological and ethical cross-currents whatever culture warriors of any side, in any time or place, would like us to believe. Simple determinism, however determined its tribunes, almost always obscures reality.
The second industrial revolution drove many millions to move -- from Europe and even Asia to America; from the still underdeveloped, quasi-feudal South to the North (especially African Americans); from the countryside into the rapidly growing cities; from the East to the West; from inside the home to factories. It was truly revolutionary; thus reactions abounded.
Know-Nothingness ended as a party but remained as an ever-present feature of American politics. Prejudice was stoked by the mass immigration of foreigners different from those who mostly didn't welcome them and were seen, rightly and not, to be yet more competition in a heartless economic system. Likewise, Northern racism flared up as thousands of African Americans fled the increasingly inhospitable South, attracted by the demand for labor in burgeoning Northern cities, and bringing a hybrid music, the blues (the precursor of jazz and rock), with them. (It's worth noting that virtually every form of American music seems to have had its origins in the old Confederate territory; hardly surprising given the cultural mixing that had gone on for centuries.) The notorious Supreme Court decision of 1896, Plessy v Ferguson enshrined the American version of apartheid (that is, racial segregation) in constitutional law; the South and much of the rest of the country had already established it de facto as well as de jure, at least at the state and local level. These laws and social codes that undergirded segregation were collectively known as Jim Crow and they governed black life for around a century after the fall of Reconstruction. Less dramatic, perhaps, but equally important was the continuing urbanization of American life as farming consolidated and industry took off: a river of people flowed out of the countryside and into the cities to find new work in the new economy.
The movement west, however, deserves special note both for what it created and what it destroyed. Government policies like the Homestead Act, the railroads that spread like a time-lapse fungus, and the lure of gold and other mineral riches turned the west wild -- boom towns and bonanza ranches popped up like fairy circles of mushrooms on the greensward. Some, like Chicago, remained; many did not. Fortunes were made and lost with equal speed as a vast, nearly pre-modern expanse was within a generation dragged into modernity. The historian Frederick Jackson Turner's frontier thesis wisely noted that this massive safety valve was soon to be shut off; whence would come relief from socioeconomic pressure once the West was won?
Left out of Turner's thesis were those features of the landscape known as the Indians. Settler-colonial societies always efface the existence of indigenous population, at least while they're settling and colonizing; apologies tend to sometimes follow total victory by as little as a century. They tend also to efface much of the population itself. In our case, Indians were consistently herded into ever-smaller spaces, finally to reservations on usually the most inhospitable lands available -- that is, undesired by the settler-colonists. This was hardly exceptionally American: all over the world usually European or European-formed nation-states dealt similarly with inconvenient populations in those areas they colonized, which was much of the rest of the planet. But in America, both the Plains Indians and the bison that formed the basis of their economy and way of life were steadily exterminated. The federal government led the way with the Dawes Act of 1887 that broke up tribal lands into parcels, some reserved for Indians, who were to be "civilized," and the rest for white settlers who poured in. Where acts of Congress failed, massacres like that at Wounded Knee in 1890 served. By the end of this period, American Indians numbered less than a quarter million.
Turner's plaintive question -- where to find a new safety valve? -- found a predictable answer in such intellectuals as the Adams brothers, Henry and Brooks, and Admiral Alfred T. Mahan, who eventually found a mouthpiece in Theodore Roosevelt: take to the seas, big stick in hand and following the European example, and civilize lands as yet innocent of American values. Some wiser heads called merely for Doors to be Opened, as had already happened in China and Japan, rather than the expensive acquisition of actual territory. But Europe had just carved up Africa, and even Japan was attempting to create what would later be called its "co-prosperity sphere." Why not get in on the action? -- especially since America required, at minimum, nicely spaced coaling stations such as Hawaii if it were fulfill its manifest destiny to challenge the British and others for dominance on the high seas via which international trade routes lay. Soon America was to embark on a "splendid little war" that launched the transoceanic phase of the Empire of Liberty.