-Caveat Lector- an excerpt from: The Evolution of Mass Culture In America - 1877 to the Present Gerald R. Baydo, Editor The Forum Press, Inc.�1982 Arlington Heights, Illinois 60004 ISBN 0-88273-260-9 ----- The Origins of the Corporate State Howard A. DeWitt The triumph of industrial America and the rise of the corporate state is associated with the post- Civil War change in intellectual attitudes. The belief that anyone could rise from rags to riches glorified the role of the busi-nessman and deified the values of the banking community. By the 1870s the growth of the transcontinental railroad, the emergence of a modern factory system, the rapid burst of technological innovation, the availability of ac-cumulated capital, and the extensive supply of various classes of skilled and unskilled laborers made the success of big business inevitable in the Ameri-can experience. There were many reasons for the triumph of corporate ideas during the last three decades of the nineteenth century. The military needs of the Civil War, for example, stimulated demands for increased industrial production as well as the scientific distribution and marketing of consumer goods. The triumph of the corporate state led to surplus produc-tion which created new foreign markets in Asia, Europe, and Latin America for American goods. The dominance of business in domestic and foreign affairs created a strong demand for reform in American politics. Thus, virtually every social-intellectual, economic, or political change in the United States could be traced to the corporate state, and the result was to create a nationwide debate over the role of economic change in American life. There was an element of conflict between free enterprise capitalists and the common man in the late nineteenth century. There was a widespread belief among intellectuals that American institutions should meet social needs and provide material wealth for all levels of society. A number of� reform-minded ministers like Washington Gladden and Walter Rauschenbusch wrote and preached that improved working conditions, slum clearance, temperance, and decent employee-industrial relations would lead to greater prosperity and defuse the revolutionary impulse in American society. This intellectual hostility to the rising corporate state was known as the social gospel movement. As religious activism declined in the city, zealous Catholics, Protestants and Jews organized to generate new life into urban religious institutions. The social gospel movement was a reaction against uncontrolled individualism and unrestrained capitalism. The popularity of public charities, schools for destitute children, and aid for senior citizens marked an important change in American values. Washington Gladden, who became known as the Father of Social Christianity, urged church leaders to develop responsible attitudes toward labor and urban problems. Gladden believed that a revitalized, reform-minded urban religion could improve the welfare of the working classes. In response to these developing reform attitudes the defenders of individualism and unrestrained competition argued that business concentration did not influence the mobility of business-minded entrepreneurs. Drawing freely upon the Horatio Alger myth that anyone could make a million dollars, defenders of the corporate state argued persuasively that the only responsibility of big business was to continue to provide an expanding economy. This argument was supported by the growth of the factory system. In 1860 slightly more than 100,000 factories operated in America, but by 1900 over 200,000 manufacturing plants were creating the impression that individual corporate initiative was open to anyone. Yet these statistics were misleading. By 1900, when only ten percent of all manufacturing plants had annual production of a million dollars, one percent of the nation�s factories produced over two-thirds of all U.S. goods. To fully appreciate the triumph of business concentration, it is necessary to examine the rise of the transcontinental railroad and the monopolistic tendencies that it stimulated in the American economy. In 1860 raillroads were the most significant economic enterprise in the United States. As new track was laid, freight and passenger trains created a quiet revolution in settlement and the distribution of consumer goods. Of all the railroad projects that occupied the public imagination none was more exciting than the transcontinental line. In 1862 Congress granted the Central Pacific railroad the right to build east from Sacramento, and the Union Pacific was chartered to build westward from Omaha, Nebraska. After a great deal of controversy over excess federal aid to the railroad industry and a strong anti-Chinese movement due to the use of Asian labor the transcontinental railroad was completed. On May 10, 1869, the two railroads linked their tracks before a wildly drunken crowd in Promontory, Utah. As a large crowd gathered boisterously cheering, a young lady with a radiant smile provided a spike of gold, silver, and iron to begin the elaborate ceremony which completed the railroad system. There was a feeling that the transcontinental railroad was the beginning of an unlimited era of technological triumph. A telegraph wire was placed around each spike, and every barroom In America exploded with cheers as they heard the "tap-tap-tap" driving the last spike into the ground. This cataclysmic event marked a new era of economic growth in American civilization. In the 1870s Pullman sleeping cars, steel rails, uniform gauges, improved tracks, and terminal facilities made the railroad an impressive national transportation network. The invention of cold-storage railroad cars provided a link for Chicago meat packers to all parts of the United States. The cold storage warehouses in the Middle West created a revolution in the distribution of agricultural goods and led to increasingly sophisticated marketing techniques. The corruption and monopolistic tendencies of the Union Pacific and Central Pacific lines did not escape the scrutiny of public opinion. Despite the economic advantages of the transcontinental railroad, its critics argued that the railroads each owned the construction company which built their lines. The result of this convenient economic arrangement was to siphon millions of dollars from state and federal government. The Credit Mobilier, the company which built the Union Pacific, billed the railroad for $73 million for construction work that cost less than $50 million to complete. The Central Pacific and Union Pacific received twenty million acres of land and $60 million in government loans to complete their project. The state and county governments provided $528 million and graciously donated fifty million acres of land to the two railroads. In most cases these subsidies encouraged railroads to overbuild in order to enlarge construction profits. The need for improved transportation stifled much of the criticism of the railroad industry. By 1883 the Northern Pacific completed its line to Port-land, Oregon, and the Atchison, Topeka and Santa Fe railroad connected Kansas and Nebraska. In 1893 James J. Hill�s Great Northern Railroad coupled Seattle with the Middle West, and the presence of five major railway systems throughout the United States created new demands for consumer goods and intensified business activity. Yet, large numbers of railroads experienced financial problems or quietly went bankrupt and were bought up by investment bankers. As one critic suggested, free-enterprise capitalism failed long before monopolistic bankers gained control of key transportation systems. It was the greed of easy short-term profits which condemned the railroad barons to long-term economic failure. In the 1890s it was apparent that the railroad industry was overbuilt and in shallow financial water. The panic and depression of 1893 caused 318 companies to experience bankruptcy, and this allowed two New York investment banking firms to gain control of most major railroads. Typical of the investment banker was J. P. Morgan who financed the consolidation of a number of railroads to prevent irresponsible financial and investment schemes. However, Morgan insisted that bank representatives be placed on the management of leading railroads, and this increased monopolistic tendencies in the transportation industry. By 1900 a few major railroad systems, controlled by Wall Street banking houses, controlled over half the mileage in the nation. The railroad industry is an excellent example of how finance capitalism led to the rise of uncontrolled oligarchical monopolies. As wealth accumulated it was reinvested in corporate endeavors which led to aggregations of capital which hampered competition in the marketplace. Wall Street bankers argued that pooling of business resources guaranteed greater prosperity, but the average citizen believed that economic controls in the hands of a few individuals would destroy the fabric of American de-mocracy. As a result, fears of "Robber Barons" or "Captains of Industry," as they were commonly known, reached epidemic proportions. The big businessman created a new level of economic monopoly from 1870 to 1900. John D. Rockefeller�s rise to power aptly demonstrates this dominant development in late nineteenth century America, the rise of monopolistic business practices. In response to Rockefeller�s legendary early speculative exploits in the oil industry, Americans coined the term "robber baron" to describe his business character. During the Civil War, he financed his first oil refinery. By 1867 he was the most prosperous oil magnate in the Cleveland area. In 1870 Rockefeller formed the Standard Oil Company of Ohio in which he introduced modern technical and managerial skills to squeeze out the competition. Since the oil industry was highly competitive, transpor- tation costs cut heavily into profits. To increase Standard Oil�s earnings, Rockefeller guaranteed large scale shipments to railroads in return for rebates which reduced his company�s transportation costs. By 1880 Standard Oil controlled more than 90 percent of all refined oil in the United States. Rockefeller�s ingenious business tactics had virtually ended all competition. In 1882 Rockefeller and his partners formed the country�s first trust, which was a company that controlled an industry through consolidation, spies, industrial sabotage, rebates, and other unscrupulous business tactics. By consolidating twenty-seven different companies into a single corporation, Rockefeller created America�s first corporate giant. The Ohio courts responded by declaring Standard Oil a company which illeglly restrained trade. This forced Rockefeller to create his oil trust under New Jersey�s liberal corporate laws. As he rose to power, Rockefeller created numerous enemies in private business and federal government agencies. As a result of his tactics, the United States Supreme Court forced the Standard Oil Company to reorganize its business interests to avoid trust prosecution. In 1911 Rockefeller grudgingly formed thirty separate firms to satisfy federal laws. The irony of Rockefeller�s Standard Oil story is that the company contributed to the growth of the American economy while fostering federal regulation of big business. As much as Rockefeller dominated the oil field, Andrew Carnegie, a poor Scottish immigrant, revolutionized the steel industry. Prior to investing in the steel business, Carnegie became a wealthy man from investments in railroad construction, bridge building, and oil refining. On a business trip to England, he witnessed the Bessemer process for producing steel. This inexpensive production technique made it highly profitable to invest in the steel industry, and soon the Pennsylvania countryside was dotted with steel mills. When the Panic of 1873 caused financial difficulty, Carnegie bought out many of his competitors. The significance of Carnegie�s business success came in the area of scientific management. He introduced cost conscious production technigues. Business expenses were reduced by mechanization and revolutionary accounting procedures. In a few years the price of steel declined so rapidly that it replaced iron, wood, and stone in construction. In 1900 Carnegie sold his steel holdings to the investment broker, J. P. Morgan, for half a billion dollars, thus paving the way for the creation of the powerful United States Steel Corporation. Many myths were perpetuated about Carnegie�s life. His defenders suggested that he was typical of the poor immigrant who made millions, then devoted the rest of his life to philanthropic causes. In 1889 Carnegie wrote "The Gospel of Wealth," a popular pamphlet, which argued that the rich had a moral obligation to spend their money for the welfare of the general public. Many industrial barons were civic-minded individuals who supported the arts and helped to establish a tradition which linked wealth to cultural advancement. Prior to his death, Carnegie used his massive fortune to create libraries, charitable institutions, research foundations, and endowments for peace and international cooperation. Since such philanthropy was not tax deductible, Carnegie was supporting his belief that corporate wealth would create a better world. John Pierpont Morgan was a late nineteenth-century businessman who made his fortune providing investment capital for fledgling corporations. The post-Civil War banking system made it unlawful for large banks to accept land as security for a loan. Many banks lacked the funds to lend money to legitimate business enterprises. As a result, the J. P. Morgan Company became one of the investment corporations which provided loans for business expansion. The general pattern was for a new or expanding company to sell stock or bonds, and the J. P. Morgan Company would then act as a broker for these economic devices. Thomas A. Edison, a young inventor, prospered from the financial support of the J. P. Morgan Company. As a young inventor in the telegraph and telephone fields, Edison was well known for his scientific genius. Without J. P. Morgan�s financial support, however, Edison�s technology would not have spread to every part of the United States. In 1877, at age thirty, Edison worked on an incandescent light and the phonograph. These diverse inventions indicate the scope and breadth of Edison�s mind. In October 1878, Edison perfected the theory of the incandescent light and founded the Edison Electric Company. He theorized that the light produced by electricity could be broken into small units and distributed to homes and businesses. On September 4, 1882, the first commercial electrical station opened at Pearl Street near New York City�s financial district. J. P. Morgan�s financial support helped the Edison Company to open its business with 85 customers and 400 lamps. To help publicize electricity, Morgan installed his own electrical plant in his Manhattan home. In a few years electrical lighting stations were constructed in Boston, Chicago, and Philadelphia with Morgan�s financial support. The key to Morgan�s financial success is that he provided the financial resources for new corporate enterprises. Until Morgan entered the invesment market, the sale of Stocks in a corporation was considered a risky venture. By the 1880s the reputation of the J. P. Morgan Company guaranteed the confidence of eager investors. As a result of his financial reputation, Morgan was able to bring about the merger of many corporations and to control these business interests by placing his men on the boards of directors. Investors would eagerly purchase stock in Morgan-controlled companies, because they believed that his management skills assured high profits. The relationship between Rockefeller, Carnegie, and Morgan is an important element in understanding the rise of the corporate state. Carnegie was the cost-conscious steel master who built a major American industry, and Rockefeller carried these ideas one step further by seeking out the best methods to expand the oil industry. Morgan was the banker who financed financial undertakings by entrepreneurs like Carnegie and Rockefeller. Between 1898 and 1901 Carnegie and Morgan struggled for control of the steel industry. In 1901 Morgan and his partners bought out Carnegie�s steel interests for an inflated price of $447 million and formed the first billion dollar trust�United States Steel. T he billion dollar trust which Morgan or-ganized was the capstone to the monopolistic triumphs of the robber barons. The high noon of monopoly occurred just after the turn of the century as more than 300 trusts emerged in the attermath of the formation of United States Steel. Yet, it would have been impossible to consolidate this level of wealth had it not been for the inventors and technological change. The economic revolution was a result of more than 440,000 new inventions from 1870 to 1900. A review of the most important inventions indicates the degree of technological innovation which aided the rise of business values. In 1866 Cyrus W. Field was successful in laying a transatlantic cable to Europe. Alexander Graham Bell�s telephone was operating by the 1890s, and the American Telephone and Telegraph Company made American business a worldwide phenomena. To speed the pace of business success, Christopher L. Sholes invented the typewriter, James Ritty the cash register, and William S. Burroughs the adding machine. These inventions were an important catalyst to the general technological revolution during the late nineteenth century. Much of the economic productivity of America was due to the rise of the city. One of the key elements in cities was the large number of immigrants who arrived from Europe. In the 1880s more than five million foreigners entered the United States to seek their tunes. Many immigrants found it difficult to adjust to American lite, and this helped to give rise to City bosses. In New York City the Tammany Hall political machine secured jobs and housing and provided social contacts for the new immigrants. In return the boss requested and received political support from the alien once he was naturalized. By the late 1880s immigrant votes furnished the base for the power of the successful city machines. The city boss acted as a mediator between the poor immigrant and the law. Tammany Hall leader George Washington Plunkitt suggested that this was a social service organization designed to aid the poor. In many respects city bosses were power brokers insuring the adequate function of urban government and society. While there was prosperity and full-employment the city boss found little compe-tition from high-minded reformers. The prospect of a lengthy depression, however, threatened to challenge the urban machine. In each decade from 1870 to 1900 there were three to four-year periods of economic disaster which created unemployment, bankruptcy, and business failures. Although progress, prosperity, and economic growth were generally the hallmarks of the rise of the corporate state there were reformers who argued that the lack of business competition threatened the fiber of American democracy. The "Goo-Goos," as the reformers were known, pointed out that the Panic of� 1893 caused 500 banks and 16,000 business to fail. In June 1894, the Federal Government announced that one-fourth of railroad capital was in receivership, and federal officials painted a gloomy picture for the future of the American economy. The question of who was to blame for the roller-coaster-like economy occupied the minds of most people in the 1890s. Many Americans blamed the business practices of the robber barons for the catalysmic changes in employment and business. The press and reformminded politicians charged that unscrupulous business practices by J. P. Morgan�s United States Steel trust and John D. Rockefeller�s Standard Oil Company made it impossible for the common man to compete in the business world. The defenders of the industrial barons quoted Charles Darwin�s Origins of the Species (1859) to argue that the strongest and most capable individual made millions of dollars while the weak fell by the wayside. Herbert Spencer, a popular English philosopher and writer, delighted American advocates of the corporate system with his Social Darwinism. This theory argued that commerce and trade must flow without interference from government. In Spencer�s view the rich deserved their wealth, and the poor were simply the product of laziness, vice, and general lack of ability. Social Darwinism was a convenient rationale to explain the extremes of wealth and poverty present in America�s new industrial society. The critics of the American economy were an important force in creating a public demand for reform. The most popular protest themes during the late nineteenth century centered around railroad and land monopolies. Henry George, a transplanted New Yorker, rose to prominence in California during the 1870s as a critic of the Central Pacific and Southern Pacific railroads. The California Democratic Party hired George to edit the Oakland Transcript. He used his position to call for an end to the unbridled economic power of the railroads and to plead for the election of reform-minded Democratic politicians. In his writings, George linked the railroads� use of inexpensive Chinese labor with huge profits and monopolistic business practices. Thus George also advocated the enactment of legislation to curb Chinese immigration. The railroad barons and the land speculators, George argued, did not profit from the benefits of their own labor. Although George viciously attacked the practices of big business, he did not gain an immediate audience for his ideas. Then one day as he was riding his horse in the Oakland hills, Henry George developed an economic theorv which reflected the hostility of middle-class Americans toward the new corporate wealth George speculated that land prices were rising for reasons he believed to be economically catastrophic. In a moment of spontaneous reflection, George suggested that as progress and wealth increase in society, a twin emerges in the form of poverty. If wealth is created without hard work, it inevitably results in unemployment and blue-collar dissatisfaction The rise of land values made it virtually impossible for the average person to purchase a home, or to succesfully operate a small farm. George believed that the traditional mobility of the landowner was vanishing as land barons and corporate interests dominated the economy. In a series of pamphlets, George suggested that the large land grants to railroads were unfair because they accentuated the drift toward monopoly. It was George�s premise that a portion of public lands should be returned to the people. In the depression-ridden 1870s this was an unusually popular idea. It could be accomplished by a single massive tax on land speculation. In a finely argued piece of logic, George demonstrated that wages no longer had the purchasing power that they had in the past. In a time of spiraling inflation and declining wages, George�s theories attracted a substantial public following. The most important weapon in Henry George�s intellectual arsenal was a device called the single tax. It was a plan to tax the "unearned increments on the rise of land values. In other words, it a person held a piece of land for speculative purposes, there would be a still tax upon the property. In this way, unearned profits would-disappear and free economic competition would remain a standard practice. One of the key arguments in George�s philosophy was the idea that the railroads� power was due to monopolistic practices aided by federal money and land grants. This was the perfect argument to connect hostility toward both the railroads and th[e] federal government. In 1879 George�s best-selling book, Progress and Poverty, popularized the single tax and sold a record-breaking five million copies. There was little sophistication in George�s work. He asked a simple question: "Why should an individual be rewarded for simply selling land in an inflationary market?" This question exploited the growing middle-class fears that the unemployed and business interests would engage in a revolutionary conflict. In many respects Progress and Poverty recognized the triumph of the corporate state, and it called for a public campaign to restore individual initiative to the American dream. George believed that the sturdy pioneer and the yeoman farmer were no longer the backbone of the nation. He was right, for the industrial order had transformed America from a rural, agricultural state into an urban, industrial complex. As America lost its pioneer charm and became cynical over the triumph of business values, a new form of literature began to emerge. Suddenly bitter, acid-penned critics began to examine the new corporate civilization. Among the most satiric writers was a nasty, sharp-tongued San Francisco newspaperman, Ambrose Bierce. As a reporter for the San Francisco News Letter, Bierce wrote a titillating gossip column, "The Town Crier," in which he satirized local culture and reported sexual scandals. In 1911, Bierce�s The Devil�s Dictionary became an immediate best-seller although it contained little more than a collection of ironic definitions and nonsense statements. Bierce�s work was a perfect reflection of the cultural anarchy of industrial America. In an age of business dominance, Bierce�s writings provided a comic-opera tone to relieve the misery of vanishing economic opportunity. The decline of farm prices and the increasing difficulty of the American farm also became a popular theme. Frank Norris, the product of a wealthy Chicago family, moved to California and became an eyewitness to the emergence of the railroad�s control of the American West. After a year of studying creative writing at Harvard, Norris wrote a series of books on the battle between the farmer and the railroad monopoly. His epic novel, The Octopus, published in 1901, was a dissection of California agricultural problems during the golden age of corporate growth. In The Octopus Norris fictionalized the Battle of Mussel Slough. In 1880 near Hanford, California, local farmers and the railroad argued over homesteader claims. The Southern Pacific railroad published a series of promotional pamphlets encouraging settlement on less than desirable railroad land. Southern Pacific managers then constructed a rail line through the San Joaquin Valley and confidently predicted that the influx of marginal land settlers would turn a large profit for Southern Pacific. This land scheme was also to the railroad�s tax advantage, because Southern Pacific did not take possession of the land. This delayed state land taxes to the railroad�s advantage. In a complicated legal maneuver the railroad reached a gentleman�s agreement with local homesteaders by which the farmers leased the land. It was, however, an extralegal agreement which allowed the Southern Pacific to evict the tenant farmers. Although local citizens referred to Mussel Slough as "Starvation Valley," the land prospered. This prompted the railroad to bill the tenant farmers twenty-five to forty-two dollars an acre for the land. Local settlers pointed to elaborate irrigation systems, extensive land improvements, and railroad promises to sell the land as reasons for not paying the assessed prices. When the local sheriff came to evict the settlers there was a bloody shooting, and seven people were killed in the so-called Battle of Mussel Slough. Frank Norris�s novel, The Octopus, while fictionalizing the incident, also helped to keep alive bitter memories of agricultural strife. The hostility to corporate interests was reflected in the rapid sale of the book and its long survival as a best-seller. There were numerous novels which were critical of big business interests in the late nineteenth century, and this is a strong indication of a revolutionary intellectual mentality in the midst of the triumph of the corporate state. In order to place the origins of the corporate state in a proper perspective, it is necessary to examine a number of changes in the city and the subtle influences of immigrants and religion. This resulted in a great degree of political change and a shift in traditional American voting patterns. The major political parties found that this intellectual change brought thirdparty challenges, new attitudes upon foreign affairs, and an increased pressure from fledgling labor unions to control the economy. The effects and challenges of the corporate state led to the birth of reform sentiment and the twentieth century conflict between government and business. These changes were subtle but they began to appear in the major American cities in the 1890s. The city dominated American politics in the late nineteenth century. The rapid growth of major urban centers made it difficult for traditional politiclans to exercise power. As a result, bosses who directed urban political machines arose as power brokers in the Gilded Age. American voters were passionate in their participation in the political arena in an era when the Republican Party usually predominated. In many respects there was a theatrical air to the political spectrum as witty, nattily-dressed Republican and Democratic bosses provided jobs for European immigrants. By 1890 one of four Philadelphians and one of three Bostonians were foreign born. In New York City, four of five residents were foreigners or born of foreign parents. The immigrants supplied a ready source of cheap labor for expanding American industry-soon sweat shops grew up in every major city-as well as a source of new votes for the period�s political brokers. During the Gilded Age, with its influx of large numbers of immigrants, ethnic and religious influences were an important factor in American society. The Democratic Party depended heavily upon German and Irish Catholics to control some northern cities. Yet, the Democratic Party was also strongly supported by Episcopalians, Jews, and Lutherans. Since all ethnic and religious groups were interested in personal freedom, Democratic Party bosses were able to trade votes for promises of freedom to worship, work, and practice any cultural trait common to an ethnic group. The Republican Party was not as fully represented by cultural, ethnic, or religious factors. In general, Republican voters were fundamentalist Christians with strong business interests. They were native born Baptists, Methodists, and Presbyterians who believed that politics was a means of controlling public morals. It was inevitable that the clash between Republican and Democratic politicians would lead to anti-foreign sentiment. In the 1880s an anti-Catholic pressure group, the American Protective Association, was formed to fight the Roman Catholic Church and advance the Protestant faith. The A.P.A. staged the first serious modern attempt by right-wing politicians to infiltrate the mainstream of the American political system, and in the 1890s it lent its support to hundreds of anti-alien demonstrations. In local politics it was easy for white, Anglo-Saxon, Protestant politicians to control public opinion, because the federal government was not involved in education, consumer protection, or other social issues which touched the daily lives of Americans. Only during presidential elections did the national Republican and Democratic party machines organize local communities. This helps explain why there was such a narrow view of American life in non-presidential years. Although Republican presidents generally captured the White House from 1877 to 1900, there was still a vibrant two-party political system. Between 1874 and 1892 the Democratic Party controlled the House of Representatives by sizable majorities, and only in 1880 and 1888 did the Republicans eke out a slim majority in the lower house of Congress. Yet, there were few political issues of consequence raised by the major parties, both of which were frequently dissension ridden. The general division in American politics allowed big business to exert undue influence. Corporate lobbyists often manipulated politicians into supporting business-minded legislation. There were few politicians who were reform-oriented. The most significant changes in American politics were aimed at curbing the role of party patronage. For years it had been customary to reward the party faithful with appointive political office. In return, officeholders kicked back part of their salaries to the party to finance elections. The increase in the size of the federal bureaucracy prompted President Ulysses S. Grant to introduce competitive examinations for civil service positions. The use of patronage to build party loyalty often led to state political machines dominating the presidency. In the late 1870s President Rutherford B. Hayes challenged the New York Republican machine by demanding that customhouse officials be fired for incompetence and public drunkenness. In 1883 the Pendleton Civil Service Act culminated the drive for government efficiency by creating a three-member commission to supervise competitive examinations for federal employment. The Pendleton Act prevented the collection of mandatory campaign funds from federal officeholders, and by 1900 almost 50 percent of all federal jobs were controlled by the Civil Service Commission. In the 1880s American public opinion became increasingly sensitive over the importation of foreign goods. The Republican Party argued that a high tariff on goods imported into the United States would foster the growth of American industry. The Democrats responded that low tariff�s and less federal regulation would maintain low prices and readily available consumer goods. The importance of the tariff issue to Americans was demonstrated in 1888 when President Grover Cleveland, a Democrat, lost his bid for a second term. Cleveland did not believe that he should wage an active campaign, and the Democratic Party underestimated public demand for a strong stand on the tariff question. Benjamin Harrison, the Republican candidate, campaigned strenuously for a high tariff and suggested that industrialists and factory workers could not expect decent profits and wages without protection from foreign competition. The pro-tariff states provided Harrison with a narrow victory and an indication of strong American feeling about foreign goods. Since the Republican Party was the most business-minded of� the two major parties, the G.O.P. reflected the belief that a high tariff encouraged the increased production and consumption of American goods. In control of the presidency and both houses of Congress, the Republican leadership passed the McKinley Tariff of 1890 which extended tariff coverage to goods that had previously entered the United States without duties. In order to foster the growth of agricultural products, the McKinley Tariff provided protective duties for key crops. The Democratic party used the tariff issue in the congressional elections of 1890 to argue that high consumer prices and reduced buying power resulted from Republican unwillingness to recognize that a protective tariff hurt the economy more than it helped it. The voters agreed and elected a Democratic Congress. This was a prelude to the return of Democratic political power. In 1892 Grover Cleveland was elected to a second presidential term due to serious public concern over the economy. The decline in prices for agricultural and manufactured goods created pressure for an adjustment in the national supply of money. The Sherman Purchase Act of 1890 had increased the supply of silver that the federal government would purchase each month, but the Depression of 1893 was blamed upon silver speculation and the Sherman Act was repealed. The controversy over silver was one of the reasons the People�s Party of America, or the Populists, as they were known, emerged as a potent third party force. The Populists were disgruntled farmers, supported by a few urban workers, who believed that increased silver coinage and sweeping political change would reform the economy. In the spring of 1893 the stock market hit a new low, and the following year Jacob Coxey led an army of unemployed blue-collar workers in a march upon Washington, D.C., as discontent over economic dislocation became increasingly widespread throughout the country. In local elections in 1893 the Populists won numerous state government seats, and in 1894 a small number were elected to Congress. The major parties were braced for a strong challenge from the Populist Party in the election of 1896. The controversy over silver coinage led to the emergence of a young, powerful Nebraskan, William Jennings Bryan, who argued with the intensity of a Baptist preacher that free silver was a cure for the nation�s economic ills. Although he was only thirty-six years old, young Bryan captured both the Democratic and Populist party nominations for the presidency. A large number of tradition-minded Democrats deserted the party because they believed that Bryan�s views were too radical on the money question. This forced Bryan to campaign as the candidate of the common person and to promise to rebuild the Democratic party. The 1896 presidential election was an exciting affair as Bryan�s supporters organized "silver clubs" in every state. Bryan himself delivered almost six hundred speeches to more than three million Americans. A short, stocky man with a rumpled appearance, Bryan used his great oratory skills to further his cause. As the campaign intensified, Bryan�s watchword became, "You shall not crucify mankind upon a cross of gold!" The fervent moral tone of Bryan�s politics appealed to a large number of Americans who believed that political and business corruption must be controlled by the federal government. Small-town bankers, businessmen, immigrants, and almost all those living in the urban-industrial Northeast were frightened by Bryan�s campaign. The Republican party exploited these fears of Democratic-Populist radicalism by suggesting that free silver would destroy the nation�s economy. Church leaders called Bryan a dangerous radical as the election of 1896 degenerated into a name-calling contest, and the Republican party proved extremely skillful in blaming the current economic depression upon President Cleveland�s Democratic politics. The Republican candidate, William McKinley, was an appealing candidate, because he was able to exude sincerity and honesty. A tall, imposing man, McKinley soothingly lectured the nation on the problems of the economy. He seemed much like a kindly grandfather ready to lead the United States back toward prosperity. The smooth direction of the 1896 Republican campaign was the work of Mark Hanna, a wealthy Ohio crony of McKinley�s. The key to Republican Party success was the organization of thousands of small McKinley clubs throughout the nation. A large number of Democrats in the Middle West defected to the Republican Party, and McKinley�s overwhelming election brought a surprising number of Midwestern farmers into the G.O.P. Perhaps the best example of Hanna�s campaign skills was the Republican Party flag day held two weeks before the presidential election. The significance of the flag day is that it conjured up images of the Republican Party as the savior of the Union. Although the Civil War had been over for more than thirty years, Hanna used the G.O.P.�s reputation for saving the Union to help elect McKinley president. In 1897 prosperity returned to American life, and the farmers and urban laborers ignored the protests of third-party candidates. Many historians believe that there has never been a history of radical change supported by working-class Americans, and the election of 1896 surely seemed to reaffirm the appeal of staid, business-minded conservatism to most blue-collar workers-. Yet, the Socialist Party grew almost continually in the decade after 1900, and almost a million Americans voted for the party�s presidential candidate in 1912. As the corporate state stood on the verge of triumph, radical politics presented at least a temporary challenge. One of the most important changes in American life during the period of the origins of the corporate state was the rise of organized labor. In the late nineteenth century America�s longest surviving unions were formed along craft lines. The employer resisted union demands, and there was a great deal of violence in the 1870s between the worker and business. As a result, workers grew increasingly militant by the mid-1880s. The most powerful early industrial union was the Knights of Labor, formed in Philadelphia as a secret society. In 1881 Terrence V. Powderly, a Scranton, Pennsylvania, machinist became the leader of this organization, His influence was to promote worker cooperative efforts, boycotts, and nationwide demonstrations as tools to achieve economic justice for American toilers. Thousands of the more than 600,000 members of the Knights of Labor participated in strikes in the 1880s. This served to concentrate public attention upon the fledgling labor movement. Yet, the Knights of Labor did not fully establish itself as the mainstream American labor organization because the union�s leadership failed to organize workers to engage primarily in collective bargaining along craft lines. Since the Knights failed to adjust their structure to the emerging corporate economy, a weakness developed which contributed to the loss of membership and eventual decline in power. In May 1886, during a picketing demonstration at the McCormick Harvester Company in Chicago, local police killed four strikers. To protest this violence, a mass meeting was held at Haymarket Square. After a series of moderate speeches the police attempted to break up the meeting and a riot ensued. A small bomb was thrown from an unknown source, killing a policeman and six other bystanders. The business community and the press blamed the Haymarket riot upon labor, and this incident contributed to the rapid disintegration of the Knights of Labor. The American Federation of Labor, organized in 1886 by Samuel Gompers, was the most realistic and successful trade union of its time. The AFL promoted a union program which worked for the best interests of skilled workers. Rejecting the utopian idealism of the Knights of Labor, the AFL believed that labor had to form a tight-knit coalition to achieve better wages and improved working conditions through collective bargaining. Much of Gompers� rhetoric was aimed at making the skilled laborer a well paid and respected worker. By 1897 more than 400,000 workers were members of the AFL. The growth of the American Federation of Labor highlighted the general dissatisfaction of the American worker in the late nineteenth century. In the 1890s a series of dramatic and violent strikes caused public opinion to react negatively to organized labor. The high level of unemployment in the 1890s due to a prolonged depression from 1893 to 1898 created middleclass fears of labor violence. In 1892 Andrew Carnegie�s Homestead steel plant in Pennsylvania was struck by workers reacting against wage cuts and poor working conditions. More than three hundred Pinkerton detectives were called in to escort strikebreakers�or scabs, as they were known-into Carnegie�s plant. There was some public sympathy for the strikers, but it vanished when Russian Anarchist, Alexander Berkman, attempted to assassinate the plant manager. The strike failed, and union activity in the steel industry ended for several years. An equally disasterous setback for labor followed in the Pullman strike of 1894. When the Depression of 1893 hit, there were increased wage cuts, layoffs and strikes. In 1894 more workers were unemployed due to strikes than at any time before in American history. The most significant strike occurred in George M. Pullman�s company town, Pullman, Illinois. This model company city located south of Chicago was struck by Eugene V. Debs� New American Railway Union. When Debs demanded that Pullman accept arbitration and the company refused, a lengthy strike ensued. The Pullman Company persuaded President Cleveland to use federal troops to break the strike. The ruse used to invoke federal intervention was that the United States malls were being illegally disrupted by the Pullman strike. On July 4, 1894, President Cleveland dispatched 2000 federal troops to Chicago to end the Pullman strike by demanding that the trains run to deliver the mail. The union lost control of the strike and public attitudes were strongly anti-union by 1900. Despite this failure, Gomper�s American Federation of Labor was the first major union federation to survive a large scale economic depression. It would retain its position as the dominant American trade union organization in the next century. By 1900 the corporate state was fully developed and in control of the political economic structure of American life. Labor, agrarian protesters, and the small business interests were no longer able to challenge big business. The stage was set for the final conflict between corporate capitalism and the federal government. This would lead to the modern political and economic system that the United States embraces in the present day. ===== Suggested Readings For an excellent study of businessmen�s attitudes on the economy and government, see Edward C. Kirkland, Dream and Thought in the Business Community (1956). The influence of Andrew Carnegie is brilliantly documented in Harold C. Livesay, Andrew Carnegie and the Rise of Big Business (1975). A pioneer study using quantification to examine the attitudes of wealthy mining barons is Richard H. Peterson, The Bonanza Kings: The Social Origins and Business Behavior of Western Mining Entrepreneurs, 1870-1900 (1977). For pioneering studies of the business community, see Thomas C. Cochran and William Miller, The Age of Enterprise: A Social History of Industrial America (1942) and E. C. Kirkland, Industry Comes of Age: Business, Labor and Public Policy, 1860-1897 (1961). The varied phases of political activity in the late nineteenth century are examined in ten essays dealing with a wide variety of topics, H. Wayne Morgan, editor, The Gilded Age: A Reappraisal (1970). Richard J. Jensen, The Winning of The Midwest: Social and Political Conflict, 1886-1896 (1971) is an important study emphasizing the importance of social and religious values upon politics. For reform in the Gilded Age see John G. Sproat, The Best Men: Liberal Reformers in the Gilded Age (1968). For the nativist reaction to Catholics, Jews, and eastern European immigrants see John Higham., Strangers in the Land: Patterns of American Nativism, 1860-1925 (1955) and Harvey Schwartz, Era of Intolerance: The Tradition of Anti-Radical Nativism, 1875-1920 (1966). A useful study of rising labor and declining agricultural influences is Grant McConnell, The Decline of Agrarian America (1969). For a brief look at farmer hostility see, Howard A. DeWitt, "Manufacturers in lowa�A Note on Iowa Agriculture in 1873," Annals of Iowa, XXXVII (Spring, 1965). For conflict between the Knights of Labor and the AFL see Gerald N. Grob, Workers and Utopia: A Study of Ideological Conflict in the American Labor Movement, 1865-1900 (1961). pps. 17-33 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. 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