Book Report: American Colossus by H.W. Brand

American Colossus: The Triumph of Capitalism, 1865-1900American Colossus: The Triumph of Capitalism, 1865-1900 by H.W. Brands

My rating: 4 of 5 stars

As one of the Gilded Age’s leading capitalists said “‘What do I care about the law?’ bellowed Cornelius Vanderbilt. ‘Hain’t I got the power?'”. [p 8] The Gilded Age was one where the powerful grew in strength while the weak (blacks, Native Americans, Chinese, farmers, the working class) became weaker. “Wealth had always conferred power, but never had a class of Americans been so wealthy as the great capitalists of the late nineteenth century, and never had such a small class wielded such incommensurate power. By the century’s end the imperatives of capitalism mattered more to the daily existence of most Americans than the principles of democracy.” [p 8] The capitalists (Morgan, Vanderbilt, Rockefeller, Gould) learned and moved much faster than government could react. In fact, capitalism “demanded, and received, the protection of the courts, which reinterpreted the Constitution in captialism’s favor.”[p 8]

Brand’s history of the Gilded Age is an epic, fascinating telling of America’s growth after the Civil War especially, but not solely, focusing on the effects of unbridled capitalism. “Even as the Republican party freed the slaves, it emancipated the capitalist classes from the constraints imposed by Jackson and his Democratic heirs. Government became the sponsor of business rather than its foe, underwriting railroad construction, raising tariff rates, creating a national currency, and allowing the likes of [J.P.] Morgan to troll for fortunes in the troubled waters of the war.” [p 5]

New challenges called for new methods as seen in the development of the trans continental railroad. In the past an employee would likely be working side-by-side, or at least in the same building as, his employer. Building an enterprise that spanned the country called for new thinking. “The technique of railroads – in contrast to their technology – changed dramatically… Railroads were the first really large corporations in American history, employing thousands of persons spread over entire regions. They were the first to develop the methods of corporate administration that would characterize modern enterprise… Railroads pioneered the kind of precise management of operations that other firms would follow.”[p 22]

Wall Street was started in the Gilded Age. The stronger and bigger corporations grew, the more opaque they became. “Corporations guarded their balance sheets as the proprietary information it was; not even to shareholders did boards of directors typically reveal reliable numbers on assets, revenues, and profits. Stock was issued at whim – which was what made watering stock so tempting. Insiders held an enormous advantage over everyone else.”[p 66] The ramification of this was a turbulent market was periodic market crashes and depressions such as the one following the Panic of 1873. It would take 50 more years – after the Great Depression – until FDR could push through regulations that standardized accounting and reporting for publicly traded companies.

The country had grown tired of Reconstruction and saw benefits in bringing the South into the fold. “Many Northerners assumed that the labor system that worked in the North – the market-based exchange of labor for money – could be reproduced in the South. Most white Southerners doubted that such a system could work in Dixie or that it should if it could. As for the freed men and women, they had their own ideas, which didn’t accord neatly with the thinking of the whites of either camp.” [p 125].

After conquering the South during the Civil War, General Sherman issued Special Order 15 which “became teh basis for the slogan ‘Forty acres and a mule’ that served as a beacon to black hopes and the battle cry of the Radical Recinstructionists.” [p 128] The plan had serious drawbacks once the war ended – in effect it codified confiscation and redistribution of large parcels of land by the federal government. [p 131]. As a result the freed blacks were forced into subservient relationship with whites once again. “The state governments established under Radical Reconstruction promoted the welfare of the freedmen but in the process gained reputations for corruption, eventually tarnishing the whole enterprise with sufficient scandal that the former white ruling classes recaptured power – in a takeover proudly call ‘Redemption’ by its participants and partisans – while the North stood aside.”[p 319]

In 1890 Henry Cabot Lodge introduced a bill that “would place congressional elections under federal supervision.”[p 392]. The bill was filibustered until after the 1890 elections that the Democrats won by a landslide. “Meaningful federal interest in civil rights died with it, not to be resurrected till the second half of the twentieth century. The capitalist wing of the Republicans solidified its grip on the party of Lincoln; the democratic wing declined still further. Race as an issue all but disappeared from national politics. ..’I told the people of my county before they sent me here,’ a delegate to Virginia’s 1901 constitutional convention declared, ‘that I intended … to disfranchise every negro that I could disfranchise under the Constitution of the United States, and as few white people as possible.'”[p 393]. The Supreme Court doubled down in Plessy v Ferguson establishing segregation as the norm. As we know, this action held force for 70 years until Brown v The Board of Education and the Civil Rights Bill enacted under LBJ. Even today the blacks living situation are affected.

The Gilded Age also brought widespread settlement of the West. John Wesley Powell was commissioned to explore the west including sailing down the Colorado River. Powell’s West was divided into three parts. The ‘irrigable lands’ were a small portion…located on or near streams… The ‘timber lands were the wooded mountain slopes and mesas… The ‘pasturage lands constituted the largest part …[which] could not sustain cultivation but, if carefully managed, might support livestock.”[p223]. “The key to developing the Arid Region was wise public stewardship. Land laws that had evolved in the wet East must be modified. The grid system of rectangular surveys, for example, made no sense where stream courses, rather than township and section lines, determined patterns of husbandry.”[p 223]. “Powell spoke for a distant future, as things turned out. His views would inform the development of the Southwest during the twentieth century, when government did take the lead in making the desert habitable and profitable.” [p 224] This is a key to answering the mistaken claims made by Ammon Bundy and his ilk that took over the Malheur National Wildlife Refuge in the winter of 2016 claiming the lands should be given to individual ranchers.

Of course settling the west meant the massacre and dislocation of thousands of Native Americans. Another group lost power. “[The Battle of] Wounded Knee, as matters proved, marked the end of an era, the last armed resistance to white control of the territory claimed by the government of the United States. For three hundred years Indians had fought the Anglo-Americans; the struggle had stained every state and nearly every county with the Indians’ blood or the whites’. Now the struggle was finally over. The Indians could no longer resist; the invaders had won.” [p 426].

The common working man also lost his power to organize against unfair labor practices. In reaction to reduced wages Pullman car workers struck and halted trains across the states which started labor actions and riots. President Cleveland ordered ‘the entire garrison at Fort Sheridan – infantry, cavalry, and artillery – to the lake fron in the city of Chicago.”[p 469] Labor leaders asked for injunctions to force labor back to work. “Injunctions were relatively new in labor actions and the scope of the injunction in the Pullman case was unprecedented… Stephen Gregory denounced injunctions in labor cases as a subordination of democracy to capital.” [p 471]. Once again, power won out. “Not for two more generations would the industrial principle of labor organization take hold in the United States. In the interim the injunction would be used again and again to handcuff labor leaders as the courts continued to side with capital.”[p 472]

We also read about Boss Tweed’s rise to power at Tammany Hall through graft and patronage. Tweed applied the principles of capital to government. “By the late 1860s the Tweed machine was running smoothly. Money greased the gears, collected from all who had to do business with the city.”[p 313].

In today’s era of banks “too big to fail” it is illuminating to reflect back on the monetary crisis of 1895 “when the Treasury’s gold reserve again dipped toward the witching mark of $100 million – and then crashed into the nether region beyond.” [p 532] J.P. Morgan, arguably “the most powerful person in the country, not excluding the president.” [p 532] came to the rescue. “Morgan proposed that the Treasury sell bonds to a private syndicate he would organize. This syndicate would pay gold for the bonds. The double effect of the deal would be to reverse the outflow of gold from the Treasury and to restore investor confidence in the United States government.”[p 534]. Morgan’s syndicate then promptly sold the bonds at a tidy additional profit.

Of course there were many good parts of the Gilded Age: infant mortality declined and widespread public education afforded the vast majority of people the ability to read and write.

“Yet for all the advances in American material and cultural life, there remained a feeling that … a screw had come loose and the wheels fallen out of balance. Inequality – the distance between the segment of society headed by the Vanderbilts in their gaudy mansion and Jacob Riss’s other half in the alleys around the corner – was more obvious than ever. The capitalists controlled the government: the legislative branch, which protected the tariffs and their assets with a gold standard; the executive branch, which dispatched troops to crush the capitalists’ working-class opponents; and the judicial branch, which defined dissent as conspiracy and monopoly as accepted practice. … In the contest between capitalism and democracy, capitalism had never enjoyed such a formidable advantage.”[p 545]

The dawning of the 20th century showed promise as Theodore Roosevelt became president after McKinley’s assassination. “Roosevelt intially pledged to carry out the policies of his predecessor. One with who knew Roosevelt suggested that he would indeed carry out McKinley’s policies – much as people cary out their garbage.” [p 546] To begin with, Roosevelt brought an antitrust suit against the Morgan railroad combine. [p 547] Supreme Court justice “John Marshall Harlan, the veteran dissenter, [e.g. Plessy v Ferguson] wrote the opinion for the 5 to 4 majority striking down the trust. [p 547]. A few years later the Standard Oil trust was dissolved, this time by a unanimous decision. But there weren’t victories on all fronts as the color line became deeper. [p 550]

Woodrow Wilson passed the Federal Reserve Act of 1913 which “took effective control of the nation’s money supply away from capitalists like Morgan and bestowed it upon the presidentialy nominated and senatorially approved Federal Reserve Board.” [p 553] Reform may have gone farther except for the outbreak of World War I.

If you are looking for a good overview of the Gilded Age – the era between the Civil War and 1900, start here. In addition to the hard facts we learn such tidbits as how our current image of Santa Claus came about.

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