American Colossus: The Triumph of Capitalism, 1865-1900

by H. W. Brands

  Wilson complemented his de-Morganization of American monetary policy with a de-McKinleyfication of the tariff. Like other progressives—and citing no less an authority than sugar truster Henry Havemeyer—Wilson contended that “the tariff made the trusts.” To weaken the trusts he proposed to revise the tariff. The objects of his attack—the producers of nearly every protected item on the list of thousands—screamed in pain, predicted the ruin of the economy, and vowed revenge at the ballot box. But Wilson and the Democrats plunged ahead, effecting the first serious reduction of the tariff in twenty years.

  As a third prong of his anti-capitalist offensive, Wilson rewrote the rules of antitrust policy. For all the symbolism of the breakup of Standard Oil, other monopolies—with lower profiles or better lawyers—continued to conduct business more or less as usual. Some progressive antitrusters demanded broad legislation outlawing restrictive trade practices; others preferred the flexibility of a federal commission empowered to tailor rules to particular industries. Wilson, on the counsel of Louis Brandeis, his economics tutor, ultimately opted for the commission, which likewise suited a majority of Congress. In 1914 Wilson signed the measure that created the Federal Trade Commission. Yet those progressives who called for a broad law weren’t left empty-handed. The Clayton Act of 1914, while less rigorous than Senator Henry Clayton of Alabama had intended, marked a substantial advance—or setback, as laissez faire capitalists viewed it—from the Sherman Act of 1890.

  Wilson might have done still more on behalf of democracy against capitalism, but the troubles in Europe that exploded into war in 1914 distracted him, then preoccupied him, and finally shattered his presidency (and his health). The Republican reaction of the 1920s reversed democracy’s advance, with Calvin Coolidge declaring that “the business of America is business” and most Americans apparently agreeing. But capitalism undid itself in the Great Crash of 1929 and the Great Depression that followed, leaving Franklin Roosevelt to sweep into office on a mandate to employ the tools of democracy to remedy the failures of capitalism. During the Hundred Days of the early New Deal he and the Democratic majority in Congress raced to do just that—their hurry reflecting, in some, a fear that the democratic momentum would diminish before capitalism was fully reformed and restrained, and, in others, a concern that capitalism would collapse before democracy could shore it up.

  BY THEN NEARLY all the heroes—or villains—of the capitalist revolution were gone. Jay Gould had died in 1892, unmourned by any save his family. “He was an incarnation of cupidity and sordidness—nothing nobler, nothing more,” the New York World observed. Andrew Carnegie lived nearly two decades after selling his steel company to Morgan. He never quite washed away the bloodstains from the Homestead debacle, although the $350 million he gave to literacy, world peace, and numerous other worthy causes bought him as much earthly forgiveness as a man could ask. He died in 1919—just four months before Henry Frick, who may have hastened to meet the infernal appointment he had forecast for himself and his Homestead accomplice.19

  John D. Rockefeller survived the longest, well into the age of the second Roosevelt. Many years earlier he had handed control of his business interests to his son, who darkened the family name by brutally mishandling a coal strike at Ludlow, Colorado, during the spring of 1914. Militiamen in the pay of the Rockefellers assaulted miners and their families with machine guns and torches, killing twenty, including a dozen women and children. The Ludlow massacre became to the Rockefellers what Homestead had been to Carnegie, a symbol of ruthless capitalism crushing the ordinary people of America.20

  Like Carnegie, Rockefeller sought absolution by lavish philanthropy. At his death in 1937 he had outdone Carnegie, spending some half-billion dollars on the University of Chicago, the Rockefeller Institute for Medical Research, the Great Smoky Mountains National Park, and other projects. A minuscule part of his giving, however, afforded him the greatest personal pleasure; he habitually handed shiny new dimes to whomever he met. The older he got, the more devout he grew. In his days of building the Standard Oil monopoly his Baptist beliefs had inspired charges of hypocrisy; now they simply appeared the understandable response of one sliding toward death.

  Yet Henry Ford remembered the old days and would have none of Rockefeller’s religiosity. As the automaker left an interview with the oil man, Rockefeller said, “Good-bye, I’ll see you in heaven.”

  “You will if you get in,” Ford muttered.21

  ACKNOWLEDGMENTS

  The author would like to thank the many people who made this book possible. David M. Kennedy suggested the project and provided valuable critiques of various drafts, although the project ultimately took a turn neither of us expected. Eric Foner and Richard White likewise read early drafts and offered insightful comments. My colleagues and students at Texas A&M University and the University of Texas at Austin have let me test my thinking on them for years, and have happily informed me when my evidence or logic has fallen short. Roger Scholl, Bill Thomas, and Kristine Puopolo at Doubleday and James D. Hornfischer of Hornfischer Literary Management have been consummate professionals throughout. Roslyn Schloss remains the queen of copy editors.

  NOTES

  PROLOGUE: THE CAPITALIST REVOLUTION

  1. H. W. Brands, Masters of Enterprise: Giants of American Business from John Jacob Astor and J. P. Morgan to Bill Gates and Oprah Winfrey (New York: Free Press, 1999), 40, 55, 66; Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Simon & Schuster, 1990), 21–22.

  2. Chernow, House of Morgan, 159.

  3. Matthew Josephson, The Robber Barons (1934; San Diego: Harcourt, 1995), 15.

  CHAPTER 1: SPECULATION AS MARTIAL ART

  1. H. W. Brands, Masters of Enterprise: Giants of American Business from John Jacob Astor and J. P. Morgan to Bill Gates and Oprah Winfrey (New York: Free Press, 1999), 11.

  2. H. W. Brands, The Age of Gold: The California Gold Rush and the New American Dream (New York: Doubleday, 2002), 471.

  3. James M. McPherson, Battle Cry of Freedom: The Civil War Era (New York: Oxford University Press, 1988), 442–50, 593–94; Paul Studenski and Herman E. Kroos, Financial History of the United States (New York: McGraw-Hill, 1963), chs. 13–14; Bray Hammond, Sovereignty and an Empty Purse: Banks and Politics in the Civil War (Princeton: Princeton University Press, 1970), 211–28, 263–82, 321–51.

  4. The best history of Wall Street is Charles R. Geisst, Wall Street: A History (New York: Oxford University Press, 1997). See also John Steele Gordon, The Great Game: The Emergence of Wall Street as a World Power, 1653–2000 (New York: Scribner, 1999). Steven Fraser, Every Man a Speculator: A History of Wall Street in American Life (New York: HarperCollins, 2005), shows how Wall Street eventually wended through every city and state in America.

  5. John Steele Gordon, A Thread across the Ocean: The Heroic Story of the Atlantic Cable (New York: Walker & Co., 2002), recounts the birth of transatlantic telegraphy. David Paull Nickles, Under the Wire: How the Telegraph Changed Diplomacy (Cambridge: Harvard University Press, 2003), examines the international impact.

  6. William Worthington Fowler, Ten Years in Wall Street; or, Revelations of Inside Life and Experience on ’Change (Hartford: Worthington, Dustin & Co., 1870), 19–20.

  7. Ibid., 24–25, 33–35.

  8. Ibid., 33–37, 40–42.

  9. Edwin G. Burrows and Mike Wallace, Gotham: A History of New York City to 1898 (New York: Oxford University Press, 1999), 475; John Steele Gordon, The Scarlet Woman of Wall Street: Jay Gould, Jim Fisk, Cornelius Vanderbilt, the Erie Railway Wars, and the Birth of Wall Street (New York: Weidenfeld & Nicolson, 1988), 18–19.

  10. Burrows and Wallace, Gotham, 658.

  11. James K. Medbery, Men and Mysteries of Wall Street (Boston: Fields, Osgood & Co., 1870), 169.

  12. Harold Evans, with Gail Buckland and David Lefer, They Made America: From the Steam Engine to the Search Engine; Two Centuries of Innovators (New York: Little, Brown, 2004), 26–35.
Evans notes the debt of Fulton to John Fitch, whose Delaware River steamboat didn’t catch on. On Gibbons v. Ogden, a concise summary is Kermit L. Hall, ed., The Oxford Companion to the Supreme Court of the United States (New York: Oxford University Press, 1992), 337–38. On Vanderbilt, see Arthur D. Howden Smith, Commodore Vanderbilt: An Epic of American Achievement (New York: R. M. McBride, 1927); Wheaton J. Lane, Commodore Vanderbilt: An Epic of the Steam Age (New York: Knopf, 1942); and the gossipy Meade Minnigerode, Certain Rich Men: Stephen Girard, John Jacob Astor, Jay Cooke, Daniel Drew, Cornelius Vanderbilt, Jay Gould, Jim Fisk (New York: G. P. Putnam’s Sons, 1927).

  13. Matthew Josephson, The Robber Barons (1934; San Diego: Harcourt, 1995), 15. This is the classic skeptical study of nineteenth-century American capitalism.

  14. A succinct history of American railroads is John F. Stover, American Railroads (Chicago: University of Chicago Press, 1997). Stewart Hall Holbrook, The Story of American Railroads (New York: Crown, 1947), is more capacious, while Albro Martin, Railroads Triumphant: The Growth, Rejection, and Rebirth of a Vital American Force (New York: Oxford University Press, 1992), is more celebratory. William D. Middleton, Landmarks on the Iron Road: Two Centuries of North American Railroad Engineering (Bloomington: Indiana University Press, 1999), covers the technology of construction. Sarah H. Gordon, Passage to Union: How the Railroads Transformed American Life, 1829–1929 (Chicago: Ivan R. Dee, 1996), traces the social and cultural significance. Thomas C. Cochran and William Miller, The Age of Enterprise: A Social History of Industrial America (New York: Harper & Row, 1961), writes the social history of railroads into the social history of industrialization.

  15. American Railroad Journal, Sept. 2, 1854, in Alfred D. Chandler Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge: Belknap Press of Harvard University Press, 1977), 104. Chandler, ed., Railroads: The Nation’s First Big Business (New York: Harcourt, Brace & World, 1965), provides contemporary perspective and revealing statistics, besides Chandler’s own insights.

  16. Chandler, Visible Hand, 92; Geisst, Wall Street, ch. 2.

  17. Josephson, Robber Barons, 70; Brands, Masters of Enterprise, 20–25.

  18. Ibid., 22.

  19. Josephson, Robber Barons, 66.

  20. Fowler, Ten Years in Wall Street, 480–82.

  21. Brands, Masters of Enterprise, 38–39.

  22. Ibid., 40; Maury Klein, The Life and Legend of Jay Gould (Baltimore: Johns Hopkins University Press, 1986), 66.

  23. Fowler, Ten Years in Wall Street, 495–96.

  24. Brands, Masters of Enterprise, 24.

  25. Fowler, Ten Years in Wall Street, 502.

  26. Brands, Masters of Enterprise, 24; Charles Francis Adams Jr., “A Chapter of Erie,” in Charles Francis Adams Jr. and Henry Adams, Chapters of Erie (Ithaca: Cornell University Press, 1956), 52–55.

  27. Gordon, Scarlet Woman of Wall Street, 189–93.

  28. Henry Adams, The Education of Henry Adams (1907; Boston: Houghton Mifflin, 1961), 211.

  29. Ibid., 224.

  30. Ibid., 238.

  31. Henry Adams, “The New York Gold Conspiracy,” in Adams and Adams, Chapters of Erie, 114.

  32. Report of the Majority of the Committee on Banking and Currency, Investigation into the Causes of the Gold Panic, 41st Cong., 2d sess., 1870, HR Rep. 31, 152–53.

  33. Ibid., 153.

  34. Ibid., 6–7.

  35. Ibid., 174, 232, 444.

  36. Ibid., 252.

  37. Ibid., 256.

  38. New York Times, Sept. 24, 1869.

  39. Investigation into the Causes of the Gold Panic, 141.

  40. Klein, Jay Gould, 111–12; Gordon, Scarlet Woman of Wall Street, 272.

  41. Gordon, Scarlet Woman of Wall Street, 275; Investigation, 16; Brands, Masters of Enterprise, 46–47.

  42. Brands, Masters of Enterprise, 47.

  43. Investigation, 176.

  44. Ibid., 7, 19–20.

  45. Adams, Education, 282–83.

  46. Adams, “New York Gold Conspiracy,” 130–31, 135–36.

  CHAPTER 2: ONE NATION UNDER RAILS

  1. David Haward Bain, Empire Express: Building the First Transcontinental Railroad (New York: Viking, 1999), 16–17.

  2. James M. McPherson, Battle Cry of Freedom: The Civil War Era (New York: Oxford University Press, 1988), 122.

  3. H. W. Brands, The Age of Gold: The California Gold Rush and the New American Dream (New York: Doubleday, 2002), 394–400.

  4. George T. Clark, Leland Stanford: War Governor of California, Railroad Builder, and Founder of Stanford University (Stanford: Stanford University Press, 1931), is the most complete biography. In Oscar Lewis, The Big Four: The Story of Huntington, Stanford, Hopkins, and Crocker and the Building of the Central Pacific (New York: Knopf, 1938), Stanford shares space with his partners.

  5. Clark, Leland Stanford, 73–78.

  6. Bain, Empire Express, 109.

  7. Ibid., 112.

  8. Stuart Daggett, Chapters on the History of the Southern Pacific (New York: Ronald Press, 1922), 23–24.

  9. Clark, Leland Stanford, 208.

  10. Brands, Age of Gold, 422.

  11. Congressional Globe, 38th Cong., 1st sess., June 21, 1864, 3150–52.

  12. Ibid., 3154.

  13. Bain, Empire Express, 137.

  14. Liping Zhu, A Chinaman’s Chance: The Chinese on the Rocky Mountain Frontier (Niwot: University Press of Colorado, 1997), 21.

  15. Benson Tong, The Chinese Americans (Westport: Greenwood Press, 2000), 21.

  16. Brands, Age of Gold, 63.

  17. Ibid., 479; Huping Ling, Surviving on the Gold Mountain: A History of Chinese American Women and Their Lives (Albany: State University of New York Press, 1998), 21; Mark Twain, Roughing It (Hartford: American Publishing Co., 1872), 391.

  18. Andrew Gyory, Closing the Gate: Race, Politics, and the Chinese Exclusion Act (Chapel Hill: University of North Carolina Press, 1998), 17; Robert Louis Stevenson, “Across the Plains” (1892), in Stevenson, From Scotland to Silverado, ed. James D. Hart (Cambridge: Belknap Press of Harvard University Press, 1966), 138–39.

  19. Gyory, Closing the Gate, 19–20.

  20. Clark, Leland Stanford, 78–79, 126–27.

  21. Bain, Empire Express, 208, 221.

  22. Stephen E. Ambrose, Nothing Like It in the World: The Men Who Built the Transcontinental Railroad, 1863–1869 (New York: Simon & Schuster, 2000), 156–57.

  23. Bain, Empire Express, 220.

  24. Ibid., 360–62.

  25. Maury Klein, Union Pacific: Birth of a Railroad, 1862–93 (Garden City: Doubleday, 1987), 66–67. Grenville M. Dodge, How We Built the Union Pacific Railway, and Other Railway Papers and Addresses (1910; Ann Arbor: University Microfilms, 1966), includes the superintendent’s own version. Robert G. Angevine, The Railroad and the State: War, Politics, and Technology in Nineteenth-Century America (Stanford: Stanford University Press, 2004), situates Dodge, a Civil War general, among the many military officers and military-minded civilians who contributed to railroad construction.

  26. Klein, Union Pacific, 216.

  27. The war for the Plains is discussed in detail in ch. 6.

  28. Bain, Empire Express, 351.

  29. Ambrose, Nothing Like It in the World, 200–01, 235–36.

  30. Brands, Age of Gold, 432.

  31. Clark, Leland Stanford, 244.

  32. Bain, Empire Express, 447; Klein, Union Pacific, 193–94.

  33. Klein, Union Pacific, 220.

  34. Ibid., 220–27; Bret Harte, “Opening of the Pacific Railroad”; Walt Whitman, “Passage to India”; Ambrose, Nothing Like It in the World, 366; Brands, Age of Gold, 437.

  CHAPTER 3: THE FIRST TRIUMVIRATE

  1. H. W. Brands, Masters of Enterprise: Giants of American Business from John Jacob Astor and J. P. Morgan to Bill Gates and Oprah Winfrey (New York: Free Press, 1999), 64.

  2. Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern
Finance (New York: Simon & Schuster, 1990), 87.

  3. Jean Strouse, Morgan: American Financier (New York: Random House, 1999), 65. This is the best recent biography. Herbert L. Satterlee, J. Pierpont Morgan: An Intimate Portrait (New York: Macmillan, 1939), is the authorized biography (Satterlee was Morgan’s son-in-law) but very useful nonetheless.

  4. Chernow, House of Morgan, 24–25; Byron, “Don Juan: Canto the Twelfth.”

  5. Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, 1998), xxii, 8–9, 31. Allan Nevins, Study in Power: John D. Rockefeller, Industrialist and Philanthropist, 2 vols. (New York: Scribner, 1953), is still valuable. John T. Flynn, God’s Gold: The Story of Rockefeller and His Times (New York: Harcourt, Brace, 1932), reveals the strengths and weaknesses of the journalistic approach.

  6. Chernow, Titan, 20–22, 38.

  7. Matthew Josephson, The Robber Barons (1934; San Diego: Harcourt, 1995), 46.

  8. Ibid., 33–35, 39–41.

  9. Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Simon & Schuster, 1991), 26–28.

  10. Ibid., 28–29.

  11. Chernow, Titan, 79, 100.

  12. Ibid., 79–80; Nevins, Study in Power, 1:33; Ida M. Tarbell, The History of the Standard Oil Company, 2 vols. (1904; New York: Peter Smith, 1950), 1:43. Tarbell’s is the original exposé of Rockefeller’s business practices and still the starting point on Standard.