Penguin History of the United States of America (83 page)

The preconditions for a reforming movement were amply present. The upturn of the business cycle enabled Americans rapidly to put behind them all painful memories of 1893 and 1894. At the time it seemed to be a justification of the gold-bugs, for the United States was now committed to the gold standard (a commitment made matrimonial, so to speak, by the Gold Standard Act of 1900), and even of the protectionists, for the tariff was raised yet again in 1897. Closer analysis would have shown that, if anything, the inflationist ideas of the Greenbackers were the ones that had been vindicated. Large numbers of banknotes had been put into circulation in the mid-nineties, and gold coin had suddenly become so common as seriously to mitigate the deflationary effects of making only one kind of currency, and that in a precious metal, the basis of trade. Money was becoming cheaper again, which was hard luck on industrial wage-earners, whose wages stayed the same, but excellent news for primary producers, above all for farmers. The farmers had another bit of luck when atrocious harvests in Europe in 1897 created a voracious demand for the bumper crops of America. Wheat poured out and gold poured in, and all the middlemen, as well as the agriculturalists, benefited. Trade revived in the West. Meanwhile times were so good in Europe that the local factories could not meet the demand: American producers were stimulated to supply the deficiency. For a brief moment, as Britain faltered under the strain of the second Boer War, more capital flowed out of America than flowed in – an unprecedented state of affairs, but one of only short duration, for the time being. British and European investors noticed how well American firms were doing and began to buy their securities in large quantities. Before long a stock-market boom was under way. The percentage of workers unemployed went down steadily, halving between 1897 and 1914; industrial production of all kinds went up. Immigration rose from 216,397 in 1897 to 1,218,480 in 1914 – the last being the second highest figure in the whole of American history. Immigrants do not come in such numbers to a stagnant or unprosperous country.

It is clear, then, that in spite of occasional hiccups (above all, the panic of 1907) these were good years for the US economy, and so presumably for the American people. The second inference is not quite so soundly based as the first, to be sure, and there are plenty of indications that prosperity was not equally diffused among the classes, ethnic groups and sections. Prices to the consumer went up faster than wages, after keeping behind them for twenty-five years; the gap between the incomes and property of the rich and the poor widened; some trades did better than others; the South continued to lag far behind the rest of the country; all these things created tension. But the national growth (the Gross National Product, which went from $14,600,000,000 in 1897 to $38,600,000,000 in 1914) nevertheless made itself felt universally, even among the poorest: it was in
this period that the blacks of the South started their Great Migration to the North, attracted, like Europeans, by the work and wages now available there. With the single exception of Florida all the states of the South lost black population during this period, and all the states of the North and West gained it. If only by increasing variety of experience and employment, these were promising years for the African-American. The number of lynchings began to decline.

With such solid ground under their feet it is not surprising that the Americans entered a creative, recreative and even more than usually energetic phase. Their faith in their country and its destiny now assumed an almost triumphal aspect. Not that their faith had ever been seriously shaken. Even at the height of the Populist movement or the depths of the nineties depression, the chief concern of the discontented had been to make America live up to her promise, not to remould her according to alien lights. Still, there had been a defensiveness about Americanism, understandable enough in the circumstances – a defensiveness exemplified by the resurgence of nativism. Now both defensiveness and nativism melted away (not for ever). Not that America was now supposed to be without faults. No doubt there has always been a tension in American minds between the idea that the city has been set upon a hill because it is already perfect and the idea that it has been set up in order to become perfect; in practice the former notion prevails in times of insecurity, so that any suggestions for change, and those who make the suggestions, are regarded with suspicion, while the other prevails in times of self-confidence. So it was at the dawn of the twentieth century. An amazingly wide range of citizens saw possibilities of improvement in their country and worked together to bring it about. Scorn of the dead past, co-existing happily with automatic reverence for George Washington and Abraham Lincoln, was built into every American soul, and there was a competitive eagerness to make the most convincing claim to the future. Everyone with serious business in hand now claimed to be furthering progress (quite like the boosters of new towns and railroads). Eventually the word and its adjective were captured by Robert La Follette (1855-1925) and Theodore Roosevelt, who between them were responsible for launching a new political party, called the Progressive, in 1912; the platform of that party is still the best document to turn to initially for an understanding of the so-called Progressive Era. It was rather short to be called an era on any time-scale longer than that of American history; yet it was full of fluctuations and mutations, and even the Progressive platform tells only part of the story. Many battles had been won and lost before the document was drafted, and much was to happen after it had been forgotten which nevertheless made significant modifications to the meaning of the word ‘progressive’.

At the beginning of the period, when McKinley was safely installed in the White House and gold was becoming plentiful again, the most important component of the idea of progress in America was probably that provided,
somewhat paradoxically, by big business. A generation of industrialism had left its mark in all sorts of ways; one was a common belief in the efficiency of business and desire to emulate its techniques. Andrew Carnegie, the leading expounder of the businessman’s creed (in 1900 he published a book entitled
The Gospel of Wealth
), seems to have held that the methods by which he had made himself a multimillionaire so many times over would have similarly wonderful results if applied to the fields of humanitarianism and international relations. There was nothing strange about the first assumption. It was widely shared. Charitable foundations, endowed with vast amounts of capital to be spent for a variety of worthy ends – perhaps predominantly educational and medical – now became permanent features of the American scene: corporations for philanthropy. The excursions into international relations were rather more eccentric. Henry Ford, the genius who showed how mass-production, assembly-line methods could make a car a cheap product, available to the millions, eventually brought himself and philanthropic diplomacy into ridicule when he sent his Peace Ship to Europe during the First World War with instructions to her cargo of do-gooders to bring back peace by Christmas. The instructions proved to be inapplicable. Before that, however, Carnegie had played a large part in bringing together the conferences which, in 1899 and 1907, set up the International Court of Arbitration at the Hague, forerunner of the World Court and the post-1945 International Court of Justice.

Business progressivism, then, was neither entirely unidealistic nor wholly ineffective. But it was chiefly concerned with the sphere that businessmen knew best. Having secured a gold currency the bankers, industrialists and merchants felt free to progress towards their other objectives. There were two schools of thought as to what these should be. One held on to the faith in competition and contested the ascendancy of the great trusts; the other held that the time had come to secure past gains and keep open the possibility of new ones by co-operation – in other words, by building up the trusts still more. The second school was on the whole victorious during the progressive period, although the first had its successes too. Undeniably it expressed what may be termed either new prudence or new timidity among the very rich.

There was still something of the old buccaneering spirit about. In 1907, during the panic of that year, J. P. Morgan got possession of the Tennessee Iron and Coal Company for US Steel. By this move US Steel extended its dominance into the South and greatly increased its assets, for the Tennessee Company was to prove an extremely profitable investment.
²
Morgan’s activities in this matter were highly adroit and, it appears, none too scrupulous: for example, he seems to have lied extensively to the President of the United States about the transaction, and thereby avoided a possible brush with the Sherman Anti-Trust Act (passed in 1890) of the kind which
had wrecked one of his earlier combinations, the Northern Securities Company
³
, in 1902. But on the whole Morgan was now a conservative, cautious influence. He had come to understand well the fragility of his great combinations. US Steel, the biggest of them all, failed to pay a dividend in 1903. If it made a habit of this the investors who had bought its watered stock might sell out, the price of steel shares might tumble and the great merger come unstuck. This in turn would bring steel prices down, and the financial structure of the United States, which was deeply involved with the steel industry, would be at risk again. In the event, after a few uncertain years, US Steel settled down as one of the best-paying stocks on the market; a ‘blue chip’; one of the most reassuringly solid things in the business world. But Morgan and its other masters feared that there might yet be a resurgence of price wars and price-cutting. Wherever the great banker looked he seemed to see signs of weakness. Only his excellent business connections in Europe had enabled him to check the panic of 1893. Since then he had been able to introduce a certain measure of stability into selected industries – railroads, for example; but not enough. Industry was still burdened with the need to earn sufficient income to pay off the watered stock that had been issued so lavishly in more sanguine times; Morgan’s own operations had added vastly to the quantity. The nub of the matter was this: if the great trusts could not earn enough income to meet any demand that they repay the capital, as well as the interest of the various debts they had incurred in launching themselves, they would continue to be at the mercy of any downturn in the business cycle; any serious recession would plunge them into difficulties, which in turn would involve the banks and foreign investors who were the chief sources of their risk capital and short-term borrowings. In an unregulated stock market they were also vulnerable to raids by speculators of the Jay Gould type, who might for purposes of their own try to drive down the value of their shares. They were vulnerable to their smaller competitors. If Bethlehem Steel began regularly to out-earn US Steel, for instance, the latter would soon feel the pinch. Yet the collapse of ‘Big Steel’ would not only ruin the industry and all connected with it (including, perhaps, the House of Morgan); it might start a chain reaction (I permit myself an anachronism) which in the end might bring about the collapse of capitalist America, and perhaps of Europe too. Morgan, in short, had begun to envisage the possibility of just the sort of general crisis that was to occur in 1929; and as he built up his astonishing collection of art, assembled in his travels about England, France and Italy, where greedy dealers placed the treasures of libraries and palaces in front of his glassy eye and huge red nose, he turned over various remedies in his mind. Gradually it became clear to him that safety could lie only in a partnership between American business and the American government. Similar conclusions forced themselves on the other leading capitalists; and they began
a slow quest to set up such a partnership. They drew up an agenda: American capitalism had a long way to go in the development of the institutions necessary to keep the show on the road. Among other things, a major reform of banking was necessary. The consequence was that big business made itself felt at every stage in the progressive story, and not by any means as a purely reactionary force.

All the same, it would be a mistake to suppose that business, however profoundly it had shaped and now coloured the day-to-day operations of American life, was the key to progressivism. Nor could the industrial working class, however active, muster the power necessary to dominate the epoch. That privilege belonged to the new middle class.

This class had emerged as, numerically, the chief beneficiary of the great transformation of American society. America’s rapid development under the impact of industrialism and urbanization implied an equally rapidly developing need for professional services. The need for a new order was generally felt, and implied the recruitment and training of new men, and new women, to administer it. Society was now rich enough to pay for their services. Hence in the last decades of the nineteenth century there was a mushroom growth among the professions. Doctors and lawyers, of course; but also engineers, dentists, professors, journalists, social workers, architects. This was the age of the expert: he was given a free hand, and at times a respect, such as he has seldom enjoyed since. Business itself went professional: one of the heroes of the age was Frederick W. Taylor, prophet of ‘scientific management’ and the inventor of time-and-motion study; the Harvard Business School was founded in 1908. Each new technical marvel – the telephone, the phonograph, the motor-car, the aeroplane (the Wright brothers made the first powered flights of a heavier-than-air machine in 1903) – increased the faith that there was a sound technical answer to every problem, even to the problem of government. When a devastating hurricane and flood wrecked the port of Galveston, Texas, in 1901, the local businessmen proclaimed the regular authorities incompetent to handle the task of reconstruction and handed the city’s government over to a commission of experts – a pattern that was to be widely followed in the next few years.