B005HFI0X2 EBOK (22 page)

Similar distress afflicted many of America’s farmers. As a result of the deflation produced by America’s resumption of the gold standard, many farmers were affected by falling prices for wheat, cotton, and other commodities and rising payments for farm mortgages. They were also frustrated by railroad rates.

The Grange, an agrarian reform movement, set the stage for the People’s Party, formed in 1887. The Populists’ Omaha Platform in 1892 included a number of reforms that would later be realized, including direct election of senators, a progressive income tax, civil service reform, and an eight-hour day, and some that would not be, including the nationalization of railroads, telegraphs, and telephones. The Populist manifesto of 1892 painted a frightening picture: “The urban workmen are denied the right to organize for self-protection, imported pauperized labor beats down their wages, a hireling standing army, unrecognized by our laws, is established to shoot them down, and they are rapidly degenerating into European conditions. The fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few, unprecedented in the history of mankind.”
⁶⁷

Populists were instructed in the mysteries of finance by William H. “Coin” Harvey’s bestselling book
Coin’s Financial School
(1894), in which a fictional teenage boy in Chicago bests financiers in debate. The Populist movement included colorful characters like Mary Ellen Lease, known as “Mary Yellin” to her detractors, who moved on from populism to white supremacy, and Ignatius Donnelly, member of Congress, self-proclaimed expert on the lost continent of Atlantis, and author of
Caesar’s Column
, a novel about the overthrow of American democracy by plutocracy.

The Populists were not the only group to enlist fiction in their cause. With his bestselling book
Progress and Poverty
(1879), Henry George founded an international movement to tax the “unearned increment” derived from the appreciation in land prices.

Edward Bellamy presented a socialist utopia in his bestselling novel
Looking Backward, 2000–1887
(1887). There were political novels defending contemporary American capitalism, as well. Using a pseudonym, John Hay, Lincoln’s secretary and later secretary of state under McKinley and Theodore Roosevelt, published an antilabor novel,
The Breadwinners
, in 1884. Hay portrayed unions as criminal conspiracies against the public.

THE GREAT COMMONER

During the Depression of the 1890s, the hard-money policy and repression of railroad strikers carried out by Democratic president Grover Cleveland, a New Yorker, alienated many Democrats in the South and West, which remained the regional bases of the party. At the 1896 Democratic Convention in Chicago, populists captured the party. On the third day of the convention, William Jennings Bryan, their charismatic hero, declaring, “You shall not crucify mankind upon a cross of gold,” mimed placing a crown of thorns on his head and stretched out his arms like the crucified Jesus Christ. According to the correspondent for the
Atlanta Constitution
, “Westerners shouted, waved handkerchiefs, hats, flags, canes, umbrellas and anything else conspicuous and portable. . . . Hundreds of umbrellas were opened by the apparently crazed people. Harmless missiles of paper and other things were hurled through the air on the delegates’ heads.”
⁶⁸

Appalled, like other northeastern patricians, Henry Adams wrote that “a capitalistic system had been adopted, and if it were to be run at all, it must be run by capital and by capitalistic methods; for nothing could surpass the nonsensity of trying to run so complex and concentrated a machine by Southern and Western farmers in grotesque alliance with city day-laborers.”
⁶⁹
To ensure a Republican victory, personal and corporate wealth were mobilized for a political campaign on a scale never before seen in the United States. Despite their efforts to reach out to northern industrial workers, the Democrats failed to expand beyond their southern and western agrarian base. In 1896, McKinley, campaigning on the slogan, “the full dinner pail,” won an electoral college majority of 271 votes to Bryan’s 176; in the popular vote, McKinley’s 7,102,246 defeated Bryan’s 6,502,925. A rematch between McKinley and Bryan in 1900 produced even larger margins for McKinley: 292 to 155 in the electoral college and 7,219,530 votes to 6,358,071.

The poet Vachel Lindsay recorded the agony that he shared with many others:

Election night at midnight:

Boy Bryan’s defeat.

Defeat of the western silver.

Defeat of the wheat.

Victory of the Letterfiles

And plutocrats in miles

With dollar signs upon their coats,

Diamond watchchains on their vests

And spats on their feet.

Victory of the custodians,

Plymouth Rock,

And all that in-bred landlord stock.

Victory of the neat.

Defeat of the aspen groves of Colorado Valleys,

The blue bells of the Rockies,

And blue bonnets of old Texas,

By the Pittsburgh alleys.

Defeat of alfalfa and the Mariposa lily.

Defeat of the Pacific and the long Mississippi.

Defeat of the young by the old and silly.

Defeat of tornadoes by the poison vats supreme.

Defeat of my boyhood, defeat of my dream.
⁷⁰

Subsequent generations have debated whether Bryan was a precursor of twentieth-century liberalism or a provincial reactionary. The same Bryan who supported federal regulation of railroads and industry and the rights of organized labor later, in the final act of his life, prosecuted a Tennessee teacher for teaching Darwinism in the 1927 Scopes “Monkey Trial.”

In 1896, Bryan was opposed by progressives including Robert La Follette, Louis Brandeis, and Woodrow Wilson. On becoming president, Wilson reached out to the populist wing of the party by making Bryan secretary of state, but complained to a friend that “the man has no brains. It is a great pity that a man with his power of leadership should have no mental rudder.”
⁷¹
The socialist radical Jack London said he would vote for McKinley to stop Bryan.
⁷²
Theodore Roosevelt, who became McKinley’s second vice president in 1900 and his successor when McKinley was assassinated in 1901, warned that “if Bryan wins, we have before us some years of social misery, not markedly different from that of any South American republic.”
⁷³

If anachronistic labels like “liberal” and “conservative” are dispensed with, in favor of the concepts of Hamiltonian developmentalism and Jeffersonian producerism, then Bryan’s place in the American tradition is easily identified. Bryan declared: “What we need is an Andrew Jackson to stand as Jackson stood, against the encroachments of aggregated wealth.”
⁷⁴
Bryan was the last American presidential candidate to be an agrarian: “You come to us and tell us that the great cities are in favor of the gold standard. I tell you that the great cities rest upon these broad and fertile prairies. Burn down your cities and leave our farms and your cities will spring up again as if by magic. But destroy our farms and the grass will grow on the streets of any city in this country.”
⁷⁵

Bryan led the Jeffersonian backlash against American developmental capitalism in the era of the first industrial revolution and the railroads. He followed Andrew Jackson, who led the Jeffersonian backlash against the American developmental state in the preceding era of canals and water mills. And Bryan preceded Barry Goldwater and Ronald Reagan, who led a later Jeffersonian backlash against the version of the American developmental state identified with Franklin Roosevelt’s New Deal and Dwight Eisenhower’s Modern Republicanism in the second industrial economy, based on electrification and the automobile.

Bryan’s opponent William McKinley was the most important leader of the Hamiltonian tradition between Abraham Lincoln and Theodore Roosevelt. Having started out as an old-fashioned protectionist, McKinley had come to see that the success of America’s protectionist import-substitution policies meant that major industries would benefit more from access to foreign markets than from continued protection. In the speech he delivered on the day he was fatally shot by an anarchist named Leon Czolgosz, McKinley emphasized the need for the United States to pursue reciprocal trade liberalization with trading partners.

Bryan shared the antiblack attitudes of most of his southern and western supporters and refused to criticize the Ku Klux Klan, for fear of creating divisions in the Democratic Party’s base. In contrast, the Civil War veteran McKinley was fond of telling a story about a black flag bearer in Louisiana who died in battle during the Civil War: “Tell me that men made of that metal shall be deprived of their constitutional right! The fight will go on until every citizen will enjoy every right guaranteed by the constitution of the United States.”
⁷⁶
As governor of Ohio, McKinley used the national guard to protect black prisoners against lynch mobs. During a tour of the South in 1898, McKinley visited Booker T. Washington’s Tuskegee Institute in Alabama and the black Georgia Agricultural and Mechanical College at Savannah.
⁷⁷
His successor, Theodore Roosevelt, enraged white southerners by inviting Washington to dine at the White House.

Nor was McKinley the pawn of banking and business that generations of populists and progressives have caricatured. The heir to several generations of Scots-Irish manufacturers in the Midwest, McKinley, like many manufacturers, preferred bimetallism—in effect mild inflationism—to the deflationary gold standard preferred by creditors in the financial community. (In the slang of the time, this made him a “straddle bug” instead of a “gold bug.”)

The quiet McKinley has been overshadowed by his rambunctious successor Roosevelt. But he was the major transitional figure between the old Hamiltonianism of Hamilton, Clay, and Lincoln, and the new Hamiltonianism of progressives like Theodore and Franklin Roosevelt.

THE MYTH OF THE ROBBER BARONS

The Steam Age was the first stage in the transformation from the agrarian to the industrial economy. In the preindustrial biomass economy, the wealth accumulated by merchants like Stephen Girard and John Jacob Astor came at the expense of exploited labor (Indian fur trappers, fur traders, and slaves on plantations) or the ecosystem (the beaver population that Astor decimated). The mines that produced oil for Rockefeller and ore for Carnegie might have scarred local areas, but they did not produce deforestation and mass extinctions. Standard Oil’s kerosene helped to save the whales from extinction.

Americans have tended to judge industrial tycoons more harshly than landed plutocrats. The slaveholders of the Virginia dynasty like Washington and Jefferson, Madison and Monroe, are treated as noble statesmen, while the industrialists like Rockefeller and Carnegie and the politicians whom they supported and sometimes bribed are treated as villains. But even at their strike-breaking, influence-peddling, wealth-displaying worst, the northern railroad and industrial tycoons who dominated American politics and the economy in the second half of the nineteenth century represented a great improvement over the southern slaveowners who dominated the country in the first half of the century and then tried to destroy it. The northern industrialists may have repressed their workers, but at least they did not own them.

A plausible and dispassionate assessment of the period was provided by Franklin Delano Roosevelt in an address, drafted by Adolf Berle, that he delivered during his 1932 presidential campaign at the Commonwealth Club in San Francisco: “The history of the last half century is accordingly in large measure a history of a group of financial Titans, whose methods were not scrutinized with too much care, and who were honored in proportion as they produced the results, irrespective of the means they used. The financiers who pushed the railroads to the Pacific were always ruthless, we have them today. It has been estimated that the American investor paid for the American railway system more than three times over in the process; but despite that fact the net advantage was to the United States. As long as we had free land; as long as population was growing by leaps and bounds; as long as our industrial plants were insufficient to supply our needs, society chose to give the ambitious man free play and unlimited reward provided only that he produced the economic plant so much desired.”
⁷⁸

THE ARGUMENT

T
he second industrial revolution of the mid- to late nineteenth century produced a dazzling variety of transformative technologies, of which the most important were the electric motor and the internal combustion engine. The Motor Age saw the rise of giant corporations and powerful investment banks. In response to the second industrial economy, some Americans sought to tame and use the new concentrations of industrial might and financial power, while others feared them and wanted to break them up. America’s political institutions and policies grew increasingly misaligned.

Polity and economy were finally realigned during the cataclysm of the Great Depression and World War II by the New Deal. By the 1970s, however, the American economy faced growing foreign competition, slowing growth, and high inflation. The crises of the 1970s and 1980s inspired a Jeffersonian backlash against the Hamiltonian institutions of the New Deal: the Great Dismantling.

The greatest invention of the nineteenth century was the invention of the method of invention.

—Alfred North Whitehead
¹

O
n a humid afternoon in Philadelphia in September 1752, Benjamin Franklin and his adult son William flew a kite made of silk, with a foot-long piece of wire sticking out of the frame. At the base was a string of hemp, a conductor, and a nonconducting ribbon of silk, with a metal key at their intersection. As rain fell, the Franklins took shelter in a barn. What happened next was described by British correspondent and colleague Joseph Priestley in 1767: “When, at length, just as he was beginning to despair of his contrivance, he observed some loose threads of the hempen string to stand erect, and to avoid one another . . . he immediately presented his knuckle to the key, and (let the reader judge of the exquisite pleasure he must have felt at that moment) the discovery was complete. He perceived a very evident electric spark.”
²

If lightning had actually struck the kite, Franklin might have been killed. As it was, he had been knocked out during an earlier attempt to electrocute a turkey.
³
In 1753, a Swedish scientist in Saint Petersburg, Russia, was killed by lightning when he repeated Franklin’s experiment.

Franklin built on the work of many predecessors. Otto van Guericke in 1670 devised a mechanism capable of producing an electric charge, and a generation later Charles-François de Cisternay du Fay demonstrated the difference between negative and positive charges. In 1745, the Leyden jar, an early version of the condenser, was invented.

More breakthroughs followed Franklin’s successful experiment, thanks to Priestley, who in 1766 showed that the force between charges varies inversely with their distance, and Charles-Augustin de Coulomb, who in 1777 invented a device to measure electric charges. After Hans Christian Oersted proved in 1819 that electrical currents generate magnetic fields, Michael Faraday demonstrated that an electric current in one wire could induce a current in another. James Clerk Maxwell, building on Faraday’s work, set out the formal mathematics of electromagnetism in 1873 in his
Treatise on Electricity and Magnetism
.

Technology built on science. Already in 1800, Alessandro Volta had invented the first battery. Then in the 1840s, James Prescott Joule showed that a magneto could convert mechanical energy into electrical energy. In 1867, dynamos that used magnets to turn rotary motion into electrical power were invented in parallel by Werner Siemens in Germany and Charles Wheatstone in Britain.
⁴
As early as the 1870s, Siemens adapted electromagnetic dynamos to create electric arc furnaces for smelting metals.

The American historian Henry Adams, writing about himself in the third person, described his response to the dynamo he encountered at the Paris Exposition of 1900: “As he grew accustomed to the great gallery of machines, he began to feel the forty-foot dynamos as a moral force, much as the early Christians felt the Cross. The planet itself seemed less impressive, in its old-fashioned, deliberate, annual or daily revolution, than this huge wheel, revolving within arm’s-length at some vertiginous speed, and barely murmuring,—scarcely humming an audible warning to stand a hair’s-breadth further for respect of power,—while it would not wake the baby lying close against its frame. Before the end, one began to pray to it; inherited instinct taught the natural expression of man before silent and infinite force. Among the thousand symbols of ultimate energy the dynamo was not so human as some, but it was the most expressive.”
⁵

Adams thought that the dynamo “would not wake the baby lying close against its frame.” Earlier a baby had been used as a metaphor for electrical technology itself.

Franklin may or may not have asked, in connection with electricity, “What is the use of a newborn baby?” (Some accounts have him asking the same question after witnessing a balloon ascension in France.)
⁶
And the great British scientist Michael Faraday may or may not have quoted Franklin in the context of electricity, although he certainly did so in the context of the discovery of new elements in an 1816 lecture: “Before leaving this substance, chlorine, I will point out its history as an answer to those who are in the habit of saying to every new fact, ‘What is its use?’ Dr. Franklin says to such, ‘What is the use of an infant?’ ”
⁷

FROM LONE INVENTOR TO CORPORATE LABORATORY

With each succeeding wave of technological innovation, the individual inventor has become less important than teams of scientists and engineers, informed by the latest scientific advances and working in laboratories supported by financiers, corporations, and, increasingly, by governments, the only entities capable of funding basic research on a massive scale. The first industrial revolution had largely been the result of individual inventors like James Watt and Robert Fulton, relying on trial and error. In the words of the historian Joel Mokyr, “It created a chemical industry with no chemistry, an iron industry without metallurgy, power machinery without thermodynamics.”
⁸
Increasingly, invention depended on science. The European inventors, including Gottlieb Daimler and Karl Benz, who invented the automobile with a gas-fueled internal combustion engine, enjoyed the benefits of state-sponsored science in Germany, the country which, along with France, initially led automobile development before Americans like Henry Ford naturalized the technology and exploited the economies of scale provided by America’s enormous market.

The industrialization of research and development (R&D) and invention became a defining feature of twentieth-century industrial capitalism. In 1901, General Electric established the first corporate research laboratory in the United States. Other corporations that established their own research facilities included DuPont (1902) and Eastman Kodak (1913). The most famous was Bell Labs, established by the American Telephone and Telegraph Company (AT&T) in 1925. Between 1920 and the 1980s, the number of employees of corporate research labs rose from six thousand to nearly a million.
⁹

Even more important in the long run was the contribution of the federal government to innovation. Beginning with the Morrill land-grant college acts in the late nineteenth century, the federal government created a sophisticated technological innovation system in agriculture, in which federally funded regional and state laboratories worked on problems and disseminated solutions by way of county extension services to American farmers. Attempts to construct an equivalent system for American manufacturing repeatedly failed. But a large-scale federal role in research and invention became permanent during the third industrial revolution during and after World War II, with the establishment of the National Science Foundation and the National Institutes of Health and military-related contracts to industrial firms and academic researchers who developed the first few generations of computers and created the Internet.

THOMAS EDISON AND THE RISE OF R&D

Thomas Edison provides an example. Dirty, disheveled, and dressed in workman’s clothes in many of the photographs he posed for, Edison played the archetype of the folksy American genius as successfully as Franklin had played the role of backwoods sage in a coonskin cap. When Nikola Tesla, a brilliant Serbian engineer who had worked in Paris, successfully applied for a job with Edison in the United States, the dapper European recalled: “I was thrilled to the marrow by meeting Edison, who began my American education right then and there. I wanted to have my shoes shined, something I considered beneath my dignity. Edison said, ‘You will shine the shoes yourself and like it.’ He impressed me tremendously. I shined the shoes myself and liked it.”
¹⁰

In reality, Edison was less an individual than the director and public face of an institution. Born in Ohio, Edison was raised in Michigan, where he struggled to make money in his teen years by selling newspapers and candy on trains. When he saved a three-year-old boy from being hit by a train, the boy’s grateful father, a station agent, taught Edison to be a telegraph operator. Telegraph technology inspired Edison’s early inventions, including a stock ticker and a vote counter.

While Edison was a brilliant inventor himself, most of the products for which he is given credit, from the incandescent lightbulb to the phonograph and motion picture technology, were the work of the engineers he organized into teams in a succession of laboratories. No lone genius, he was the director of his own research lab and was funded throughout his career by corporations like Western Union and by financiers like Jay Cooke and J. P. Morgan.

He established a small workshop in Newark and then, in 1876, he created a large laboratory in Menlo Park, New Jersey. Menlo Park consisted of a six-building complex on thirty-four acres that Edison had purchased in 1875, because of its combination of rural quiet and proximity to New York investors. His team at Menlo Park patented around four hundred inventions, including the lightbulb and the phonograph, before moving in 1882 to a larger laboratory in West Orange, New Jersey.

Called the “Wizard of Menlo Park” by a journalist, Edison drew on the talents of a research team with members from many countries, including his English chief mechanic, Charles Batchelor, his German glass-blower, Ludwig Boehm, and his Swiss clockmaker, John Kruesi. While mathematicians, machinists, and carpenters in his team of two dozen worked on new devices, the business side of Edison’s “invention factory” was handled by bookkeepers, secretaries, and draftsmen who created drawings for the patent office, and his lawyer and agent, Grosvenor Lowery. His research staff included a number of individuals who went on to illustrious subsequent careers, including Johann Shukert, who would found what became Siemens in Germany, and John Kreusi, who became chief engineer at General Electric.
¹¹

SUBDIVIDING ELECTRICITY

Everyone knows that Thomas Edison invented the lightbulb, and he did—almost.

Others had experimented with incandescent lighting. The first form of electric illumination was the arc lamp, devised by a Russian, Paul N. Jablochkoff, and improved by an American, Charles F. Brush. In the 1870s and 1880s, arc lighting began to replace gas lights in public places like streets and railway stations, but it could not be used in residences and offices.

As early as 1859, Moses Farmer lit his home in Salem, Massachusetts, with glowing platinum wires. Joseph Swan, a British scientist, patented the first incandescent lightbulb in 1878. After making his home the first to be lit by electric bulbs, Swan turned a lecture hall in Newcastle into the first public building to be lit by bulbs in 1880 and then, in 1881, made the Savoy Theatre in London the first theater to be lit completely by electricity.

When he founded his Menlo Park, New Jersey, laboratory in 1876, Edison focused on electricity. In 1879, after testing six thousand plant fibers, Edison’s team in New Jersey, like Swan, chose carbonized cotton for the filament. The bulb owed its design to the earlier work of two Canadian inventors, Henry Woodward and Matthew Evans.

Swan sued Edison for patent infringement. The British courts forced Edison to make Swan a partner in his British company, which became Ediswan. In 1882, Edison sold the US patent rights to the Brush Electric Company. In 1883, the US Patent Office had declared that Edison’s patents were invalid because they were based on the designs of William Sawyer. But Edison was a master of self-promotion and to this day receives credit for the invention of the incandescent bulb.

Edison’s most important contribution was to create an entire system of electric lighting, from the generator through the wires to the incandescent bulb in the electric lamp. Edison announced that his goal was to make electricity “subdivided so that it could be brought into private homes.”

A DYNAMO NAMED JUMBO

At 3 p.m. on September 4, 1882, Thomas Edison activated a switch and the age of electricity began.

Power in the form of direct current (DC) surged from the Pearl Street Station at 255–257 Pearl Street, several blocks away. Complete with an early version of an electric meter to monitor usage by customers, the Pearl Street Station was the first modern electrical-power network in the United States; another station designed by Edison had begun operating in Holborn Viaduct in London on January 12, 1882. A steam dynamo called “Jumbo” sent electricity through wires in tubes that at Edison’s insistence had been buried deep underground. The Pearl Street Station at its inception provided electricity to 110 customers in Lower Manhattan. One of the early customers was the
New York Times
, which published a description of the light from the fifty-two incandescent lightbulbs that lit up that afternoon as “soft, mellow and graceful to the eye . . . without a particle of flicker to make the head ache.”

Just as significant as the technology that Edison introduced to the world was the place that he chose for the introduction. Edison flipped a switch and turned on hundreds of lightbulbs in the offices of Drexel, Morgan, in the presence of J. P. Morgan, the preeminent financier in the United States. Beginning in 1878, Morgan and his partners, along with the Vanderbilt family, had financed Edison, helping him incorporate the Edison Electric Illuminating Company in December 1880. In 1892, Morgan would arrange the merger of Edison Electric, based in Schenectady, New York, and Thomson-Houston Company, based in Lynn, Massachusetts, to create General Electric, one of the first twelve companies to be included in the Dow Jones Industrial Average. As his reward, Morgan got not only one of the first offices but also the first home in New York to be lit by Edison’s invention.

The alliance of Edison and Morgan symbolized a new era for the American economy. Between 1880 and 1900, electric lightbulbs became twice as efficient and only one-fifth as expensive. Fluorescent lighting was used for offices and large buildings because of its energy efficiency.
¹²
Along with the automobile, electricity was the most important technology of the second industrial revolution that rendered the steam-based technology of the first industrial revolution obsolete. And the entrepreneurial capitalism represented by the individualistic railroad barons of the Steam Age was rapidly giving way to the new finance capitalism symbolized by Morgan, described in the next chapter.