Penguin History of the United States of America (73 page)

This episode was the final signal that the industrial world had entered upon a new phase, that of finance capitalism. By the 1890s, and especially after the panic of 1893, which threatened universal ruin, the money men were determined to get control, and were in a position to do so. They were no longer dependent for business and funds on London: the growth of American industry in the previous twenty years had generated enormous profits which were at the sole disposal of New York. Only they could help companies through difficult times when there were too few customers and too many creditors, and the chastened industrial managers were eager to accept their help and leadership. In return for their assistance the New York banks usually exacted drastic reorganization, heavy fees and seats on the board for themselves or their representatives. The leader in this movement was the House of Morgan, which stood, then as now, at the corner of Wall Street and Broad Street, next door to the New York Stock Exchange. Morgan’s was the centre of American capitalism in more than mere geographical position. Between 1893 and 1913 (the year of his death) its chief was behind all the moves to stabilize operations and promote mergers in the railroads, in shipping, in the new electricity industry, in the telegraph, in telephones, as well as in steel. J. P. Morgan was the spider in a vast web of interlocking directorships (741 of them in 112 corporations), and as during the same period Standard Oil was steadily extending its influence, by the end of the first decade of the twentieth century it was almost the case that all the leading American capitalists were associates either of Morgan or of Rockefeller. The rationalization of industrialism by private capital might be said to have been very successfully completed.

The Morgans and the Rockefellers thought so. But neither at the time nor subsequently were their achievements unquestioned. In the first place it is far from clear that the larger and larger corporations, trusts and holding companies that emerged from their machinations were any more efficient than the smaller concerns which they superseded. They conferred more power on their masters, and more money; but in their actual economic functioning, in the basic business of production, there was little or no visible gain from giantism. A superficial case might be made for Rockefeller: he had a genius for cutting production costs, which certainly increased Standard Oil’s profits and may even have lowered the price of petroleum to the consumer. But he owed his unique position and immense wealth not to his flair for thrift but to his perception that the oil producers were at the mercy of the refineries and the shippers: after he got his dominating position in both by single-mindedly pursuing control of the refining process, he was able to dictate terms to the owners of the oil wells, whose product had to be processed and shipped to market before it could earn them a penny, and also to the railroads, which could not afford to lose Rockefeller’s custom.
It was powerful business, but it is hard to see what the gain was to the economy from Rockefeller’s monopoly. His critics thought he was simply taxing the oil industry for his private benefit. Morgan was worse, for he did not always succeed. Thus in the first years of the twentieth century he put together a syndicate to beat the British and monopolize the transatlantic passenger steamship business, but was soon defeated: as a banker he did not know enough about shipping. He and his associates thought as money men protecting or forwarding their investments, not as creators of new wealth. In short, the power of the finance capitalists may have acted as something of a brake on America’s development.

And financial crises continued to occur. Economic historians still differ as to the cause; but whatever it was – whether the unwise greed of speculators, the inherent contradictions of free enterprise, over-production, under-consumption, monetary profligacy or such frequent accidents as war and bad harvests – it was and is plain that the great trusts were impotent to control it. Too many railroads lay outside Morgan’s grasp, too many oil wells outside Rockefeller’s (especially after the great Texan field opened in 1901 with the first gusher at Spindletop). In all other areas the overcapitalized giants, which had lavishly issued watered stock in generous anticipation of future earnings (US Steel was launched on the greatest flood of ‘water’ thus far seen), found themselves still dangerously exposed to the competition of smaller concerns; and if one of the giants should ever crash the repercussions for the American, indeed for the world, economy would be appalling. For the United States was by 1900, thanks less to its big businessmen than to its active population and vast resources, the world’s leading industrial nation. It produced more coal and pig-iron, and manufactured more raw cotton, than its nearest competitor, Great Britain; produced more iron ore and steel than Germany; more gold than Australia, and nearly as much silver as Mexico; more tobacco and cotton than India, and more wheat than Russia. Britain had a much larger merchant fleet, Russia had far more sheep and produced somewhat more petroleum; but even in these departments America’s achievement was increasingly formidable – her production of crude oil, for instance, more than doubled between 1899 and 1909. Every year, in short, increased the giant’s pre-eminence. America was still a debtor nation, borrowing more than she lent; but her enterprises were generating ever-mounting quantities of money that were beginning to find their way into investments overseas. The day was not far off when, as the saying goes, if Wall Street sneezed, the rest of the world would catch a cold. And Wall Street had not discovered how to stop itself sneezing.

From another point of view the triumph of the trusts seemed not so much inefficient or irrelevant as immoral. The bigger business grew, the larger were the bribes it could offer to national and local politicians, the greater was the pressure it could bring on the voters, in such a way as to undermine the democratic principles on which the United States was based. Others
noticed the appalling conditions of labour throughout industrial and urban America, and asked why employers never had money to spare to improve them, though there always seemed to be funds in hand for re-investment or for Wall Street battles. Others again looked at the rising class-consciousness and class-hostility that industrialism bred, at the tensions provoked by the immigrant workers imported in large numbers to operate the economic machine, at the hideous industrial towns, at the shacks and rookeries of the New York slums, and asked if things would not be better managed if the trusts were disciplined. Others reasoned that whatever excuse for themselves the trusts might make, there was clearly something wrong with America, and it would be folly to rest content with business civilization as it stood: even if big business was not the cause of everything that had gone wrong, it was at least as certainly not the cure.

America had changed, was still changing, was moving into ever stranger waters. The fact spread a deepening malaise ever more widely in the national consciousness as the nineteenth century wore to its end. The old self-confident spirit was never very far away, perhaps: it was manifested with great exuberance in Chicago at the ‘World Columbian Exposition’ of 1893, which was visited by twenty-eight million people, who marvelled at this celebration of America; but the Exposition was also marked by a meeting of the American Historical Association at which the young Frederick Jackson Turner read a paper arguing, in part, that since the 1890 census had shown that every part of the continental United States had now been organized, most of it already into states, the ‘frontier’ was closed and a new epoch was at hand. American institutions, formed in more propitious conditions, would be severely tested. The paper had a colossal influence, for all sorts of reasons, among them the fact that his audience was all too ready to be convinced. Other voices had been uttering similar warnings for years. In 1883 the prophet of the single tax reform, Henry George, had pointed with alarm to the filling-up of the West and the continued influx of immigrants: ‘What, in a few years more, are we to do for a dumping-ground? Will it make our difficulty the less that our human garbage can vote?’ In 1886 the
North American Review
announced, quite wrongly, that ‘the public domain of the United States is now exhausted’. Americans knew, before Turner told them, that their country had radically altered, and they did not much like it. The census of 1890 had also shown that the foreign-born element in the population now numbered over nine million (the total US population in that year was sixty-three million) and although as a percentage of the whole this was not much of an increase on the pre-Civil War figure (14 per cent instead of 13 per cent) it was easy to feel dangerously swamped by the incomers, especially as they tended to concentrate conspicuously in a few urban centres. Not only that: the composition of the immigration was changing rapidly. By 1890, when 445,680 Europeans were admitted, fully 25 per cent were from eastern or southern Europe: were Catholics, Greek Orthodox or Jews; Italians, Greeks, Hungarians or Slavs. Numbers and
proportions of this ‘new immigration’ were going to go on rising steadily for the next two decades and more.

American history has been largely the story of migrations. That of the hundred years or so between the Battle of Waterloo and the outbreak of the First World War must certainly be reckoned the largest peaceful migration in recorded history; probably the largest of any kind, ever. It is reckoned that some thirty-five million persons entered the United States during that period, not to mention the large numbers who were also moving to such places as Argentina and Australia. Historians may come to discern that in the twentieth and later centuries this movement was dwarfed when Africa, Asia and South America began to send out their peoples; but if so they will be observing a pattern, of a whole continent in motion, that was first laid down in nineteenth-century Europe. Only the French seemed to be substantially immune to the virus. Otherwise, all caught it, and all travelled. English, Irish, Welsh, Scots, Germans, Scandinavians, Spaniards, Italians, Poles, Greeks, Jews, Portuguese, Dutch, Hungarians, Czechs, Croats, Slovenes, Serbs, Slovaks, Ukrainians, Lithuanians, Russians, Basques. There were general and particular causes.

As regards the general causes, the rise in population meant that more and more people were trying to earn their living on the same amount of land; inevitably some were squeezed off it. The increasing cost of the huge armies and navies, with their need for up-to-date equipment, that every great European power maintained, implied heavier and heavier taxes which many found difficult or impossible to pay, and mass conscription, which quite as many naturally wanted to avoid. The opening up of new, superbly productive lands in the United States, Canada, Australia, New Zealand and the Ukraine, coupled with the availability of steamers and steam trains to distribute their produce, meant that European peasants could not compete effectively in the world market: they would always be undersold, especially as the victory of free trade was casting down the old mercantilist barriers everywhere. Steam was important in other ways too. It became a comparatively quick and easy matter to cross land and sea, and to get news from distant parts. The invention of the electric telegraph also speeded up the diffusion of news, especially after a cable was successfully laid across the Atlantic in 1866. New printing and paper-making machines and a rapidly spreading literacy made large-circulation newspapers possible for the first time. In short, horizons widened, even for the stay-at-home. Most important of all, the dislocations in society brought about by the French Revolution, the Industrial Revolution and the various wars and tumults of nineteenth-century Europe shattered the old ways. New states came into being, old ones disappeared, frontiers were recast, the laws of land-tenure were radically altered, internal customs barriers and feudal dues both disappeared, payment in money replaced payment in kind, new industries stimulated new wants and destroyed the self-sufficiency of peasant households and the saleability of peasant products. The basic structure of rural Europe was
transformed. Bad times pushed, good times pulled (American factories were usually clamouring for workers): small wonder that the peoples moved. It was a necessary phase in their development, which roughly followed a standard pattern everywhere. The Industrial Revolution would first make itself felt as a disturbing force, driving people off their farms and into emigration, or factories, or both. Then it slowed down the increase in the birth-rate, it raised the standard of living, it created new employment on a large scale. Consequently emigration fell off. By the end of the century the British and the Germans were no longer the leading nations among the migrants: their industrialization had reached maturity. Their place was taken by the comparatively backward Poles and Italians.

Particular reasons were just as important as these general ones. For example: between 1845 and 1848 Ireland suffered the terrible potato famine. A million people died of starvation or disease, a million more emigrated (1846-51). Matters were little better when the Great Famine was over: it was followed by lesser ones, and the basic weaknesses of the Irish economy made the outlook hopeless anyway. Mass emigration was a natural resort, at first to America, then, in the twentieth century, increasingly, to England and Scotland (a fact regularly and unfortunately overlooked by most Irish-Americans today, who seem to think that they are Ireland’s only overseas representatives). Emigration was encouraged, in the Irish case as in many others, by letters sent home and by remittances of money. The first adventurers thus helped to pay the expenses of their successors.

Political reasons could sometimes drive Europeans across the Atlantic. In 1848 some thousands of Germans fled the failure of the liberal revolution of that year (but many thousands more emigrated for purely economic reasons). Pogroms in Tsarist Russia later brought large numbers of Jews to America. The collapse of the Kingdom of the Two Sicilies in i860 destroyed the economy of southern Italy by exposing it to competition from the north: hence, in due course, the arrival of the Sicilians and Neapolitans. Swedes and Norwegians abandoned the struggle of farming in their cold and narrow fields, and once more set out for Vinland the Good. European and American commerce began to stir up the ancient societies of the East: so Japanese and Chinese began to settle in California and Hawaii.
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