Chapter 19 - From Crisis to Empire
Politics of the Gilded Age
The Gilded Age
Mark Twain called the late 19th century the "Gilded Age." In the popular view, the late 19th century was
a period of greed and guile, when rapacious robber barons, unscrupulous speculators, and corporate
buccaneers engaged in shady business practices and vulgar displays of wealth. It is easy to caricature the
Gilded Age as an era of corruption, scandal-plagued politics, conspicuous consumption, and unfettered
capitalism. But it is more useful to think of this period as modern America's formative era, when the
rules of modern politics and business practice were just beginning to be written.
It was during the Gilded Age that Congress passed the Sherman Anti-Trust Act to break up monopolistic
business combinations, and the Interstate Commerce Act, to regulate railroad rates. State governments
created commissions to regulate utilities and laws regulating work conditions. Several states filed suits
against corporate trusts and tried to revoke the charges of firms that joined trusts.
Politics During the Gilded Age
In recent years, it has become commonplace to characterize politics in the Gilded Age as corrupt and
issueless. The major parties "divided over spoils, not issues" and over "patronage, not principle," in the
words of the historian Richard Hofstadter, and maintained voter loyalty by waving the bloody shirt (i.e.,
appealing to Civil War loyalties) and playing on religious, ethnic, and regional divisions.
This view is quite misleading. An era of intense partisan fervor, the Gilded Age had a higher level of voter
turnout than at any other time in American history. The federal government assumed greater authority
and power over banking and currencies, taxes and tariffs, land and immigration. This period also
witnessed the rise of a number of highly politicized movements--including the temperance and women's
rights crusades and the Populist insurgency--that sought to address the wrenching social
transformations of the age.
Civil Service Reform
George Plunkitt, a local leader of New York City's Democratic Party, defended the spoils system. "You
can't keep an organization together without patronage," he declared. "Men ain't in politics for nothin'.
They want to get somethin' out of it."
But in one of the most significant political reforms of the late 19th century, Congress adopted the
Pendleton Act, creating a federal civil service system, partly eliminating political patronage.
Andrew Jackson introduced the spoils system to the federal government. The practice, epitomized by
the saying "to the victory belong the spoils," involved placing party supporters into government
positions. An incoming president would dismiss thousands of government workers and replace them
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with members of his own party. Scandals under the Grant administration generated a mounting demand
for reform.
Ironically, the president who led the successful campaign for civil service, Chester Arthur, a Republican,
was linked to a party faction from New York that was known for its abuse of the spoils of office. In fact,
in 1878, Arthur had been fired from his post at New York Federal Custom's Collection for giving away too
many patronage jobs.
In 1880, Arthur had been elected vice president on a ticket headed by James A. Garfield. Garfield's
assassination in 1881 by a mentally disturbed man, Charles J. Guiteau, who thought he deserved
appointment to a government job, led to a public outcry for reform.
As president, Arthur became an ardent reformer. He insisted that high ranking members of his own
party be prosecuted for their part in a Post Office scandal. He vetoed a law to improve rivers and
harbors. In 1883, he helped push through the Pendleton Act. Failing to please either machine politicians
or reformers, Arthur was the last incumbent president to be denied renomination for a second term by
his own party.
The Pendleton Act stipulated that government jobs should be awarded on the basis of merit. It provided
for selection of government employees through competitive examinations. It also made it unlawful to
fire or demote covered employees for political reasons or to require them to give political service or
payment, and it set up a Civil Service Commission to enforce the law.
When the Pendleton Act went into effect, only 10 percent of the government's 132,000 civilian
employees were placed under civil service. The rest remained at the disposal of the party power, which
could distribute for patronage, payoffs, or purchase. Today, more than 90 percent of the 2.7 million
federal civilian employees are covered by merit systems.
In 1884, New York became the first state to adopt a civil service system for state workers.
Massachusetts became the second state when it started a merit system in 1885.
Tweedledum and Tweedledee
During the 1870s and 1880s, the Democratic and Republican Parties were of almost exactly equal
strength. In the elections between 1876 and 1892, no more than 3.1 percentage points separated the
two parties. The two parties differed enormously in their principles, programs, and ethno-cultural
composition.
In the late 19th century, it was sometimes said that there wasn't a dime's difference between the two
parties, that the difference between the two parties was the difference between tweedledum and
tweedledee. This wasn't true.
The Republican Party tended to emphasize national unity, economic modernization, and moral reform.
Regarding the Democrats as the party of treason for opposing the Civil War, the Republicans ran Union
veterans in eight of nine presidential elections between 1868 and 1900. The sole exception, James G.
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Blaine, lost in 1884. The party urged the faithful to "vote as you shot." They portrayed Democrats as
"the old slave-owner and slave driver, the saloon-keeper, the ballot-box-stuffer, the Kuklux [Klan
member], the criminal class of the great cities, the men who cannot read or write."
The Republicans were committed to rapidly modernizing the economy through such measures as
protective tariffs to assist industry and land grants to encourage railroad construction. The Republican
Party was also committed to using the 14th Amendment to protect corporations' ability to operate free
from excessive state regulation.
The Democrats were split on this program of economic modernization. Grover Cleveland supported big
business and the gold standard but in 1887 came out strongly against the tariff, which he viewed as a tax
on consumers for the benefit of rich industrialists.
The Election of 1884
The presidential campaign of 1884 was one of the most memorable in American history. The Republican
nominee, James G. Blaine of Maine, was nicknamed the "plumed knight," but disgruntled Republican
reformers regarded him as a symbol of corruption. He "wallowed in spoils like a rhinoceros in an African
pool."
These liberal Republicans indicated to Democratic leaders that they would bolt their own party and
support a Democrat, provided he was a decent and honorable man. Grover Cleveland seemed to meet
these qualifications. He had started his career as sheriff of Erie County where he personally hanged two
murderers to spare the sensitivities of his subordinates. He had been known as the "veto" Mayor of
Buffalo for rejecting political graft, and as governor he repudiated Tammany Hall.
Republicans waved the "bloody flag," harshly attacking Cleveland for avoiding service during the Civil
War. He had hired a substitute to take his place.
Democrats, in turn, claimed that Blaine had sold his influence in Congress to business interests. They
published letters from a Boston bookkeeper which indicated that Blaine had personally benefited from
helping a railroad keep a land grant. Democrats chanted: "Blaine! Blaine! James G. Blaine! The
Continental Liar from the State of Maine!"
Then a Buffalo newspaper dealt Cleveland a devastating blow. Under the headline, "A Terrible Tale," the
newspaper revealed that the Democratic candidate had a child out of wedlock. Even worse, Republicans
charged, Cleveland had placed the child in an orphanage and the mother in an insane asylum,
Republicans wore white ribbons and campaigned under the phrase "home protection."
But these moralistic attacks failed to ignite much public indignation against Cleveland. Republicans
chanted, "Ma, ma, where's my pa?" Democrats replied: "Gone to the White House, ha, ha, ha."
Just six days before the election, a group of Protestant clergy were meeting in New York. The clergymen
endorsed Cleveland with words that would alter the course of the election:
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We are Republicans and don't propose to leave our party and identify ourselves with the party whose
antecedents are Rum, Romanism and Rebellion.
The following Sunday, as Irish Americans filed out of Catholic Churches, they were handed bills
containing the phrase "Rum, Romanism and Rebellion," attributed to Blaine himself. Blaine's denials
were ineffective and he lost New York by 1,149 votes. In the election, white Southerners, Irish
Americans, and German American voters turned out in record numbers.
In office, Cleveland pleased conservatives by advocating sound money and reduction of inflation,
curbing party patronage, and vetoing government pensions. But he alienated business and labor
interests by proposing a lower tariff and was defeated by Republican Benjamin Harrison in 1888,
winning the popular vote but losing the electoral vote.
In 1892, Cleveland won reelection thanks in part to a third party movement--the Populists--that
siphoned off some of the strength of the Republican Party, and by a vigorous campaign against the
extravagance of the Republican "Billion Dollar Congress."
But his second term was ruined by the economic depression of the mid-1890s, the worst economic crisis
that the country had ever seen. Insisting on sound money, he sought to keep the country on the gold
standard and helped convince Congress to enact an income tax (which was declared unconstitutional by
the Supreme Court). In 1896, Cleveland's policies were repudiated by his own party.
The Tariff Question
After 1887, the tariff become the central issue in American politics. Democrats, led by Grover Cleveland,
charged that the tariff raised prices, enriched the wealthy, and fostered inefficiency. Republicans argued
that tariffs promoted infant industries, protected established industries, raised workers wages and
protected them against low-wage competition, and fostered a rich home market for farm goods.
In fact, the tariff was not especially important for manufacturers. European manufacturers could not
compete with the American advantages of large efficient factories, vast internal markets, ample raw
materials, sophisticated advertising, and a highly efficient distribution system. By 1885, the United
States had become the world's low cost, high volume manufacturers. In 1900, a London newspaper
lamented:
We have lost to the American manufacturer electrical machinery, locomotives, steel rails, sugarproducing and agricultural machinery, and latterly even stationary engines, the pride and backbone of
the British engineering industry.
The actual beneficiaries from a high tariff were sugar growers and producers of wool, leather hides, coal,
timber, and iron ore.
Anti-Trust
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The 1880s marked the emergence of trusts, companies that bought out locally-owned factories and
merged them into conglomerates that sought to monopolize entire industries. The concentration of
industry aroused "deep feelings of unrest," said Supreme Court Justice John Marshall Harlan, a
conservative Republican:
The conviction was universal that the country was in real danger from another form of slavery...that
would result from the aggregation of capital in the hands of a few individuals controlling, for their own
profit and advantage exclusively, the entire business of the country.
A national consensus emerged that monopolies were dangerous to democracy. The Interstate
Commerce Act of 1887, which applied only to railroads passing through more than one state, declared
that railroads could only charge just and reasonable rates. It required railroads to post their rates,
provide 10-day notice before raising rates, prohibited railroads from charging less for a long haul than a
short haul over the same line. The act also set up the first federal regulatory commission, the Interstate
Commerce Commission (ICC) had authority to investigate the railroads. Railroad operators found ways
to circumvent the law, and many of the ICC's decisions were reversed by the Supreme Court.
The Sherman Anti-Trust Act passed in 1890 outlawed any combination "in restraint of trade." In 1894, in
the case of U.S. v. Debs, the Supreme Court ruled that the act could be used to stop labor unions from
interfering with commerce. Between 1890 and 1901, the federal government filed 18 suits under the
law, four against labor unions.
Grover Cleveland
He was the first Democratic president elected after the Civil War and the only person ever to be elected
to non-consecutive terms in office. A bachelor when he was elected to his first term, he became the first
president to be married in the White House when he wed Frances Folsom, a former ward 27 years his
junior. He became the first president to have children while in office. The Baby Ruth candy bar was
named after one of his offspring.
When confronted with a charge that he had fathered a child out of wedlock, Cleveland immediately
acknowledged the truth. He also admitted that he had avoided military service in the Civil War by paying
a substitute to take his place.
When warned that his fight for lower tariffs might cost him the 1888 election, he replied: "What is the
use of being elected or re-elected unless you stand for something." Cleveland was defeated by Benjamin
Harrison in the Electoral College even though he won the popular count by more than 90,000 votes. He
lost the election because he failed to carry his home state of New York.
In 1892, his supporters urged him to seek accommodations with western Democrats who wanted
unlimited coinage of silver. His response was, "I am supposed to be the leader of my party. If any world
of mine can check these dangerous fallacies, it is my duty to give that word, whatever the cost may be to
me."
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As president, he signed the Indian Emancipation Act, established the Departments of Agriculture and of
Labor, lowered tariffs, and successfully defended the gold standard.
The Depression of the Mid-1890s
The Gilded Age ended with the financial panic of 1893. A conflict over the value of the nation's currency
led lenders to call in their loans. A weakening American currency frightened foreign investors, helping to
start a four-year depression.
One way to limit the supply of money is to tie the dollar to gold. This was the practice in the Gilded Age.
The government pledged to convert each dollar into a fixed amount of gold. Since there was not much
gold available, federal government could not print many dollars. This galled farmers. Partly because of
overproduction, prices for farm crops kept falling. Farmers needed low-interest credit to keep going, and
because of the gold standard, they could not get it. Nor could they raise prices. Thousands of farmers
lost their land.
Their solution was silver, which was much more abundant than gold. Under pressure from the Populists,
Congress in 1890 authorized the Treasury to issue dollars backed by silver as well as gold. This greatly
increased the money supply and made credit available at lower rates. But the dollar lost value. The
currency was in effect devalued, particularly in the eyes of lenders in Britain, a country on a pure gold
standard. Nervous already from various bankruptcies, they called in their dollar loans and converted
them into gold.
President Grover Cleveland got the silver act repealed within months. But this did not lessen the
concern that the dollar would be devalued. When gold reserves fell below $100 million in April 1893, the
panic was on.
The Farmers' Plight
At the end of the 19th century, about a third of Americans worked in agriculture, compared to only
about four percent today. After the Civil War, drought, plagues of grasshoppers, boll weevils, rising
costs, falling prices, and high interest rates made it increasingly difficult to make a living as a farmer. In
the South, one third of all landholdings were operated by tenants. Approximately 75 percent of African
American farmers and 25 percent of white farmers tilled land owned by someone else.
Every year, the prices farmers received for their crops seemed to fall. Corn fell from 41 cents a bushel in
1874 to 30 cents by 1897. Farmers made less money planting 24 million acres of cotton in 1894 than
they did planting 9 million acres in 1873. Facing high interests rates of upwards of 10 percent a year,
many farmers found it impossible to pay off their debts. Farmers who could afford to mechanize their
operations and purchase additional land could successfully compete, but smaller, more poorly financed
farmers, working on small plots marginal land, struggled to survive.
Many farmers blamed railroad owners, grain elevator operators, land monopolists, commodity futures
dealers, mortgage companies, merchants, bankers, and manufacturers of farm equipment for their
plight. Many attributed their problems to discriminatory railroad rates, monopoly prices charged for
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farm machinery and fertilizer, an oppressively high tariff, an unfair tax structure, an inflexible banking
system, political corruption, corporations that bought up huge tracks of land. They considered
themselves to be subservient to the industrial Northeast, where three-quarters of the nation's industry
was located. They criticized a deflationary monetary policy based on the gold standard that benefited
bankers and other creditors.
All of these problems were compounded by the fact that increasing productivity in agriculture led to
price declines. In the 1870s, 190 million new acres were put under cultivation. By 1880, settlement was
moving into the semi-arid plains. At the same time, transportation improvements meant that American
farmers faced competitors from Egypt to Australia in the struggle for markets.
The first major rural protest was the Patrons of Husbandry, which was founded in 1867 and had 1.5
million members by 1875. Known as the Granger Movement, these embattled farmers formed buying
and selling cooperatives and demanded state regulation of railroad rates and grain elevator fees.
Early in the 1870s the Greenback Party agitated for the issue of paper money, not backed by gold or
silver, with the idea that a depreciating currency would make it easier for debtors to meet their
obligations.
Another wave of protest grew out of the National Farmers' Alliance and Industrial Union (the Southern
Farmers Alliance) formed in Lampedusa County, Texas in 1875, and the Northwestern Farmers' Alliance,
founded in Chicago in 1880. By the late 1880s, the cooperative business enterprises set up by the
Farmers' Alliances had begun to fail due to inadequate capitalization and mismanagement. By 1890, the
Farmers Alliances had begun to enter politics. In 1892 the Alliance formed the Peoples' or Populist Party.
Among other things, the Populists financed commodity credit system that would have allowed farmers
to store their crop in a federal warehouse to await favorable market prices and meanwhile borrow up to
80 percent of the current market price.
The Populist platform also sought a graduated income tax, public ownership of utilities, the voter
initiative and referendum, the eight-hour workday, immigration restrictions, and government control of
currency.
In the presidential election of 1892, the Populist candidate, James B. Weaver of Iowa, received more
than a million popular votes (8.5 percent of the total) and 22 electoral votes. The Populists also elected
10 representative, 5 senators, and 4 governors, as well as 345 state legislators.
Populism
A little more than a century ago, a grassroots political movement arose among small farmers in the
country's wheat, corn, and cotton fields to fight banks, big corporations, railroads, and other "monied
interests." The movement burned brightly from 1889 to 1896, before fading out. Nevertheless, this
movement fundamentally changed American politics.
The Populist movement grew out of earlier movements that had emerged among southern and western
farmers, such as the Grangers, the Greenbackers, and the Northern, Southern, and Colored Farmers
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Alliances. As early as the 1870s, some farmers had begun to demand lower railroad rates. They also
argued that business and the wealthy--and not land--should bear the burden of taxation.
Populists were especially concerned about the high cost of money. Farmers required capital to purchase
agricultural equipment and land. They needed credit to buy supplies and to store their crops in grain
elevators and warehouses. At the time, loans for the supplies to raise a crop ranged from 40 percent to
345 percent a year. The Populists asked why there was no more money in circulation in the United
States in 1890 than in 1865, when the economy was far smaller, and why New York bankers controlled
the nation's money supply.
After nearly two decades of falling crop prices, and angered by the unresponsiveness of two political
parties they regarded as corrupt, dirt farmers rebelled. In 1891, a Kansas lawyer named David
Overmeyer called these rebels Populists. They formed a third national political party and rallied behind
leaders like Mary Lease, who said that farmers should raise more hell and less corn. The Populists spread
their message from 150 newspapers in Kansas alone.
Populist leaders called on the people to rise up, seize the reins of government, and tame the power of
the wealthy and privileged. Populist orators venerated farmers and laborers as the true producers of
wealth and reviled blood-sucking plutocrats. Tom Watson of Georgia accused the Democrats of
sacrificing "the liberty and prosperity of the country...to Plutocratic greed," and the Republicans of doing
the wishes of "monopolists, gamblers, gigantic corporations, bondholders, [and] bankers. The Populists
accused big business of corrupting democracy and said that businessmen had little concern for the
average American "except as raw material served up for the twin gods of production and profit." The
Populists blamed a protective tariff raised prices by keeping affordable foreign goods out of the country.
The party's platform endorsed labor unions, decried long work hours, and championed the graduated
income tax as a way to redistribute wealth from business to farmers and laborers. The party also called
for an end to court injunctions against labor unions. "The fruits of the toil of millions," the Party declared
in 1892, "are boldly stolen to build up the fortunes for a few, unprecedented in the history of mankind."
The Populists also called for a secret ballot; women's suffrage; an eight-hour workday, direct election of
U.S. Senators and the President and Vice President; and initiative and recall to make the political system
more responsive to the people.
The party put aside moral issues like prohibition in order to focus on economic issues. "The issue," said
one Populist, "is not whether a man shall be permitted to drink but whether he shall have a home to go
home to, drunk or sober." A significant number of Populists were also willing to overcome racial
divisions. As one leader put it, "The problem is poverty, not race."
In the 1892 presidential election, Populist candidate James Weaver of Iowa received a million votes and
22 electoral votes. Five Populist Senators and ten Representatives were elected, along with three
governors, and 1,500 state and county officials.
The Populists embraced government regulation to get out from the domination of unregulated big
business. The platform demanded government ownership of railroads, natural resources, and telephone
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and telegraph systems. Even more radically, some Populists called for a coalition of poor white and poor
black farmers.
Populism had an unsavory side. The Populists had a tendency toward paranoia and overblown rhetoric.
They considered Wall Street an enemy. Many Populists were hostile toward foreigners and saw sinister
plots against liberty and opportunity. The party's 1892 platform described "a vast conspiracy against
mankind has been organized on two continents and is rapidly taking possession of the world." After
their crusade failed, the embittered Georgia Populist Tom Watson denounced Jews, Catholics, and
African Americans with the same heated rhetoric he once reserved for "plutocrats."
But in the early 20th century, many of the Populist proposals would be enacted into law, including the
secret ballot; women's suffrage; the initiative, referendum, and recall; a Federal Reserve System; farm
cooperatives, government warehouses; railroad regulation; and conservation of public lands.
The Populists also provided the inspiration for later grassroots movements, including the Anti-Saloon
League, which helped make Prohibition a part of the Constitution; and the Congress of Industrial
Organizations (CIO), which persuaded millions of auto workers, stevedores, and steel workers to
unionize with its call for industrial democracy.
Populist rhetoric still plays an important role in contemporary American politics. Politicians speak the
language of populism whenever they defend ordinary people against entrenched elites and a
government dominated by special interests. During the 1930s, Franklin Roosevelt hailed "the forgotten
man" and railed against "economic royalists" and in 1992 Bill Clinton ran for the presidency by pledging
to "put people first."
The Election of 1896
Not since the election of 1860 were political passions so deeply stirred. At stake appeared to be two
very different visions of what kind of society America was to become.
Rarely in American history had conditions seemed so unsettled. The financial panic of 1893 was followed
by four years of high unemployment and business bankruptcies. The panic led Jacob Coxey, a
businessman from Massillon, Ohio, to organize the first mass march on Washington. Coxey's army
demanded a federal public works program. As rumors of revolution swept Washington, the government
responded by jailing the march's leaders.
The violent steel strike at Homestead mills near Pittsburgh in 1892 and the intervention of federal
troops in the Pullman Strike and the imprisonment of labor leader Eugene V. Debs in 1894 stirred the
public passions. By 1896, the situation of many southern and western farmers was desperate.
At the Democratic Party convention in Chicago, delegates repudiated the leadership of President Grover
Cleveland, seized the Free Silver issue from the Populists, and nominated William Jennings Bryan of
Nebraska. Bryan won his party's nomination with one of the most famous speeches ever delivered at a
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political convention. "The boy orator of the Platte" was viewed by his supporters as the champion of the
plain people, the prairie avenger who promised financial relief to hard-pressed farmers. Bryan's
supporters viewed his campaign as a continuation of the old American struggle between producers and
exploiters, debtors and creditors. To hard-pressed farmers, Bryan's program of financial relief offered
hope that they might survive financially.
Bryan's radical attacks on Wall Street, banks, and railroads frightened many prosperous farmers and
businessmen. The gulf between populist farmers and immigrant and urban laborers made it impossible
for the Populists to forge successful ties with the urban working class. The Populist movement was
deeply imbued with the values of Evangelical Protestantism, alienating many Catholics.
Bryan's opponent, Republican William McKinley, campaigned on a platform of jobs and sound money,
promising a "full dinner pail."
Business interests spent nearly $16 million to elect McKinley, allowing the Republicans to adopt a new
style of campaigning. Instead of relying on party organization to turn out the vote, Republicans relied
increasingly on advertisements.
Unlike some earlier Republican candidates, McKinley rejected moralistic crusades, like prohibition, that
alienated ethnic groups. In 1896, McKinley assembled a political coalition that included both the new
industrialists and their workers. Most of industrial America voted Republican, including most workers in
factories, mines, mills, and railroads. As a result the Republican Party went on to dominate the
presidency for most of the next three decades.
During the late 1890s, two solutions appeared to the nation's monetary problems. New discoveries of
gold in South Africa and Australia greatly increased the world's gold supply. At the same time, bankers
created a new "currency"--bank checks. More and more of the nation's business transactions took place
through checks rather than through paper money and gold coins.
The Wonderful Wizard of Oz
Is the Wizard of Oz just a fairy tale about a girl from Kansas transported to a colorful land of witches and
munchkins? Or does the story have a political dimension? Scholars still disagree about whether L. Frank
Baum's great children's story was about the collapse of the Populist movement.
Henry Littlefield, a teacher in Pebble Beach, California, was the first person to suggest that the story was
about Populism. He argued that:
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the Scarecrow (who has no brain) represented the farmers;
the Tin Man (who had once been a human wood-cutter, but chopped his body parts off and
replaced them with metal) represented industrial workers;
the Cowardly Lion represented northern reformers;
the Emerald City represented Wall Street, greenback colored; and
the Wizard represented the Money Power, whose influence rests on manipulation and illusion.
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Littlefield interpreted the yellow brick road as representing gold and Dorothy's silver slippers (which
were changed in the movie to ruby slippers) as representing the Populist call for backing the dollar with
silver. Oz was the abbreviation for ounces, a reference to the Populist call for the government to coin.
The Populist Crusade and Restrictions on African Americans
During the late 1880s and early 1890s, a million African Americans joined the Colored Farmers Alliance.
At one of their conventions, black farmers argued that "land belong to the sovereign people," and
should not be treated as private property. As the Populist movement divided the South's white
population, a number of black leaders saw a chance to forge an alliance with poorer whites.
The threat of this bi-racial alliance led many upper-class conservative Democrats to play the "race card."
They appealed to white farmers to vote Democratic in order to maintain a system of white supremacy.
The appeal to racism proved highly effective in undermining Populism's appeal. Upper-class
conservative Democrats took the lead in calling for legalized segregation and disfranchisement of
African Americans. But the reforms they offered, such as the poll tax and literacy tests, had the practical
effect of taking the vote away from many poor whites.
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