American Economy in the Early Twentieth Century

The explosive growth of the Standard Oil Company and Carnegie Steel represented a paradigm shift in the way America conducted business. In the past individual merchants had complete control over their own trade, including hours and pay. This concept changed in the early twentieth century. With a constant influx of cheap labor from Europe and new capital, companies found it increasingly easy to take over small businesses and create monopolies. Roosevelt's oil octopus used a corrupt rebate system from the railroads to starve fledgling competitors into submission. With a price far too heavy to ship its goods, smaller companies quickly became a part of Roosevelt's oily fingers or died trying to compete. Carnegie employed similarly brutal tactics when he crushed a labor rebellion at Homestead. When the Amalgamated Association of Iron and Steel Workers produced a union strike that protested the twelve-hour workday and wage discrepancy, Carnegie and his right-hand man Frick never budged. The duo sent in an army of Scabs to break the strike and continue production at the factory. An armed conflict ensued between the Pinkertons (strikebreakers) and the union members willing to fight at all costs to keep their jobs. The incident ended when the state militia was brought in to occupy Homestead, and the union ran out of money. Americans were shocked by these events. It meant that the common man no longer owned his business, and that the factory boss could order him around for as little pay as he pleased.

The only way to earn a decent living was to migrate to the city, where food existed and the pay was somewhat adequate. Farmers suffered the most and became the "Third Estate" mule of sorts to the industrial juggernauts. Power, corruption, and greed abounded in the upper levels of society, as class division became a visible problem between the rich and poor. These new economic factors astonished the American public, and represented a change from Jefferson's old concept of the rural farmer to Hamilton's more modern vision of an urban factory workforce.

Federal Attempts tp Regulate Business

In the early years of the railroad industry, the U.S. government actively contributed to it by providing generous land grants to the powerful railroad companies. Much of the railroad's successes in construction and speed flourished because of government subsidizing. Congress and local governments actively encouraged expansion into the West by the railroad companies, chiefly because they brought trade and a brighter economic future for pioneers. Small towns begged the companies to lay track through their towns, so that goods would flourish from the "iron river". A prairie town not attached to the railroad would quickly become a "Ghost Town" because it had no means of support. Political entities at first allowed the railroad companies and Vanderbilt to establish a network of iron from east to west with little interference. When corruption reared its ugly head in the 1880s, the U.S. government took action. Swashbuckling speculators arose as filthy figures who exploited the people and sold railroad stock illegitimately. Jay Gould was one such figurehead. Stories of under-the-table deals with politicians and lobbyists soon took precedent in public thought. When Cornelius Vanderbilt commented that he owned the law, the government sought action.

The judicial and legislative branches clashed over the issue. The Supreme Court ruled in the Wabash decision that states could not regulate the interstate mechanical monster. To the contrary, Congress passed the Interstate Commerce Act, which banned rebates and required railroads to publish their rates openly. The legislation did eliminate many unfair corporate dealings, though it still maintained a pro-wealth swagger. Such a law was unable to stop the rise of monopolies and trusts. As Bailey put it, the act "tended to stabilize, not revolutionize, the existing business system". The ICA was new in one crucial respect-it was the first time that the government had actively interfered with private business.

Rockefeller witnessed a threat to his empire in the form of government regulation. When the trust-busters failed in the state legislature, they moved on Congress to represent the best interests of the poor masses. The Congress responded with the Sherman Anti-Trust Act, which was largely ineffective. It's loose legal structure allowed for corporations to wriggle past and exploit the labor unions. The act banned any formation or trust, and the big companies stated that the union could not exist under these conditions. Thus the law actually backfired from its original intention to help the underclass. The struggle between the trusts and the government would continue for decades to come.

The Growth of Labor Unions and Business

The early twentieth century class divide required an allegiance to one of two factions. One was the esteemed and wealthy business goliaths, whose membership included

Rockefeller, Andrew Carnegie, J.P. Morgan, and Vanderbilt. These individuals forged lasting and powerful trusts that required their partners to mingle with one another for the betterment of the company. When J.P. Morgan loaned money to defunct companies in 1893 he placed on their board of directors his own businessmen. Close bonding between companies and collectivization proved profitable. The working class saw the success of this methodology and applied it to the union. The Knights of Labor began with the idea of one unified labor class that would fight cooperatively for better wages and shorter work days. The union spanned many ethnic groups and included both skilled and unskilled laborers.

Despite their idealistic efforts, the Knights of Labor lacked decentralization. Big business had learned that one individual or even an entire body of people under one broad cause could not achieve success. Individualism was anti-industrialist and therefore companies quickly learned to gain a profit through monopolization. The collection of individual entities that worked on their own but still turned a profit to the larger company reaped the most profit. Rockefeller would own the oil company, but he let the managers do the dirty work. In this fashion the corporate powers were able to maintain a vast empire of wealth, with only minimal intervention. The labor unions evolved as well. The A F of L split from the Knights of Labor and was comprised of only skilled workers. It encompassed many self-governing unions that worked together for the good of the worker. To conclude, the labor unions often followed in the footsteps of their profit-seeking oppressors in regard to group action.

Coxey's Army vs. The Socialist Movement

Coxey's army aimed to help the unemployed rebound from the reeling American economy. Following the depression of the late 1890s, many workers found themselves without jobs to support their families. Presidents Harrison and Cleveland juggled money in the national treasury, ultimately cutting a deal with J.P. Morgan that bailed the government out of near bankruptcy. The Coxey "rebellion" was one that strove to delete unemployment from the country's economic landscape and to replace it with temporary public works programs. It touted that the government had to invest monetarily in the people for the unemployed to get through the depression. (Side note/question: Did FDR draw inspiration for his New Deal from Coxey's Army and methodology?). Coxey's Army did not oppose capitalism and it recognized the need for the businessman as the quintessential source of well-being for the worker. Without a job, the worker could not earn a living to feed his family.

In contrast, Mother Jones and the socialists vehemently opposed capitalism. They roared that only when corporate greed was eliminated could the working class take hold of the economy. The socialist position stated that the economy had to be in the hands of the people for an equal economy to formulate. In their minds a select few with power did not have the best interests of the destitute poor in mind. Socialism was more radical than Coxey's decree in that it wanted a complete upheaval of the economic system, and it deprived the general population of the American dream to become the "Self Made Man". The socialists believed that no one should be a Carnegie or Rockefeller, therefore Mother Jone's ideas did not receive widespread approval. Coxey's Army was more realistic in that it reflected American public opinion and reliance on a capitalist tradition.