THE ECONOMIC REVOLUTION
Long before the Civil War, steam and machinery had begun to invade
American industries and statesmen of the new commercial and industrial
order had appeared in Washington. The census of 1860 reported nearly a
million and a half wage earners in the United States, and more than a
billion dollars invested in manufacturing. By that year over thirty
thousand miles of railway had been constructed, including such important
lines as the New York Central, the Erie, the Baltimore and Ohio, and the
Pennsylvania. Politicians of the type of Stephen A. Douglas, who
discussed slavery in public and devoted their less obvious activities to
securing grants of public lands and mineral resources to railway and
manufacturing corporations, had begun to elbow the more cultivated and
respectable leaders like Calhoun, Webster, and Alexander Stephens, who
belonged to the old order.
But the spectacular conflict over slavery prevented the political
results of the economic transformation from coming to the surface. Those
who had occasion to watch the proceedings of Congress during the two
decades just before the War discovered the manipulations of railway
corporations seeking land grants and privileges from the Federal
Government and the operations of the "protected" interests in behalf of
increased tariffs. Those were also harvest days for corporations and
companies in the state legislatures where special charters and
privileges were being bartered away by the wholesale. There was emerging
in a number of the larger industrial centers a small, though by no means
negligible, labor movement. But the slavery issue overshadowed
everything. The annexation of Texas, slavery in the territories, the
Compromise of 1850, the Nebraska bill, and Bleeding Kansas kept the mind
of the North from the consideration of the more fundamental economic
problems connected with the new order. The politicians, to be sure, did
not live by the slavery agitation alone, but it afforded the leading
topics for public discussion and prevented the critical from inquiring
too narrowly into the real staples of politics.
The Civil War sharply shifted the old scenery of politics. It gave a
tremendous impetus to industry and railway construction. The tariff
measures during the War gave to manufacturers an unwonted protection
against foreign competition; the demand for war supplies, iron, and
steel, railway materials, textiles, and food supplies, quickened every
enterprise in the North; the great fortunes made out of speculations in
finances, contracts for government supplies, and land-grants placed an
enormous capital in private hands to carry forward business after the
War was over.
Within little more than a quarter of a century the advance of industry
and commerce had made the United States of Lincoln's day seem small and
petty. The census of 1905 showed over twelve billion dollars invested in
factories and nearly five and one half million wage earners employed. In
that year, the total value of manufactured products was over fourteen
billion dollars--fifteen times the amount turned out in 1860. As late as
1882 the United States imported several hundred thousand tons of steel
rails annually, but within ten years the import had fallen to 134 tons
and no less than 15,000 tons were exported. At the close of the Civil
War about 3000 tons of Bessemer steel were produced annually, but within
twenty years over two million tons were put out every twelve months.
The building of railways more than kept pace with the growth of the
population and the increase in manufacturing. There were 30,000 miles of
lines in 1860; 52,000 in 1870; 166,000 in 1890; and 242,000 in 1910.
Beginning at first with the construction of lines between strategic
centers like Boston and Albany, and Philadelphia and Reading, the
leaders in this new enterprise grew more bold. They pushed rapidly into
the West where there were no cities of magnitude and no prospect of
developing a profitable business within the immediate future. Capital
flowed into the railways like water; European investors caught the
fever; farmers and merchants along prospective lines bought stocks and
bonds, expecting to reap a harvest from increased land values and
business, only to find their paper valueless on account of preferred
claims for construction; and the whole West was aflame with dreams of a
new Eldorado to be created by transportation systems.
The era of feverish construction was shortly followed by the combination
of lines and the formation of grand trunk railways and particular
"systems." In 1869, Cornelius Vanderbilt united the Hudson River and New
York Central lines, linking the metropolis and Buffalo, and four years
later he opened the way to Chicago by leasing the Lake Shore Michigan
and Southern. About the same time two other eastern companies, the
Pennsylvania and Baltimore and Ohio secured western connections which
let them into Chicago.
It must not be thought that this rapid railway expansion was due solely
to private enterprise, for, as has been the standing custom in American
politics, the cost of doubtful or profitless undertakings was thrown as
far as possible upon the public treasury. Up to 1872, the Federal
Government had granted in aid of railways 155,000,000 acres of land, an
area estimated as "almost equal to the New England states, New York, and
Pennsylvania combined; nineteen different states had voted sums
aggregating two hundred million dollars for the same purpose; and
municipalities and individuals had subscribed several hundred million
dollars to help railway construction." To the Union Pacific concern
alone the Federal Government had granted a free right of way through
public lands, twenty sections of land with each mile of railway, and a
loan up to fifty million dollars secured by a second mortgage on the
company's property. The Northern Pacific obtained lands which a railway
official estimated to be worth enough "to build the entire railroad to
Puget Sound, to fit out a fleet of sailing vessels and steamers for the
China and India trade and leave a surplus that would roll up into the
millions." Cities, townships, counties, and states voted bonds to help
build railways within their limits or granted rights of way and lands,
in addition, with a lavish hand.
The chronicle of all the frauds connected with the manipulation of land
grants to railways and the shameless sale of legal privileges cannot be
written, because in most instances no tangible records have been left.
Perhaps the most notorious of all was the Credit Mobilier scandal
connected with the Union Pacific. The leading stockholders in that
company determined to secure for themselves a large portion of the
profits of construction, which were enormous on account of the prodigal
waste; and they organized a sham concern known as the Credit Mobilier in
which they had full control and to which the construction profits went.
Inasmuch as the Federal Government through its grants and loans was an
interested party that might interfere at any time, the concern, through
its agent in Congress, Oakes Ames, a representative from Massachusetts,
distributed generous blocks of stock to "approachable" Senators and
Representatives. News of the transaction leaked out, and a congressional
investigation in 1872 showed that a number of men of the highest
standing, including Mr. Colfax, the Vice President, were deeply
implicated. Nothing was done, however; the leading conspirator, Ames,
was merely censured by the House, and the booty, for the most part,
remained in the hands of those connected with the scandal. When the
road was complete, "it was saddled with interest payments on $27,000,000
first mortgage bonds, $27,000,000 government bonds, $10,000,000 income
bonds, $10,000,000 land grant bonds, and if anything were left, dividend
payments on $36,000,000 of stock."
* * * * *
It would be easy to multiply figures showing astounding gains in
industry, business, foreign trade, and railways; or to multiply stories
of scandalous and unfair practices on the part of financiers, but we are
not primarily concerned here with the technique of inventions or the
history of promotion.[7] The student of social and political evolution
is concerned rather with the effect of such material changes upon the
structure of society, that is, with the rearrangements of classes and
the development of new groups of interests, which are brought about by
altered methods of gaining a livelihood and accumulating fortunes. It is
this social transformation that changes the relation of the individual
to the state and brings new forces to play in the struggle for political
power. The social transformation which followed the Civil War embraced
the following elements.
In the first place, capital, as contrasted with agriculture, increased
enormously in amount and in political influence. Great pecuniary
accumulations were thenceforward made largely in business
enterprise--including the work of the entrepreneur, financier,
speculator, and manipulator under that general term. Inevitably, the
most energetic and the keenest minds were attracted by the dominant mode
of money-making. Agricultural regions were drained of large numbers of
strenuous and efficient men, who would otherwise have been their natural
leaders in politics. To these were added the energetic immigrants from
the Old World. That forceful, pushing, dominating section of society
historically known as the "natural aristocracy" became the agents of
capitalism. The scepter of power now passed definitively from the
masters of slaves to the masters of "free laborers." The literary and
professional dependents of the ruling groups naturally came to the
defense of the new order.[8] The old contest between agrarianism and
capitalism now took on a new vigor.[9]
On the side of the masses involved in the transition this economic
revolution meant an increasing proportion of wage workers as contrasted
with agriculturalists, owning and operating their farms, and with
handicraftsmen. This increase is shown by the following table, giving
the number of wage earners in _manufacturing_ alone:
POPULATION WAGE EARNERS
1850 23,191,876 957,059
1860 31,443,321 1,311,246
1870 38,558,371 2,053,996
1880 50,155,783 2,732,595
1890 62,947,714 4,251,535
1900 75,994,575 5,306,143
1910 91,972,266 6,615,046
In terms of social life, this increase in wage workers meant, in the
first place, a rapid growth of city populations. In 1860, the vast
majority of the people were agriculturists; in 1890, 36.1 per cent of
the population lived in towns of over 2500; in 1900, 40.5 per cent; in
1910, 46.3 per cent. In the forty years between the beginning of the
Civil War and the close of the century, Chicago had grown from 109,260
to 1,698,575; Greater New York from 1,174,779 to 3,437,202; San
Francisco from 56,802 to 342,782.
In the next place, the demand for labor stimulated immigration from
Europe. It is true there was a decline during the Civil War, and the
panic of 1873 checked the tide when it began to flow, but by 1880 it had
nearly touched the half-a-million mark, and by 1883 it reached the
astounding figure of 788,992. Almost all of this immigration was from
Germany, Ireland, Great Britain, and Scandinavian countries, less than
one in twenty of the total number coming from Austria-Hungary, Italy,
and Poland in 1880. On the Pacific coast, railway building and
industrial enterprise, in the great dearth of labor, resorted to the
Orient for large supplies of Chinese coolies.
This industrial development meant the transformation of vast masses of
the people into a proletariat, with all the term implies: an immense
population housed in tenements and rented dwellings, the organization of
the class into trades-unions, labor parties, and other groups; poverty
and degradation on a large scale; strikes, lockouts, and social warfare;
the employment of large numbers of women and children in factories; the
demand for all kinds of legislation mitigating the evils of the
capitalist process; and finally attacks upon the very basis of the
industrial system itself.
This inevitable concomitant of the mechanical revolution, the industrial
proletariat, began to make itself felt as a decided political and
economic factor in the decade that followed the War. Between 1860 and
1870, the railway engineers, firemen, conductors, bricklayers, and cigar
makers had formed unions. In the campaign of 1872 a party of Labor
Reformers appeared; and a few years later the Knights of Labor, a grand
consolidated union of all trades and grades of workers, came into
existence as an active force, conducting an agitation for labor bureaus,
an eight hour day, abolition of contract labor systems, and other
reforms, and at the same time engineering strikes.
In 1877 occurred the first of the great labor struggles in that long
series of campaigns which have marked the relations of capitalists and
workingmen during the past four decades. In that year, trouble began
between the management of the Baltimore and Ohio railway and its
employees over a threatened reduction in wages--the fourth within a
period of seven years. From this starting point the contest spread
throughout the East and Middle West, reaching as far as Texas. Inasmuch
as there was already considerable unemployment, the strikers saw that
only by violence and intimidation could they hope to prevent the
companies from moving their trains. Troops were called out by the
governors of several states and Federal assistance was invoked.
Pittsburgh fell almost completely into the hands of the strikers;
railway buildings were burned and property to the value of more than ten
million dollars destroyed. Everywhere the raw militia of the states was
found to be inefficient for such a serious purpose, and the superior
power of the Federal Government's regular troops was demonstrated. Where
railways were in the hands of receivers, Federal courts intervened by
the use of injunctions and the first blood in the contest between the
judiciary and labor was drawn.
The last, but perhaps most significant, result of the industrial
revolution above described has been the rise of enormous combinations
and corporations in industry as well as in transportation. An increasing
proportion of the business of the country has passed steadily into
corporate, as contrasted with individual, ownership;[10] and this
implies a momentous change in the rights, responsibilities, and economic
theories of the owners of capital. Moreover, it involves the creation of
a new class of men, not entrepreneurs in the old sense, but organizers
of already established concerns into larger units.
The industrial revolution had not advanced very far before an intense
competition began to force business men to combine to protect themselves
against their own weapons. As early as 1879 certain oil interests of
Cleveland, Pittsburgh, Philadelphia, and other centers had begun to
control competition by making agreements through their officers. Three
years later, they devised an excellent scheme for a closer organization
in the formation of a "trust." They placed all their stocks in the hands
of nine trustees, including John D. Rockefeller, who issued in return
certificates representing the proportionate share of each holder in the
concern, and managed the entire business in the interests of the
holders.
The trust proved to be an attractive proposition to large business
concerns. Within five years combinations had been formed in cotton oil,
linseed oil, lead, sugar, whisky, and cordage, and it was not long
before a system of interlocking interests began to consolidate the
control of all staple manufactures in the hands of a few financiers. Six
years after its formation the Standard Oil Company was paying to a small
group of holders about $20,000,000 annually in dividends on a capital of
$90,000,000, and the recipients of these large dividends began to invest
in other concerns. In 1879, one of them, H. M. Flagler, became a
director of the Valley Railroad; in 1882, William Rockefeller appeared
as one of the directors of the Chicago, Milwaukee, and St. Paul; in
1887, John D. Rockefeller was connected with a syndicate which absorbed
the Minnesota Iron Company, and about the same time representatives of
the Oil Trust began to figure in the Northern Pacific, the Missouri,
Kansas, and Texas, and the Ohio River railways. Thus a perfect network
of financial connections throughout the country was built up.
But on the whole the decades following the Civil War were characterized
by economic anarchy, _laissez faire_ with a vengeance. There were
prolonged industrial crises accompanied by widespread unemployment and
misery among the working classes. In the matter of railway management
the chaos was unparalleled.
Shortly after 1870 a period of ruinous competition set in and was
followed by severe financial crises among the railways. Passenger and
freight rate "wars" for the "through" traffic brought many roads to the
verge of bankruptcy, in spite of their valiant efforts to save
themselves by exorbitant charges on subsidiary branches where they had
no competition. Crooked financiering, such as the watering of stocks,
misappropriation of construction funds by directors, and the purchase of
bankrupt lines by directors of larger companies and their resale at
great advances, placed a staggering burden of interest charges against
practically all of the lines. In 1873 nearly half of the mileage in the
country was in the hands of court receivers, and between 1876 and 1879
an average of more than one hundred roads a year were sold under the
foreclosure of mortgages. In all this distress the investors at large
were the losers while the "inside" operators such as Jay Gould,
Cornelius Vanderbilt, and Russell Sage doubled their already
over-topping fortunes.
A very good example of this "new finance" is afforded by the history of
the Erie Railway. In 1868, Vanderbilt determined to secure possession of
this line which ran across New York State in competition with the New
York Central and Hudson River lines. Jay Gould and a group of operators,
who had control of the Erie, proceeded to water the stock and "unload"
upon Vanderbilt, whose agents bought it in the hope of obtaining the
coveted control. After a steeple chase for a while the two promoters
came to terms at the expense of the stockholders and the public. Between
July 1 and October 24, 1868, the stock of the Erie was increased from
$34,000,000 to $57,000,000, and the price went downward like a burnt
rocket. During the short period of Gould's administration of the Erie
"the capital stock of the road had been increased $61,425,700 and the
construction account had risen from $49,247,700 in 1867 to $108,807,687
in 1872. Stock to the amount of $40,700,000 had been marketed by the
firm of Smith, Gould, and Martin, and, incredible as it may seem, its
sale had netted the company only $12,803,059."[11]
The anarchy in railway financing, which characterized the two decades
after the War, was also accompanied by anarchy in management. A Senate
investigating committee in 1885 enumerated the following charges against
the railroads: that local rates were unreasonably high as compared with
through rates; that all rates were based apparently not on cost of
service but "what the traffic would bear"; that discriminations between
individuals for the same services were constant; that "the effect of the
prevailing policy of railroad management is, by an elaborate system of
secret special rates, rebates, drawbacks, and concessions, to foster
monopoly, to enrich favorite shippers, to prevent free competition in
many lines of trade in which the item of transportation is an important
factor;" that secret rate cutting was constantly demoralizing business;
that free passes were so extensively issued as to create a privileged
class, thus increasing the cost to the passenger who paid; that the
capitalization and bonded indebtedness of companies largely exceeded the
actual cost of construction; and that railway corporations were engaged
in other lines of business and discriminating against competitors by
unfair rate manipulations. In a word, the theories about competition
written down in the books on political economy were hopelessly at
variance with the facts of business management; the country was at the
mercy of the sharp practices of transportation promoters.
* * * * *
However, emphasis upon this great industrial revolution should not be
allowed to obscure the no less remarkable development in agriculture.
The acreage in improved farm lands rose from 113,032,614 in 1850 to
478,451,750 in 1910. In the same period the number of farms increased
from 1,449,073 to 6,361,502. Notwithstanding the significant fact that
"whereas the total population increased 21 per cent between 1900 and
1910, the urban population increased 34.8 per cent and the rural
population 11.2 per cent," the broad basis of the population during the
half a century here under consideration has remained agricultural, and
in 1913 it was estimated that at the present rate of transformation "it
will take a generation before the relative number of industrial wage
workers will have reached half of all bread winners."
_The Development of the West_
When Hayes was inaugurated, a broad wedge of territory separated the
organized states of the East from their sister commonwealths in the far
West--Oregon, California, and Nevada. Washington, Idaho, Montana,
Wyoming, Utah, Arizona, New Mexico, Dakota, and Indian Territory still
remained territories. Their combined population in 1870 was under half a
million, less than that of the little state of Connecticut. New Mexico
with 91,000 and Utah with 86,000 might, with some show of justification,
have claimed a place among the states because Oregon was inhabited by
only 90,000 people. The commonwealth of Nevada, with 42,000, was an
anomaly; it had been admitted to the Union in 1864 to secure the
ratification of the Thirteenth Amendment abolishing slavery.
This vast and sparsely settled region was then in the second stage of
its economic evolution. The trapper, hunter, and explorer had gathered
most of their harvest, and the ranchmen and cowboys with their herds of
cattle were roaming the great grazing areas, waging war on thieves, land
syndicates, and finally going down to defeat in the contest with the
small farmer who fenced off the fertile fields and planted his homestead
there. So bitter were the contests among the cattle kings, and so
extensive was the lawlessness in these regions during the seventies and
early eighties that Presidents were more than once compelled to warn the
warlike parties and threaten them with the Federal troops.
Of course, the opening of the railways made possible a rapidity in the
settlement of the remaining territories which outrivaled that of the
older regions. The first Pacific railroad had been completed in 1869;
the Southern Pacific connecting New Orleans with the coast was opened in
1881; and two years later the Atchison, Topeka, and Santa Fe was
finished, and the last stroke was put on the Northern Pacific,
connecting Chicago and Portland, Oregon. Thus four lines of
communication were established with the coast, traversing the best
agricultural regions of the territories and opening up the
mineral-bearing regions of the mountains as well. Lawless promoters fell
upon the land and mineral resources with that rapacity which Burke
attributed to Hastings.
* * * * *
Utah presented, in the eighties, the elements of an ordered and
well-advanced civilization and could with some show of reason ask for
admission as a state. The territory had been developed by the Mormons
who settled there, after suffering "persecution" for their religious
opinions and their plural marriages, in Illinois and Missouri.
Notwithstanding an act of Congress passed in 1862 prohibiting polygamy,
it continued to flourish. The territorial officers were nearly all
Mormons and the remoteness of the Federal authority prevented an
enforcement of the law. Consequently, it remained a dead letter until
1882, when Congress enacted the Edmunds law prescribing heavy penalties,
including the loss of citizenship, for polygamous practices. Hundreds of
prosecutions and convictions followed, but plural marriages were openly
celebrated in defiance of the law. At length, in 1887, Congress passed
the Edmunds-Tucker act authorizing the Federal Government to seize the
property of the Mormon church.
Meanwhile the gentile population increased in the territory; and at
length the Mormons, seeing that the country was determined to suppress
polygamy and that, while the institution was maintained, statehood could
not be secured, decided upon at least an outward acquiescence in the
law. After much discussion in Congress, and notwithstanding the repeated
contention that the Mormons were not sincere in their promises, Utah was
admitted as a state in 1895 under a constitution which, in accordance
with the provisions of the enabling act of Congress, forbade polygamous
and plural marriages forever. Thus the inhabitants of the new state were
bound by a solemn contract with the Union never to restore the marriage
practices which had caused them so much trouble and "persecution," as
they called it.
* * * * *
Although the Mormons were the original pioneers and homestead makers in
that great region, theirs was in fact the last of the middle tier of
territories to receive statehood. They had left the advancing frontier
line far behind. To the northward that advance was checked by the
enormous Sioux reservation in Dakota, but the discovery of gold in the
Black Hills marked the doom of the Indian rights. Miners and
capitalists demanded that the way should be made clear for their
enterprise and the land hungry were clamoring for more farms. Indeed,
before Congress could act, pioneers were swarming over the regions
around the Indian lands. Farmers from the other northern states,
Norwegians, Germans, and Canadians were planting their homesteads amid
the fertile Dakota fields; the population of the territory jumped from
14,181 in 1870 to 135,177 in 1880, and before the close of the next
decade numbered more than half a million. It was evident that the region
was destined to be principally agricultural in character, inhabited by
thrifty farmers like those of Iowa and Nebraska. Pretensions to
statehood therefore rose with the rising tide of population.
Far over on the western coast, the claims of Washington to statehood
were being urged. The population there had increased until it rivaled
Oregon and passed the neighboring commonwealth in 1890. In addition to
rich agricultural areas, it possessed enormous timber resources which
were to afford the chief industry for a long time; and keen-sighted men
foresaw a swift development of seaward trade. Between the Dakotas and
Washington lay the narrow point of Idaho and the mountainous regions of
Montana, now rapidly filling up with miners and capitalists exploiting
the gold, silver, coal, copper, and other mineral resources, and
rivaling the sheep and cattle kings in their contest for economic
supremacy.
After the fashion of enterprising westerners, the citizens of these
territories began to boast early of their "enormous" populations and
their "abounding" wealth, and to clamor for admission as states. Finding
their pleas falling upon unheeding ears, the people of the southern
Dakota took matters into their own hands in 1885, called a convention,
framed a constitution, and failing to secure the quick and favorable
action of Congress threatened to come into the Union unasked. Sober
counsels prevailed, however, and the impatient Dakotans were induced to
wait awhile. Meantime the territory was divided into two parts in 1887,
after a popular vote had been taken on the matter.
As had been the case almost from the beginning of the Republic, the
admission of these new states was a subject of political controversy and
intrigue at the national capital. During Cleveland's first
administration the House was Democratic and the Senate Republican.
Believing that Dakota was firmly Republican, the Senate passed the
measure admitting the southern region in 1886, but the Democratic House
was unable to see eye to eye with the Senate on this matter. In the
elections of 1888, the Republicans carried the House, and it was evident
that the new Congress would take some action with regard to the
clamoring territories. Montana was probably Democratic, and Washington
was uncertain. At all events the Democrats thought it wise to come to
terms, and accordingly on February 22, 1889, the two Dakotas,
Washington, and Montana were admitted simultaneously.
With less claim to statehood than any commonwealths admitted up to that
time, except Nevada, the two territories of Idaho and Wyoming were soon
enabled, by the assistance of the politicians, to secure admission to
the Union. Republican politics and the "silver interests" were
responsible for this step. Although neither territory had over 40,000
inhabitants in 1880, extravagant claims were made by the advocates of
admission--claims speedily belied by the census of 1890, which gave
Idaho 88,000 and Wyoming 62,000. At last in July, 1890, they were
admitted to the Union, and the territorial question was settled for a
time, although Arizona and New Mexico felt that their claims were
unjustly treated. It was not until seventeen years later that another
new state, Oklahoma, modeled out of the old Indian Territory, was added
to the Union. Finally, in 1912, the last of the continental territories,
Arizona and New Mexico, were endowed with statehood.[12]
_The Economic Advance of the South_
Notwithstanding the prominence given to the negro question during and
after Reconstruction, the South had other problems no less grave in
character to meet. Industry and agriculture were paralyzed by the
devastations of the War. A vast amount of material capital--railways,
wharves, bridges, and factories--had been destroyed during the conflict;
and fluid capital seeking investment had been almost destroyed as well.
The rich with ready money at their command had risked nearly all their
store in confederate securities or had lost their money loaned in other
ways through the wreck of the currency. Plantations had depreciated in
value, partly because of the destruction of equipment, but especially on
account of the difficulties of working the system without slave labor.
The South had, therefore, to rehabilitate the material equipment of
industry and transportation and to put agriculture on another basis than
that of slave labor. Surely this was a gigantic task.
The difficulties of carrying forward the plantation system with free
negro labor compelled the holders of large estates (many of which were
heavily mortgaged) to adopt one of two systems: the leasing or renting
of small plots to negroes or poor whites, or the outright sale in small
quantities which could be worked by one or two hands. This
disintegration of estates went forward with great rapidity. In 1860 the
average holding of land in the southern states was 335.4 acres; in 1880
it had fallen to 153.4; and in 1900 it had reached 138.2. The great
handicap was the difficulty of securing the capital to develop the small
farm, and no satisfactory system for dealing with this problem has yet
been adopted.
The very necessities of the South served to bind that section to the
North in a new fashion. Fluid capital had to be secured, in part at
least, from the North, and northern enterprise found a new outlet in the
reconstruction of the old, and the development of the new, industries in
the region of the former confederacy. The number of cotton spindles in
the South increased from about 300,000 in 1860 to more than 4,000,000 at
the close of the century; the number of employees rose from 10,000 to
nearly 100,000; and the value of the output leaped from $8,460,337
annually to $95,002,059. This rapid growth was, in part, due to the
abundance of water power in the hill regions, the cheap labor of women
and children, the low cost of living, and the absence of labor laws
interfering with the hours and conditions of work in the factories.
Even in the iron and steel industry, West Virginia and Alabama began to
press upon the markets of the North within less than twenty years after
the close of the War. In 1880, the latter state stood tenth among the
pig-iron producing states; in 1890 it stood third. The southern states
alone now produce more coal, iron ore, and pig iron than all of the
states combined did in 1870. The census of 1909 reports 5685
manufacturing establishments in Virginia, 4931 in North Carolina, 4792
in Georgia, and 3398 in Alabama.
The social effects which accompany capitalist development inevitably
began to appear in the South. The industrial magnate began to contest
with the old aristocracy of the soil for supremacy; many former slave
owners and their descendants drifted into manufacturing and many poor
whites made their way upward into wealth and influence. The census of
1909 reports more than thirty thousand proprietors and firm members in
the South Atlantic states, an increase over the preceding report almost
equal to that in the New England states. The same census reports in the
southern states more than a million wage earners--equal to almost two
thirds the entire number in the whole country at the opening of the
Civil War. The percentage of increase in the wage earners of the South
Atlantic states between 1904 and 1909 was greater than in New England or
the Middle Atlantic states.
With this swift economic development, northern capital streamed into the
South; northern money was invested in southern public and industrial
securities in enormous amounts; and energetic northern business men were
to be found in southern market places vying with their no less
enterprising southern brethren. The men concerned in creating this new
nexus of interest between the two regions naturally deprecated the
perpetual agitation of sectional issues by the politicians, and
particularly northern interference in the negro question. Business
interest began to pour cold water on the hottest embers which the Civil
War had left behind.
FOOTNOTES:
[7] The following brief chronology of inventions illustrates the
rapidity in the technical changes in the new industrial development:
1875--Bell's telephone in operation between Boston and
Salem.
1879--Brush arc street lighting system installed in San
Francisco.
1882--Edison's plant for incandescent lighting opened in New
York City.
1882--Edison's electric street car operated at Menlo Park,
New Jersey.
1885--Electric street railways in operation at Richmond,
Virginia, and Baltimore.
[8] For the keenest analysis of this social transformation,
see Veblen, _Theory of the Leisure Class_ and _Theory of
Business Enterprise_.
[9] See below, Chaps. VI and VII.
[10] See below, p. 234.
[11] Youngman, _The Economic Causes of Great Fortunes_, p.
75.
[12] By an act passed in August, 1912, Congress provided a
territorial legislature for Alaska, which had been governed
up to that time by a governor appointed by the President and
Senate, under acts of Congress.