Rise of the United States
THE RISE OF THE UNITED STATES
In this section, you should learn to identify and discuss the following names
- The Spanish-American War, McCarthyism, Greenbacks, Inflation, The Erie
Canal, The Progressive Era, The Gilded Age, Belle epoch, Walt Whitman Rostow,
The Stages of Economic Growth, The "Take-Off Stage".
In addition, you should have considered the following issues and be able to
- How did the United States of the nineteenth century differ from twentieth-
- In what sense had America become an imperial power?
- How did the federal government's policies in paying off the national debt
caused by the Civil War concentrate capital?
- How did the geography of the United States initially impede its economic
- What is the basic economic proposition of W.W. Rostow's Stages of
- Why did the effort involved in reaching "the take-off stage" not cause in
America the sort of class warfare or basic changes in the philosophy of
government that occurred elsewhere in the world?
Although we have not covered these topics in great detail, you should
although be thinking about them:
- How is the present national debt of the United States being "paid off"?
Does this seem to you to be a "fair" way to go about things?
- Why did steam locomotives eventually win out over riverboats and canals in
providing the transportation infrastructure for American economic development?
What general principle underlies this particular event?
- It has been suggested that imperialism is a necessary element of the
growth of an industrial power. Is this accurate? And, if it is an accurate
statement, why should this be the case?
American History textbooks and the American historians who write them usually
break the history of the United States into two parts, with the Civil War
marking the division. If I were teaching a course in American History, I would
divide the course at 1898 rather than 1865. In fact, I have taught American
History, and I have in fact divided the course at 1898 rather than 1865. This
was in another place and another time. It took place back in the 1950's, a
period marked by a witch-hunt for "communists" or "communist sympathizers" (they
called them comsimps) that went under the general name of
McCarthyism. Senator Joseph McCarthy (R-Wisconsin) headed a senate
committee investigating "unAmerican activities," and he became the most familiar
of a number of people trying to root out commies and comsimps from influential
positions in our society. The people who needed to be rooted out included
librarians, school teachers, dentists, film actors, radio comedians, and almost
Back to the point, however. I was asked by the administration of the school
to explain the "suspicious" division of my course. Being a graduate student
without a PhD or tenure, I had no protection against this sort of inquisition
and could have been fired if the administrators did not like the reasons I gave
them. I was not being paid so much that it made much difference, one way or
another, and so I simply gave them my reasons.
It seemed to me that, from 1776 to 1898, the United States was primarily an
agrarian country concerned with settling the land that had come under its
control. Its disputes were primarily internal and by far the greatest part of
its immigrant population came from northwestern Europe for the purpose of
farming. It was one of the few liberal republics to have maintained its
independence and commitment to democracy, and it served as an ideal and support
for liberal and democratic movements throughout the world. The rulers of the
kingdoms and empires of Europe looked upon the United States as a source of "Red
In 1898, however, the industrial development of the United States and its
exploitation of its natural resources had reached such a level that it could
complete for world markets against the great industrial powers of Europe. In
that same year, and most suddenly, the United States began building an overseas
empire of its own. The Spanish-American War of 1898 was supposedly
fought to assist the people of Cuba in gaining their independence of a cruel and
tyrannical Spanish empire, but the United States took other Spanish possessions
in the process, including Puerto Rico, some assorted Pacific islands, and the
Philippines. In the same year, America annexed the kingdom of Hawaii and divided
up the island of Samoa with Great Britain and Germany. In 1899, the people of
the Philippines, who had thought that the Americans had come to liberate them,
rebelled, and the American army and navy crushed the rebels and their hopes for
freedom. This shocked and sickened many Americans of the time, but it was done.
The United States had been transformed from an agrarian nation based on
democratic ideals into an industrial and imperialist power.
It seemed to me that this was perhaps the watershed in American history, the
time at which an "old America" had passed away and a "new America" was born.
Without going into the matter too deeply, it would seem that American industrial
development was the underlying cause of this transformation, and one might ask
how this industrial development (most which took place between 1865 and 1885)
had occurred, and how it had been paid for. There are many possible answers to
this question, and they are all true to a greater or lesser degree.
In the first place, the Civil War had done a great deal to develop Northern
industries. Many steel mills, tool shops, ship yards, and the like were
established to fill the military needs of the North and were easily converted by
their owners to peace-time production. The federal government had paid for this
sort of thing by issuing greenbacks, paper money that could be
used as real money because the government promised that anyone who wished could
trade the greenbacks in for gold or silver money. This amounted to a national
debt, and the government began to pay it off by restricting the coining of new
gold and silver money and by retiring the paper currency. This meant, of course,
the government took in taxes in the form of paper money which it then burned.
This policy had the effect of reducing the amount of money in circulation. It
was the equivalent of the modern Federal Reserve Board raising the prime lending
rate to the point where the nation would be always on the edge of a recession.
For the banks, however, the government's policy was one that steadily increased
the value of the gold and silver money they owned. Money was concentrated in the
hands of a few very wealthy men, such as J. Pierpont Morgan and Cornelius
Vanderbilt, who then invested it in projects of industrial development. By 1898,
the war debt was substantially retired, and the discovery of gold in the
Klondike began to increase the national "wealth" in the international currency
of gold bullion.
I would suppose that our present (1993-1998) economic boom is the result
of a similar process. People are always very upset about the size of the
national debt and national deficit spending over the long run, without paying
too much attention to the dynamics of the matter. Consider that the national
debt reached about three trillion dollars (that's three thousand billion
dollars) in 1990. That's a lot of money, of course. But inflation
has been "under control" for the past eight years, averaging only about three
percent annually. That adds up, however, and means that the value of the dollar
has decreased almost twenty-five percent during those eight years. That means
that the three trillion dollar national debt of 1990 is now worth only about two
and a quarter trillion dollars. That's still a lot of money, but it doesn't take
much of a mathematician to figure out that the immense national debt is melting
away. High finance is funny.
At any rate, people throughout the world who owned gold back in the 1870's
and 1880's recognized that the United States was a good place to invest it.
American companies could always get credit at relatively reasonable interest
rates, since the lenders knew that the money that would be repaid would be worth
significantly more than the same amount of money at the time that they lent it.
It was this influx of foreign capital that made possible the great burst of
railway building that changed the face of the nation and made possible an
equally great burst of industrial development.
You see, the United States consists of three regions, each isolated from its
neighbor. The rivers of the East run into the Atlantic and it is isolated from
the Midwest by the Appalachian Mountains. The Midwest consists of the great
basin of the Mississippi River and its tributaries, and its water-routes run to
the Gulf of Mexico. The rivers of the West run to the Pacific Ocean, and it is
isolated from the Midwest by the Rocky Mountains. Until the nineteenth century,
water transport was the only economical way of shipping goods for any long
distance and water transport between the regions of the United States was
economically unfeasible. The development of the steamboat in the early years of
the nineteenth century made it possible to use inland waterways to the fullest,
and every developed country, including the United States, began building canals
to link those waterways and regions. The Erie Canal, joining the
Hudson River and Lake Erie, was the first route to unite the East and Midwest.
It was an immense work, but nothing like that which would be required to join
the West and Midwest. In the long run, this proved to be unnecessary. The
reliability and freight capacity of steam-driven locomotives had been improving
steadily and, by the close of the Civil War, the paddle-wheel river boats and
expensive canals were a thing of the past. Both American and foreign capital was
poured into railway building, and the results were quickly apparent.
One result was that it was now possible to ship iron ore from Minnesota to
Pennsylvania where there were great deposits of anthracite coal. This was the
foundation upon which Andrew Carnegie's immense steel empire was built. Another
result was that it was now possible to ship live cattle from the plains of
Kansas and Texas to great slaughter-houses and canneries in Chicago and then to
ship the products of the canneries throughout the nation and world. In order to
settle the Continent and to create this new industrial economy, the United
States needed a greater population than it had, and so the promise of jobs and
freedom drew a new wave of immigrants. Coming from southern and eastern Europe,
the ethnic makeup of the country was changed significantly. Other changes of
similar magnitude were also taking place. America was becoming an economic
empire well before it became a political empire as well.
This period of American History, from about 1875 to about 1900, is often
called The Progressive Era or The Gilded Age, and
corresponded with the late Victorian era in Great Britain and the Belle
epoch in France. In a way, they were the fruit of a century of invention
and material progress, some eighty years in which the European nations had
enjoyed relative peace, and some eighty years in which the conservative alliance
formed at the Congress of Vienna in 1815 had managed to keep wealth and power in
the hands of the traditional elites.
In the United States, however, it was an era of social turmoil in which the
American Trade Union Movement was born, the Socialist Party was established,
local reform movements proliferated, and in which violent and deadly clashes
grew increasingly common. A government long committed to protecting the welfare
of business found itself facing the threat (and, in some areas, the reality) of
popular revolt, and began to turn its attention to long-overdue measures to
protect the workers from their employers and the public at large from American
Why should the maturation of the Industrial Revolution in America have been
accompanied by what might very well have become a bitter class war? Perhaps
because the American public, including the working class, had been paying for
the nation's economic growth, but had not been allowed much of a share in it.
Back in the 1950's, an economist by the name of Walt Whitman
Rostow published an interested work entitled The Stages of
Economic Growth. His basic proposition was that economic growth is not
gradual or uniform, but historically follows a well-defined path. There must be
a period of capital accumulation and development of infrastructure. Whatever
part of the product of the working class is turned into capital or economic
infrastructure cannot be available to them for consumption. Consequently, the
working class and consumers generally must pay for this capital accumulation and
infrastructure development. Eventually, however, the level of capital
accumulation and infrastructure development reach a level that Rostow called
the take-off stage, and like the airplane that Rostow had in mind,
the economy takes off.
By and large, this formulation seems to be valid, but it means that, in a
capitalist economy, the working class pays for the creation of capital that is
kept in private hands. One might ask why the working class accepts such a
system. Sometimes, of course, they don't and there is a class war. Sometimes,
workers are kept so suppressed that they are unable to protest, and, at other
times, the attention of the working public is diverted by one means or another.
Sometimes, the government works to keep an equitable division of wealth among
the various classes. And, sometimes, the capitalists accept a measure of civic
responsibility that earns them popular respect.
That seems to have been the case in the United States. Many, although
certainly not all, of the wealthy accepted the proposition that they were
stewards of the nation's wealth and that they should give as well as take.
Stanford, Vanderbilt, Carnegie-Mellon, Rockefeller Universities and others;
Pulitzer Prizes, Carnegie Public Libraries, the Ford and Rockefeller
Foundations, as well as hospitals, scholarships, museums, parks, and all sorts
of other public amenities bear the names of the great industrialists of the late
nineteenth century in America. I suspect that it was this, more than any other
single thing, that saved the United States from the sort of class warfare that
occurred in many places elsewhere in the world.
Oh, yes. Back to the administrators and my course. I met with three gentlemen
and started to explain my reasoning but didn't get any further than the point
about anti-imperialism. They were interested in that and started talking among
themselves about William Jennings Bryan on the matter of imperialism, Alfred
Thayer Mahan's influence on Theodore Roosevelt, steam-powered ships and the need
for coaling stations, and so forth. After a while, one of them noticed that I
was still sitting there and told me that I could leave if I wished. As I closed
the door behind me, I could see that they had gotten some coffee and were still
talking. They may still be there after all of these years, for all I know, still
drinking coffee and still talking about 1898.
We have covered so much territory and touched on so many ideas in this
particular essay that is difficult to choose sites that would give you an
overview of the material. Consequently, I'll suggest only a couple of required
sites to visit, and you might use whatever spare time you have available to
browse through the recommended sites.
We'll let a site in the United Kingdom, The The Steel
Industry, stand for all of the heavy industries that contributed to the
growth of the United States economy during the nineteenth century, and Electricity represent the
industry that came to dominate the twentieth century. A visit to Ellis Island will serve to indicate the
flood of immigrants who contributed to the nation's growth.
The story of the violent attempts of coal miners to organize and gain a
better life for themselves is told (from the mine-owners' point of view) in The
Molly Maguires, while the growing fear of social unrest is typified in the
events discussed in The
Haymarket Massacre. Some idea of the clashes between owners and workers is
conveyed by a new site constructed by a major in our own Department of History
in The Pullman
Strike. The aversion of many Americans to the new imperial stature of the
United States is eloquently presented by one of the greatest speakers of his
day, William Jennings Bryan, speaking on Imperialism
This text was produced by Lynn H. Nelson, Department of
History, University of Kansas.
31 March 1998