Module: HST4314 Building the American Nation
By: Krutika Sharma
The aftermath of the Civil War saw the 14th amendment being passed in June 1868 which established guaranteed citizenship to all persons born in the United States, including ex-slaves. This was the first time citizenship was defined by the constitution and also overturned the infamous Dred Scott decision that could be considered to be the impetus for the rising anti-slavery movement as well as the Civil War. It is undeniable that capitalism has inexplicably, “for better or for worse, come to define the United States”.[i] The American economy and in turn, American capitalism for the majority years before the Civil War, was fuelled by cotton slavery which became a nationalised American project during the initial phase of industrialisation during the early 19th century. Thus, an economy that was being sustained by the slave trade soon found itself in a position that was now being forced to become reliant on other means as, in the law, civil and legal rights had been established for Black citizens. This also went against the commodification of slaves and effectively tore apart the foundations that formed the capitalist, entrepreneurial mindsets of the slave owners. Hence, the end of slavery had far-reaching consequences in all spheres of American society, in particular, marking a decisive shift in the social and economic spheres of society, which had a direct impact on the development of American capitalism. In this essay, the changes in American capitalism from being associated with the slave economy to being the powerful force of the Gilded Age will be explained by exploring transformations in the economy, the establishment of a new labour system based on contract and the creation of a nationalised American elite class.
Before it can be understood how the end of slavery changed American capitalism, the developments before the end of slavery that contributed to the founding of American capitalism must also be explored to help understand later changes. The economic progress and development of American capitalist thinking during the years of the industrial revolution and before the Civil War can essentially be attributed to one factor: cotton slavery. Given its prominence in causing an economic boom that was being generated by the southern slave system, the fact that “the capital stored in slaves exceeded the combined value of all the nation's railroads and factories" [ii] is not by any means surprising. The notion of these far-reaching consequences of the booming cotton industry being contained in the South can be dispelled by the ripples of prosperity evident in the North, especially within the early origins of Wall Street. This is also underpinned by the widely regarded myth associated with slavery that it was again, a ‘regional’ institution. However, it is now more commonly known that cotton slavery was a national American project and not confined to the South alone, with bankers in the North financing industrial development and also being dependent on profits from the cotton and slave economy, as well as slaves being used as collateral for loans.
Therefore, whilst it is evident just how imperative slavery was for the income being generated in the United States as a whole, the prominence of the "Cotton is King" reality that defined the American economy before the Civil war, also feeds into the development of capitalist thinking that emerged from the ‘market revolution’ phenomenon. This also mirrored the exponential growth in the reconstruction period post the Civil War. The “spirit of enterprise” that pervaded American society was perhaps a consequence of the newfound liberty that came with the American Revolution and this gave rise to greater individual competitiveness- unearthing capitalist thinking as a natural by-product of this individual liberty.[iii] But, arguably this “market revolution” was most strongly experienced by the slave owners more specifically and perhaps even before America as a nation as a whole. This is because, in one way, slave masters always saw their slaves as commodities and as part of a wide-scale trading market, thus representing a shift towards more capitalist thinking with slave owners striving for their slaves to work even more efficiently to gain the highest monetary value from their plantations. Therefore, this highlights the definitive relationship between slavery and American Capitalism and its influence in creating the economic roots of the independent American Nation.
Now that we have looked at the relationship between slavery and American Capitalism, we can examine the impacts of the end of slavery on American Capitalism. It can be understood that the abolition of slavery threatened to hinder the capitalist drive that had been sparked amongst not only slave owners but other industrialists in the South. This meant that there was a need for another focus to sustain and fuel the economy. The new focus was found in developing the American industrys opposed to developing the agrarian economy. According to economists Andrew Atkeson and Patrick J. Kehoe, the inventions during the years of 1860 and 1900 " launched a transition to a new economy, a period of about 70 years of ongoing, rapid technological change." [iv] Additionally, the Civil War marked a shift away from cotton production and agrarian production towards a new political economy orientated towards domestic industrialisation such as steel production, railroad, and coal production.
This meant that the Americans adopted the policy of protectionism as after the Civil War, there was a shift from free trade advocated by the South to a policy of high tariffs and protectionism which meant that American manufacturers did not have to compete with more efficient European imports and as a consequence, could nurture American industry. This in turn led to America becoming the largest industrial economy by World War One. Therefore, American Capitalism was now based on ensuring that domestic industries within America prospered, in contrast to pre-civil war, when Capitalism mainly revolved around the economic implications and consequences that followed the cotton slave economy.
Furthermore, the end of slavery theoretically marked a legal end to the unequal relationship between the slave master and slave that formed the capitalist spirit of the pre-Civil War years. When looking at the implications of capitalism even in the 21st century, it can be suggested that capitalism is embedded within social inequality, which in the case of pre-Civil War America, was defined by the relationship between the slave owners (that came to regard themselves as entrepreneurs) and the slaves. However, with slaves being regarded as free citizens, we have established that this aided the development of industry in areas other than the agrarian industry which led to the development of a new stratum of society that was immensely wealthy. This can be considered to be a characteristic of the popularised Gilded Age era, which was a term coined by Mark Twain and inspired by the book with the title of the same name. The Gilded Age is understood to be a period where “ bloodshed over slavery and civil rights in the post-war South were replaced by new battles- both political and literal- between capital and labor.”[v] Therefore, the social inequality that came with this new facet of capitalism was blatantly evident in the making of industrial titans which included Carnegie, Alva Vanderbilt and J.P Morgan,[vi] which in 1890 culminated in “11 million of the nation’s 12 million families earn[ing] less than $1200 per year; of this group, the average income was $380, [which was] well below the poverty line”.[vii] Not only this, but American elites in the 1870s and 1880s displayed their wealth in ostentatious ways as elite women became chief architects of this social change. For example, Alva Vanderbilt held the lavish royal dress-up events after her chateau was built to host the upper class of New York Society and this garnered widespread press attention; it was a great departure from the modest republican culture of the past. Hence, this meant that instead of capitalism being associated with wealth that was held by regional slaveowners it was now being associated with the American industrialists that formed a new, nationalised upper class and heralded a new form of capitalism that prioritised presenting wealth and highlighting the discrepancies between the rich and the poor.
Also, it can be argued that the end of slavery also marked a change in the way the wealthy strata of American society asserted their views about capitalism and wealth by depicting capitalism and inequality as something natural. Before the abolishment of slavery, it was clear that slave owners justified their right to economic dominance as well as their capitalist thinking by using racial, intellectual and social discrimination that exploited the slaves. They often referred to the slaves as subhuman and being intellectually inferior, thus regarding them incapable of being anything else other than a slave. However, this new upper class, unlike the slave owners, justified their economic superiority and capitalist tendencies by not relying on more obvious forms of discrimination but instead on aspects of Social Darwinism. The concept of Social Darwinism followed the theme of the lazier faire approach advocated by wealthy businessmen as they started to become more wary of political involvement in the market, thus Social Darwinism applied natural selection to society. The concept suggested that society was defined by a struggle for survival and the best suited survived because of their virtues which in essence meant that the American elites believed inequality wasn’t a social problem, it was just the law of nature.
In economics, this meant that "businesses were expected to do whatever was necessary to survive. Only by defeating their competitors could they hope to prosper.” [viii] As well as this, a sense of corruption infiltrated the economics that carried the Gilded Age. This is also evident in the way large cooperation’s such as Carnegie Steel were using corrupt methods to attain favourable deals and railroads also held monopolies on goods transportation which meant that many farmers were put in unfavourable positions in terms of having to accept discriminatory rates.[ix] To put this inequality further into context, the President of the Standard Oil company, John D. Rockefeller claimed that his amassed fortune was “merely [due to] a survival of the fittest… the working out of a law of nature and a law of God”.[x] Therefore all of this indicates how the association of wealth with social Darwinism changed American capitalism as unlike before, it depicted the concept of capitalism to be something that had naturally developed and created distinctions within society- with the new American bourgeoise somewhat exploiting the working classes using forms of discrimination that they believed were different from those used to justify slavery. In contrast when slavery was present, capitalism was thought to be a reward of being racially and intellectually superior, which also adds to the fact that American capitalism had created a greater divide within American society during the reconstruction era more than ever seen before.
Another way American Capitalism changed was how it became focussed on a contractual relationship between vagrants (that mainly consisted of ex-slaves) and employers. Before the Civil war, as discussed before, American capitalism was centred around the slave economy and the historian Nicole Etheson argues that for the Republicans the free labour system (working for wages) meant that they saw contracts as a form that encompassed agreements between the employer and the employee which were beneficial for both parties as they could express the terms and things they expected from each other. [xi] However, although it could be argued that in theory slavery was abolished, in practice this was not the case, as historian W.E.B Du Bois wrote, “The Slave went free; stood a brief moment in the sun; then moved back again toward slavery”. [xii] Free labour was a concept that employers in the South and North could not simply comprehend and they refused to believe that they “could no longer use physical coercion on their workers” [xiii] This sentiment is also explored by the historian Amy Dru Stanley who also highlights how the capitalist thinking in this period, whilst being somewhat similar to the thinking present before the Civil War, was also in a way, changed. She argues that although the “object of the legislation… was not to set beggars in bondage, but to hold them fast within the world of exchange”, [xiv] the fact that rich philanthropists were against the establishment of the free welfare state as they believed it would fuel their “natural idleness” and enslave them, mirrors some of the beliefs of Social Darwinism explored previously. Therefore, even though the system of contract labour aimed to place ex-slaves in a somewhat beneficial relationship with their owners, thus changing American capitalism to be structured on a new system of free labour, in reality, this was hardly the case. Perhaps the only change that can be seen in American capitalism is the idea that Amy Dru Stanley alluded to, which was that American capitalism was being justified by greater discriminatory means other than the racial superiority slave owners claimed and was powered by rich industrialists, not just regional slave owners.
To conclude, it is more than evident that American capitalism changed between 1865-1896; its transformation from the years of the industrial revolution to the era post the Civil War is undeniable. Despite contract labour essentially reverting to the same terms of force and coercion that defined slavery, it is still valid to argue that the end of slavery marked a decisive change in American capitalism as it dictated changes in the economy which saw, a new capitalist model being based on domestic industrialisation. It also drove social changes that gave rise to Gilded age and saw the creation of a new elite upper class that defended the deepening social inequality associated with this new capitalism using notions of Social Darwinism.
Notes: [i] S. Beckert, ‘History of American Capitalism’ in E. Foner and L. McGirr (eds), American History Now, (Philadelphia: Temple University Press, 2011), pp.314-35. [ii] S. Beckert, and S. Rockman, ‘Introduction.: Slavery’s Capitalism’ in S. Beckert and S. Rockman (eds), Slavery's Capitalism: A New History of American Economic Development, (Philadelphia: University of Pennsylvania Press, 2016) [iii] J. L. Larson, ‘Foreword: The Market Revolution in Early America: An Introduction’, OAH Magazine of History, 19:3, (2005), pp. 4-7. [iv] A. Atkeson and P.J. Kehoe, ‘The Transition To A New Economy After The Second Industrial Revolution’, NBER Working Paper Series (2001), pp.2-35. [v] M. E. Stanley, ‘The Gilded Age’ Journal of American History, 105:3, (Oxford: University Of Oxford Press, 2018), pp. 772–774, https://doi.org/10.1093/jahist/jay435 [accessed 4th January 2020] [vi] Ibid, pp.772 [vii] 'Andrew Carnegie: The Richest Man In The World The Gilded Age', American Experience. https://www.pbs.org/wgbh/americanexperience/features/carnegie-gilded/ [accessed 4th January 2020] [viii] ‘Politics in the Gilded Age The Age of Political Machines’, Sage American History, http://sageamericanhistory.net/gildedage/topics/gildedagepolitics.html [Accessed 4th January 2020] [ix] Ibid. [x] ‘The Two Darwinisms, The American Prospect Ideas, Politics and Power, https://prospect.org/columns/two-darwinisms/ [ Accessed 4th January 2020] [xi] N. Etcheson, ‘Reconstruction and the Making of a Free-Labor South’ Reviews in American History, 37:2 (2009), pp. 236-42. [xii] ‘Reconstruction vs. Redemption, Natural Endowment For The Humanities, https://www.neh.gov/news/reconstruction-vs-redemption [ accessed 4th January 2020] [xiii] N. Etcheson, ‘Reconstruction and the Making of a Free- Labor South’, p.238. [xiv] A.D. Stanley, ‘Beggars Can’t Be Choosers: Compulsion and Contract in Postbellum America’, The Journal of American History, 78:4, (Oxford: Oxford University Press, 1992) p.1293. Bibliography ‘Andrew Carnegie: The Richest Man In The World The Gilded Age’, American Experience. https://www.pbs.org/wgbh/americanexperience/features/carnegie-gilded/ [accessed 4th January 2020] Atkeson, A. and Kehoe, P.J. ‘The Transition To A New Economy After The Second Industrial Revolution’, NBER Working Paper Series (2001) Beckert, S. ‘History of American Capitalism’ in E. Foner and L. McGirr (eds), American History Now, (Philadelphia: Temple University Press, 2011) Beckert, S. and Rockman S. ‘Introduction.: Slavery’s Capitalism’ in S. Beckert and S. Rockman (eds), Slavery's Capitalism: A New History of American Economic Development, (Philadelphia: University of Pennsylvania Press, 2016) Etcheson, N. ‘Reconstruction and the Making of a Free-Labor South’ Reviews in American History, 37:2 (2009) Larson, J. L. ‘Foreword: The Market Revolution in Early America: An Introduction’, OAH Magazine of History, 19:3, (2005). ‘Politics in the Gilded Age The Age of Political Machines’, Sage American History, http://sageamericanhistory.net/gildedage/topics/gildedagepolitics.html [Accessed 4th January 2020] ‘Reconstruction vs. Redemption, Natural Endowment For The Humanities, https://www.neh.gov/news/reconstruction-vs-redemption [ accessed 4th January 2020] Stanley A.D. ‘Beggars Can’t Be Choosers: Compulsion and Contract in Postbellum America’, The Journal of American History, 78:4, (Oxford: Oxford University Press, 1992) Stanley, M. E. ‘The Gilded Age’ Journal of American History, 105:3, (Oxford: University Of Oxford Press, 2018), https://doi.org/10.1093/jahist/jay435 [accessed 4th January 2020] ‘The Two Darwinisms, The American Prospect Ideas, Politics and Power, https://prospect.org/columns/two-darwinisms/ [ Accessed 4th January 2020]
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