Professor Roxalyn Baxandall

Stephen Cheng

US Labor History

Due: May 16, 2012 (final research paper)

The Causes and Significance of the Gilded Age

Introduction

In terms of the United States of America, along with other countries such as

Germany after its unification in 1871, the late nineteenth century was a period of rapid

and advanced economic development. Among other processes and trends associated with

such development, corporations established themselves, financial institutions such as

banks and stock and bond markets took on more crucial economic roles, a socioeconomic

class system specific to capitalism took shape, and a gap between wealthy and destitute

widened. This period in the history of the United States was and still is commonly

referred to as the “Gilded Age,” as christened by the novelist Mark Twain.

The Gilded Age represented the height of capitalist economic development in the

US as demonstrated by aforementioned examples like the burgeoning rich-poor gap (a

sign of the general law of capitalist accumulation at work). It was a product of the

conclusion of the American Civil War, which redefined the US not just politically but

also economically (i.e. the destruction of slavery, etc.), thus allowing for a transition from

an unevenly developed and distorted form of capitalism (a slave labor force in the

southern US which grew cash crops for plantation owners versus merchant and industrial

capital that tended to employ wage laborers in the northern US) to a more “pure” and

“complete” form of capitalism in the later nineteenth century.

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Capitalism in the nineteenth century US entailed extensive industrialization

which, furthermore, entailed a socioeconomic group of people who must work for

monetary compensation (i.e. wages) in order to survive. The industrial revolution, along

with the construction of a national railroad system and the rapidly growing prominence of

corporations and finance, represented the height of capitalist economic development at

this point in US history. Yet the roots for these trends that were characteristic of an

industrial form of capitalism in the country are to be found in the evolution of

socioeconomic relationships during the eighteenth and nineteenth centuries.

The beginnings of capitalism in the United States are associated with changes in

agricultural socioeconomic relationships that simultaneously occurred. In the context of

English history, historians Ellen Meiksins Wood and Robert Brenner attribute the earlier

development of capitalism in England to the fundamental shift in the nature and structure

of agriculture. In rural England, the relationship between noble and serf gave way to a

“landlord/capitalist tenant/wage laborer structure,” thus demonstrating a general turn

from feudalism to capitalism.1 A discussion of the origins of capitalism in England is

necessary in order to understand the agricultural origins of the transition from a pre-

capitalist and/or non-capitalist socioeconomic system to a capitalist one. Later on, such

an understanding, originally grounded in the history of England, can be applied to the

history of the US.

English economic history: An analytical detour

In general terms, Wood writes,

1 Robert Brenner, “Agrarian Class Structure and Economic Development in Pre-Industrial Europe,” in T.H. Aston and C.H.E. Philpin (editors), The Brenner Debate: Agrarian Class Structure and Economic Development in Pre-Industrial Europe (Cambridge University Press, 1987) 48-49.

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The capitalist system was born in England. Only in England did capitalism emerge, in the early modern period, as an indigenous national economy, with mutually reinforcing agricultural and

industrial sectors, in the context of a well-developed and integrated domestic market.2

In this capsule statement, Wood not only asserts that England was the birthplace of

capitalism but also mentions key and relevant features of the aforementioned “capitalist

system” such as the “indigenous national economy,” “mutually reinforcing agricultural

and industrial sectors,” and a “well-developed and integrated domestic market.” Implied

in the statement is that a capitalist socioeconomic system necessarily establishes itself

and operates within a national context (a statement that is borne out today given that

virtually every nation-state in the world has a capitalist economy), needs a domestic or

“home” market, and requires agricultural and industrial sectors that assist each other in

their activities.

Such factors are important for understanding why Wood and Brenner hold the

view that capitalism had its beginnings in English agriculture. Without a socioeconomic

revolution in the countryside in which feudal relationships transform into capitalist

relationships, there cannot be a “well-developed and integrated domestic market” and

“mutually reinforcing agricultural and industrial sectors” that serve as the foundations for

a functioning capitalist system. Since these foundations can only take shape, exist, and

operate after the establishment of an agrarian form of capitalism, the process that

contributes to the development of the domestic market, coexisting and cooperating

agricultural and industrial sectors, and capitalism as a whole is essential in terms of

understanding the origins of capitalism. This process is an essential part of Brenner’s

thesis.

2 Ellen Meiksins Wood, The Pristine Culture of Capitalism: A Historical Essay on Old Regimes and Modern State, (London, New York: Verso, 1991) 1.

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The thesis on the English origins of capitalism originates from the “Brenner

Debate” in which Brenner argued,

[B]y the end of the seventeenth century, English landlords controlled an overwhelming proportion of the cultivable land – perhaps 70 – 75 per cent – and capitalist class relations were developing as nowhere else, with momentous consequences for economic development. In my view, it was the emergence of the ‘classic’ landlord/capitalist tenant/wage-labourer structure

which made possible the transformation of agricultural production in England, and this, in turn, was the key to England’s uniquely successful overall economic development. With the peasants’ failure to establish essentially freehold control over the land, the landlords were able to engross, consolidate and enclose, to create large farms and to lease them to capitalist tenants who could

afford to make capital investments.3

According to Brenner, the “landlord/capitalist tenant/wage laborer structure” that serves

as the core relationship for an agrarian capitalist system arose due to the inability of serfs

or former serfs to become free-holding farmers within the countryside. Had a system of

“freehold control” been established over the land, each farmer or farming household

probably would have had a tract of land which would allow for adequate self-subsistence

as opposed to a division of labor centered around growing crops for the goal of exchange

for other goods (in the case of the latter, signs of the beginnings of commodity production

and exchange). But as Brenner notes, no such effort by farmers to control the land as

free-holders succeeded.

Instead, landlords were able to establish control via enclosure over large tracts of

land and thus force ordinary farmers off the land. Consequently, these farmers either

became rent-paying tenants or wage laborers in the urban communities. Since enclosure

of the land meant that landlords held control over vast amounts of land, the land could

3 Robert Brenner, “Agrarian Class Structure and Economic Development in Pre-Industrial Europe,” in T.H. Aston and C.H.E. Philpin (editors), The Brenner Debate: Agrarian Class Structure and Economic Development in Pre-Industrial Europe (Cambridge University Press, 1987) 48-49.

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thus be used for purposes such as commodity production. In the case of these landlords

who acquired numerous acres of land, such an opportunity appeared in form of the

raising of sheep for wool. The wool was a necessary raw material for the growing textiles

industry. Therefore landlords could produce and sell wool and thus, in concrete terms,

capitalism began in rural, feudal-turning-capitalist England as peasants found themselves

forced off the land and sheep took the place of people. Likewise, Barrington Moore, Jr.

writes to such effect,

Propelled by the prospect of profits to be made either in selling wool or by leasing their lands to those who did and thereby increasing their rents, the lords of the manors found a variety of legal and semilegal methods to deprive the peasants of their rights of cultivation in the open

fields and also their rights to use the common for pasture of their cattle, the collection of wood for fuel, and the like” and “The yeomen were the chief force behind peasant enclosures. Directed

toward land for tillage, these enclosures were quite different from those of the lordly sheep farmers. They were mainly a form of nibbling away at wastes, commons, and very frequently at

the fields of neighbors, including landlords who did not keep a sharp lookout to defend their rights. At other times peasant enclosures were mutual agreements to consolidate plots and

abandon the system of strips in the open field. Within the limits of their situation, the yeomen too were eager to break away from traditional agricultural routines and try new techniques in the

hope of profit […] Those who promoted the wave of agrarian capitalism, the chief victors in the struggle against the old order, came from the yeomanry and even more from the landed upper

classes. The main victims of progress were as usual the ordinary peasants.4

In the first volume of Capital: A Critique of Political Economy, Karl Marx also refers to

the land enclosures as a historical example in a series of chapters devoted to “primitive

accumulation,” a violent, bloody, and repressive socioeconomic process which allows for

the rise and development of capitalism.5

From the English historical context to the US historical context

In terms of the US during the eighteenth and nineteenth centuries, historian

Charles Post writes about similar socioeconomic developments. Post argues that while

the antebellum northern US was capitalist, the antebellum southern US was not

4 Barrington Moore, Jr., Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World, (Boston: Beacon Press, 1966) 9-11.5 Karl Marx. Capital: A Critique of Political Economy (volume one), (Penguin Books, 1990) 873-913.

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capitalist.6 The existence of these fundamental socioeconomic differences between these

two regions of the country led to the outbreak of the American Civil War. Post writes

about the build-up of political, social and economic pressure and hostility which led to

the beginning of the war in 1861,

By the 1840s, the continued expansion of plantation slavery threatened the further development of capitalism in the US, which rested on the expansion of agrarian petty-commodity production. The growing contradictions between the social conditions of the development of capitalism and slavery set the stage for the sharp class conflicts that culminated in the Civil War. Sharpening

conflicts between manufacturers, merchants, farmers, planters and slaves in the 1840s and 1850s over a variety of issues – but especially the class structure of western expansion – produced a political crisis: the collapse of the bi-sectional Whig and Democratic parties, the increasing

sectionalization of politics, and the secession crisis that culminated in four bloody years of Civil War. The outcome of the war and nearly a dozen years of tumultuous struggles during

Reconstruction ultimately secured the social and political conditions for industrial capitalist dominance in the Gilded Age.7

The end of the American Civil War pointed to a transformation of the US into an entirely

capitalist nation-state.

The development of capitalism in the late nineteenth century US: The American Civil War and the Reconstruction

The causes for the Gilded Age period of US history originate from the way the

American Civil War occurred and concluded. The importance of that conflict lies in its

origins and conclusions. The war was a definitive example of the uneasy and doomed

coexistence of two fundamentally incompatible socioeconomic structures in the

antebellum US. The conclusion of the American Civil War with the victory of the Union

meant that the US path towards complete industrial capitalist development was set. In

6 Post situates the agrarian beginnings of capitalism in the antebellum northern US in Charles Post, “The agrarian origins of US capitalism: The transformation of the northern countryside before the civil war,” Journal of Peasant Studies 1995: 389-445. Concerning the antebellum southern US, Post writes,“Plantation slavery in the Americas was the creature of the capitalist world market and was subject to its imperatives of cost-cutting, but rested on non-capitalist social property relations (emphasis added),” in Charles Post, “Plantation Slavery and Economic Development in the Antebellum Southern United States,” Journal of Agrarian Change July 2003: 302. 7 Charles Post, “Agrarian Class Structure and Economic Development in Colonial British North America: The Place of the American Revolution in the Origins of US Capitalism,” Journal of Agrarian Change October 2009: 480.

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order to understand the importance of the American Civil War’s conclusion in relation to

the economic development of the US during the late nineteenth century, the causes for

the war are also important to understand.

Prior to the American Civil War, the northern and southern regions of the country

had different economic systems. These economies differed in terms of their workforces

and types of production. While the northern US economy had a work force that mainly

consisted of a growing majority of wage laborers so as to accommodate and facilitate an

industrial commodity production process, the southern US economy had a primarily slave

labor force involved in an agricultural economy based on the cultivation and harvest of

cash crops such as cotton. During the late eighteenth century and the early-to-mid

nineteenth century, these fundamentally distinct economic systems coexisted. This

coexistence was an uneasy relationship which eventually and ultimately became hostile.

Although the Missouri Compromise (1820) and the Compromise of 1850 were aimed at

prolonging coexistence, such efforts proved impossible and, shortly after the 1860

electoral victory of Abraham Lincoln and the Republican party, the American Civil War

began.

A unified, or much more closely reunified, US meant that the political and

geographical boundaries of the country became the framework for large-scale capitalist

accumulation. This accumulation process encompassed not just the entire polity of the

US but also the country’s whole economy. The geographic breadth of such accumulation

is worth noting given that it would not have existed at such a magnitude if the war ended

differently. However, since the war concluded with the total military and political victory

of the Union and the destruction of the slave-based economy in the southern part of the

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reunified US (not to mention the military and political defeat and destruction of the

Confederate States of America), the end of the conflict and the onset of the

Reconstruction period meant that the country was able to embark on a path of complete

capitalist development in terms of its own economy. Few or no obstacles such as a once

powerful but defunct slave-owning socioeconomic system stood in the way.

Such economic development pointed to various tendencies (some of which were

mentioned before in earlier pages of this paper) that favored the growth of US capitalism.

Some of those tendencies were:

1) the geographic expansion of the US in order to acquire natural resources, raw

materials, and land for industrial commodity production;

2) the opportunity to construct a national railway network (thus, in

terms of connecting eastern and western regions, crossing not just the entire US

but also the entire North American continent) so as to aid, expand, and quicken

travel, commodity exchange, and the shipment of commodities;

3) the increasingly important and central roles of corporate and financial

institutions in mediating large-scale commodity production and exchange,

given that factory-based industrial production required and still requires the

involvement of many people, not least of all wage laborers.

The historical periods that encompassed US capitalist development included the

Reconstruction, which lasted from the mid-1860s into the late 1870s, and the Gilded Age,

which lasted throughout the late nineteenth century from the 1870s onward and possibly

into the turn of the century and the early twentieth century as the US became not just an

advanced capitalist nation-state but also a world power that exercised political, economic,

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and military force in regions beyond its borders.

The Reconstruction was an effort by the US government to subject the defeated

post-Civil War southern states to a thorough political, economic, and social

transformation and thus allow for the integration of these states into the reunified Union.

This historical period allowed for the possibility of transforming former slaves into wage

laborers or freeholding farmers. Additionally, it also allowed for the possibility of greatly

and substantially limiting the political power and wealth of the plantation owners.

However, despite the promising potential of the Reconstruction, its success was limited

and ultimately its end in 1877 proved to be ignominious. Even a Reconstruction-era

institution such as the Freedmen’s Bureau, aimed at helping former slaves integrate into

mainstream post-Civil War US society, was viewed with suspicion and contempt by

white Southerners, Northern Democrats, and some Republicans and was considered to be

an aid provider to the “undeserving” poor.8 Likewise, efforts at postwar reconciliation

between the northern and southern regions of the US papered over the question of race

and the status of former slaves in during the period of Reconstruction, as can be seen in

the attempts by Protestant ministers to promote a new sense of national unity.9

Ultimately, the Reconstruction fell short of its goals due in no small part to

opposition and indifference from various sectors of post-Civil War US society. However,

one of the key accomplishments of the Union victory in 1865, the American Civil War’s

last year, the end of slavery in the country, remained intact. In relation to the

development of capitalism in the US and its culmination during the Gilded Age, the basic

8 Chad Alan Goldberg, Citizens and Paupers: Relief, Rights, and Race, from the Freedmen’s Bureau to Workfare (Chicago and London: The University of Chicago Press, 2007) 51. 9 Edward J. Blum, Reforging the White Republic: Race, Religion, and American Nationalism 1865-1898 (Baton Rouge: Louisiana State University Press, 2005) 136-141.

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requirements of capitalism in terms of acquiring a wage labor –based workforce were

already met when the war ended with the demise of the slave system. Although freed

slaves lacked important and basic political and legal rights, so far as the system of

capitalism was concerned they constitute a source of human labor power that can be paid

for. Likewise, capitalist development entailed a large group of wage laborers, of people

who sell their labor power in exchange for wages. The US during the Gilded Age was no

exception.

The development of capitalism in the late nineteenth century US: The Gilded Age

As mentioned before, the Gilded Age marked the pinnacle of US capitalist

development in the late nineteenth century. Telltale signs included the prominence of

factory-based industrial production, the rise of an incredibly wealthy capitalist class of

industrialists and financiers, and the burgeoning population of wage laborers, otherwise

known as proletarians. In an astounding and telling observation about the rich-poor gap

that existed then, Priscilla Murolo and A.B. Chitty write,

“There are too many millionaires and too many paupers,” observed the Hartford Courant in 1883. In 1890, the richest 1 percent of Americans had a combined annual income larger than the poorest 50 percent. Captains of finance and industry feasted at lavish banquets. The guests at one dinner puffed cigarettes wrapped in $100 bills; at another, rare black pearls were tucked into the

oysters served as appetizers. Workers, meanwhile, scavenged for firewood.10

As leading capitalists, or captains of industry and finance (or “tycoons” or “robber

barons”), such as J.P. Morgan, John D. Rockefeller, Andrew Carnegie, and Jay Gould

came to the fore in US society, the ranks of the US wage labor force, or proletariat, rose.

Again, Murolo and Chitty observe,

10 Priscilla Murolo, A.B. Chitty, and Joe Sacco, From the Folks Who Brought You the Weekend: A Short, Illustrated History of Labor in the United States, (New York: The New Press, 2001) 111.

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As industrial capitalism expanded, so did the ranks of wage workers. By 1900, they number about 18 million, up from 6.7 million in 1870; together with their families, they added up to at least

three-quarters of the U.S. population of 76 million.11

Not surprisingly, ideologies which justified such a vast socioeconomic divide arose and

circulated. In the case of Russell H. Conwell in 1915, direct access to monetary wealth

was available to any person and, furthermore, the possession of monetary wealth was a

sign of devotion to the Christian God,

Now then, I say again that the opportunity to get rich, to attain unto great wealth, is here in Philadelphia now, within the reach of almost every man and woman who hears me speak tonight, and I mean just what I say. […] I say, then, you ought to have money. If you can honestly attain unto riches in Philadelphia, it is your Christian and godly duty to do so. It is an awful mistake of

these pious people to think you must be awfully poor in order to be pious.12

However, working people begged, or rather demanded, to differ as clear-cut signs of class

struggles appeared. Workers went on strikes and other forms of mass protest. Leftist

politics developed as anarchists, syndicalists, and socialists gained popularity among

disaffected, alienated, and infuriated sections of the US population. The railroad workers’

strikes in 1877 make up one prominent historical example. The same holds true for the

Haymarket protest in 1886, in which the political left and the labor movement fought

against the capitalist class. Toward that end the Industrial Workers of the World, the

Socialist party, and later on the Communist party, took shape and became active in labor

organizing. Likewise, a more mainstream and moderate Progressive movement arose to

combat the distorting effects of an uneven concentration and distribution of wealth on the

liberal democratic, or bourgeois democratic, system of politics and government in the

US.

Concluding remarks

11 Murolo, Chitty, and Sacco, 116. 12 “Russell H. Conwell Sanctifies Wealth, 1915” in Leon Fink (editor), Major Problems in the Gilded Age and the Progressive Era, (Lexington, Massachusetts, and Toronto: D.C. Heath and Company, 1993) 10-11.

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The Gilded Age was the first sign of a dynamic US capitalist socioeconomic

system at work. While this dynamism was a hallmark of modernity in the US, it also

brought forth a barbarism of its own in the form of a type of poverty that is specific to

capitalism; namely, poverty due to a lack of monetary wealth. This period in the history

of the US, or more precisely the economic history of the country, also demonstrated the

potential and soon-to-occur reality of the US as a leading power in the world. The events

of the late nineteenth century and the entire twentieth century have proven the latter a

fact.

However, and needless to write here, the Gilded Age was a specific moment in a

historical process of capitalist development within a nation-state located in North

America. It had its roots in the development of agricultural capitalist relationships in the

late eighteenth century and early nineteenth century US. One can even add that, in the US

during the 1840s and 1850s, agricultural technologies such as the reaper helped

contribute to the growth of a wage labor class and assisted in the establishment of a

domestic market.13 Both were signs of early capitalist development in the country, and

which also confirm the arguments that Wood and Brenner made.

Although the Gilded Age was a historically specific time period, its legacy

remains relevant in the present day. Given the vast division between wealthy and poor

today and a severe crisis induced by the financial sectors of a socioeconomic system that

is still fundamentally capitalist, among other trends such as free trade agreements,

sweatshops, and austerity policies, protests in the form of Occupy Wall Street are only

appropriate and to be expected in a contemporary era which some have referred to as a

13 Charles Post, “The ‘Agricultural Revolution’ in the United States: The Development of Capitalism and the Adoption of the Reaper in the Antebellum U.S. North,” Science and Society, Summer 1997: 216-218.

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“second Gilded Age.” The anti-austerity protests in the European countries and the Arab

Spring only confirm the virtual, indeed actual, possibility of rebellion, not just on a

national scale but on an international level. The significance of the Gilded Age, then, is

anything but lacking.

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Bibliography

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Blum, Edward J. Reforging the White Republic: Race, Religion, and American Nationalism, 1865-1898. Baton Rouge: Louisiana State University Press, 2005.

Brenner, Robert. “Agrarian Class Structure and Economic Development in Pre-Industrial Europe.” The Brenner Debate: Agrarian Class Structure and Economic Development in Pre-Industrial Europe. Ed. T.H. Aston and C.H.E. Philpin. Cambridge: Cambridge University Press, 1987. 10-63.

Fink, Leon (ed.). Major Problems in the Gilded Age and the Progressive Era. Lexington, Massachusetts, and Toronto: D.C. Heath and Company, 1993.

Goldberg, Chad Alan. Citizens and Paupers: Relief, Rights, and Race, from the Freedmen’s Bureau to Workfare. Chicago and London: The University of Chicago Press, 2007.

Marx, Karl. Capital: A Critique of Political Economy (volume one). Penguin Books, 1990.

Moore, Jr., Barrington. Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World. Boston: Beacon Press, 1966.

Murolo, Priscilla, A.B. Chitty, and Joe Sacco. From the Folks Who Brought You the Weekend: A Short, Illustrated History of Labor in the United States. New York: The New Press, 2001.

Post, Charles. “Agrarian Class Structure and Economic Development in Colonial British North America: The Place of the American Revolution in the Origins of US Capitalism.” Journal of Agrarian Change 9.4 (October 2009): 453-483.

Post, Charles. “The agrarian origins of US capitalism: The transformation of the northern countryside before the civil war.” Journal of Peasant Studies 22.3 (1995): 389-445.

Post, Charles. “The ‘Agricultural Revolution’ in the United States: The Development of Capitalism and the Adoption of the Reaper in the Antebellum U.S. North.” Science and Society 61.2 (Summer 1997): 216-228

Post, Charles. “Plantation Slavery and Economic Development in the Antebellum Southern United States.” Journal of Agrarian Change 3.3 (July 2003): 289-332.

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“Russell H. Conwell Sanctifies Wealth, 1915.” Major Problems in the Gilded Age and the Progressive Era. Ed. Leon Fink. Lexington, Massachusetts, and Toronto: D.C. Heath and Company, 1993. 10-11.

Wood, Ellen Meiksins. The Pristine Culture of Capitalism: A Historical Essay on Old Regimes and Modern State. London, New York: Verso, 1991.

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