A Very Different Age: Americans of the Progressive Eraby Steven J. Diner
The early twentieth century was a time of technological revolution in the United States. New inventions and corporations were transforming the economic landscape, bringing a stunning array of consumer goods, millions of additional jobs, and ever more wealth. Steven J. Diner draws on the rich scholarship of recent social history to show how these changes affected
The early twentieth century was a time of technological revolution in the United States. New inventions and corporations were transforming the economic landscape, bringing a stunning array of consumer goods, millions of additional jobs, and ever more wealth. Steven J. Diner draws on the rich scholarship of recent social history to show how these changes affected Americans of all backgrounds and walks of life, and in doing so offers a striking new interpretation of a crucial epoch in our history.
Diner's view of the Progressive era, stressing the effects of the Industrial Revolution on American society, concentrates on the lives and experiences of workers, women, African-Americans, immigrants, and politicians in that period. With the exception of the latter, there is substantial overlap. For instance, Diner's discussion of the rise of unionization in the face of increased industrial output describes not only the lives of the laborers who unionized, but the experiences of women entering the work force, blacks who were systematically excluded from most unions, and immigrants who were particularly active in the labor movement. The political reaction to the whole process is fittingly summarized by Diner as a case of government responding "not only with the carrot of union recognition and mediation but with the stick of suppression of radicals"culminating in the jailing of labor leader Eugene V. Debs not only for his strike activities, but for his antiWW I stance during the first "Red Scare." In general, Diner sees the Progressive era as bringing some limited successes but many failures to much of the population. Women ultimately gained suffrage in 1920, but after WW I, African-Americans returned to the dismal prospects of pre-Progressivism America. Diner asserts that the acts of progressive politicians and social reformers in general were sometimes genuine but mostly selfish: Teddy Roosevelt attacking corporate monopoly as it suited his needs, and Woodrow Wilson segregating formerly integrated government departments. Diner is left to conclude that "progressives, like other Americans, joined a contest for control under rules set by industrial capitalism."
Through solid research and apposite anecdotes, Diner is able to demonstrate the emergence of both problems and ideas that still persist in our own "very different age." Sobering and useful.
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A Very Different Age
1OWNERS, MANAGERS, AND CORPORATE CAPITALISM“We have come upon a very different age from any that preceded us,” proclaimed New Jersey governor Woodrow Wilson, Democratic candidate for President of the United States in 1912. Men now work “not for themselves” but “as employees … of great corporations.”1 Wilson’s words expressed the anxieties of millions of Americans, who watched corporations transform the way they spent their working hours and the way they spent their money. Corporations elevated top managers to positions of unprecedented power and simultaneously destroyed the livelihoods of many small entrepreneurs. We turn first, therefore, to the people who managed American business large and small, those who benefited from the rise of corporate capitalism and those who suffered.The organizers of the giant trusts, men like John D. Rockefeller, fearful of the exigencies of the traditional competitive market, sought order, predictability, and control of all aspects of production and distribution to ensure steady profits. No one exemplified this quest for total control better than J. P. Morgan, the preeminent business leader of the early twentieth century. A financier, Morgan hated disorder, devoting himself to eliminating price competition in business and bringing about orderly consolidations to maximize profits. In the late 1880s, he began to consolidate and stabilize America’s railroads, which had high fixed costs and regularly engaged in price wars. Morgan brought together officers of competing railroad lines to encourage agreements to limit competition. During the depression of the mid-1890s, Morgan consolidated numerous competing railroads into a limited number of large railroad systems in different regions.Morgan is best known for putting together U.S. Steel, the first billion-dollar corporation in America. The consolidated company manufactured over half the country’s basic iron and steel, giving it effective control over prices. Morgan also helped to consolidate the telephone industry and to develop the electrical industry. Because of barons like Morgan and Rockefeller, a small number of corporations in most major industries controlled the majority of their market by the early twentieth century.Consolidations created a new set of problems for corporate leaders, however. Great size did not automatically make a company efficient or profitable. Giant manufacturers had to develop systems to supply their multifarious manufacturing plants with raw materials, to organize the flow of materials and goods from one stage of production to another, and to coordinate the production output with the transportation system that shipped the goods to distributors. A small manufacturer might know intuitively what it cost to make a product and what profit he made when he sold it, but big corporations needed to assess the costs of every aspect of the operation.Complex corporations therefore required executives with substantial managerial ability. Professional career managers who did not necessarily own large quantities of company stock became the corporations’ administrators and leaders. Although these positions typically went to the sons of businessmen from old-stock families in the Northeast, family background alone became insufficient.MANAGERS OLD AND NEWSystematic management, dependent upon bureaucracies rather than on individuals, began to take hold at the end of the nineteenth century. Mechanical engineers initiated the earliest discussions of how to direct large enterprises. Henry Towne, an engineer and lock manufacturer, told fellow engineers in 1886 that the management of industry required men who combined the qualities of a mechanical engineer and those of a businessman. A few heads of corporations experimented with new procedures. Andrew Carnegie required each department at Carnegie Steel to submit detailed figures on the costs of materials and labor. Accountants in his central office processed these figures, and Carnegie reviewed the accountants’ cost statements daily and demanded explanations from the head of any department where they increased. One of his managers complained, “The men felt and often remarked that the eyes of the company were always on them through the books.”2Many corporate heads clung to familiar modes of operation, however. Often it took a generational change in company leadership to bring systematic management, as at E. 1. Du Pont de Nemours & Company, manufacturer of gunpowder. For nearly a half century, Henry Du Pont, the company president, directed the large family business out of a one-room office overlooking the gunpowder mills, writing by hand almost all of the company’s correspondence. In addition to running his own company, he bought controlling interests in several other large powder companies and dominated the Gunpowder Trade Association, formed in 1872 to regulate production. Three years after Henry’s death in 1899, four of the five Du Pont partners, all elderly or infirm and unwilling to assume the presidency, contemplated selling the company, but Alfred Du Pont, the youngest and least experienced, objected. He convinced his cousins Coleman and Pierre Du Pont to join him in buying the family business. Coleman, who had worked at the company until 1898, left out of frustration with the conservative ways of the elderly partners. At the time of the purchase, Pierre wrote to his brother, “We have not the slightest idea of what we are buying, but we are probably not at a disadvantage as I think the old company had a very slim idea of the property they possess.”3 The new partners integrated the company’s diverse holdings, centralized management, developed a specialized research department, and started their own marketing unit.Foremen and other front-line managers felt the impact of centralized management first. In the late nineteenth century, factory foremen exercised considerable independent authority. They hired, trained, supervised, and fired workers, and usually decided which tools and materials would be used in each job. So long as they got the work done, upper managers left foremen alone.Foremen cherished the autonomy and social status of a manager. Most began their careers as skilled craftsmen, priding themselves on their superior knowledge of the craft. According to a history of a silversmith firm, foremen “deported themselves with great dignity and customarily reported for work attired in silk hats, cutaway coats, and attendant accessories.”4 Despite their origins as skilled workers, or perhaps because of it, foremen vigorously opposed unions and sometimes treated workers harshly. One analyst observed in 1911 that foremen “spurn the rungs by which they did ascend.”5Systematic management undermined the autonomy of foremen and lower-level managers. When Stuyvesant Fish became president of the Illinois Central Railroad in 1896, he complained of “an absence of system in the organization as a whole” and described managers’ treatment of employees as “personal and paternal.” Fish implemented a code of personnel policies to allow the railroad to function and expand “without the slightest fear of being disturbed by the withdrawal of any man from any position.”6 At Scovill Manufacturing in Connecticut, which made brass products, foremen decided what to pay each of their workers until the company president ordered that timekeepers report to the payroll supervisor the actual hours worked by every employee, including the foremen. Elsewhere, special clerks relieved foremen of responsibility for purchasing materials needed for a job, and engineers began to instruct foremen on the tools to use and the sequence in which tasks should be performed.Foremen and other front-line managers resisted this attack on their autonomy and status. One manager complained that foremen “resented taking instructions from abrasive, soft-handed college men who had never themselves poured a mold or run a machine.” Superintendents complained vociferously about the number and extent of reports demanded by the central office. Occasionally a foreman might prevail in a conflict with a senior manager. In one instance, an experienced foreman got into an altercation with a supervisor and told him to stay out of his shop for a month. The supervisor complained to a senior manager, who responded, “Well, Mr. Lawrence, the foreman of the plating-room has the reputation of carrying through with his word. If I were you, I think I should keep out of that department for the rest of the month.”7Similar tension developed between buyers and managers in big city department stores. These retail corporations, begun in the late nineteenth century, attracted middle-class shoppers by offering package delivery, child care, entertainment, and other services while customers shopped for all kinds of goods under a single roof. Initially, department stores gave considerable autonomy to buyers for each department. They determined what merchandise to sell, managed the department sales staff, wrote advertisements, and arranged floor displays. After the depression of the 1890s, store managers concerned with overall store profits tried to limit the quantity of goods buyers stocked and eliminate harmful competition among departments. To the consternation of buyers, store managers placed goods on sale to meet competition from other stores and readily accepted returned goods. Like factory foremen, buyers resisted these challenges to their autonomy. Store managers, dependent on buyers’ relationships with numerous manufacturers of clothing and other goods, sometimes relented. This tug-of-war between buyers and store managers continued for many years.These conflicts between front-line and senior corporate managers seemed minor when compared with the conflicts between management and labor. Corporations depended upon large numbers of workers. Numerous strikes, frequent worker turnover and absenteeism, and concerted efforts by workers to restrict the pace of production limited managers’ control of production. Although most employers responded to workers in the time-honored way—at- tempting to coerce them to produce more and forcefully breaking strikes—some large corporations also looked for ways to rationalize labor relations without relinquishing control over production. Two general approaches emerged: scientific management and corporate welfare programs.Frederick W. Taylor, an enormously creative and unyieldingly rigid engineer and industrial manager, devoted much of his career to solving corporate management’s labor problem by dramatically increasing the efficiency of workers. This win-win strategy, he argued, made possible both higher wages and larger profits. Taylor was born in Philadelphia in 1856 to wealthy native-born parents. His mother participated in the antislavery and women’s rights movements, and his father worked as a lawyer and pursued a gentlemanly interest in literature. As a child, Frederick showed a penchant for orderliness and insisted on elaborate sets of rules when he played games. The young Taylor attended Phillips Exeter Academy to prepare, according to his father’s wishes, for Harvard and a career in the law. The son preferred to attend medical school, but in his last year at Exeter he developed headaches and vision problems. Instead of going to Harvard, this eccentric young man became an apprentice pattern maker, despite the fact that the work required him to read complicated mechanical drawings, and his eye problems miraculously cleared up.His apprenticeship completed, Taylor went to work at Midvale Steel Company, partly owned by a family friend, as a journeyman machinist and took home-study courses in physics and mathematics in his spare time, earning a degree in mechanical engineering from Stevens Institute of Technology. Promoted to chief engineer six years later, he struggled to find more efficient ways for his workers to perform their tasks and attempted, without success, to persuade the workers to increase their productivity by using his new methods.Taylor left Midvale in 1903 to become a full-time “management consultant.” At Bethlehem Steel Company, his most important client, he accumulated extensive information on the speed and effectiveness of tools and machines, and helped develop a steel alloy for use in manufacturing new high-speed machines. He also conducted time and motion studies to determine how quickly workers could do a particular task and when they became fatigued. From this work, Taylor developed a system of “shop management” in which engineers determined the optimum use of each machine and the most efficient pace at which a worker could do a task. He matched each worker to the task that man could do best, and provided substantial wage incentives to get the workers to achieve maximum efficiency.Taylor’s reputation spread among professional engineers, and the American Society of Mechanical Engineers elected him president in 1906. Three years later, officials at federal arsenals engaged Taylor to apply his principles to munitions manufacture. Soon thereafter, liberal lawyer Louis Brandeis, representing clients opposed to a railroad rate increase before the Interstate Commerce Commission, used several of Taylor’s disciples as expert witnesses to argue that scientific management could greatly reduce railroad costs, and that the railroads should not charge consumers for their own inefficiency. Brandeis’ appeal to scientific management stirred intense national interest. The American Magazine, edited by progressive journalist Ray Stannard Baker, serialized Taylor’s recently completed manifesto, The Principles of Scientific Management.In Principles, Taylor described how he increased daily steel hauling from 12½ to 47 tons per worker at Bethlehem. He watched seventy-five men for three or four days and picked out four “who seemed physically able to handle … 47 tons.” He and his associates looked up the men’s histories and made inquiries about their “character, habits and … ambition.” They selected a “little Pennsylvania Dutchman who had been observed to trot back home for a mile or so after work in the evening, about as fresh as he was when he came trotting down to work in the morning.” Then they called out the man, whose name was Schmidt, and offered to raise his pay from $1.15 to $1.85 a day if he agreed “to do exactly as this man tells you to-morrow, from morning till night,” with “no back talk.”
Schmidt started to work, and all day long, and at regular intervals, was told by the man who stood over him with a watch, “Now pick up a pig and walk. Now sit down and rest. Now walk—now rest,” etc. He worked when he was told to work, and rested when he was told to rest, and at half past five in the afternoon had his 47½ tons loaded on the car. And he practically never failed to work at this pace and do the task that was set him during the three years that the writer was at Bethlehem.
“One man after another was picked out and trained to handle pig iron at 47½ tons per day,” Taylor boasted, until all of the pig iron was handled at this rate, and the men were receiving 60 percent more wages.Taylor made sweeping claims for his system, describing it as a “science” resting “upon clearly defined laws, rules and principles.” Scientific management will “double the productivity of the average man engaged in industrial work,” provide cheaper and better goods to consumers, increase both profits and wages, and thereby “eliminate the wage question as a source of dispute.”8 In short, Taylor proposed to increase dramatically the autonomy of management engineers and simultaneously reduce that of both workers and traditional corporate managers, promising in exchange greater economic security for workers and greater profits for owners.Taylor’s system never worked nearly as well as he claimed. Unions resisted it, often through strikes, and individual workers sabotaged Taylor’s time and motion studies. After civilian government workers struck against the introduction of Taylorism at the arsenal in Watertown, Massachusetts, in 1911, Congress held hearings on the Taylor system, and investigators concluded that scientific management did not enhance the welfare of workers. In 1916, Assistant Secretary of the Navy Franklin D. Roosevelt banned the Taylor system in government arsenals and navy yards.Workers understood that Taylorite engineers sought to take away from them all matters of judgment about their jobs: what tools to use, in what order tasks should be performed, how many pounds they should lift at one time, how fast they should work, when they should rest—in short, every aspect of control over work. “In the past, the man has been first,” Taylor declared, but “in the future the system must be first.”9 Although workers surely wanted higher wages, few would willingly sell their autonomy for Taylor’s wage incentives. Moreover, workers recognized better than Taylor that corporate managers, faced with pressures to control costs, would not maintain high wages once they had established higher standards of worker productivity. In the end, workers rejected scientific management because it threatened both their autonomy and their economic security.Many managers resisted Taylorism as much as or more than their workers. Taylor’s system limited their autonomy too, circumscribing their responsibilities and assigning key decisions to planning departments. Systematic management had already restricted the autonomy of foremen over materials, costs, and methods of production. Taylor proposed to go further, eliminating traditional foremen altogether in favor of a “functional foremanship.” A “gang boss” would have responsibility for the movement of materials, a “speed boss” would oversee the organization of production, an “inspector” would ensure a quality product, a “repair boss” would maintain machinery, and a “disciplinarian” would hire and fire workers.Foremen and superintendents fought the Taylorites wherever they appeared. When developing his methods at Midvale Steel, Taylor designed a bulletin board on which he posted tags giving work assignments to different machines in the shop. He had to cover it with thick glass, however, to keep the foremen from tearing off the hated tags. As a consultant to Simonds Roller Bearing Machine Company of Fitchburg, Massachusetts, in 1897, he set up a planning office. All of the foremen quit in protest. When machinists at the Watertown Arsenal walked out in opposition to Taylor’s reorganization, several of the foremen supported the strikers. At Bethlehem Steel, managers successfully opposed Taylor’s elaborate cost accounting system. Although some fifty companies employed elements of Taylorism, in the years before World War I only two companies embraced it completely. By threatening the autonomy and economic security of workers and managers alike, scientific management failed to fulfill corporate managers’ quest for control of production costs.Welfare capitalism offered an alternative, equally unrealistic, way to make labor reliable, efficient, and pliant. Its advocates proposed a wide variety of employee benefits to secure worker loyalty and prevent unionization and walkouts, including subsidized housing, free health care, libraries, social clubs, company cafeterias, and recreational activities. Some employers even offered company stock. Others allowed workers to elect representatives to advise management about worker concerns and set up procedures to hear employee grievances.At least forty companies initiated substantial welfare programs before World War I. Some also established personnel departments to deal with all aspects of employee recruitment, training, and supervision, incorporating welfare work within them. The National Civic Federation, formed by corporate leaders in 1900 to find ways to mediate labor-management conflict and to discourage worker radicalism, established a Committee on Welfare Work in 1904 to promote these activities.Although some executives claimed altruistic motives, most sought to stabilize their labor force and to increase productivity. George Perkins of International Harvester candidly asserted that his company undertook welfare programs “in a purely business spirit.” Another businessman proclaimed crudely, “When I keep a horse and I find him a clean stable and good food I am not doing anything philanthropic for my horse.” Elbert H. Gary of U.S. Steel got to the heart of the matter when he explained in 1914 that “we must make it certain that the men in our employ are treated as well, if not a little better than, those who are working for people who deal and contract with unions.”10Foremen and front-line managers, their autonomy and status already challenged by centralized administration and scientific management, now had to contend also with welfare and personnel directors. One personnel manager, after studying the way foremen hired and fired workers in several factories, declared that “in no other phase of management is there so much unintelligence, recklessness of cost, and lack of imagination.” Some personnel administrators viewed foremen as mere workers. Officials of Henry Ford’s “sociological department” at his Dearborn auto factory visited the homes of Ford workers beginning in 1915 and ensured that they had orderly and wholesome habits. Ford’s “sociologists” initially visited foremen as well as workers, but the foremen refused to submit to inspections and senior managers backed down. “We were trying to teach other fellows how to live,” one foreman explained, “and they wanted to investigate us at the same time.”11Historians, in describing how corporate capitalism transformed work in America, have understandably focused on industrial workers and their struggle with capital. But corporate capitalism also transformed, albeit less dramatically, the work lives of its managers. Personnel directors, management engineers, and the senior executives who centralized control of corporate conglomerates secured a leading place in the new economic order. Foremen and other front-line supervisors, although much better off than the workers they often drove ruthlessly, still lost status and autonomy. Like the workers they supervised, they found ways to resist.SMALL BUSINESSMENThe spread of giant corporations also challenged the economic security of self-employed entrepreneurs. Small companies managed by their owners could hardly compete with large manufacturers of steel, petroleum products, or processed foods. Still, the vast expansion of the national industrial economy created opportunities in the interstices of the giant industries. The number of manufacturing firms actually increased 37 percent in the 1890s and by smaller percentages in succeeding decades, even as a limited number of corporations came to dominate most major industries.Small metal fabricators and machinery makers in New England, for example, succeeded by making specialized products in quantities too limited for large enterprises. A company begun in 1901 made steel core plugs used in tar paper, floor coverings, and newsprint manufacture. Another, founded in 1917, manufactured miner’s cap lamps; still another, founded in 1908, produced equipment for distilling water. Small manufacturing firms, headed by men who had been skilled industrial craftsmen or proprietors of other small businesses, often excelled at providing deliveries on short notice and offering personal service. A former office worker told an interviewer that he started a metal business because he “had ambition.” Another explained, “I had a family, and I needed more money.” A toolmaker started his own business because he resented the fact he received only 30 cents of the $1.50 his employer charged for the product he made.12Similarly, small textile manufacturers in Philadelphia survived by producing limited quantities of specialty fabrics which required highly skilled labor, leaving the continuous production of basic cloth to large, automated mills in New England and the South. These family businesses produced wool and worsted fabrics, carpets, upholstery, knit goods, and lace curtains, for example, and they shifted quickly from one product to another as the market changed. A textile industry publication reported in 1907 that “a Philadelphian has a set purpose to have a business of his own, no matter how small, and young men are starting in business today with two or three looms, making worsteds or rugs.” The proprietor “is the designer, operator and owner for a time” and as his business increases he becomes a “selling agent and manager” too. Proprietors worked “in overalls, running or directing operations of looms or spindles.”13Some small manufacturers, then, maintained family businesses or succeeded in new enterprises by manufacturing goods too specialized for large companies. But for all those who survived and thrived as small entrepreneurs in the corporate-dominated economy, many more lost autonomy and their economic security.Corporate consolidation and integration hit independent distributors who sold manufactured goods to shopkeepers particularly hard. Many corporations developed their own sales and distribution networks staffed by their own employees, freeing themselves from dependence on self-employed distributors. At the same time, new retail corporations—department stores, mail-order companies, and chain stores—purchased goods in huge quantities from manufacturers and sold them directly to consumers, hurting both small wholesale and retail merchants.Manufacturers of consumer and agricultural machinery, such as Singer Sewing Machine, Remington Typewriter, and McCormick Harvesting, established distribution networks by the 1880s. Only people who could explain to prospective buyers how the machines worked and provide instruction, service, repair, and technical assistance to customers could sell their products. In the 1890s, food processing and distribution corporations established networks of offices that shipped fruit from plantations in the Caribbean or meat from regional slaughterhouses to stores across the country. Chicago’s William Wrigley manufactured and packaged chewing gum and sold it directly to shopkeepers. Asa Candler produced Coca-Cola syrup in Atlanta, employing a worldwide sales force to sell it to druggists and other retailers. National Biscuit Company, formed out of a horizontal combination of three regional companies, shifted from making bulk crackers for store cracker barrels to the manufacture of attractively packaged Uneeda Biscuits. It centralized manufacturing in large New York and Chicago plants, used extensive advertising to increase consumer demand, and built an international sales network that brought the crackers into the stores. Although shopkeepers made only a small profit on this product, consumer demand proved so great that merchants had little choice but to stock Uneeda Biscuits.Before companies developed their own distribution networks and built demand through mass advertising, one manufacturer explained, they “stood on the merchant’s doorstep begging him to buy his product.” But an advertising trade journal gloated early in the new century, “The manufacturer selling an advertised trademarked article is absolutely independent. The only class to whom he is responsible is the consumer.”14 Companies like National Biscuit and Wrigley thereby reduced the autonomy of shopkeepers throughout the nation.They also eliminated many independent entrepreneurs who had worked as wholesale distributors for corporate manufacturers. Elliot S. Rice, a casualty of the management reorganization and integration at Du Pont, began his business career as a wholesale grocer in Erie, Pennsylvania, before the old Du Pont management persuaded him to move to Chicago to serve as a general agent for the company in the Midwest. Technically self-employed, Rice received a salary from Du Pont along with a commission on sales. After Du Pont’s new management established a sales department in Wilmington, Rice complained to Coleman Du Pont that a company official had bypassed him in hiring a freight manager for Chicago. “I cannot believe that the foregoing was ever authorized by you,” he wrote. Du Pont’s reply stunned him. “I beg to advise you that your office in Chicago will be entrusted with just so much of our business as we think you can handle, always reserving the right to ourselves to decide the question.”15 Not long thereafter, an auditor in the corporate office asked Rice to justify certain expenditures, and Rice refused until Coleman Du Pont intervened personally. Other demands for information followed. When the vice president for sales concluded that Rice was inefficient and overpaid, Rice resigned.The rise of mass retail corporations posed the biggest threat to the autonomy of wholesalers and distributors. In the middle of the nineteenth century, specialty stores in cities sold specific types of goods, like gloves, umbrellas, or women’s hats; small-town general stores sold many different kinds of items. In succeeding decades, big city department stores began offering a wide variety of goods under a single roof. Meanwhile, mail-order houses, offering many of the goods sold in department stores as well as appliances, hardware, and furniture, began to distribute catalogues and take orders from people across rural America. Montgomery Ward and Sears, Roebuck began in the 1870s, but the mail-order business really took off in the mid-1890s when Sears greatly expanded its offerings and cut costs, manufacturing many goods itself and buying large quantities directly from the producers. Sears’s profits soared from $68,000 in 1895 to $2,868,000 in 1905. By 1906, Sears owned sixteen manufacturing plants and filled 100,000 orders daily. Chain stores, selling inexpensive consumer goods in small retail outlets across the country, grew rapidly after 1900. The most successful chain stores included the Great Atlantic and Pacific Tea Company (A&P) with nearly five hundred general grocery stores by 1912, and Frank W. Woolworth’s five-and-ten-cent stores.Small retailers fought back. In several states, they pressed state legislatures for laws restricting department stores, failing everywhere but Missouri. There, the state Supreme Court overturned their legislative victory. When chain stores began to grow some years later, urban merchants again failed to secure restrictive laws. Rural merchants had a different target—the United States Post Office. Until the first years of the twentieth century, farmers had to pick up letters at tiny post offices located in general stores and packages at railroad stations. With rural free delivery, the Post Office closed many of these substations, depriving proprietors of their modest income as postal agents and also reducing the need for farmers to come to their stores. Moreover, rural people could now order through the mail, picked up daily at their homes, the vast array of goods offered by catalogue companies. Then, to make matters worse, postal officials extended rural home delivery to packages. Small-town merchants and private delivery companies vigorously opposed this, but Congress bowed to the desires of rural consumers, establishing rural parcel delivery in 1912. In its first year, orders to Sears increased fivefold.The shopkeepers responded with spirited campaigns to convince people to buy local, even labeling catalogue buyers “traitors” to their community. One flyer read: “What’s the use of sending money east when we can buy just as cheap at the Popular Store?” Some merchants collected Sears and Ward catalogues and ceremoniously burned them in the town square. Others appealed to neighborly loyalty. “When you want to raise money for some needy person in town do you write to the ‘Fair’ store in Chicago or do you go to your home merchant?” the editor of a rural Iowa newspaper asked rhetorically in 1904. “When your loved one was buried, was it Marshall Field and Co. who dropped a tear of sympathy and uttered the cheering words, or was it your home merchant?” This same newspaper sharpened its admonition the following year. “People who continually buy goods away from home,” it declared, “are helping to kill the town in which they live by destroying its businesses and lowering the price of its real estate and driving out its population.”16Mail-order companies, chain stores, and the new sales departments in manufacturing corporations also hurt traveling salesmen and small distributors, who vented their anger at hearings before the U.S. Industrial Commission in 1899. Hoping to spark federal action against the “retail trusts,” people like P. E. Dowe, representing an organization of traveling salesmen, asserted that no longer could his members attain their own business “as an equitable return for years of hard work under trying conditions.” Instead they must give up their independence and work for huge corporations. “Trusts have come … as a curse for this generation and a barrier to individual enterprise,” he lamented.17 His plea, mingling with those of the small city merchants and rural general store proprietors, evoked broad sympathy but no government action. Some tradesmen retained autonomy and economic security by distributing goods not sold by corporate retailers. Many others lost out, becoming, for better or for worse, employees in an economy dominated by corporate capitalism.CORPORATE CAPITALISM AND GOVERNMENT REGULATIONWhen shopkeepers and small distributors railed against the trusts and demanded government action to protect traditional entrepreneurship, they echoed a familiar theme of the Progressive Era. Organized farmers demanded regulation of railroad rates and grain elevators and called on government to give farmers control over the marketing of their crops. Middle-class reformers, troubled by industrial violence, child labor, and horrific work conditions, demanded government regulation of factory and mine safety, child and female labor, working conditions and hours.The national government did not regulate economic life substantially in the late nineteenth century, although it vigorously promoted corporate interests by subsidizing railroad construction, maintaining a tight currency, and keeping tariffs on imported goods high to protect domestic producers. By the end of the century, however, many Americans looked to the national government to mitigate the negative effects of industrial capitalism. With so much economic power concentrated in the hands of giant corporations, many argued, the federal government must now regulate the market and supervise corporations in the public interest. The “trust question” and “the industrial question” became central issues of national politics in the early twentieth century.However, the debates on these issues did not neatly pit businessmen against consumers, farmers, workers, and social reformers. They also pitted smaller businessmen against larger ones, and businessmen in one industry against those in another. While politicians, reformers, and journalists demanded government control of the trusts, most businessmen did not rigidly oppose regulation, but tried to control it for their own purposes.Many states established public utilities commissions to protect consumer interests by regulating local gas, electric, and steam companies. Utilities executives generally supported state regulation as an alternative to regulation by several different city commissions, discovering quickly that they could influence the public utilities commissions to restrict competition, rationalize service, and secure profits. Public outrage at several prominent mine disasters caused coal industry executives to join with others in an effort to bring about uniform state safety legislation for mines. This approach won the support of the coal mine operators represented by the American Mining Congress, who thought uniform safety standards would equalize the costs of safety across the industry. The movement for uniform laws failed, however, because mine operators in different states could not resolve their differences in this highly competitive industry.Businessmen in many industries and in many different states supported workmen’s compensation laws in the second decade of the century. For many years, common-law doctrine held that workers injured as a result of their own negligence, the negligence of another worker, or at jobs that inherently involved high risk could not sue their employers for damages. As accidents increased in the late nineteenth and the early twentieth century, both court rulings and changes in state legislation altered these common-law principles, making the outcome of injury suits against employers unpredictable. Workers wanted a system that provided immediate compensation to injured laborers and reformers wanted incentives to improve industrial safety. Businessmen joined labor unions and reformers in supporting state workmen’s compensation to eliminate uncertainty about employer liability and to simplify compensation.On the federal level, the trust question preoccupied the administrations of Theodore Roosevelt, William Howard Taft, and Woodrow Wilson. Leaders of the large corporations, facing uncertain and inconsistent enforcement of the Sherman Antitrust Act, sought a clearer federal policy that would not force the breakup of large corporations or intrude too heavily upon management’s prerogatives. In 1903, Congress established, at President Roosevelt’s request, a cabinet-level Department of Commerce and Labor with a Bureau of Corporations within it. The bureau could investigate corporations and publish its findings, but had no direct regulatory authority. George W. Perkins, a senior officer of J. P. Morgan & Company and a friend and political ally of Roosevelt, mobilized business support for the new department and the bureau. Smaller manufacturing firms, owned and operated by individual entrepreneurs, feared the power of both large corporations and labor unions. Through the National Association of Manufacturers (NAM), they lobbied for vigorous enforcement of antitrust laws and opposed any concessions to organized labor. A textile manufacturer in the NAM told a congressional committee in 1904 that “the so-called organized labor and the organized capital in the shape of trusts are not antagonistic to each other” and he expressed alarm “as to what will become of the commercial and manufacturing conditions in the United States if one class of labor gets control of all labor, and one class of capital gets control of all trade.”18The National Civic Federation, which represented the large corporations, played a significant role in discussions of federal antitrust policy that culminated in the passage of the Federal Trade Commission Act and the Clayton Antitrust Act in 1914, two major achievements of President Wilson’s administration. The former declared illegal “unfair methods of competition” and empowered the commission to issue cease and desist orders, to require annual and special reports from corporations, and to investigate antitrust violations. The Clayton Act outlawed certain kinds of corporate consolidations, including interlocking directorates in firms capitalized at over a million dollars, and price discrimination. Similarly, both powerful Eastern bankers, like Morgan, and Western and small rural bankers played a role in reforming the nation’s monetary system through the Federal Reserve Act of 1913. Although progressive politicians and journalists portrayed these laws as the product of a public uprising against the trusts, corporate leaders played a major role in shaping them.The leaders of the major corporations that dominated industrial America above all sought control of production and the market for their products. To restrict competition, they formed voluntary trade associations and created massive horizontal combinations. To control the supply and price of goods and raw materials and the distribution of their products, they purchased mines, plantations, and transportation facilities, creating great vertical combinations. To regulate costs and the flow of materials through the production process, they developed systematic central management. To control labor, they provided welfare benefits to their workers and developed personnel departments. To protect themselves against the uncertainties and inconsistencies of America’s courts and legislative bodies and from the growing demand for solutions to the “trust question,” they played a major role in developing government regulatory policy in the Progressive Era.Corporate leaders’ quest for control threatened many people. Foremen and middle managers lost autonomy and social status to central office executives. Small manufacturers adapted or went out of business. Independent distributors and merchants reluctantly relinquished their economic security and autonomy. Corporations also changed the nature of work in America, creating new kinds of jobs in offices, department stores, and company bureaucracies, transforming the way farmers produced and marketed their crops, and fundamentally altering the work lives of industrial laborers and craftsmen. In each of these instances, people both resisted change and adapted to it creatively, challenging corporate control however they could.Copyright © 1998 by Steven J. Diner
Meet the Author
Steven J. Diner, professor of history at George Mason University, is the author or editor of five other books, including A City and Its Universities: Public Policy in Chicago. He lives in Washington, D.C.
Steven J. Diner, professor of history at George Mason University, is the author or editor of five other books, including A City and Its Universities: Public Policy in Chicago. He lives in Washington, D.C.
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