Between 1898 and 1918, many American states introduced the initiative, referendum, and recallknown collectively as direct democracy. Most interpreters have seen the motives for these reform measures as purely political, but Thomas Goebel demonstrates that the call for direct democracy was deeply rooted in antimonopoly sentiment.
Frustrated with the governmental corruption and favoritism that facilitated the rise of monopolies, advocates of direct democracy aimed to check the influence of legislative bodies and directly empower the people to pass laws and abolish trusts. But direct democracy failed to achieve its promises: corporations and trusts continued to flourish, voter turnout rates did not increase, and interest groups grew stronger. By the 1930s, it was clear that direct democracy favored large organizations with the financial and organizational resources to fund increasingly expensive campaigns.
Recent years have witnessed a resurgence of direct democracy, particularly in California, where ballot questions and propositions have addressed such volatile issues as gay rights and affirmative action. In this context, Goebel's analysis of direct democracy's history, evolution, and ultimate unsuitability as a grassroots tool is particularly timely.
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About the Author
Thomas Goebel is author of The Children of Athena: Professionals and the Creation of a Credentialed Social Order, 1870-1920. He was a research fellow at the German Historical Institute in Washington, D.C., from 1997 to 2002.
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A Government by the PeopleDirect Democracy in America, 1890-1940
By Thomas Goebel
The University of North Carolina PressCopyright © 2002 University of North Carolina Press
All right reserved.
Chapter OneFrom the Revolution to the Populists: The Antimonopoly Tradition in American Politics
Most scholars have interpreted the introduction of the initiative, referendum, and recall as a typical political reform movement of the Progressive Era. Reformers, mostly of middle-class and Protestant backgrounds, were spurred into action by the sordid spectacle of American politics during the Gilded Age. They developed a number of reform proposals designed to break the power of political machines and urban bosses, eradicate the rampant corruption of legislative bodies, make government more efficient and based on professional expertise, and purify the body politic. Among the most important reform proposals generated by this impulse were the Australian ballot, direct primary, direct election of U.S. senators, direct democracy, commission government for municipalities, and corrupt-practices acts. As the titles of many of these ideas imply, they were framed in the political idiom of popular sovereignty, defined as attempts to return political authority to the people by removing the corrupt influences that thwarted popular rule. In their effects on American politics, however, they often achieved the opposite results. As pointed out by many standard interpretations of this period, these reforms helped reduce voter turnout, disfranchised blacks in the South, and minimized the role of urban immigrant voters. In rewriting the rules governing elections in America, these reformers clearly reallocated political power to their own benefit.
Such an account, however, presents a rather one-sided picture of the genesis of the direct democracy movement. It is one of the central arguments of this book that much of the impetus for the introduction of direct legislation stemmed from a specific mode of economic analysis, from a model of political economy that permeated reform communities in late nineteenth-century America. Surely, political concerns were highly important in the rhetoric of reformers. But a closer reading of their arguments clearly reveals that the initiative, referendum, and recall were primarily intended to abolish oppressive monopolies and artificial trusts in America by removing the legislative basis for their existence. Reformers moved within a powerful antimonopoly tradition in American history, the origins of which reached back to the eighteenth century. In order to fully understand the motivations and discursive strategies of the reform movement, it is crucial to situate the call for direct democracy within larger traditions of American political thought and culture. This chapter will thus outline the importance of antimonopoly sentiments as a force in American politics from the Revolution to the end of the nineteenth century.
The Political Economy of American Populism
During the nineteenth century, no other Western country industrialized as quickly as the United States. For many Americans, their country seemed the virtual embodiment of the material progress and restless spirit of the age. Most foreign observers were likewise impressed by the hustle and bustle of life in America, the boundless energy of its people, and the entrepreneurial spirit that shaped the course of the nation. But there was also a different side to the image of a nation engaged in the never-ending pursuit of material riches: a pervasive fear of the consequences of commercialization, industrialization, and modernization that manifested itself most clearly in an abiding American hostility to monopolies and corporations. Of all the Western nations that witnessed the rise of large industrial firms in the nineteenth century, only the United States also produced a strong, enduring, and politically potent antimonopoly movement. Beginning as early as the American Revolution and extending to the Great Depression, Americans were locked in a contested debate about the political and social consequences of centralized economic power. If, in the final equation, the rise of big business reshaped American society, it triumphed only after a protracted battle. And antimonopoly, more than any other critique of corporate capitalism, proved to be the most tenacious opponent big business interests had to overcome.
The Populist movement of the 1890s, with its heated attacks on corporate charters, special privileges, franchises, and monopolies of all kinds, formed the most powerful eruption of the antimonopoly tradition in American history. Despite the substantial progress made in the study of Populism, we are still confronted with a highly truncated view of its larger significance in American history. Populism seems to unfold in something of a historical vacuum, suddenly emerging in the 1890s to briefly light up the political landscape before rapidly disintegrating after 1896. Although some mention is usually made of such intellectual and political precursors to Populism as Jeffersonian and Jacksonian democracy, producerism, Greenbackism, and the Grange, the precise relationship of Populism to the political culture of nineteenth-century America has not been systematically explored. Instead, historians have portrayed Populism as "a political culture at odds with the mainstream of political habits and attitudes." Closer inspection of Populism, however, reveals that the political concerns and the rhetoric of American Populism, if not its policy proposals, were strikingly unoriginal. In their concern with monopoly and corporations, in their denunciations of political corruption and governmental favoritism, in their calls for "equal rights to all, special privileges to none," the Populists stood squarely in an American intellectual and political tradition that stretched back to the early decades of the nineteenth century and that would continue to influence politics until well into the twentieth. They drew on a complex amalgam of ideas, attitudes, rhetorical strategies, and reform demands, here labeled populist republicanism, which revolved around a distinctive model of economic affairs.
Populist republicanism provided a model of political economy, a theory of the relationship between the political realm and the economic sphere, that endowed it with the distinctiveness and the focus needed to provide a coherent explanation of the economic problems of nineteenth-century America. At the heart of populist republicanism stood the argument that the abuse of political power caused economic inequality. By manipulating and exploiting the power of the state, private interests acquired their wealth and their monopolistic position. Although this belief informed the perception of the "revolutionary generation" of the connection between legislative favoritism and the growth of monopolies, and retained a powerful hold on Americans in the nineteenth century, modern historians have neglected it. It is a belief that is diametrically opposed to much of modern economic theory, both in Marxist and liberal versions. Oligopolistic and monopolistic market positions are achieved via the economies of scale and scope, via the superior efficiency of large corporations. Because of their economic clout, these corporations then also acquire political leverage. While the role of the state was not a passive one, the state's help was not crucial in the genesis of modern industry.
Convincing as this theory might sound in late twentieth-century America, it would not have swayed large numbers of Americans in the nineteenth century, including the Populists of the 1880s and 90s. In the political culture of antimonopolists, there was little that was efficient about large corporations and monopolies. In their interpretation of the rise of modern industry, financial and political speculation and manipulation took center stage. Special interests, already influential but far from dominant, acquired illicit political power and induced the state to grant them special privileges, charters, franchises, and resources, which then allowed them to exploit and tax the public. The railroads received the power of eminent domain and huge land grants, and they proceeded to fleece the public through high rates. Private banks were allowed to control the money supply, to contract the currency, and to exert pressure on creditors. Corporations used discriminatory practices to undermine their competition, while the tariff taxed their consumers via inflated price levels. In all of these instances, public power was transferred to private interests without mechanisms for public control. The objects of Populist rage might shift from banks to railroads to trusts, but the language of protest proved remarkably resilient. The real strength of Populism did not derive from the way its language and arguments offered a challenge to the American political system, but rather from the manner in which it connected to a long and rich tradition of oppositional politics in American history.
In tracing the various permutations of this model of political economy, it will be argued that populist republicanism formed a remarkably cohesive language of protest acting as the most important source of reformist and radical politics in America. It was republican in its understanding of the relations between politics and the economy, in its model of political economy that seemed to offer a cogent analysis of the encroachment of inequality and monopoly upon American liberty. It was populist, also, in its confidence that the mass of the people could correct the faults in the American polity. Populist republicanism was based on the fusion of republican concerns about corruption and special privileges with the mass democracy of Jacksonian America. For almost a century, it afforded Americans a chance to frame their economic grievances in terms that harked back to the legacy of the American Revolution. Because the political economy of populism focused on the political arena as the fountainhead of special privileges obtained through corruption and bribery, most of the reforms advocated in the name of antimonopoly were of a distinctly political nature. Their common thrust was to place more power into the hands of the only incorruptible agency in the country, the people. Over the course of the nineteenth century, Americans severely weakened state legislatures, adopted the popular ratification of new state constitutions and amendments, and increasingly resorted to popular referenda to decide crucial issues. In the 1890s, some groups embraced the most radical proposal yet to break the power of corrupt lawmakers: direct legislation in the form of the initiative and referendum.
The Legacy of the Revolution
The study of republicanism, built on the pioneering work of Bernard Bailyn and Gordon Wood, has led to a new understanding of the motives and forces behind the American Revolution. No longer seen as just a liberal experiment in self-government, the revolution is now widely viewed as having been driven by a pervasive fear of corruption and the imminent moral decay of American society, and by the desire to counteract the British plot to fully enslave the American colonies. Republicanism continued to be a reservoir of ideas, arguments, and rhetorical choices and conventions throughout the nineteenth century. Most historians concerned with republicanism have probed its implications for political and constitutional issues. Amid the discussions about the chances for a republican form of government, these questions did indeed preoccupy the generation of the Founding Fathers. But already in the 1780s and 1790s, some observers began to argue that the growing commercialization of American society and the involvement of state and the federal governments in economic affairs paved the way for some of the corruption and aristocratic monopolies that had plagued England.
According to James Huston, this argument formed an integral part of republican explanations for social inequality and a rising concentration of wealth. Within this "political economy of aristocracy," the source of oppressive economic conditions could clearly be located in those government policies that bestowed special privileges, charters, and public powers on private individuals and groups, ostensibly to promote economic development. Through the corruption of legislative bodies, elites were scheming to procure for themselves those special privileges and monopolies that would enable them to appropriate the fruits of the labors of common Americans for their own selfish purposes. Corruption, that central fear of the revolutionary generation, emerged as the crucial link in accounting for the willingness of politicians to actively support the creation of artificial monopolies. The American Republic only recapitulated the mistakes that had caused so much misery in Europe.
Soon after the Revolution, it became obvious that the country would be faced with the same problems of economic inequality and political corruption that the revolutionary generation had hoped to leave behind. The rapid economic development of the United States created a host of controversies about political and economic issues, especially the issue of the role of the state in economic affairs. Political scientists have repeatedly remarked on the weakness of the American state in the nineteenth century. It was primarily a state of "courts and parties," as Stephen Skowronek has written, incapable of effective regulation, dominated by the spoils system, and easily accessible to private interests. It is also true, however, that American governments on the state and national level were by no means inactive. They functioned primarily as dispensers of privileges and resources. By giving away vast stretches of public land, by granting the right of eminent domain or the right to build a ferry or to dam a river, and by granting corporate charters, governments sought to promote economic development and to stimulate private industry in the capital-scarce economy of the early nineteenth century. In the process, American governments often blended the boundaries between the public and private spheres, granting public powers to private individuals. It was a system of economic promotion that invited private parties to seek access to the political process in order to partake of government largesse.
One key instrument in the attempts of political elites to stimulate economic development was the granting of corporate charters. The corporation had a long tradition in Anglo-American law as a policy tool of the state. Both in England and in colonial America, a corporation was regarded as a quasi-public association of individuals endowed with public powers for the exercise of a function beneficent to the body politic. By the 1830s, it was becoming obvious that a new legal definition of the relationship between the state and the corporations was emerging. Spurred on by the rapid rise in the number of chartered corporations-Pennsylvania alone granted more than 2,000 until the Civil War-a number of jurists began to dissolve the bond between the state and the corporation. A distinction was made between public and private corporations; while the former, such as a city or township, continued to be under close state supervision, a corporation chartered for purely private (that is, mostly commercial) purposes was emancipated from its dependency upon the state. The business corporation was reinterpreted as just another device to facilitate the transaction of business affairs. The social benefits inherent in economic advancement and the rise of American industry were, in the eyes of the legal scholars and judges who pushed this reinterpretation, reward enough for granting private individuals such rights as limited liability or eminent domain. Yet, even if the distinction between public and private corporations had become well established by 1830s, the notion that a corporation was a creature of the state, operating under a burden of public responsibility and subject to state supervision, remained a crucial argument in "populist republicanism."
Prior to the 1830s, the republican analysis of economic trends had little political impact. Impressed with the rapid progress of their nation, most Americans supported the policies designed to promote private industry. Warnings about the rising levels of inequality and poverty found little popular resonance. By the 1830s, Jacksonian Democracy made a strand of republican economic analysis populist, linking it to popular government, universal suffrage, and egalitarianism. A mode of economic argument was transformed into a powerful political movement. Thoroughly American in its individualism, in its belief in the free market and private property, and in its conviction that a competitive system of private capitalism was most conducive to preserve the freedom and autonomy that formed the birthright of every American, populist republicanism also rendered a constant critique of political and social events in America. Caught up in the drama of the emergence of the first mass democracy the world had ever seen, populist thought and its model of political economy suggested a meaningful explanation of economic and social dislocation and became a potent weapon in the partisan strife that enveloped the American polity.
Excerpted from A Government by the People by Thomas Goebel Copyright © 2002 by University of North Carolina Press. Excerpted by permission.
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Goebel successfully analyzes the larger political context of US politics in exploring the emergence of the institutional tools of direct democracy: the initiative, the referendum, and the recall. . . . Well-written.Choice
An insightful analysis of the origins and operation of the direct democracy movement.Journal of American History
An in-depth history of America's greatest civic reform movement from an economic perspective. . . . Worthy of further examination by historians and political scientists.North Carolina Historical Review