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The Political Economy of American Industrialization, 1877-1900

Author(s):Bensel, Richard Franklin
Reviewer(s):Carlton, David L.

Published by EH.NET (August 2001)

Richard Franklin Bensel, The Political Economy of American

Industrialization, 1877-1900. Cambridge, UK and New York: Cambridge

University Press, 2000. xxiii + 549 pp. $64.95 (cloth), ISBN: 0-521-77233-8;

$24.95 (paper), ISBN: 0-521-77604-X.

Reviewed for EH.Net by David L. Carlton, Department of History, Vanderbilt

University.

Economics, Politics, and Region in the Making of Modern America

In The Political Economy of American Industrialization, 1877-1900,

Richard F. Bensel further develops the argument he first outlined in

Sectionalism and American Political Conflict (1984), and which he began

to flesh out more intensively in Yankee Leviathan (1990): that the key

to American politics lies in its role in shaping the enduring struggle for

resources between “core” and “peripheral” regions.

In the present installment of his sweeping reinterpretation of American

political history, Bensel focuses on the period lying between the end of

Reconstruction and the threshold of the “Progressive Era” — a period

beginning with a rough balance between the two major parties, Republican and

Democratic; proceeding through a period of increasing instability; and

concluding with the consolidation of Republican dominance following what

Walter Dean Burnham has called “the system of 1896.”[1] Economically, it was

also the era that saw the creation of the first modern industrial

corporations, the consolidation of an integrated national economy, and the

rise to dominance of an urban-industrial “core” region, the American

Manufacturing Belt. To Bensel, as to numerous other observers, the political

and the economic events are fundamentally related. Bensel’s own twist is to

contend that the economic developments are at bottom politically driven. The

rise of the Manufacturing Belt he views as essentially the product of its

expropriation of the surplus productions of the periphery, an expropriation

advanced by the structure of national politics and directed, above all, by the

Republican Party. The Republicans, he contends, built a carefully balanced

program consisting of three parts: (1) tariff protection for “core”

manufacturing, made more broadly popular by offering protection for western

wool producers and tariff-financed pensions for Union veterans; (2)

maintenance of the gold standard — a less popular stance insulated from

popular pressure by handing its administration over to the executive branch;

and (3) creation of an “unregulated” national market, insulated even more from

localistic impulses by consignment to the federal judiciary. By successfully

juggling a coalition of constituencies not all of who accepted the full

program, by fending off successive peripheral challenges to it, and by gaining

crucial new support, by the mid-1890s the Republicans established their

dominance of American politics as the party of the “core.”

In building the party system around divergent regional interests, furthermore,

American politics worked to fragment other potential opposition to the

emerging political economy. The class bases of the parties, for instance,

varied enormously by region; while nonsouthern immigrant workers and

“subsistence” farmers supported the Democrats, lower-class southern blacks and

Appalachian subsistence farmers voted Republican — thus pitting against each

other groups that might otherwise have been allies. The principal forms of

class conflict in late-nineteenth-century America — between sharecroppers and

landlords in the South over control of the cotton crop, and between industrial

workers and industrialists in the North over control of the workplace and

division of its product — had no partisan vehicle for expression in national

politics. In the South, black sharecroppers were ruthlessly suppressed and

increasingly disfranchised (as were many poorer whites). The major third-party

movements of the period, the Greenbackers and the Populists, were mainly

vehicles for petty independent agricultural producers. Despite their

good-faith efforts to create a “union of the producing classes,” their

advocacy (and, by 1896, Democratic advocacy as well) of inflationary monetary

policies that might reverse the redistribution of wealth to the Core wound up

driving most industrial workers into the arms of the “Core” party, the

Republicans. With politics focused on interregional struggles, industrial

workers fought out class issues in the workplace rather than at the ballot

box, making the United States unique in the western world for the frequency

and violence of its strikes. Thus Bensel’s answer to Werner Sombart’s old

question “Why is there no socialism in the United States?”: regional conflict,

not class conflict, drove American politics, and made it possible for a

modernizing elite to advance a profoundly harsh and dislocating economic

agenda while at the same time deftly managing potential democratic challenges.

The preceding summary cannot begin to do justice to the complexity of Bensel’s

argument, which goes into enormous (and, it must be said, often tedious)

detail about the minutiae of party coalition construction and management.

Taking heed of critics of his earlier work, Bensel explores at great length

the problem of silver Republicans in the West and Gold Democrats in the East,

and the paradox that the predominantly anti-gold standard Democrats could

only win nationally by ceding monetary control to their pro-gold New York wing

– control that they fatally took back in 1896.

Among this book’s other virtues can also be counted its description of the

regional economies of the late nineteenth century. Building on his earlier

work, which relates congressional voting behavior to “trade areas” constructed

like those of the modern Rand McNally Commercial Atlases, Bensel demonstrates

emerging regional disparities using a series of economic development measures

standardized by population — value added by manufacturing, patents, wealth,

and adult male literacy — and, most importantly for him, mortgage interest

rates. His analysis here is subtle and complex, most especially in his

exploration of fundamental differences between the two “peripheral” regions,

the South and the West. The key variables, in his view, were capital flows

among the regions. The major money-market centers, New York, Chicago, Boston,

Cincinnati, and Cleveland, were of course in the “Core,” as were the other

capital-exporting trade regions. Western trade regions were major capital

importing regions; however, as rapidly developing regions well integrated into

eastern capital markets for mortgages and municipal bonds, their people were

divided on monetary questions — mining interests and farmers eager for

silver, pro-development elites firm for gold. The South, on the other hand,

remained isolated from national capital flows (at least apart from those

needed to move its harvests into international markets); in this regard it

remained very much a “conquered province.” While Republicans were able to buy

western support for their program of national consolidation, the economically

and (increasingly) politically isolated South was open to “devastating”

exploitation, notably through the protective tariff (p. 20). If the

Manufacturing Belt was in fact built on massive interregional transfers of

wealth, the South was its major victim, and the South was accordingly the

region most firmly opposed to the Republican agenda.

And here this reviewer starts running into trouble. Bensel’s argument is

sweeping, but as one plods through its considerable length one increasingly

fears that he is trying to carry the argument through bald assertion and

repetition. (The book could be considerable shorter and less trying to read —

and, while I’m at it, may this middle-aged, bifocaled reader protest the tiny

typefaces preferred by Cambridge University Press?) Especially disturbing is

Bensel’s cavalier treatment of the profound economic issues raised by his

argument. To be sure, in 527 pages Bensel takes ample opportunity to state and

restate his contentions, frequently in ways that qualify his stronger claims.

But in the end he understands core-periphery relationships in

late-nineteenth-century America to have been fundamentally predatory. Time and

again he asserts that the Manufacturing Belt built its dominance by means of a

“massive” and “harsh” redistribution of wealth from the periphery, mediated by

the tariff, the deflationary gold standard, and Core control of the central

institutions of national economy — banking, railroads, and giant industrial

enterprise.

An economic historian might well ask, “Just what was the precise impact

of these policies on regional disparities?” Clearly the factors he identifies

would work against the interests of the periphery and in favor of those of the

Core — but to what degree? What about countervailing factors? And how much

regional disparity can be explained by factors internal to each region?

In the case of the South, this reviewer finds it hard to credit the notion

that the tariff impoverished the South to any degree comparable to the impact

of the collapse of slavery — the central factor in the eyes of most modern

economic historians, but one that Bensel ignores in favor of reviving old,

politically-driven polemics against the “colonial economy.” Likewise, with

respect to the tariff’s impact on the “Core,” I suspect that much of the

tariff’s redistributive impact was within the Manufacturing Belt (it

only protected some industries, after all), and that it played much

less of a role in the development of the Belt than did the workings of

agglomeration economies, increasing returns to scale, and the awesome burst of

technological and entrepreneurial innovation characterizing America in the

Gilded Age. (Indeed, Bensel himself sometimes declares the tariff “ambiguous”

in its effects (p. 465), treating it primarily as the political glue holding

the Republican Party together — only to reassert that it “clearly and

radically” sucked wealth from the periphery to the core (p. 524).) Finally, as

Bensel himself acknowledges at times, the nationalization of the American

economy offered benefits to the periphery as well, through lowered prices on

manufactured goods; new, urban markets for the meat and grain of the West; and

even industrial opportunities for peripheral entrepreneurs in textiles,

tobacco, and iron. In short, the evolution of regional relationships in the

late-nineteenth-century United States requires a much fuller analysis than we

get here. To be sure, such an analysis may be well beyond his skills (they

certainly are beyond mine), and its sheer complexity may render it impossible

even to an accomplished cliometrician. But such analysis, not bald assertion,

is precisely what we need.

None of the above concerns should detract from Bensel’s achievement; by

reasserting the centrality of region to understanding American economic and

political development, he has done us all a great service. Nonetheless, I

would suggest that Bensel’s basic data are compatible with a somewhat

different interpretation than he offers: that the politics of the Gilded Age

didn’t drive economic change so much as they reflected it.

Politicians are, after all, in the business of interpreting the anxieties of

voters, diagnosing them as political problems and promising political

solutions. Frequently, too, those diagnoses and solutions have been in effect

diversionary, steering politicians and the electorate away from forthright

confrontations of their own ambivalence about social change and toward

convenient external “enemies.” Thus in the 1850s anxieties over wrenching

economic change were refracted into nativism and sectional conflict,

demonizing “Romanists,” the “Slave Power,” and the “Black Republicans.” [2]

In this view, in the late nineteenth century the tariff, and even to a degree

the gold standard, were less causes of regional divergence than

politically useful symbols of that divergence. National economic

consolidation generated more regional disparity than either tariff or gold,

and produced new class tensions in the burgeoning industrial cities of the

Core. But, as Bensel notes, the policies underlying the national economy were

largely carried through by the judiciary, and were thus insulated from

electoral politics in much the same way that control of contemporary European

consolidation has been insulated from popular opposition by its consignment to

the bureaucrats of Brussels. Despite peripheral grumbling about this

“government by judiciary,” however, few Americans of any class or region were

really willing to challenge the fundamentals of economic nationalization;

those who were — the Socialists, Greenbackers, and Populists — were doomed

to marginality, or, like African-Americans or Native Americans, were pushed

out of the system altogether. Democrats and Republicans alike basically

welcomed the consolidation of the national economy as potentially enhancing

the prosperity of all; neither party repudiated the tariff altogether, and,

given the central stabilizing role of the gold standard and its persistence

through both Republican and Democratic administrations, one wonders how long

even a Bryan Administration would have insisted on abandoning it — especially

given the speed with which the issue fell off the national agenda after 1896.

Too many people had a stake in economic nationalization for it ever to have

been threatened; the fears it generated, though, had to be expressed

politically in a manner that was at once a plausible depiction of reality and

an evasion of it.

In other words, at least some of the issues Bensel regards as central to the

creation of the American political economy may have been, in large part, what

radical critics of the American economy said they were: mere shadow-boxing,

ploys by the political classes to distract voters from the fundamental issues

of inequity in a capitalist political economy. Bensel could convince me

otherwise, but only if he provides an economic analysis to match the subtlety

of his political analysis.

David L. Carlton is Associate Professor of History at Vanderbilt University,

specializing in the history of the American South. His principal

work-in-progress is a study of the industrialization of North Carolina,

tentatively titled Strategies of Southern Development.

[1] Walter Dean Burnham, Critical Elections and the Mainsprings of American

Politics. New York: W. W. Norton, 1970, especially chapter 4.

[2] See, for instance, Michael F. Holt, The Political Crisis of the

1850s. New York: Wiley, 1978.

Subject(s):Urban and Regional History
Geographic Area(s):North America
Time Period(s):19th Century