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.