Why things got better.
People are nostalgic for the fifties and sixties. It was a time of great prosperity for a generation that was able to buy homes, go to college, and great economic growth. People often remember certain parts of the reason why things were better; however, many people don’t include the full picture. This is often called “selective memory”. We need to talk about why things were better, and the forces that made things better.
Our story begins in the Gilded Age, which is usually said to have started right after the American Civil War during Reconstruction. The West was being opened to settlers and economic development. The South in this period is finally industrializing because of capitalism being introduced to the region. As a result, America’s economy was booming, and an influx of immigrants settled in America.
Railways were built by people like Cornelius Vanderbilt and James J Hill. This resulted in goods being transported across the country at a much quicker rate. This also led to the expansion of cities as people were pouring in from the countryside. Expansion required steel and a new way of production which made it cheaper. Andrew Carnegie introduced the Bessemer process from England, and this made steel production much more cost-effective. Many of these men were often called “Captains of Industry”.
When people moved into the cities, communication became much more vibrant and led to technological advances. Many of the products we use today were invented in this era such as lightbulbs, cars, telephones, cameras, etc.
However, there were great things about this era. And is why it is often called the “gilded age”. It’s a lot more nuanced than that.
The term “gilded” is a moniker used by Mark Twain in his book The Gilded Age: A Tale of Today to describe it as golden on the outside, but rotten to the core on the inside [3].
Troubling parts about the Gilded Age
While the economy was seeing the fastest economic growth in US history, it also contained the longest recorded contraction. This happened between 1873–1879 and is called the “Long Depression”. Business cycles were epic in this era, epic booms, and epic busts. The 1880s were a period of cataclysmic business cycles. Bank panics were quite common, and they were not trusted (it was common for farmers to keep money under their beds).
Wages increased quickly in this era, but they also decreased significantly. Workers were paid practically nothing, and the only reason wages even went up was because bosses had to compete with the west, the west had open land to homestead on. But by the 1890s, much of the good land was taken up. The rest became what was known as “dirt farmers”.
Regulations such as workplace safety laws and housing inspections were practically nonexistent. Got your arm chopped off in an industrial meatpacking accident? Too bad. There was no workman’s compensation and many resorted to panhandling. Because people got body parts chopped off, it was common to find fingers in their food such as hotdogs. Hey it’s still sausage, right? You better hope you didn’t damage the machines in the process because the employer was likely to bill you.
There was often no filtration and barely any cleaning of the workplaces. Diseases like phossy jaw and black lung were very common. People worked 80–100-hour workweeks and had no breaks. It was common for workers to have no breaks in between and even pass out from exhaustion. Taylorism was present where the workers would be micromanaged to achieve maximum efficiency.
Tenements were often overcrowded and had poor sanitation. Those buildings were hotspots for diseases like tuberculosis and scarlet fever. Immigrants had had no choice but to suck it up and suffer in these conditions.
Child labor was robust as the Industrial Revolution drove demand for cheap labor. Children could reach their tiny hands into nooks and crannies, and you didn’t have to pay them as much. However, adult pay was so bad that children were often the breadwinners for the family. Even though Child labor was technically outlawed, it wasn’t taken seriously until the Great Depression.
In many cities, there were areas called company towns. They were communities that were built by a single company for its workers. Everything from the churches, schools, stores, markets, and places of living were owned by one person or executives. These were often little more than shantytowns and tent cities where the lives of its workers were dictated by the companies. Workers were often paid in company script which made sure that a lot of them didn’t leave. Workers voted for the company approved candidates and, in some cases, had bedtimes that were mandatory. This was little better than indentured servitude.
Free market philosophy was quite dominant as trusts (also known as cartels) came to dominate the economy. Markets are a competition. What happens in a competition? Someone wins. When they win, do they let losers keep their fair share or allow others to rise? Of course not. The companies that won came together to form written agreements to make prices high and keep competition out of the market (This was called predatory pricing). Standard Oil was known for participating in this sort of behavior.
Finally, who can forget good old racism. As I have explained in my previous paper “the difference between liberals and leftists”, slavery didn’t necessarily die out as it morphed. When African Americans were freed, they often didn’t have economic assets and couldn’t do anything. Jim Crow laws were enacted to keep African Americans from gaining equality. Native Americans were being butchered in the west and were forced on to reservations in Oklahoma (where they were still stripped of land). Asian Americans built many of the railways in the west but also were paid abysmal wages and subject to racism.
It got ugly.
Who on earth would tolerate such conditions? I know I wouldn’t. It gets worse.
The conditions above eventually culminated into violence. Strikes would often turn violent and most of the time, it was initiated by capitalists who would hire what were called “Pinkertons”. Pinkertons were “private defense agencies” who were mostly used as espionage agents to spy on workers. This prevented organized labor as well as strike breakers (who would beat up striking workers until they went back to work). Outside of Chicago, there was a fort built by rich capitalists which allowed for quick maneuver of the military to stamp out organized labor.
Capitalists would often provide the weapons to initiate these labor wars. The Homestead Strike, which was a strike against Andrew Carnegie and his steel business, was deadly. Of course, the men who worked as Pinkertons would often get overlooked by the courts.
The law system was corrupt from top to bottom and stacked against the working class. It was very common for judges, who were often bought and paid for by capitalist lobbying (now you know why the right wing is so concerned with court control), to turn a blind eye to Pinkertons and corrupt police officers. Remember the part about workplace destruction? The courts would back the capitalists.
Capitalism in general was ugly in the 19th and early 20th century. Depending on what graph and statistics you look at, capitalism made life worse for the people involved. Yes, people’s wages went up, but that doesn’t mean the ability to purchase goods goes up. Because of this, human height went down in many parts of the capitalist world [4]. Yes, technology was developed that made our lives better, but those are just material things. It’s honestly hard to enjoy these material things when we can’t afford them or don’t have the time to do so. Not to mention that capitalism wasn’t exactly voluntary.
For all the reasons listed, these men were often called “Robber Barons”, those with that political perspective resisted change.
Resistance
There were those who liked the system we had and there were those who didn’t and wanted to change. The latter said that if we work together, come together as a collective, we can make changes happen for society.
Labor Unions emerged to counteract the capitalist power dynamic and forced them to the bargaining table (this is called collective bargaining). The American federation of Labor (also known as the AFL, who would eventually become known as the AFL-CIO), was formed as an example of mass organization by the working class. Samuel Gompers was a famous figure in organizing the movement.
Progressives came into the fold and argued for stability in all of this. The first progressive was William Jennings Bryan. He ran in opposition to the railroad companies and wanted to nationalize them so they would offer better prices to farmers (who were being nickled and dimed due to monopolies). He also ran against the Gold Standard which was a major cause of business cycle crises before the emergence of the federal reserve. When there isn’t enough money to circulate in the system, it can cause a crisis. He wanted to introduce silver to the system, whether this would have caused hyperinflation is a matter of debate, but he had a great point and was on the right track.
Theodore Roosevelt, who was originally part of the aristocracy, implemented labor reforms such as the department of labor and the Pure Food and Drug Act after reading “The Jungle” by Upton Sinclair [5]. That book described the conditions of the stockyards and meatpacking industry in Chicago. This was all against the aristocratic will because again, he was a Roosevelt, one of them. Roosevelt also implemented a lot of environmentalist reforms such as the forest service and brought about many national parks.
Finally, you might be surprised to learn this, but it was around this time that socialist movements first got their foothold in America. Socialism used to be a popular idea even in early America with many Quakers often founding many short-lived, but successful democratic communities. Karl Marx was quite fascinated with America and wrote some articles for the New York Daily Tribune. It is often assumed that Abraham Lincoln would read them because he read the Daily Tribune as well as making some very Marxian speeches. Many European immigrants would bring over socialism as an ideal to America and would help found socialist political advocacy groups.
All these aspects combined is where we will start our story. History is about telling a story, not just a memorization of facts.
Beginning of our story
The beginning of our story is in 1894. The panic of 1893 weakened the economy greatly as not as many railroad companies bought rail cars from the Pullman Company. The Pullman Company in Pullman, Illinois (a company town) was owned by and operated by George Pullman. What he did was to lay off workers and reduce wages by 25%. However, he did not decrease rents. The company also charged high rates for gas and water. The American Railroad union tried to form in response to these actions. When the company refused to recognize them, the union voted to strike. The strike showed no signs of success at first so Eugene V. Debs (who was the union leader at the time) called for something drastic. He decided to stop the movement of Pullman cars across the country by calling for a boycott. This became what was essentially a general strike, which is when multiple industries strike. 250,000 workers across the country joined in the general strike. President Grover Cleveland, who was very anti-worker, called for an injunction against the union and Debs. Debs was sentenced to six months in jail [6].
President Cleveland did this supposedly to maintain the flow of federal mail. However, wasn’t that interfering with the free market? Unions, even if they represent public workers, should be allowed to strike. In many ways, the state protects the capitalist class and capitalists will often intertwine the two.
During his time in jail, Debs was visited by the Milwaukee Chapter of Socialists. They gave him a copy of “Das Kapital” by Karl Marx as well as other works by Karl Kautsky. He became a socialist afterwards and spent his remaining years revolting against capitalism.
Debs was with the Democratic Party at first. He rescinded his membership and formed the Social Democratic Party. The Social Democratic lasted a few years until the leadership decided to do a merger with disaffected element of the Socialist Labor Party to form the Socialist Party of America (SPA).
In its first election participation in 1900, the presidential candidate was Debs and they won 87k votes (0.6%). By 1912, they won 901k votes (6%) and even won four counties across the country. This was all thought to be off to a pretty good start. Socialist candidates started winning in races for office. Their biggest presence was in Oklahoma of all places [7]. Daniel Hoan, who was the mayor of Milwaukee and a socialist, was re-elected numerous times.
By this time, the capitalist class started to get scared. They saw all of this and thought: “Uh oh, socialists, office, running, winning, votes!” So, some of the first anti-socialist propaganda started coming out in this era as well.
The biggest hinderance for American socialists in this era was often racism. Many white labor unions often refused to join the SPA because socialists believed in racial equality. There were many openly racist members within the SPA. There was a big debate within the party whether it should participate in racial equality events because it was such a hot button issue. Another often cited issue was the idea of the American dream which many workers thought they would one day achieve. Become a capitalist themselves. Also, Americans bellies were apparently too full of roast beef and apple pie to be radicalized.
A few major events took place which would de-rail the SPA forever.
The first was the SPA’s refusal to endorse America’s entry into World War I which received intense heat from many rather conservative areas within the party such as Oklahoma. Debs said that it was a war declared by capitalists, fought for by workers.
There was a group of anarchists who were called the “Galleanists”. They were a group of insurrectionary anarchists who carried out a series of bombings against officials, businessmen, anti-immigrant politicians, and a church. People began to associate anarchism with these freaks and hell broke loose, especially because apparently the SPA was involved (it wasn’t).
A major event took place in Russia in 1917. The Bolsheviks overthrew the aristocracy and took power. People realized that this could happen in America! The SPA was split down the middle on whether to support the revolution. Those who supported it, broke off and for the CPUSA (communist party of the United States of America) and yes, they are still alive today. Those who didn’t retained the name socialist.
All these events resulted in the first red scare. The infamous Palmer Raids happened which was carried out against many different leftist groups and labor organizations. Many activists who were immigrants, were deported. Debs was sentenced to ten years in jail (he was eventually pardoned by President Harding in 1924 because the charges were frivolous). Ironically, this proved to be somewhat positive for the SPA. Debs ran his 1920 presidential campaign from his jail cell and even gave speeches from his jail cart. A vote for him was a vote for freedom of speech. Anyone should be allowed to say what they want. He was put in jail for being against America’s entry.
It wasn’t doom for the American Left yet. In 1924, progressive Robert La Foullete ran for president in alliance with the Farmer-Laborer Party (which would eventually, with the blessing of FDR, merge with the Minnesota Democratic Party) and the SPA. It was too dangerous to call yourself a socialist, but it was basically the same platform. He won 4.8 million (16.6%) votes [8].
Why have I mentioned all of this? You’re about to find out.
In 1929, there was a major financial crisis as a speculative bubble burst causing one of the darkest days in the history of the stock market. This would all eventually culminate to what would be known as the Great Depression.
There were many different causes of the Great Depression:
One) Bank runs.
This was the biggest cause as no one trusted the banks and it was common for everyone to withdraw their cash at the same time if they believed the bank was about to fail. It didn’t help that the banking system was incredibly corrupt and would pretty much steal people’s money. The bubble burst caused a lot of people to panic, and everyone started to take their money out.
Two) Deflation.
With bank runs going on, people started investing in gold to protect themselves. Which caused a major drop in the monetary base (how much money is in the economy) and impacted prices. It created a vicious cycle of loss of money, closing banks and then loss of money. That’s not all. People also stopped spending money because they thought a commodity would be cheaper tomorrow. This has the potential to halt the economy,
Three) Nominal wages.
To meet this price drop, it would require a significant reduction in wages for the short term, which is totally infeasible. Wages were incapable of going down to meet equilibrium.
Four) the Gold Standard.
There is evidence to suggest that the gold standard was responsible for the worldwide deflation in the late 1920s and early 1930s. The gold standard was largely deflationary in nature so countries like the UK, which left it, were able to keep prices stable while countries that adhered to it like France, fell due to it.
Five) Dust Bowl.
Due to severe drought, and inefficient agricultural methods, there was a major dust storm which killed agriculture in the Great Plains.
Despite what many would have you believe; President Herbert Hoover was very much an economic conservative. He believed that charity would solve the nation’s woes and was very much a fiscal conservative. He almost fiddled his thumbs while Rome burned. Almost is the word because he did do a few economic interventions. For example, he passed the Hawley-Smoot Tarriff act which put protectionist measures in place against Europe to protect the economy (this was normal in economic thinking). The depression was made worse as a result. He also broke with conventional wisdom when he encouraged capitalists to keep wages up (this was part of the reason wages went kept up). Hoover was caught between a rock and a hard place with his ideology [9].
The Great Depression was in full swing by 1932 and unemployment was up to as high as 25%! The working class was in absolute shambles as many either didn’t have jobs, sometimes gave up looking for jobs, or were making less than sustainable wages. While the rich were doing relatively well, the divide between the haves and have nots was massive and very noticeable.
The working class was looking for answers and they found them on the left. There were two big socialist parties (SPA and the Socialist Labor Party which was a Trotskyist offshoot) and the communist party. The Soviet Union was the only economy which was growing during the Great Depression. Polls showed that 25% of Americans thought that revolution was necessary.
Together with the trade unions, ideological progressives, and anarchists, they formed the New Deal coalition. Those leftists went to FDR and said, “You are going to use the government to help the mass of people, or we aren’t going to vote for you. You won’t be president; you won’t be dog catcher.” FDR, who wanted to be the president, knew this was no joke. It was well known that the Left was swelling in numbers. So, he made a deal with the coalition and said “okay, I will give you many of the reforms you want. In return I wish for two things: one) that you go out and spread the ideology of the New Deal and two) I don’t want to hear any more talk about revolution.” The coalition was good for their word [10]. There were those who disagreed, but the left spread the message of revolution anyway.
FDR was good for his word on his end. He passed many reforms such as banking regulations, monetary reform, worker compensation, farmer aid, job programs, unemployment, 40-hour work week, end of child labor, social security (which came out of the SPA), etc. Many people were getting jobs and unemployment went down to around 12% by 1936.
Now where did he go to get the money for all these things? He went to the rich. That is where the money was. At first, they laughed at him because why would they help those miserable curmudgeons? Then FDR pulled his signature move, he smiled and with a charismatic voice, made a plea to them, “gentlemen you don’t understand me. If you don’t lend the money to do this, we will have a Soviet-style revolution on our hands.” Many of the wealthy were alarmed at this and remembered that the Bolshevik Revolution which happened in Russia, could very well happen here.
So, they were split down the middle. There was the pro FDR faction (many of which would go on to become President Kennedys allies) and the anti-FDR action (many of which would go on to become “libertarians”). The pro-FDR faction won and let’s just say the latter, didn’t forgive FDR for taxing their wealth. Even to this day they are still pissed but I digress.
Eventually, World War II could come to reach America. Japan attacked Pearl Harbor and immediately, America went into war mode. FDR used his government powers to effectively nationalize industries to create jobs around the war effort. Everyone got a job either serving abroad or in the factories.
The rich saw this as an opportunity to make money. FDR however, decided he wasn’t going to let the wealthy profit off the war, so he passed a top 94% marginal tax rate (he originally tried for 100%).
America entered an awkward alliance with the Soviet Union. One was capitalist, while the other was communist. But both knew that they needed one another to defeat the axis powers. We used to post pictures of Uncle Sam and Joseph Stalin locking arms with one another in the post office. Being a Marxist of any kind was seen as a badge of honor because of the fight against fascism.
Eventually, the war ended in 1945 with an allied victory.
Why things were better.
All the events which have been mentioned in this paper, culminated to produce the prosperity that many Americans experienced in the 1950s and 60s.
The primary reasons:
One) Destruction of Europe.
The biggest reason why things were better for people in the 50s and 60s was because America was the only industrialized nation whose infrastructure was not destroyed by WWII (apart from Pearl Harbor).
Germany: gone.
Great Britain: While never formally invaded, it was however obliterated during the Battle of London.
France: gone.
Spain: Had a brutal civil war in the 30s and hadn’t recovered for a long time.
Italy: gone.
China: wasn’t industrialized yet and had a brutal civil war with the communists. It was, however, quite obliterated.
Japan: gone.
Soviet Union: couldn’t compete for several reasons. It was, however, the country with the highest death toll.
Low supply and high demand mean higher prices. Higher price means more profit. Also, heavy equipment fetches even higher prices so even more profit.
Basically, America was standing tall while everyone else was absolutely destroyed.
Two) penned up demand.
During the 30s and 40s, Americans were not buying anything. They didn’t have sufficient income to buy goods such as paint for your house, cars, consumer goods, etc. The only industries that were doing okay during this era were movies and sports (mostly as an escape from reality). During WWII, people were saving their money for a better time because everyone had rations given to them. Afterwards, a boom happened. Many of the mentioned commodities were purchased afterwards and this contributed to the boom.
Three) competition (this one is kind of repressed).
In 1945, the Soviet Union took Berlin and defeated Nazi Germany. This caused a spike in socialist and communist propaganda and adherence. Socialists and communists were everywhere. The United States, knowing full well that Europe could turn communist at any moment. There was a theory that once you became totalitarian, you couldn’t get out (which turned out to not be true, but it was widely believed). We funded the Marshall Plan which rebuilt many capitalist nations so long as they turned down communism. This was the reason why the Cold War started because the communists were rightfully pissed. We essentially built the social democracies that Europe has today and the rich capitalists, while knowing this was an unpleasant necessity, didn’t want to lose everything. Because for the communists, providing all these things, regardless of if you believed they provided them, was essential to human happiness.
Other reasons
Just because America is doing well economically, it doesn’t mean the prosperity is spread out to everyone. Let’s explore the other reasons why things were better:
One) The New Deal
As I have explained earlier, the New Deal was passed to counteract the leftist threat in America. It can be argued that America became an example of trying to compromise with the left and thus eventually weakening their outreach. Rather than Europe which tried to destroy it thus making it stronger in the end.
The New Deal had many labor reforms which brought significant economic leverage to workers such as protection of unions from termination, minimum wage, and abolition of child labor being seriously enforced. Unions make wages go up in every sector for workers not involved in a union because the employer is afraid his employees will unionize. During the Great Depression, leftists were organizing the working class into labor unions. Many workers joined labor unions for the first time. Their parents had never been in a union. Union participation went up as high as 30% in the private sector. They protect workers from their employers. Profit rates were also quite high in this era and capitalists had enough to spare.
Two) Internal reinvestment
The highest level of taxation was 91% of the wealthiest people. Yes, not as many people paid it but that’s because many of them reinvested their money into the working class. So how did they spend that tax money? They reinvested it into the economy as Keynesian economics was the most popular school of economic thought at the time. The GI bill allowed many veterans to go to college and get well-paying jobs afterwards which allowed the middle class to boom. Eisenhower expanded social security and implemented one of the largest public works programs called the interstate highway system. There was also the housing subsidies program which allowed many working-class Americans to buy homes. Eisenhower even managed to have a government spending surplus!
Three) Closed off jobs.
Racial minorities, particularly African Americans, could not participate in the job market due to Jim Crow laws which allowed for discrimination. They were also denied the ability to build generation wealth through housing due to redlining. So, all the wealth was being built by white Americans. Particularly white males. High demand for labor and less supply for it often means higher wages. The only reason why things even got better for minorities was because they were afraid of leftism in America.
Four) Height of the American empire.
America was the absolute center of the world at this time. The Bretton Woods Agreement made it so that foreign countries had to buy goods in US dollars, which made our currency much stronger. Also, if you wanted to overspend, you would need gold to back it up.
American prosperity had nothing really to do with the nuclear family, or American exceptionalism, like so many conservatives will often sight as the reason why things were better.
Conclusion
The reason why things were better was because it was a very specific, special time in which we were at the right time and the right place. America was so prosperous that it could afford to give many Americans, the so-called “American Dream”. Also, certain forces forced capital to compromise and make things better for everyone. Otherwise, we could all have been communists by now. It was a forced anomaly of capitalism.
Sources
[1] 25 Haunting Photos Of Life Inside New York’s Tenements (allthatsinteresting.com)
[2] The Gilded Age — Daily Dose Documentary (dailydosenow.com)
[3] Gilded Age — Fashion, Period & Definition | HISTORY
[5] TR Center — The Jungle (theodorerooseveltcenter.org)
[6] Pullman Strike — Wikipedia
[7] Eugene V. Debs — Wikipedia
[8] Robert M. La Follette — Wikipedia
[9] Great Depression — RationalWiki
[10] Wolff, Richard. Understanding Socialism.
