Lincoln Unbound (21 page)

Southern fire-­eaters had wanted the federal government as their tool, an instrument for the protection and expansion of slavery and the suppression of abolition. Rather than abet the slave order, the federal government crushed it and took up the cause of “the producers,” in Pomeroy's phrase. In all their different guises, the producers were now in the saddle. The effect of the policies instituted during the war shouldn't be exaggerated—­railroads and factories would have been built, and the continent settled, without them. And they had doleful unintended consequences, including the inevitable market distortions and ­corruption when government entangles itself with business. At the margins, though, federal policy encouraged and protected the interests of the shock troops of free-­labor civilization, as their dreams and schemes, sweat and toil, ingenuity and brazenness drove the propulsive growth of a continental colossus.

Lincoln didn't live to see it. But he had envisioned it, or something like it, as far back as New Salem. Lincoln's republic was about to become a world power and the most far-­reaching middle-­class society the world had ever known—­“a great empire,” as he had called it in a poetic exaggeration in the 1850s, indeed.

The war had brought a massive growth of government that immediately began to retreat, although never to its antebellum levels. During the war federal spending exceeded $1 billion, ­before dipping below $250 million in the late 1870's (excluding payments on the debt). When peace came, wartime taxes were liquated. Nearly all manufacturing taxes were abolished by 1868, the income tax in 1872.

Debt had been the main means of financing the war. By the end, the government had accumulated $2.7 billion in debt, from $90 million when Lincoln took office. Mary Todd told Herndon that Lincoln had planned after the end of his presidency to take a trip to Europe and then “return & go to California over the Rocky Mountains and see the prospects of the soldiers &c. &c digging [out] gold to pay the National debt.” But the tide of red ink receded. The government enjoyed a long period of budget surpluses and the debt had dwindled below 10 percent of gross domestic product by 1890. Between the flotation of all of those bonds and the deluge of greenbacks, Louis Hacker writes, “the nation's credit base was remarkably extended and manufacturing now had its capital fund with which to build up its plant.”

Its industry operating behind a benign protective wall shielding it from competition, America leapt to the head of the class of industrial powers. From 1860 to the turn of the century, investment in manufacturing increased from $1 billion to almost $10 billion. More than half of the country's commodity output was manufacturing, and Illinois, Ohio, and Michigan were among the country's top manufacturing states. Industry employed about a quarter of the nation's workforce. Soon enough, industrial production in the United States matched that of Great Britain, France, and Germany put together.

America's rural and urban populations both grew and provided a consumer base for manufactured products. Total population nearly doubled from 1870 to 1900, hitting 76 million, up from 40 million in 1870. Cities mushroomed—­New York at more than 3 million, and Chicago at more than 1 million. By some estimates half of the increase in manufacturing was simply a product of a larger workforce. Accounting for 80 percent of the industrial workers, the foreign-­born or the children of the foreign-­born constituted the muscle of American industry.

At the same time, the former battlefield of Kansas saw its population jump from 100,000 to a million from 1860 to 1880. Iowa and Michigan's populations doubled. Minnesota's quadrupled. Agricultural output increased vastly from the end of the war to the cusp of the 20th century. Production of wheat and corn leapt by more than 200 percent.

The Homestead Act drew ­people to the land and out into the Great Plains. In the end, by the 1870s, there would be homestead claims for 270 million acres, equaling about a tenth of the country's territory. The land-­grant college act, meanwhile, had a rocky start. Lacking suitable students, many institutions struggled. At one point, Louisiana State University had more professors than students. But the act (and a follow-­on in 1890) created more than 70 colleges and universities, many of them of enduring significance in American higher education.

The railroads continued to conquer the continent. Another 20,000 miles were added in the decade from 1860 to 1870, reaching about 50,000 total. Congress authorized another three transcontinentals, also showered with free land. Already in 1868, the United States had the most railroad track per capita on earth. More than a third of U.S. iron went to making rails. By 1890, the railroads were running on some 167,000 miles of track.

The story of this surge in construction is as grubby as it is heroic. It involves feats of construction in conditions and over distances that once would have seemed impossible. It also involved highly creative and brazen acts of theft, aided and abetted by the politicians who supported the ventures. The transcontinental railroad has competing symbols. On the one hand, there's the tableau at Promontory Summit when after some 1,800 miles the Union Pacific and Central Pacific met in 1869 and the last spike was knocked into the final tie, in the nineteenth-­century equivalent of the moon landing (the “work of giants,” said William Tecumseh Sherman). On the other, there is the Crédit Mobilier construction company, set up to grossly overcharge while building the Union Pacific and enrich insiders, leading to a scandal that erupted publicly during the Grant administration (“the King of Frauds,” said the
New York Sun
).

It is hard to grasp the scope of government support for the railroads, in mind-bogglingly generous loans and land giveaways. The historian of the railroads Richard White writes that “railroads received the land equivalent of small countries.” All told they got in excess of 130 million acres of federal land, an amount that, if it were made into a state, would be larger than all the others except Alaska and Texas. The lavish subsidies naturally encouraged the building of uneconomical roads. In the aftermath of the Panic of 1893, a quarter of railroad assets were in receivership.

Despite the corruption, waste, and inefficiency, railroads had a large hand in the transformation of American economic life. Together with the telegraph—­Lincoln's first inaugural reached the West Coast via pony express; his second via telegraph—they brought the country ever tighter together. They hastened the settlement of the West and connected the settlers with the wider world. They cut the time it took to get from one coast to another from months to less than a week. They drastically reduced the cost of shipping. They gave us standard time, replacing the lunatic patchwork of different local times with a few time zones. By 1890, nearly everyone lived relatively close to a railroad or a canal, on average within ten miles even in sparsely populated ­areas, according to historian Walter Licht. The backwoods isolation Lincoln had known in his youth was giving way in the new era.

The Census Bureau declared the frontier closed in 1890. “Up to and including 1880,” it said, “the country had a frontier of settlement, but at present the unsettled area has been so broken into by isolated bodies of settlement there can hardly be said to be a frontier line.” The Civil War had barely ended when the United States acquired Alaska, taking, in the words of Charles and Mary Beard, “the western front out on the Pacific.”

A revolution swept American business. Corporate behemoths unimaginable in the previous age of small, family-­run businesses dominated the economic landscape by the turn of the century. They didn't need to look abroad to Britain for capital anymore. They could find it on a burgeoning Wall Street. The war had created a class of financiers, mostly in New York, who had been involved in the debt-­financing of the conflict and became increasingly influential after it ended. In 1864, according to Bensel, there had been fewer than 200 bankers and brokers in New York City; by 1870, there were nearly 2,000. The country now had a national financial market. Banks in the big cities operated all around the country and the public had gotten a rudimentary ­education in modern finance through Jay Cooke's great Civil War bond drives.

The captains of this new economic dispensation are known as Robber Barons, a pejorative that doesn't do justice to their contribution, even if their sharp practices, ruthlessness, corruption, and greed are legendary. It was famously said that John D. Rockefeller's Standard Oil could do anything with the Pennsylvania legislature except refine it.

Most of them grew so rich because they were so good at what they did. Bigness didn't guarantee success, or else every American child would know of the exploits of such giants as Great Western Cereal and Consolidated Rubber Tire. If firms weren't well managed they went under, and the transportation and communications revolutions brought intensified competition.

Andrew Carnegie represented the new breed. It tended to consist of men who didn't come from wealth, who had little in the way of education, and who started on the lowliest rungs of the business ladder. They were self-­made titans of business.

Carnegie's family left Scotland when it could no longer make a living—­in other words, he was exactly the type Lincoln had invoked in his vision of America as an outlet for strivers the world over. Starting as a telegraph clerk at the Pennsylvania Railroad, Carnegie worked his way up and learned business as he went. He developed a passionate attachment to iron, which led him to steel. At the end of the Civil War, the U.S. produced 1,643 tons of Bessemer steel; by 1897, it produced more than 7 million tons. Carnegie poured his profits into innovations to make steel cheaper (and to take more market share). He wrote in a 1900 essay, “If there be in human society one truth clearer and more indisputable than another it is that the cheapening of articles . . . insures their general distribution.” Down and down he drove the costs of production and the price of steel, from about $60 per ton in 1875 to $30 in 1888.

This was a boon to the economy, and to Carnegie. But who would begrudge him it? He wouldn't have made it, as Louis Hacker points out, without tremendous ingenuity, a supreme knack for management, and a monomaniacal devotion to thrift. A colleague said, “Carnegie never wanted to know the profits. He always wanted to know the cost.” The dedication of a patriotic book he wrote in 1886 read:

TO THE

BELOVED REPUBLIC

UNDER WHOSE EQUAL LAWS I AM

MADE THE PEER OF ANY MAN, ALTHOUGH DENIED

POLITICAL EQUALITY BY MY NATIVE LAND,

I DEDICATE THIS BOOK WITH AN INTENSITY OF GRATITUDE

AND ADMIRATION WHICH THE NATIVE-­BORN CITIZEN

CAN NEITHER FEEL NOR UNDERSTAND.

The South stood outside the mainstream of an American economy shifting into a higher gear. Even without the war, it wouldn't have had in place the necessary architecture—­including the transportation network and banking system—­to keep up with the North. But the ruination of the war was like a pre-­atomic-­age Nagasaki. The South's share of the nation's wealth collapsed, from 30 percent before the war to 12 percent in 1870. Planters no longer made up a disproportionate share of the wealthiest Americans. Federal policies—­from the tariff that favored Northern manufacturers to the pensions that were available for Union veterans but not Confederate further disadvantaged the region. The North flinched from more radical reconstruction schemes that would have involved confiscating and redistributing planter property, out of a respect for property rights and fear of unleashing a class-­based politics impossible to limit to the South. On the contrary, Northern financial interests were eager for Southern cotton production to recover and contribute to foreign exchange. Reconstruction petered out.

In this reduced state, and eventually left to its own devices, the South clung to a retrograde labor system that looked advanced only compared to slavery. It transitioned from slavery to sharecropping, in what amounted to debt peonage. Merchants wanted sharecroppers to have to buy their goods, so prevented them from growing anything but cotton, which you can't eat. The natural tendency was for everyone in the South to default to cotton anyway, out of familiarity, even though its value was falling; in the decades after the war, its price dropped from forty-­three cents a pound to five cents a pound. The cycle of debt kept black farmers locked down, and so did racist repression. The South swam in cheap labor that relieved it of the need to find innovative substitutes for brawn. “Instead of installing machinery to do the work,” an operator of a lumber mill commented, “we always undertook to do it putting in another cheap negro.”

The elite in the South still feared the potential dislocations that widespread industrialization promised to the region's social system, so they kept a lid on it. The region churned out less than 10 percent of the nation's industrial output—­much of it relatively crude, such as lumbering—­while it had 30 percent of the nation's population, according to Licht. In a famous lament, the editor of the
Atlanta Constitution
wrote of a funeral and how all the implements at it were manufactured elsewhere: “The South didn't furnish a thing on earth for that funeral but the corpse and the hole in the ground.”

The postbellum epoch in America was characterized not just by the onrush of industrial and financial progress, but by chaos and conflict. It was a time of booms, busts, and panics, of labor unrest and violent crackdowns by management, of growing power for the masters of finance, of spectacular stock manipulations, of mergers creating massive corporate entities, some almost entirely dominating the field in their markets.

Amid all this turmoil, though, we had become the richest country on earth. That wealth wasn't distributed evenly—­far from it. The top 1 percent in 1890 held about half the property. Still, as Walter Licht notes, real wages rose some 70 percent from the end of the Civil War to 1890. Skilled workers in America were much better off than comparable workers elsewhere. Less-skilled workers were at least a little better off. And America was highly mobile. “A number of studies,” historian Charles R. ­Morris writes, “show quite high rates of farm laborers becoming farm owners, blue-­collar workers becoming managers, and countinghouse clerks rising to very senior positions.” It was a period of progress, uneven and at times unfair, but progress all the same.