Manifest Destiny of Capitalism

Parallels aplenty abound when one examines the turn-of-the-19th-century farm economy, trade and corporate accountability issues with that similar advent of the 21st century. If ever there was a more perfect example of not learning from past mistakes, we are witnessing it now.

The era of 1900-1920 has been called the "Golden Age of Agriculture" and for future decades when old-timers talked about the "good ol' days," they meant that period.

In contrast with the late 1800s, the dawn of a new century brought relative prosperity and abundance to American agriculture after the post-Civil-War reoccurring depressions. By 1910 farmers' purchasing power would become equal to that of urban, industrial workers, resulting in a four-year period that would soon become in the following decades the basis for calculating "parity" prices for agriculture.

What happened in these first 20 years of the new century, therefore, is crucially important to any study of America's chronic agricultural crisis, not only because these decades would alter the character of agriculture, but also because social transformations took place so rapidly that the farmers and the communities they supported lacked adequate time to adjust.

Farm prices began moving upward, in some cases more rapidly than the increase in the general price level. Steam power and broader-based education by the State Experiment Stations and USDA also played important roles in increasing farm production.

Following the panic of 1893, a severe drought not only triggered a marked decline both in the number and quality of livestock, but a dramatic increase in the price of two essential winter feed crops -- corn and hay. These unfavorable weather conditions in turn accelerated the acreage devoted to grain production in 1895 and early 1896, leading to exceedingly low prices for both farm products. Prices would remain low for the next year or so while the nation struggled with the currency question.

Several countries abroad began to have short crops of grain and feed in 1896, so by the end of 1897 commodity prices began to rise. Soon thereafter the US, still a debtor nation, realized that the chief method of meeting its foreign obligations was through the exporting of its agricultural products.

The influential Iowa farm editor, Henry C. Wallace, writing in 1900, described this period:

"The farmer is the main element in national prosperity because there are so many of him. When the farmers prosper, have money to pay their debts, provide for their families, and make improvements, good times are clearly in sight, as they were in 1897. The farmer's money started the mills and factories all over the land. For two or three years they had been running on short time, the country was bare of manufactured products, the farmers had great need of them, and this farm prosperity started a wave of prosperity among all classes, which has continued to the present hour."

Some individuals at the time thought it was more than just the farmer's money starting the mills and factories, but in fact it was the "surplus" of farmers themselves that was creating this new wave of prosperity.

At this time farmers were also accelerating their struggle against the trusts and tariffs, believing as they did that protectionism, while benefiting the trusts, raised farmers' costs on the one hand and reduced their overseas markets on the other.

Typical of this view was a 1900 Prairie Farmer editorial, which declared:

"Under the paternalism of a highly protective tariff that walls out foreign competition by putting an obstructive tax on trade, the trusts have become possible, the tariffs have become the citadel of their strength, and herein they have entrenched themselves. Some of our astute politicians aver that the trusts are not guilty of any moral obliquity, because they are amenable to any ethical rules or dogmas, nor do they come under the restraint of true civics, for it is claimed that they occupy a zone that is peculiarly their own, whose delimitation is that of business. Accepting this view of the case, then, why are not they conducted on business principles?"

Those inadequacies that were to be found at this time in the nation's political and economic structure and which the "shadow populists" had sought to remedy were soon to be championed by the so-called Progressive movement. As populist historian Lawrence Goodwyn points out:

"The countervailing idea of the 'progressive society' materialized slowly out of the symbolic values embedded in the gold standard. The 'sanctity of contracts' and 'the national honor,' it soon became apparent, were foremost among them. But, gradually, and with the vast distributional range afforded by the Republican campaign treasury, broader themes of 'peace, progress, patriotism, and prosperity,' came to characterize the [1896] campaign for William McKinley.

"The 'progressive society' advanced by Mark Hanna [McKinley's 'campaign manager'] in the name of the corporate community was inherently a well-dressed, churchgoing society. The various slogans employed were not mere expressions of a cynical politics, but rather the authentic assertions of an emerging American world view."

The Progressive era, which reached full flower in the early 1900s during the Theodore Roosevelt administration, while admitting that the US's "new wave of prosperity" was creating enormous social and economic problems, nevertheless believed that that same system could in turn solve the world's economic problems.

Consequently, progressives argued, if officeholders and businessmen were honest, upright, good and efficient, and applied the principles of science with the public good in mind, all the apparent evils of the time would disappear.

They also believed that scientific management and monopoly integration and power, if used wisely, could assuredly benefit all of society. To progressives, therefore, trusts were a fact of life; it was simply a matter of "good" and "bad" trusts.

The key to the monopoly question became one of motive rather than the fact that monopolies existed at all. When Edward Harriman and J.P. Morgan's fight for control of the railroads in the Midwest went to the Supreme Court and the Court ordered Morgan's Northern Securities Company dissolved because of its intent to restrain trade in interstate commerce, the "rule of reason" in anti-trust judicial opinion was introduced.

"Rule of reason" considered only motives, good or bad, behind monopoly, not the de facto economic effects of the combination. Justice Oliver Wendell Holmes in dissenting from the majority opinion believed that precedents should be sought in common law to distinguish between "reasonable" and "unreasonable" intent in restraint of trade. Justice John Marshall Harlan in writing for the majority had expressed the idea that every such combination restrains trade by its very size and is to the public's detriment.

To the scientists, professional people, businessmen and politicians -- the American elites -- bigness and vertical integration were the assured means for a more efficient, stable and prosperous society as a whole. Furthermore, they sincerely believed that vertical integration and/or monopoly was, in American Environmental History author Joseph Petulla's words, "the manifest destiny of capitalism."

A.V. Krebs is director of the Corporate Agribusiness Research Project, PO Box 2201, Everett, WA 98203. He publishes a free email newsletter, The Agribusiness Examiner; email; Web site:

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