The American Pageant (12th Edition)

Chapter 24 – Page 528

Our Critique

528 “The wealthy class is becoming more wealthy; but the poorer class is becoming more dependent. The gulf between the employed and the employer is growing wider; social contrasts are becoming sharper; as liveried carriages appear; so do barefooted children.” —Henry George, 1879

Just as Bailey begins the last chapter with a biased quotation from an enemy of President Grant, so Bailey opens this chapter on the economic rise of the United States with a biased quote condemning the economic growth of the Gilded Age, from 1865–1900. Henry George is a bit like Bernie Sanders—both disliked the capitalist system and both rejected the major parties and ran for office on third-party tickets. The truth is that the growth of the US economy in the late 1800s made the United States a magnet for the largest immigration in world history. If conditions were so miserable, why did so many immigrants come and stay? They did so because they liked the greater opportunity and the higher quality of life in the United States. Some failed, but most enjoyed the variety of foods, jobs, and good places to live. They sought the liberty in the United States to raise families, perhaps buy their own homes, and enjoy the new American inventions of the period—from typewriters to electric lights to telephones.

There was increasing equality of opportunity in the Gilded Age, but Henry George is right on this point: freedom often leads to wide disparities of wealth. Some people, through talent, hard work, and sometimes luck, are more successful than others. During the Gilded Age, we did have “liveried carriages” for the wealthy, but those same wealthy Americans with their liveried carriages would be utterly envious of middle-class and even poorer Americans one hundred years later, who enjoyed faster and more comfortable travel in air-conditioned cars and airplanes. Those inventions, which primarily benefitted the masses, were made possible because entrepreneurs had the freedom to dream and create in the United States.

To Bailey, the Gilded Age is not a period of amazing American triumph, it is a dark period of corrupt business, oppressed laborers, and missed opportunities. Students, in Bailey’s view, should not celebrate what great things freedom and American ingenuity accomplished in improving the world; instead students should lament the problems that still remained.

528 “The government-business entanglements that increasingly shaped politics after the Civil War also undergirded the industrial development of the nation.”

Bailey seems to sanction the idea of “government-business entanglements” after the Civil War. The Constitution, however, limits the role of government in business, and most Gilded Age presidents (and perhaps most voters then too) agreed. The big expansion that occurred in the United States after the Civil War was most effective when it was done privately—by entrepreneurs competing in relatively free markets. One error Bailey makes is that he never distinguishes between the market entrepreneurs, who wanted to succeed by making the best products at the lowest price, and political entrepreneurs, who wanted to succeed by obtaining and using government subsidies to defeat their rivals. Bailey lumps both groups together.

528 “Transcontinental railroad building was so costly and risky as to require government subsidies.”

Bailey is wrong. The evidence suggests otherwise. Here he describes the Union Pacific and the Central Pacific—the first two transcontinental railroads. Indeed they had federal subsidies of land and cash. Later, the Northern Pacific Railroad was given federal subsidies of land. But the Great Northern Railroad, under James J. Hill, received no federal subsidies and it was so successful that it was the only transcontinental not to lose money during the Panic of 1893. Both the Union Pacific and Northern Pacific Railroads went broke during the 1890s. Thus, Bailey’s statement is factually incorrect—transcontinental railroad building was not “so costly and risky as to require government subsidies.” But enough politicians, ever eager to win votes, approved them anyway.

528 “All told, Washington rewarded the [transcontinental] railroads with 155,504,994 acres, and the western states contributed 49 million more—a total area larger than Texas. Grasping railroads tied up even more land than this for a number of years.”

The textbook fails to ask a key question: Who is more at fault here, the “grasping railroads” or the politicians who decided to dole out federal cash? If the politicians had not coughed up tens of millions of dollars in cash, and land the size of Texas, railroad operators would have had no incentive to rush after this money—and do foolish things. For example, the Union Pacific and Central Pacific, because they were competing for subsidies, built their railroads way too quickly, built on poor grades, sometimes built crooked roads to get more money, sometimes built with flimsy rails, and regularly upset the Indians in the Midwest with their headlong rush to build. Bailey describes some of this, but it was a problem created because the federal government offered incentives for railroad builders to do foolish things to win federal dollars.