Carroll Quigley - Tragedy and Hope - A History of the World in Our Time

The inability of the investment bankers and their industrial allies to control the Democratic Convention of 1896 was a result of the agrarian discontent of the period 1868-1896. This discontent in turn was based, very largely, on the monetary tactics of the banking oligarchy. The bankers were wedded to the gold standard for reasons we have already explained. Accordingly, at the end of the Civil War, they persuaded the Grant Administration to curb the postwar inflation and go back on the gold standard (crash of 1873 and resumption of specie payments in 1875). This gave the bankers a control of the supply of money which they did not hesitate to use for their own purposes, as Morgan ruthlessly pressurized Cleveland in 189 3-1896. The bankers’ affection for low prices was not shared by the farmers, since each time prices of farm products went down the burden of farmers’ debts (especially mortgages) became greater. Moreover, farm prices, being much more competitive than industrial prices, and not protected by a tariff, fell much faster than industrial prices, and farmers could not reduce costs or modify their production plans nearly so rapidly as industrialists could. The result was a systematic exploitation of the agrarian sectors of the community by the financial and industrial sectors. This exploitation took the form of high industrial prices, high (and discriminatory) railroad rates, high interest charges, low farm prices, and a very low level of farm services by railroads and the government. Unable to resist by economic weapons, the farmers of the West turned to political relief, but were greatly hampered by their reluctance to vote Democratic (because of their memories of the Civil War). Instead, they tried to work on the state political level through local legislation (so-called Granger Laws) and set up third-party movements (like the Greenback Party in 1878 or the Populist Party in 1892). By 1896, however, agrarian discontent rose so high that it began to overcome the memory of the Democratic role in the Civil War. The capture of the Democratic Party by these forces of discontent under William Jennings Bryan in 1896, who was determined to obtain higher prices by increasing the supply of money on a bimetallic rather than a gold basis, presented the electorate with an election on a social and economic issue for the first time in a generation. Though the forces of high finance and of big business were in a state of near panic, by a mighty effort involving large-scale spending they were successful in electing McKinley.

The inability of plutocracy to control the Democratic Party as it had demonstrated it could control the Republican Party, made it advisable for them to adopt a one-party outlook on political affairs, although they continued to contribute to some extent to both parties and did not cease their efforts to control both. In fact on two occasions, in 1904 and in 1924, J. P. Morgan was able to sit back with a feeling of satisfaction to watch a presidential election in which the candidates of both parties were in his sphere of influence. In 1924 the Democratic candidate was one of his chief lawyers, while the Republican candidate was the classmate and handpicked choice of his partner, Dwight Morrow. Usually, Morgan had to share this political influence with other sectors of the business oligarchy, especially with the Rockefeller interest (as was done, for example, by dividing the ticket between them in 1900 and in 1920).

The agrarian discontent, the growth of monopolies, the oppression of labor, and the excesses of Wall Street financiers made the country very restless in the period 1890-1900. All this could have been alleviated merely by increasing the supply of money sufficiently to raise prices somewhat, but the financiers in this period, just as thirty years later, were determined to defend the gold standard no matter what happened. In looking about for some issue which would distract public discontent from domestic economic issues, what better solution than a crisis in foreign affairs? Cleveland had stumbled upon this alternative, more or less accidentally, in 1895 when he stirred up a controversy with Great Britain over Venezuela. The great opportunity, however, came with the Cuban revolt against Spain in 1895. While the “yellow press,” led by William Randolph Hearst, roused public opinion, Henry Cabot Lodge and Theodore Roosevelt plotted how they could best get the United States into the fracas. They got the excuse they needed when the American battleship Maine was sunk by a mysterious explosion in Havana harbor in February 1898. In two months the United States declared war on Spain to fight for Cuban independence. The resulting victory revealed the United States as a world naval power, established it is an imperialist power with possession of Puerto Rico, Guam, and the Philippines, whetted some appetites for imperialist glory, and covered the transition from the long-drawn age of semi-depression to a new period of prosperity. This new period of prosperity was spurred to some extent by the increased demand for industrial products arising from the war, but even more by the new period of rising prices associated with a considerable increase in the world production of gold from South Africa and Alaska after 1895.

America’s entrance upon the stage as a world power continued with the annexation of Hawaii in 1898, the intervention in the Boxer uprising in 1900, the seizure of Panama in 1903, the diplomatic intervention in the Russo-Japanese War in 1905, the round-the-world cruise of the American Navy in 1908, the military occupation of Nicaragua in 1912, the opening of the Panama Canal in 1914, and military intervention in Mexico in 1916 .

During this same period, there appeared a new movement for economic and political reform known as Progressivism. The Progressive movement resulted from a combination of forces, some new and some old. Its foundation rested on the remains of agrarian and labor discontent which had struggled so vainly before 1897. There was also, as a kind of afterthought on the part of successful business leaders, a weakening of acquisitive selfishness and a revival of the older sense of social obligation and idealism. To some extent this feeling was mixed with a realization that the position and privileges of the very wealthy could be preserved better with superficial concessions and increased opportunity for the discontented to blow off steam than from any policy of blind obstructionism on the part of the rich. As an example of the more idealistic impulse we might mention the creation of the various Carnegie foundations to work for universal peace or to extend scholarly work in science and social studies. As an example of the more practical point of view we might mention the founding of The New Republic, a “liberal weekly paper,” by an agent of Morgan financed with Whitney money (1914). Somewhat similar to this last point was the growth of a new “liberal press,” which found it profitable to print the writings of “muckrakers,” and thus expose to the public eye the seamy side of Big Business and of human nature itself. But the great opportunity for the Progressive forces arose from a split within Big Business between the older forces of financial capitalism led by Morgan and the newer forces of monopoly capitalism organized around the Rockefeller bloc. As a consequence, the Republican Party was split between the followers of Theodore Roosevelt and those of William Howard Taft, so that the combined forces of the liberal East and the agrarian West were able to capture the Presidency under Woodrow Wilson in 1912.

Wilson roused a good deal of popular enthusiasm with his talk of “New Freedom” and the rights of the underdog, but his program amounted to little more than an attempt to establish on a Federal basis those reforms which agrarian and labor discontent had been seeking on a state basis for many years. Wilson was by no means a radical (after all, he had been accepting money for his personal income from rich industrialists like Cleveland Dodge and Cyrus Hall McCormick during his professorship at Princeton, and this kind of thing by no means ceased when he entered politics in 1910), and there was a good deal of unconscious hypocrisy in many of his resounding public speeches. Be this as it may, his political and administrative reforms were a good deal more effective than his economic or social reforms. The Clayton Antitrust Act and the Federal Trade Commission Act (1913) were soon tightly wrapped in litigation and futility. On the other hand, the direct election of senators, the establishment of an income tax and of the Federal Reserve System, and the creation of a Federal Farm Loan System (1916) and of rural delivery of mail and parcel post, as well as the first steps toward various laboring enactments, like minimum wages for merchant seamen, restrictions on child labor, and an eight-hour day for railroad workers, justified the support which Progressives had given to Wilson.