Capitalism Takes Command

The Social Transformation of Nineteenth-Century America

Michael Zakim, Gary J. Kornblith, Michael Zakim, Gary J. Kornblith

• Publisher: University of Chicago Press
• Year: 2011
• Print ISBN: 9780226451107, 9780226451091
• eBook ISBN: 9780226977997
• Topic: History
• Subtopic: Economic History
• Index: History

Most scholarship on nineteenth-century America's transformation into a market society has focused on consumption, romanticized visions of workers, and analysis of firms and factories. Building on but moving past these studies, Capitalism Takes Command presents a history of family farming, general incorporation laws, mortgage payments, inheritance practices, office systems, and risk management—an inventory of the means by which capitalism became America's new revolutionary tradition.

This multidisciplinary collection of essays argues not only that capitalism reached far beyond the purview of the economy, but also that the revolution was not confined to the destruction of an agrarian past. As business ceaselessly revised its own practices, a new demographic of private bankers, insurance brokers, investors in securities, and start-up manufacturers, among many others, assumed center stage, displacing older elites and forms of property. Explaining how capital became an "ism" and how business became a political philosophy, Capitalism Takes Command brings the economy back into American social and cultural history.

1

The Agrarian Context of American Capitalist Development

Christopher Clark

Over the long nineteenth century, from the late colonial period to the aftermath of World War I, American capitalism established itself with revolutionary force. The United States became the world’s largest economy and in per capita terms one of its richest, while developing to a marked degree the main facets of industrial and finance capitalism. Contemporaries marveled at the speed of the transformations this entailed. By the 1890s the United States had become the world’s biggest manufacturer and producer of minerals, its largest absorber of mobile international labor, and one of its chief financial centers. Its most powerful figures were among the world’s wealthiest individuals. Essential elements of American capitalism—integrated markets in land, capital, labor, and commodities; large-scale manufacturing; corporate organizations; a substantial wage-earning working class and salary-earning middle class—all emerged during the period.

Economic historians once characterized this as a sectoral shift from “primary” activities, such as agriculture and fisheries, to “secondary” manufacturing activity, noting the growth of urban societies and the emergence of service (“tertiary”) sectors to facilitate and coordinate these. Scholars in the Marxian tradition pointed to the constraints that led working men and women—American-born and immigrants—to enter wage work, providing the labor force on which capitalist industry and finance were built. But the long nineteenth century, in which the United States expanded territorially from seaboard settlements to become a continental empire, was also a period of dramatic growth in agriculture. During the seventy years before 1860 alone this growth was rapid enough: farms and plantations more than quadrupled in number to more than two million. But over the next sixty years, the figure more than trebled again, to nearly six and a half million. Farms and ranches large and small were created across much of the continent, and the United States played a leading part in a global drama of agricultural settlement that involved Canada, Australasia, and parts of South America, Africa, and Asia.¹

Agriculture and its expansion were deeply involved in many of capitalism’s key attributes, and so had profound implications for American capitalist development. Expansion entailed the creation of landed property by the addition of “new” lands to the property system, the emergence of land markets, and the production and distribution of produce that fed growing national and international commodity markets. Agriculture also created markets for wage labor, though here the picture was more complex and ambiguous. The sectional conflict between North and South and the destruction of chattel slavery during the Civil War involved the defeat of one agricultural system based on forced bondage by another based on “free” family and wage labor. But while wage labor in farming grew in specific circumstances, agriculture did not become primarily a locus for waged employment. The continued growth of farming that relied on family-based labor would give American capitalism some of its notable characteristics.

The long nineteenth century marked a distinctive period in the development of US agriculture, and hence American capitalism as well. Rural societies, of course, had dominated early America; in 1790 nine-tenths or more of the population was engaged in or connected with farming. The emergence of other sectors meant that the relative position of farming necessarily declined. By 1820 about 72 percent of the workforce was in agriculture; by 1920 the proportion had fallen to 27 percent, and in that year census enumerators found, for the first time, less than half the population living in settlements defined as “rural” (with fewer than 2,500 inhabitants). Yet the expansion of American farming continued throughout this period. Though its proportion of total employment fell, the absolute size of the farm workforce increased until the 1910s. Only in certain pockets did the number of farms decline before 1900, and the total number was still rising in the 1920s. In many regions, farm households tended to become focused on specific patterns of agricultural production; as household manufacturing declined, farm consumption from markets rose, and specializations emerged.²

By 1920, however, agriculture was entering a new phase. Output continued to rise, but farming went into significant demographic and even geographical retreat; farm sizes grew but, except during the Depression, the number of farms fell. Government and agribusiness came to dominate farm policy and investment, and the proportion of the population engaged in farming began to plunge toward its present-day level of around 2 percent.³ Systematic investment in machinery, artificial fertilizers, hybrid seeds, and other commoditized inputs marked a massive substitution of capital for labor, raising labor productivity in agriculture by a factor of 15 by the early twenty-first century. Previously, by contrast, productivity gains had been more modest and as much attributable to labor as to capital inputs.⁴ Nineteenth-century farmers had increased their production for markets, but even the most commercialized often relied on their own or neighborhood resources for such essentials as seeds, fertilizer, and motive power that later in the twentieth century they would purchase in the market.⁵ Farm work was organized in ways that limited reliance on wage labor. Large farms and plantations existed in certain circumstances but were not the majority of farms, or often even permanent features of a system dominated by medium-and small-sized units.⁶

What effects did the expansion and sustained importance of agriculture have on American capitalism before 1920? Some influences were complementary: the first part of this chapter considers these. But agricultural expansion was uneven and contested, so the discussion will move on to explore its more problematical influences. Structural conditions guiding the relationships between agriculture and capitalism provoked conflicts among different kinds of producers, between farming and commerce, and between proprietors and labor.

There were numerous evident ways in which agriculture complemented other aspects of America’s economic and social transformation:⁷ continental expansion; the acquisition and privatization of land; the output of foodstuffs and other produce that became commodities in national and international commerce; the distribution of urban and commercial centers; and connections with manufacturing and with finance. In all these arenas agricultural growth and capitalist development appear to have been mutually reinforcing.

The pursuit of continental expansion was rooted in several contingencies. Several colonies made claim to “western” land, and the Confederation congress succeeded in gaining federal control over these “public lands” outside the already settled regions. Under the 1783 Treaty of Paris and other international agreements from which indigenous people were excluded, Euro-Americans assumed sovereignty over land actually held by Native Americans. Governments used land sales as a source of revenue that avoided political obstacles to direct taxation. Above all there was an inexhaustible supply of citizens and immigrants keen to occupy and cultivate new regions. To Euro-Americans there was a virtuous circle of government and private interest, resulting in expansion.

White settlement divided and commoditized land, creating land markets and setting terms for cultivation by private property-holders. This process helped destroy other kinds of transactions across the zones of intercultural contact between Native Americans and Euro-Americans that Richard White dubbed the “middle ground.”⁸ Driven by popular demand for landed independence and, in the case of slaveholders, by opportunities for clearing new land with slave labor, the nation’s rural regions and rural populations grew rapidly. Though less than a majority of people owned land, the proportion was significantly greater than in much of Europe. So, though rural societies were far from egalitarian—even for whites—freehold farming and the vision of equality that it conjured up underpinned the ideology of expansion. Widespread land ownership, members of Congress claimed in 1796, would create a “free, enlightened, and independent” populace who would “make good Republicans instead of servile tenants.”⁹

Agrarian expansion has long been associated with the spirit of American capitalism. A leading Latin American historian remarks that the availability of land for ownership by millions of individual farmers was “the most outstanding product of the American democratic ideal.”¹⁰ Commentators were prompt to note the advantages this provided over European societies. In 1871 the Baltimore Sun claimed that 100,000 settlers had acquired land under the 1862 Homestead Act, and that this alone exceeded by 70,000 the total number of landowners in Britain.¹¹ Access to land was interpreted as distinguishing American “farmers” from European “peasants,” and as a means by which farmers could turn themselves into capitalist “businessmen.” In post-Revolutionary rhetoric the “independent farmer” represented republican virtue and simplicity. In the nineteenth century the farmer stood for the rights of “producers” or for “free labor.” By the twentieth, farmers stood as symbols of the private enterprise system and as crucial bulwarks against communism.¹²

European settlement and cultivation in North America can be seen as a process of versatile adaptation to a new environment. Landholders from various origins adopted new methods and crops, learning from the other peoples they encountered. The historian Russell Menard has labeled as “mestizo agriculture” the blend of Native American, African, and European crops and techniques that colonial cultivators passed on to the farmers of the long nineteenth century.¹³ Adapted to the new land, this agriculture was productive, feeding a rapidly growing national population and furnishing foodstuffs and raw materials for export. Rising productivity enabled a proportionately shrinking farm population to supply grains, lumber, tobacco, cotton, and other produce to cities, industries, and overseas customers alike.

Patterns of farming and the social structures of agricultural regions shaped the character and distribution of urban commercial centers. The colonial contrast between the scarcity of urban centers in the Chesapeake and the South, and the prominence of port towns in New England and the mid-Atlantic region, was replicated across the eastern half of the continent as farm settlement spread to the Southwest and into the “Old Northwest” in the first half of the nineteenth century. Plantation regions in the South, where slaves labored and practiced various skills year round, gave rise to relatively few, often small, urban centers. Most large Southern towns lay at the region’s peripheries, handling the shipping of agricultural produce to distant markets.¹⁴ Nonplantation agriculture in the South was sufficiently marginalized, either socially or geographically, to give it little influence in the forging of urban or commercial systems. Small farmers in plantation districts were often under the thumb of powerful planter neighbors. Nonplantation regions tended to be uplands, or otherwise distant from trading centers; only in specific areas, such as the Northwest Georgia upcountry, did local developments spur significant market activity before the Civil War.¹⁵ Northern agriculture, by contrast, whose production for markets was often diversified and handled by family labor, spawned many commercial centers within farming districts, some of which grew into large commercial or industrial cities. Though in both South and North there were complementary relationships between town and countryside, the consequences for capitalist development differed. Northern farm regions came to support larger commercial and manufacturing populations than did much of the rural South.¹⁶

Regions with high population densities or wide seasonal variations in demand for field labor became significant nuclei of manufacturing.¹⁷ Though early industry developed in port towns, it also grew in rural areas, where labor and skill could be recruited for seasonal work, for domestic outwork, or to provide labor for workshops and factories. In southern New England alone, rural districts produced textiles, paper, woodenware and furniture, metalwares, clocks, guns, tools, and machines.¹⁸ The combination of rural skills and labor with the development of multiple commercial towns was an important spur to industrial development. A vast triangle, whose base ran from Maine to Maryland and whose apex lay in Illinois, became the principal seat of American manufacturing by the 1850s, and remained so for more than a century. Well into the nineteenth century, most leading US manufactured goods were fashioned from agricultural raw materials: natural-fiber textiles; boots, shoes, and other leather goods; and woodenware and other lumber products. Methods developed to produce these goods were applied to new processes. For example, rolling technology used in wool carding was adapted to printing and ironworking and cloth-dyeing techniques were extended to papermaking and chemicals.¹⁹ One of the great Midwestern growth industries of the second half of the nineteenth century—meatpacking—adopted methods of sequencing, motion, and coordination in the handling of animals and their parts which would in the twentieth century be widely applied to industrial mass production.²⁰

Agriculture also underpinned commercial and financial techniques essential to the rise of American capitalism. Land itself, once it was privately owned, was the most acceptable security for lending and capital accumulation, not least because land values tended to rise as farms were cleared and improved, population grew, and market integration proceeded. Mortgages on farmland became important instruments for transferring capital from older to newer regions and for placing the expected future value of farms and crops behind nonagricultural investments. Real estate mortgages became significant in the portfolios of banks, insurance companies, and other institutions, and hence as backing for commercial and industrial credit.²¹ Meanwhile, farmers’ own periodic and cyclical demands for credit influenced the financial system. The national and international circulation of commercial paper mirrored the shipment of crops and the financing of farming, fostering an urban-hinterland dynamic around commercial centers small and large. New York City’s emergence as the nation’s largest commercial metropolis reflected both its geographical position at the intersection of continental and Atlantic trade routes and the efficiencies that centralized trading services could offer across widely dispersed rural regions. This fostered New York merchants’ influence over the international trade in cotton, even though this commodity was produced hundreds of miles away in the plantation districts of the South.

In time, the growth of farm output called for new commercial and financial techniques. The bulk marketing of grains, meats, and lumber products, especially in the Midwest, led during the mid-nineteenth century to innovations along the chain of commerce, including grain elevators, urban commodity exchanges, and futures contracts. These not only facilitated the transformation of individual farms’ produce into standard commodities, but also turned them into invisible items represented only by paper instruments.²² As well as Southern plantation districts, large areas of farmland in the rest of the United States were drawn into the orbits of commodity handling, processing, and financial metropolises, of which Chicago became the epitome. Whether we interpret these financial relationships between city and countryside as complementary or as neocolonial in character, the methods of trading farm commodities over long distances embraced farm producers in networks over which they had little oversight or control.

Agriculture also played a central part in America’s emergence as a global economic power.²³ By the 1850s the United States held a unique position: it was an independent (noncolonialized) polity undergoing rapid economic transformation that was positioned on both of the world’s largest oceans at a time when Europe’s seaborne empires were reaching their zenith. Agriculture’s demands helped shape the United States’ own early ventures into overseas empire. Proslavery Southerners proposed annexations in Cuba or Central America during the 1850s in hope of expanding American slavery despite mounting opposition to its spread in the West. The federal Guano Islands Act of 1856, passed in response to the search for organic fertilizers, enabled the United States to assert its sovereignty over rocks or small islands in the Atlantic, Caribbean, and Pacific against the likely rival claims of Britain and other European powers. American interest in Hawaii and the Philippines, first stimulated by...

Table of contents

• Cover
• Copyright
• Title Page
• Contents
• Editors’ Acknowledgments
• Introduction: An American Revolutionary Tradition
• 1. The Agrarian Context of American Capitalist Development
• 2. The Mortgage Worked the Hardest
• 3. Toxic Debt, Liar Loans, Collateralized and Securitized Human Beings, and the Panic of 1837
• 4. Inheriting Property and Debt
• 5. Slave Breeding and Free Love
• 6. Capitalism and the Rise of the Corporation Nation
• 7. Capitalist Aesthetics
• 8. William Leggett and the Melodrama of the Market
• 9. Producing Capitalism
• 10. Soulless Monsters and Iron Horses
• Afterword: Anonymous History
• Contributors
• Notes
• Index