Excerpted from: Rediscovering the American Republic, vol. 2: 1877–Present

Return to Previous: A Brief Summary of American History, Part I: 1492–1877

America in the Gilded Age, 1877–1901

During the decades following the Civil War, the U.S. population shifted from east to west as homesteaders settled the frontier. By the end of the nineteenth century, cities also were expanding rapidly as immigrants sought work in factories. The industrial revolution brought unprecedented wealth to a new class of shareholders and corporate officers. A handful of Americans, including the Scottish immigrant Andrew Carnegie, literally worked themselves up from rags to riches during this period that historians call “the Gilded Age.” The government mostly left businesses to compete against each other under the principle of laissez faire—French for “let it be.” The main regulation the government placed on commerce was the protective tariff, a tax on imports that guarded local producers from foreign competitors.

Who prospered in the political economy of the Gilded Age? Clearly Andrew Carnegie did, and with him John Rockefeller, J.P. Morgan, and other captains of industry and finance. Arguably, the laborers whom they hired also benefited. Senator (and later President) William McKinley supported a high protective tariff not only because it favored domestic business owners, but also because it fostered broader employment and higher wages for the working class, even as the efficiency of the “managerial revolution” reduced the costs charged to consumers. In times of economic growth, people at both ends of the socioeconomic spectrum prospered; however, in times of economic contraction, wage workers suffered from declining wages and unemployment. Was there a better way? Popular writer Edward Bellamy foretold the coming of a socialist utopia if only Americans would learn to accept government regulation for the common good. At the other extreme, Yale economist William Graham Sumner promoted “social Darwinism,” an unregulated market in which successful companies became monopolies and unsuccessful ones went bankrupt—just as species survive or else go extinct under the fierce law of the jungle. Seeking to negotiate within the capitalist system rather than overthrow it, Samuel Gompers paved a middle path when founding the American Federation of Labor, but neither his union movement nor anyone else’s carried much weight in the laissez-faire Gilded Age.

The federal government also took an increasingly laissez-faire attitude toward racial conflicts in the South. As southern whites regained control of the South, the regime of “Jim Crow” barred blacks from voting through a combination of clever laws and intimidating mobs. Although most Gilded Age presidents at least paid lip-service to the rights of equal citizenship (including the right to vote) for African Americans, rarely did the federal government take steps to ensure that the Reconstruction Amendments would be honored nationwide. The government’s relationship to Native Americans similarly suffered from a disconnect between promise and fulfillment, in part because layers of bureaucracy and broad spans of geography separated policymakers in Washington from western citizens, Indian agents, and diverse tribal groups who negotiated on their own terms. Ultimately, the U.S. military intervened, forcing most Native Americans onto reservations. For a time, the military had no broader scope of activity but than to pacify the western frontier. In 1898, however, the United States went to war against Spain concerning human rights and world trade interests in both the Caribbean and the Pacific. The nation—now an industrial giant—thereby exchanged the isolationism of the Monroe Doctrine for an interventionist posture that would remain characteristic throughout much of the following century.

Progressive Reform and Human Nature, 1901–1929

The early decades of the twentieth century marked a firm rejection of the laissez-faire economy of the Gilded Age. Leaders from both the Republican and Democratic Parties now championed “progressivism,” a set of political ideas calling upon the government to regulate corporations in the name of the common good and to re-engineer society on the basis of modern social science. Under Presidents Theodore Roosevelt and William Howard Taft, the federal government broke up large monopolies. Other progressive reformers were optimistic that immigration, urbanization, and industrialization all could be guided by experts who knew what it took for civilization to evolve to new heights. Woodrow Wilson, whose presidency marked the pinnacle of progressivism, called for a “Darwinian” reading of the U.S. Constitution according to which the strict limitations placed on government could be adapted into a looser interpretation allowing for greater regulation of the economy. In Wilson’s first year, 1913, the constitution was formally amended to license a federal income tax upon the rich in order to redistribute wealth to the poor. Another amendment established the direct election of U.S. senators by the people of each state, rather than by the state legislatures. Thus, America transitioned from a republican federation of states into a grand democracy of national citizens. With the national government assuming new responsibilities for individual prosperity, it seemed that anything was possible.

The progressives finally met their match in World War I—a transcontinental conflagration revealing that government cannot so easily re-engineer human nature. Wilson, however, learned this lesson slowly. He hoped that the war would make the world “safe for democracy.” He envisioned the postwar League of Nations as a cooperative enterprise by which nations could peaceably settle their differences. He found instead that the U.S. Senate rejected the League. The remainder of the twentieth century would reveal that the sources of militant conflict run too deep in the human heart to be controlled by well-minded policymakers. Americans also discovered that prohibiting the production and sale of alcohol by a constitutional amendment, as was attempted in 1919, cannot end drunkenness or other vices associated with it.

As progressivism failed, Americans returned to their roots for tried and true methods. During the 1920s, a revival of laissez-faire economics coincided with full employment, rising wages, falling prices, lower tax rates, and unprecedented profits on the stock market. Meanwhile, fundamentalist Christians warned against Darwinism and called America back to the laws of the Creator. But not everyone took the moral path toward prosperity. Flappers put on make-up, purchased birth control, and frequented speakeasies. Gangsters monopolized the bootleg market. America was as turbulent as ever during the “roaring twenties.”

The Emergence of the American Superpower, 1929–1953

In 1929, the United States reached the height of the industrial revolution. The nation demonstrated its true greatness, however, not by what had already been achieved, but by the ability to rise to prosperity again after loosing nearly everything in the Great Depression. By 1933, the stock market had been decimated, literally, down to 11% of its 1929 value. Unemployment touched one out of four Americans. A worldwide depression manifested itself by similar symptoms elsewhere. In Germany, the people embraced Adolph Hitler and his National Socialist, or Nazi, Party. In America, a more moderate leader emerged: Franklin Delano Roosevelt. Prompting Congress to enact a barrage of progressive reforms, collectively called the New Deal, Roosevelt resisted the urging of leftist pundits who advocated full-scale socialism and contented himself simply to place the capstone on the progressive edifice that had been constructed before World War I. Congressional conservatives nonetheless recognized Roosevelt as the most socialist president the nation had yet seen. Capitalism survived both the Great Depression and the New Deal, but henceforth it would be a mixed form of capitalism—an entrepreneurial market regulated by government agencies chartered to restore and maintain economic balance. The people’s perception of the proper role of government had permanently been changed.

What caused the Great Depression? And, how did America recover it from it? Scholars remain divided on both of these questions. Fans of FDR blame speculation on Wall Street for artificially inflating stock prices and thereby setting the nation up for a fall. In this telling of the story, Roosevelt’s New Deal saved capitalism from itself by imposing government-initiated discipline on the economy. On the other hand, it may have been congressional foolishness that brought on the Depression, since the stock market fell steeply, briefly recovered, and then fell steadily all in step with news concerning the Smoot-Hawley Tariff—an extraordinarily high tax on imports that threatened to slow world trade. As for recovery, the New Deal had few immediate effects. By the time full recovery was underway, another contributing factor had upstaged FDR’s recipe for reform. American factories were mobilizing to support the Allies against Nazi Germany and Fascist Italy in World War II.

After the Empire of Japan bombed the American naval base at Pearl Harbor in 1941, the United States entered the war against all three Axis Powers: Japan, Germany, and Italy. U.S. and British forces together liberated northern Africa, southern Europe, and France. Meanwhile, the Soviet Union repelled Germany from Stalingrad through Poland. By the spring of 1945, the western Allies occupied one side of Europe and the Soviets occupied the other, with Germany squished into surrender. Japan proved more recalcitrant, as her soldiers fought to the bitter end and preferred suicide to surrender. President Harry S. Truman recognized that Japan’s refusal to surrender would result in millions of additional lost lives—on all sides—unless a decisive blow would force Japan’s hand. That decisive blow came in the form of an atomic bomb in August 1945.

Victorious on three continents, and with a booming economy at home, the United States had become a world leader—a superpower. However, the Soviet Union also wielded considerable power. With its military still occupying eastern Europe and parts of Asia, communist governments appeared in East Germany, Poland, Czechoslovakia, Hungary, Romania, and Bulgaria with other nations also falling behind the “Iron Curtain” as time went on. By 1950, both North Korea and China had communist governments, thereby amplifying the threat posed to the free world by the Soviet Union. Determined to prevent the communists from conquering the globe, the United States committed itself to a policy of containment—a promise to intervene anytime and anywhere that communism was spreading. In instances where diplomacy failed, the so-called “Cold War” turned hot, as, for example, in Korea, where U.S. troops fought from 1950 through 1953 to preserve the borderline between the communist north and the democratic south.

The Cold War and Civil Rights, 1953–1981

The containment policy shaped America’s course of foreign relations for decades. After Korea, there was Vietnam. Whereas Korea ended in a stalemate, Vietnam was a slow and painful defeat. After a decade of fruitless military efforts, the United States withdrew and the North Vietnamese communists took over the entire country. The Vietnamese people had their own reasons for fighting, but more than anything they had gotten caught up into a global chess match between the Soviet Union and the United States. Other “pawns” in this game included Cuba, where the Soviets planted an arsenal of nuclear missiles aimed at the United States. Unfortunately, it was not always clear that the United States was on the side of freedom. In Greece, for example, America supported a monarchy against a democratic movement due to evidence that the “democracy” had been fostered by Soviet communists. Similarly, the United States supported a harsh regime in South Vietnam simply because the alternative was to allow the communists from the North to take over. According to President Dwight Eisenhower, Vietnam was not so much a chess pawn as a domino—and if the communists knocked over one domino, then all of Asia would topple. Therefore, communism had to be contained at all costs.

The paradoxes of the Cold War also touched upon domestic matters. Even while America was fighting for freedom overseas, African Americans suffered a systematic denial of their liberties at home. The Declaration of Independence had claimed that “all men are created equal.” The U.S. Constitution had guaranteed, in its Fourteenth Amendment, “equal protection of the laws” to all persons. Why, then, could black children not attend the same schools as white children? Why did black adults have to work, shop, or eat in different places than white adults? Why were hardly any blacks in the Deep South registered to vote? Why did local law enforcement authorities look the other way when lynch mobs hunted down blacks who dared to assert their rights?

The civil rights movement sought to restore the benefits of Reconstruction and ensure equality before the law for all people regardless of race. Lawyers from the National Association for the Advancement of Colored People persuaded the Supreme Court that schools and bus stations should be racially integrated. Ministers such as Martin Luther King, Jr., won over the sympathy of northern whites in a crusade to evict Jim Crow from the South. Although initially more popular among Republicans, the civil rights movement managed to gain favor among the national leadership of the Democratic Party. In 1964, Democratic President Lyndon B. Johnson persuaded Congress to adopt legislation outlawing racial discrimination in education, employment, and public accommodations of all sorts. At last, the nation delivered its longstanding promise to treat blacks and whites equally, but in the process another promise was broken: public policy should be determined by the local government unless the U.S. Constitution explicitly delegates authority to the federal government.

Seeing the federal government as the best solution to almost any problem, Johnson envisioned the Great Society, in which poverty would be eradicated and Americans would live peaceably with one another. Instead, poverty worsened and racial violence increased. During the 1970s, America struggled over its identity as inflation and unemployment conquered people at home and the military suffered defeat in Vietnam. Neither Richard Nixon, Gerald Ford, nor Jimmy Carter found a way to turn the corner.

The Triumph and the Vulnerability of the World’s Only Superpower, 1981–Present

Inaugurated in 1981, President Ronald Reagan breathed new life in to the American Republic. Although he once had supported the liberal-progressive platform of the Democratic Party, he now was a conservative Republican. Reagan summoned forth the laissez-faire policies of the past, urging Congress to cut taxes, slim down federal regulations, and devote most of America’s energy to winning the Cold War. Like FDR, Reagan had a gift for communication. His words instilled confidence. More than FDR, Reagan also produced results. The economy rebounded in short order, giving the free world a distinct advantage against the stagnation of communism. In 1989, communist East Germany caved in, allowing a democratic reunification with West Germany. Two years later, the Soviet Union disintegrated into several independent states. Triumphant, the United States now stood alone as the world’s only superpower.

Democrats learned a lesson from Reagan: the liberal-progressive agenda must be moderated in order to remain in step with the American people. In 1992, Bill Clinton won election to the presidency by styling himself a “New Democrat.” He promised to slim down the welfare state rather than pursue Johnson’s Great Society. During the Clinton administration, Congress also balanced the budget. Economically speaking, it seemed American prosperity would have no end. However, three problems lingered beneath the veneer of success.

First, Americans were losing their moral compass. During the 1990s, conservatives called for a revival of Judeo-Christian values while liberals championed abortion as a woman’s right and homosexuality as a matter of personal liberty. Clinton himself repeatedly fell under investigation for sexual misconduct; although the Senate chose not to convict him of impeachment charges, the evidence of his character lapse became known to everyone.

Second, Congress had achieved a balanced budget in part by downsizing the military. Although this may have appeared prudent insofar as communism no longer posed the threat it once had, a reshuffling of the geopolitical deck now put America at risk against other parties. On September 11, 2001, al-Qaeda terrorists attacked both New York City and Washington, DC. In response, President George W. Bush declared a “war on terrorism,” vowing the United States to uproot terrorist groups anywhere in the world where they may be found. This meant invading Afghanistan in 2001 and Iraq in 2003. As renewed militarism pushed the budget back into the red, Democratic challengers faulted Bush for squandering America’s prosperity.

Third, in 2007 housing prices began to plummet, revealing mistakes dating back to the 1990s. Subprime mortgage lending, low interest rates, and tax incentives for both home buyers and home sellers had stimulated a frenzy of real estate transactions, resulting in many American families owning homes they could not afford. Once the bubble burst, they found themselves owing the bank more than their homes were worth. As foreclosures and bank failures filled newspaper headlines, the Federal Reserve Board dropped the target interest rate virtually to zero. Congress appropriated what soon amounted to trillions of dollars to bail out major banks and insurance companies while also taking over Freddie Mac and Fannie Mae (the top two transactors of mortgage-backed securities). As a result, the national debt more than doubled during the first decade of the twenty-first century. In 2010 and again in 2012, bailouts sponsored by the European Union attempted to stabilize the economy of Greece, which was collapsing under the pressure of its national debt. Would the United States also need to be bailed out?

With neither the national economy nor the federal budget in sound shape, Congress boldly adopted President Barack Obama’s national healthcare proposal in 2010. Scheduled for full implementation in 2014, “Obamacare” required that virtually all Americans purchase health insurance. This sweeping package of progressive reform included taxes on the rich to pay for healthcare for the poor as well as regulations defining the kind of coverage that insurers must provide. In 2012, the Supreme Court concurred that Congress has the authority to fine individuals—in the form of income-tax penalties—if they refuse to purchase government-approved insurance.

With socialism being so openly endorsed by all three branches of the federal government, the quest for ordered liberty finally has reached a dead end. Somewhere along the way, the founding principles of the American Republic were exchanged for a promise of equal prosperity for all. Time will tell whether such a promise can ever be fulfilled—or whether the old ways will be rediscovered. But for the moment, America’s experiment with ordered liberty ends here.


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