There is a most interesting book that describes the concentration of capital and the development of monopoly capitalism during the second half of the nineteenth century in the United States. Originally published in 1934, The Robber Barons, The Great American Capitalists, 1861-1901, tells the story of a small group of men who emerged to become a new U.S. ruling class. It was written by Matthew Josephson, a U.S. journalist who contributed regularly to The New Republic, The New Yorker, and The Nation. Considered a classic, The Robber Barons was reissued in 2011.
The names of the robber barons are well known. They include Andrew Carnegie, whose empire was built on steel; John Rockefeller, an oil magnate who with ruthless methods forged new structures of concentrated capital; and J. P. Morgan, the banker who established integration of industry and banking. Most, with the notable exception of Morgan, the son of a banker, grew up in poverty. They were disciplined and controlled in their private lives; their strongest lust was the desire for money.
John D. Rockefeller was the master at monopoly. Initially, in the petroleum market, there were thousands of petty capitalists competing. Rockefeller began to take control of the market by arranging for secret rebates in transportation rates from the railroad companies, giving him an advantage over his competitors. At the same time, he launched a campaign, also secretly, to enlist the other oil refineries as allies of his Standard Oil Company, by sharing with them the rebate advantage that he enjoyed. At the same time, he aggressively campaigned to drive from the field those competitors that were considered superfluous. One technique was to use his influence over shippers to drive up the shipping costs of the competitor. He then offered to buy the company at a fraction of its value, knowing that the competitor, disadvantaged by unequal shipping rates, had no option but to sell. At the same time, when Standard Oil could not carry out its expansion by peaceful means, it was ready to use violence, applying the weapon of dynamite. By 1881, Rockefeller had de facto control of the oil industry.
The innovative method of Rockefeller was followed in other industries. Secret cooperative agreements, imposed by threats of ruining the competitor’s business, became the dominant orientation of the capitalist class. In various fields, independent producers found that the manufacturers of necessary equipment had an agreement with an association to not sell to independent producers.
With the state refusing to play a necessary regulatory role, monopoly capital itself had to develop self-regulation, constraining the behavior of individual companies in accordance with the interests of the capitalist class as a whole. The necessary approach was forged by banker J. Pierpont Morgan, whose career had followed the road toward the integration of banking and industry, the integration of finance and production. Morgan was especially concerned with the problem of dysfunctional conflicts between the great trusts. He conceived the strategy of interlocking directorates, which facilitated common policies with respect to important issues, such as the uniformity of transportation rates. At the beginning of the twentieth century, Morgan came up with the idea of combining trusts, forged through the participation of finance capital, which culminated in the establishment of the U.S. Steel Corporation. With the Morganization of the economy, industrial monopolies came under the command of bankers; and the captains of industry were replaced by investment bankers.
Before they departed from the scene, the robber barons had influenced all areas of society, not only economic institutions. The captains of industry had taken control of the government, educational institutions, the press, and the Church, shaping them according to their needs, so that all defended, each in their manner, the established order of monopoly capitalism.
A very important unintended consequence of the concentration of capital was that it led to the problem of overproduction, that is, the production of goods in excess of the capacity of the national market to buy. The problem became evident to the captains of industry during the Great Depression of 1892-1893. It was at this historic moment that the captains of industry formulated a new expansionist foreign policy as a solution to this problem, which they called “imperialism.” Their basic goal was to find new markets outside the United States for U.S. manufacturing and agricultural products.
Imperialism has been the consistent foundation of U.S. foreign policy from the last decade of the nineteenth century to the present. Imperialist policies first appeared in public discourse in the Republican Party platform of 1896, which challenged the prevailing isolationism of the political culture; the platform advocated an expansion of military expenditures and the establishment of military bases abroad. The Philippines, Hawaii, and Cuba were viewed as strategic locations for U.S. military bases, inasmuch as control of the Caribbean and the Far East were considered central to imperialist intentions.
The first practical implementation of the new expansionist foreign policy was the U.S. intervention in Cuba in 1898, which resulted in the U.S. acquisition of the Spanish colonies of Cuba, Puerto Rico, the Philippines, and Guam. Seeking to obscure the colonial character of these acquisitions of lands beyond the continental territory of the United States, the U.S. government claimed to be pursuing a civilizing mission, consistent with the values of democracy, liberty, and justice. The discourse of the political elite was effective in convincing the people that the new imperialist policies were defending freedom and were the fulfillment of a “new manifest destiny,” in contrast to the decadent European empires.
President Theodore Roosevelt expanded imperialism in a systemic form, intervening in other nations without reserve. The Roosevelt administration (1901 to 1909) sponsored the secession of Panama from Colombia, enabling the construction of the Panama Canal; it intervened militarily in the Dominican Republic, enabling it to control that country’s customs policies; it occupied Cuba for the second time; it intervened militarily in the wars between Guatemala and El Salvador and between Honduras and Nicaragua; and it intervened politically in order to provoke the resignation of the President of Nicaragua.
The administration of William Howard Taft (1909 to 1913) adopted “dollar diplomacy,” which involved bribing the politicians of Latin America nations. But military interventions continued, in Honduras and Nicaragua. In addition, the Taft administration made threats designed to curtail the development of the Mexican Revolution.
Woodrow Wilson criticized “dollar diplomacy” due to its ethical implications. But he expressed a similar view when he asserted that dollars “ought to be reserved for the ministers of the state, even if the sovereignty of the reluctant nation is mistreated in the process.” In addition, military interventions continued. Between 1913 and 1921, under the pretext of “promoting democracy” and “stopping German intervention,” the U.S. government interfered in Mexican international affairs; it occupied Haiti, an occupation that continued from 1915 to 1934; it occupied Dominican Republic, which lasted from 1916 to 1924; it intervened in Panama in 1918; and it supported coups d’état and dictatorships in Central and South America.
Wilson, however, developed a more advanced ideological formulation of imperialism. He sought to establish a new international order on a foundation of U.S. political values, thus facilitating greater global acceptance of U.S. economic penetration and reducing the need for military intervention.
However, the United States had not yet attained sufficient economic, military, and political power to impose a U.S. international order under its direction. Wilson encountered opposition from Britain and France, who objected to a reduction of their spheres of influence. At the same time, Wilson’s vision encountered opposition within the United States. U.S. capitalism and political culture had not yet developed sufficiently, and important sectors of the capitalist class were not convinced that the “new world order” proposed by Wilson would provide sufficient guarantees for the protection of their interests in other lands.
From 1921 to 1933, the administrations of Warren Harding, Calvin Coolidge, and Herbert Hoover continued U.S. imperialist policies toward Latin America, supporting military dictatorships in order to constrain anti-imperialist popular struggles, and initiating new interventions in Panama, Honduras, and Nicaragua.
We see, therefore, the continuous development of an imperialist foreign policy from 1898 to 1933, regardless of shifts in rhetoric or changes in political party. U.S. military interventions, political interference, and economic penetration were designed to attain access to markets, raw materials, and labor, even though they were presented to the people with a democratic face.
In reflecting on this decisive period of American history, we ought to begin with recognition of fundamental inconsistencies with American values. The robber barons violated the ethics of capitalism and fair competition, according to which a company succeeds because it efficiently produces, and not because it is a deceitful bully. And imperialism violates the principal of the sovereignty of nations, which became codified internationally in the aftermath of World War II, thanks in good measure to the diplomatic leadership of the United States.
But the Left often reacts with a righteous, superficial, kneejerk moralism, which ought to be avoided. The issue is made complex by the fact that these dynamics had their plus side: the concentration of industry and banking greatly increased the productive capacity of the nation; and imperialist policies had important economic advantages, facilitating a continuation of the spectacular ascent of the United States in the world-economy. Proposals for the regulation of big corporations or for the abolition of imperialism cannot be taken seriously, unless they are part of a comprehensive plan for the future social and economic development of the nation in accordance with American values.
A national conversation concerning such a comprehensive plan has not even begun. The economic package of the Wilson administration showed definite promise in enabling regulation of the corporations in a form that did not shackle production, but it was cast aside by the military demands of World War I. Subsequent conversation was subverted by the military requirements of World War II and the Cold War, and it was distorted by the framing of issues by the corporate elite. Meanwhile, anti-imperialism entered the national conversation only briefly, as a dimension of the anti-war movement of the late 1960s, and as part of the platform of the presidential campaigns of Jesse Jackson in the 1980s.
We need to be working on forging a national conversation on such a necessary comprehensive plan for the economic and social development of the nation. A plan that defines the necessary and responsible role of large corporations, combined with space for small-scale and local forms of capitalism; and that includes the development of mutually beneficial trade among the nations of the world, casting the legacy of imperialism aside.
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I enjoyed this article. It was easy to read and quite informative. I seem to remember in my college years there was a discussion in a history class about economies being interwoven and dependent upon each other as a mechanism to prevent wars. The economies of China and the US and other countries are not a bad thing. What are your thoughts on that?