The expansion of industry and its concentration in fewer and fewer hands changed the way many people felt about the role of government in economic and social affairs. On the one hand, they professed to believe strongly in a government policy of noninterference, or laissez-faire. “‘Things regulate themselves’ . . . means, of course, that God regulates them by his general laws,” Professor Francis Bowen of Harvard wrote in his American Political Economy (1870).
Certain intellectual currents encouraged this type of thinking. Charles Darwin’s The Origin of Species was published in 1859, and by the 1870s his theory of evolution was beginning to influence opinion in the United States. That nature had ordained a kind of inevitable progress, governed by the natural selection of those individual organisms best adapted to survive in a particular environment, seemed eminently reasonable to most Americans, for it fitted well with their own experiences. “Let the buyer beware; that covers the whole business,” the sugar magnate Henry O. Havemeyer explained to an investigating committee. “You cannot wet-nurse people from the time they are born until the time they die. They have to wade and get stuck, and that is the way men are educated.”
This reasoning was similar to that of the classical economists and was thus at least as old as Adam Smith’s Wealth of Nations (1776). But it appeared to
The Biltmore Estate in Asheville, North Carolina was built by George Vanderbilt, grandson of "The Commodore.” Over 1,000 laborers worked on the mansion. With 250 rooms and 175,000 square feet, the Biltmore is the largest privately built home in the United States. Critics found the mansion ostentatious and offensive.
Supply a hard scientific substitute for Smith’s “invisible hand” as an explanation of why free competition advanced the common good.
Yale professor William Graham Sumner sometimes used the survival-of-the-fittest analogy in teaching undergraduates. “Professor,” one student asked Sumner, “don’t you believe in any government aid to industries?” “No!” Sumner replied, “It’s root, hog, or die.” The student persisted: “Suppose some professor of political science came along and took your job away from you. Wouldn’t you be sore?” “Any other professor is welcome to try,” Sumner answered promptly. “If he gets my job, it is my fault. My business is to teach the subject so well that no one can take the job away from me.” Sumner’s argument described what came to be known as social Darwinism, the belief that the activities of people, that is, their business and social relationships, were governed by the Darwinian principle that “the fittest” will always “survive” if allowed to exercise their capacities without restriction.
But the fact that Americans disliked powerful governments in general and strict regulation of the economy in particular had never meant that they objected to all government activity in the economic sphere. Banking laws, tariffs, internal-improvement legislation, and the granting of public land to railroads are only the most obvious of the economic regulations enforced in the nineteenth century by both the federal government and the states. Americans saw no contradiction between government activities of this type and the free enterprise philosophy, for such laws were intended to release human energy and thus increase the area in which freedom could operate. Tariffs stimulated industry and created new jobs, railroad grants opened up new regions for development, and so on.
The growth of huge industrial and financial organizations and the increasing complexity of economic relations frightened people yet made them at the same time greedy for more of the goods and services the new society was turning out. To many, the great new corporations and trusts resembled Frankenstein’s monster—marvelous and powerful but a grave threat to society.
To some extent public fear of the industrial giants reflected concern about monopoly—much as some people today worry that Walmart may drive other retailers out of business. If Standard Oil dominated oil refining, it might raise prices inordinately at vast cost to consumers. Charles Francis Adams Jr., expressed this feeling in the 1870s: “In the minds of the great majority, and not without reason, the idea of any industrial combination is closely connected with that of monopoly, and monopoly with extortion.”
In his classic autobiography The Education of Henry Adams, Adams said that he was staggered by the immense machines on display at the Columbian Exhibition in Chicago in 1893, such as this electricity-generating dynamo. The power of religious faith and works of art and literature had yielded to mechanical power. His world was a thing of the past.
Although in isolated cases monopolists did raise prices unreasonably, generally they did not. On the contrary, prices tended to fall until by the 1890s a veritable “consumer’s millennium” had arrived. Far more important in causing resentment was the fear that the monopolists were destroying economic opportunity and threatening democratic institutions. It was not the wealth of tycoons like Carnegie and Rockefeller and Morgan so much as their influence that worried people. In the face of the growing disparity between rich and poor, could republican institutions survive? “The belief is common,” wrote Charles Francis Adams’s brother Henry as early as 1870, “that the day is at hand when corporations. . . will ultimately succeed in directing government itself.”
As criticism mounted, business leaders rose to their own defense. Rockefeller described in graphic terms the chaotic conditions that plagued the oil industry before the rise of Standard Oil: “It seemed absolutely necessary to extend the market for oil. . . and also greatly improve the process of refining so that oil could be made and sold cheaply, yet with a profit. We proceeded to buy the largest and best refining concerns and centralized the administration of them with a view to securing greater economy and efficiency.” Carnegie, in an essay published in 1889, insisted that the concentration of wealth was necessary if humanity was to progress, softening this “Gospel of Wealth” by insisting that the rich must use their money “in the manner which. . . is best calculated to produce the most beneficial results for the community.” The rich man was merely a trustee for his “poorer brethren,” Carnegie said, “bringing to their service his superior wisdom, experience, and ability to administer.” Lesser tycoons echoed these arguments.
The voices of the critics were louder if not necessarily more influential. Many clergymen denounced unrestrained competition, which they considered un-Christian. The new class of professional economists (the American Economic Association was founded in 1885) tended to repudiate laissez-faire. State aid, Richard T. Ely of Johns Hopkins University wrote, “is an indispensable condition of human progress.”
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