Capitalist America


A critical view of America’s rapid economic growth

At the beginning of the 20th century, the United States of America was a burgeoning superpower whose industrial and manufacturing economy rivaled those of the European great powers. American economic growth in the second half of the 19th century was the fastest in its history, producing rapid rises in production, wages and personal wealth. The late 1800s in particular was a period of rapid industrialisation, expansion, population growth and – for some – prosperity. The tremendous opportunities available in America caused a surge in immigration in the late 1800s. Millions crossed the seas from Europe and Asia, seeking work opportunities as well as political and religious freedom. Industrial growth also transformed American society. New transport infrastructure made travel and relocation easier; and some American cities – particularly New York, Chicago and Philadelphia – swelled with newcomers. Industrial power was matched with military power. So economically prosperous was the quarter-century beginning 1870 that Mark Twain later called it America’s ‘Gilded Age’.


New York labourers working on the Brooklyn Bridge during the 1880s

Most of this growth, of course, was facilitated by capitalism. America’s economic successes came not from government policy but from private capital and investment – as well as the ready availability of cheap labour. Unrestrained by government restrictions or high labour costs, American capitalists were able to build gigantic corporations, transportation and communications networks, heavy industries, banking and financial organisations. The amount of railroad track tripled in the 20 years before 1880, permitting the free movement of people and cargo. Coal mining and steel manufacture boomed, fuelled by new technical developments and production methods. Factories, mines and farms all benefited from mass-produced machinery, now cheaper and more readily available. ‘Gilded Age’ America became the creative hub of the world, with thousands of new inventions and patents like the telegraph, telephone, electric power and lighting. The need for investment capital led to the formation of stock markets and the growth of American banks. Leading all this growth were business tycoons, men like John D. Rockefeller, John Jacob Astor, JP Morgan and Andrew Carnegie.

Problems of the Gilded Age

“The ‘Gilded Age’ became a catchphrase for the excesses of the era, pointing to the reality that underneath the glitter was a base element. Corruption seemed to prevail among elected officials; private citizens appeared more self-interested than altruistic. Accumulating wealth by whatever means possible was a goal of many… it was an era marked by contrasts between crushing poverty and opulent excess.”
Judith F Clark, historian

Child miners in the late 1800s. The use of child labour in Gilded Age America was common.

America of the late 1800s and early 1900s provided European Marxists with a working example of laissez faire (unregulated) capitalism in the industrial age. Despite the rapid advances and economic growth, there was plenty to criticise and condemn. One of the most significant problems of the ‘Gilded Age’ were the connections between government and business, leading to political corruption and croneyism. The US endured a number of mediocre presidents and politicians, many of whom were in the pocket of big business. Laws of the time protected corporate interests but overlooked social problems and the interests of workers. There was growing discontent about wage levels and the treatment of labour. Women and children endured even worse workplace conditions, since they could be hired for much lower wages than men. Child labour was still rampant in some parts of America in the early 1900s, with children as young as six employed in factories and mills. Unions emerged in the 1870s and organised industrial action, like a 1877 strike which paralysed America’s railways for six weeks. The Knights of Labor, another significant union movement, grew rapidly in the 1880s. These unions employed tactics that were often violent and disruptive: there were numerous incidents of American unionists instigating riots, assaults and even murders. One significant example of this violence was the 1892 shooting of notorious steel tycoon Henry Clay Frick by a left-wing agitator. Frick survived and was hailed as a hero by the capitalist press, which called for strong action against unions and socialists.

These problems did give way to reforms during the so-called Progressive Era, from the 1890s to 1920. Journalists became more active in exposing corruption and injustice. There were political reforms that enhanced and improved elections and democratic representation. Social reforms created improvements to healthcare, education and the law. Economic reform and regulation was slower coming, however the early 1900s saw legislation to reduce the size and power of corporate monopolies and oligarchies. Wages increased and the America middle-class began to grow. There were gradual, but still inadequate improvements in working conditions; as a consequence unions continue to flourish in the early 20th century. America’s industrial economy was given a shot in the arm by World War I. Though the US was initially neutral and did not enter the war until April 1917, many American companies signed lucrative deals to supply the Allies – Britain and France chiefly – with munitions, equipment and supplies. The war devastated Europe, physically and economically, while America was untouched and financially enriched. The US had emerged as a superpower and few questioned its capacity to dominate the 20th century.

The Red Scare


Many in America viewed labour unions as the first stepping stone to communism

The Bolshevik revolution in Russia in 1917 triggered anti-communist paranoia, both foreign and domestic. Washington refused point-blank to recognise the Soviet Union or its communist leaders, a situation that continued until 1933. In July 1918 president Woodrow Wilson ordered 13,000 American troops to northern Russia, to support White anti-communist forces there. The communist revolution in Russia also contributed to America’s first ‘Red Scare’ (1918-20). American capitalists were concerned that Soviet ideas or agents might infiltrate American unions, making them more radical, more violent and revolutionary. A series of events in 1919 seemed to justify their fears. Strikes among Seattle dock workers (January) Boston police (September) eastern steelworkers (September) and coal miners (November) suggested America’s union movement had become more radical and militant. In mid-1919 a fringe anarchist group posted mail bombs containing pounds of dynamite to several politicians and officials. Only one man was killed but there was obvious intent to kill more. The government moved against radicals and socialists, setting up a special investigative task force and launching a series of raids in the winter of 1919-20. Almost 250 European-born socialists and political agitators were deported from the US in December 1919. In 1920 five socialist politicians were expelled from the New York State Assembly, despite having been elected by constituents.



1. By the 1900s America was the most industrialsed nation in the world, its wealth rivaling the empires of Europe.
2. Much of this progress came in the late 1800s, largely at the expense of workers, wages and conditions.
3. American trade unions began to organise in the 1870s and, as in Europe, they were susceptible to socialist ideas.
4. The ‘Gilded Age’ gave way to improvements in regulation, social policy and conditions between 1893-1920.
5. America was panicked by the Russian Revolution, which triggered the first ‘Red Scare’ of 1918-20.

© Alpha History. Content on this page may not be republished or distributed without permission. For more information please refer to our Terms of Use.
This page was written by Jennifer Llewellyn, Jim Southey and Steve Thompson. To reference this page, use the following citation:
J. Llewellyn et al, “Capitalist America”, Alpha History, accessed [today’s date],