Capitalist America

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A critical view of America’s rapid economic growth

At the beginning of the 20th century, the United States (US) was a burgeoning superpower. US industrial and manufacturing rivalled that of the European great powers. American economic growth in the second half of the 1800s was the fastest in its history, generating significant increases in production, wages and personal wealth. The late 1800s, in particular, was a period of rapid industrialisation, expansion, population growth and, for some, growing prosperity. The tremendous opportunities available in America sparked a surge in immigration in the late 1800s. Millions of migrant workers crossed the seas from Europe and Asia, seeking job opportunities as well as political and religious freedom. Industrial growth transformed American society. New transport infrastructure made travel and relocation easier. Some American cities – particularly New York, Chicago and Philadelphia – swelled with newcomers. American industrial growth expanded its military strength.

Most of this growth sprung from unrestrained capitalism. America’s economic growth came not from government policy but from private capital and investment, as well as the availability of cheap labour. Unchecked by government restrictions or high labour costs, American capitalists built gigantic corporations, transportation and communications networks, heavy industries and powerful banking and financial organisations. In the two decades before 1880 the amount of railroad track tripled, allowing 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, which became cheaper and more accessible. Late 19th century America became the creative hub of the world, conceiving hundreds of new inventions like the telegraph, telephone, electric power and lighting. The need for investment capital fuelled a growth in stock market and American banks. The figureheads of this growth were business tycoons like John D. Rockefeller (oil), John Jacob Astor (real estate), JP Morgan (banking) and Andrew Carnegie (steel).

The Gilded Age

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

Needless to say, this growth was not without its problems or criticisms. Mark Twain dubbed the last quarter of the 19th century America’s ‘Gilded Age’, for while it glittered from the outside, all was not well within. One significant problem was political corruption and croneyism, fuelled by the connections between government and business. During the Gilded Age the United States endured a number of mediocre presidents and politicians, many of them in the pocket of big business. Laws of the time protected corporate interests but overlooked social problems and the rights 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 the 1877 strike that paralysed American railways for six weeks. The Knights of Labor, another powerful 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.

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

These problems came under scrutiny during the so-called Progressive Era, between the 1890s and 1920. American journalists became more active in exposing corruption and injustice. Political reforms improved elections and democratic representation. Social reforms brought improvements to healthcare, education and the law. Economic reform and regulation were slower coming, though the early 1900s saw the introduction of legislation to reduce the size and power of corporate monopolies. Wages increased and the America middle class began to grow. There were gradual improvements in working conditions, though unions continued 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 did not enter the war until April 1917, many American companies raced to sign lucrative deals to supply the Allies – Britain and France chiefly – with munitions, equipment and supplies. While the war devastated Europe physically and economically, America was untouched and financially invigorated. The United States entered the post-war period as a genuine superpower.

The First Red Scare

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

The Bolshevik revolution in Russia in 1917 triggered anti-communist paranoia in the United States. Washington refused to recognise the Soviet Union or its communist leaders, a situation that prevailed until 1933. In July 1918 president Woodrow Wilson ordered 13,000 American troops to northern Russia, to support White anti-communist forces there. The rise of communism in Russia also contributed to America’s first ‘Red Scare’ (1918-20). American capitalists were particularly concerned about Soviet ideas – or even Soviet agents – infiltrating American unions, making them more radical and violent, potentially revolutionary. Events in 1919 seemed to justify these fears. Strikes among Seattle dock workers (January), Boston police (September), eastern steelworkers (September) and coal miners (November) suggested American unionists had become more radical and militant. In mid 1919 an anarchist group posted mail bombs containing several pounds of dynamite to several politicians and officials. Only one person was killed but the bombs were obviously intended to kill more. The US federal government moved against radicals and socialists, setting up an 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 being elected by constituents.

capitalist america

1. By the 1900s America was the most industrialised nation in the world, its wealth rivalling 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.


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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], https://alphahistory.com/coldwar/capitalist-america/.

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