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America's Second Gilded Age
"The past is never dead. It's not even past"
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Amazon logo on a screen in a dark and finger pointing at it. Concept. Stafford, United Kingdom - November 119. Courtesy of Shutterstock.
Economic inequality riles our politics today. It reminds Americans of a similar time in our history.
The Civil War brought great terror to the country. Countrymen were at war with each other and the fate of America’s national development was on the line. The war effort forced the creation of greenbacks and centralized America’s currency system. Massive contracts by the federal government spurred growth and development for domestic producers. The Pacific Railway Act of 1862 created the Transcontinental Railroad and brought the federal government closer to the plethora of oil, timber, and minerals that defined Western lands. An industrial boom defined America’s entrance into the Gilded Age, a period of time synonymous to Europe’s Belle Époque or the United Kingdom’s Victorian Era.
The nascent refuge of the founding fathers was now an industrial giant with an established appetite for growth and expansion.
As Richard White explains in The Republic For Which It Stands:
The American economy during the first Grant administration did two things extremely well. American farmers flooded Europe with wheat and eventually cotton while producing large amounts of corn, pork, and beef for domestic consumers. This productivity depended on a second success. Americans invested heavily in farms, infrastructure, and capital goods. They built the railroads required to haul crops, and they produced the iron, timber, and machinery required for the railroads and farms.
These cycles and expectations of America’s private and public sector can be traced to the first Gilded Age. Even if it was a time when America’s surging economic muscle would often flex on its own citizens.
Our politics is deeply controlled by obscenely wealthy interest. Our daily life and data is intimately connected to one of several large corporations. Washington is often a revolving door to cushy jobs at private corporations actively undermining or contending with laws orchestrated to protect labor.
Corporate takeovers and mergers seem to happen often these days.
To many, this is a Second Gilded Age.
In the original Gilded Age, the overwhelming power of finances in our civic life was clear and present. The rapid expansion of the American economy opened up a new level of potency for the financial elite and large production interests.
White also notes the way post-Civil War economics and regional divisions impacted financial development in the Gilded Age:
The South, like the Midwest, found itself starved not only of gold but also of national bank notes, whose possession in 1866 ranged between $2.50 and $8.00 per inhabitant. In the Northeast there was $77 in circulation per inhabitant. As late as 1880, the South had a quarter of the country’s population but only 10% of its currency. Those state banks that survived in the North and South found a niche by financing local merchants and making loans on farms and other real estate.
To draw interest, they invested their reserves in the national banks, which clustered in the Northeast, the Mid-Atlantic, and the larger cities of the Midwest. Until 1874 the National Banking Act of 1864 concentrated money in New York City by requiring national banks to maintain a 25 percent reserve against their deposits and notes in the large New York City national banks. By 1870 the city’s banks contained nearly a quarter of all American banking resources, and the national banks controlled 87 percent of these assets.
This spatial distribution of banks, in turn, influenced manufacturing since manufacturers borrowed from the national banks to finance their operations. The easier access businesses had to a national bank, the easier their access to credit and cash.
Obviously, the unequal distribution of wealth at all levels gave way to the Progressive Era. Yet, the way it happened was due to political and economic conditions after a landmark event in human history - the American Civil War.
We don’t have the same economic landscape as the late 19th century. But, a lot of contemporary views towards economic justice and labor rights can be traced back to America’s regional differences and how they interpreted America’s industrial transformation at this time - from free silver to creating child labor laws to reforming the way U.S. Senators were elected.
The South’s remaining class strata often impacted and undermined efforts to highlight labor’s importance. But, the economic sabotage by other regions also reinforced an unhelpful sense of condescension that clouded southern politics.
* Still, the modern development of the southern states and its attraction of tourism industries and military contracts has added to what is referred to as the Sunbelt. Something that will be explored in later posts.
* Also, in a prior post, I briefly wrote about some of the founding features of the American West (also happening):
The Gilded Age wasn’t long ago when put on the larger scale of human history. The lessons that were supposedly learned in the dark days of company towns and unending work weeks are still finding teaching moments today.
Thus, understanding this current deregulatory period as a Second Gilded Age allows us to frame our thinking when considering why these forces return.
For one, we have also lived through news cycles that gave us Cold War flares as Putin’s invasion of Ukraine commenced. In the prior century, a global economic depression, the second world war, and the resulting Cold War policies can be characterized as a epoch of time that took America off an overwhelmingly isolationist and economically austere course.
The destabilization threatened by the financial chaos meant recalibrating the federal government in ways that many conservatives still covertly or overtly argue is unconstitutional.
The New Deal and the post-World War II liberal governing consensus acted in a Keynesian manner that 19th century liberals would have rebuffed. America’s federal prowess and participation in regulating business activities could not have been predicted by many, even by “experts” during the heights of the jazzy 1920s (arguably the last gasp of the first Gilded Age).
However, as American isolationism returns and Republicans continue to chip away at reforms (particularly ones in the New Deal or inspired by it), the forces that highlighted the Gilded Age also gain strength.
Unsustainable inequality, hardening class lines, and sharp cycles of macroeconomic turmoil defined this period of American history - the same exact things characterizing our time.
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