Monopoly Capitalism, Labor and Reform Movements, 1862-1887


Because of the alliance between financial interests and the Republican Party machine, Republican rule during the first two decades after the Civil War resulted in a period of unparalleled favoritism to big business. For example, government policy under Republican control unduly favored the organizers of new railroad enterprises in the West. In 1862 Congress chartered five railroads in the Far West, and it subsequently granted these railroads large loans and huge tracts of far western territory; the Northern Pacific Railroad alone received 18.8 million hectares (47 million acres) of land.

Also during this period, a series of frauds was perpetrated, notably during the administration of President Grant (see Whiskey Ring). Unscrupulous politicians in alliance with corrupt business executives stole from both the public treasury and the public domain. By the Homestead Act of 1862, which was intended to encourage western migration, the government gave 65 hectares (160 acres) of land free to any head of a family who contracted to cultivate the tract for five years; millions of acres, however, were placed fraudulently into the hands of so-called land sharks. Even the epoch-making achievement of building the 2900-km (1800-mi) railroad from the Missouri River to the Pacific Coast (finished on May 10, 1869), which completed the first American transcontinental railroad route, was tainted with fraud. See Crédit Mobilier of America.

Reform Movements

In moves to counter this state of affairs, a dissident group within the Republican Party, called the Liberal Republicans, initiated (1870-1872) a movement to bring about civil service reform, to reduce the protective tariff that was causing high prices, and to withdraw the federal troops upholding the black Republican state governments in the South; the group also condemned the corruption in the national government. In the election of 1872 the Liberal Republicans nominated the newspaper editor Horace Greeley for president. Although he was also the nominee of the Democratic Party, he was defeated by Grant, the Republican candidate.

Outside the party, a strong protest movement arose among American farmers against the economic burdens imposed on the agricultural classes of the West and elsewhere by the railroads, particularly in the form of high freight rates charged to carry crops and supplies (see Granger Movement). A movement to bring about labor reforms and currency reforms that would make more money available to the debtor classes, especially the farmers, resulted in the formation of the Greenback Party, later called the Greenback-Labor Party. In 1876 the Greenback Party nominated the philanthropist Peter Cooper for president, but he received only 1 percent of the vote. The election of 1876 was won by the Republican Rutherford B. Hayes after a bitter struggle with his Democratic opponent Samuel J. Tilden.

Hayes's Administration

Hayes was not a machine politician; his administration was marked by his efforts to inaugurate various reforms, all of which were opposed by most other party leaders. For instance, he withdrew the federal troops still supporting carpetbag governments in the South (in Louisiana and South Carolina), although his action meant that the governments of these states would immediately come under the control of the Democratic Party. Hayes's administration was also notable for two financial measures. One measure, passed despite Hayes's veto, was the Bland-Allison Act of 1878, which answered the demands of western silver-mine owners who desired a market for their product and of western farmers and others who desired an increased amount of currency in circulation. By this act, the U.S. government agreed to purchase at least $24 million worth of silver annually from the miners and to coin the supply into silver dollars. The second measure was the resumption by the U.S. Treasury in 1879 of specie payment—that is, payments in gold for outstanding paper money; such payments, suspended during the Civil War, increased faith in the credit of the United States.

Largely because of his opposition to the Republican machine, Hayes refused renomination by the Republicans in 1880. At the convention, however, an inconclusive contest between the two machine candidates, Grant and James G. Blaine, led to the nomination of a compromise candidate, James A. Garfield. Garfield was elected over the Democratic candidate, Winfield S. Hancock, and once in office, he opposed the Republican machine leaders, principally by refusing to make federal appointments according to their orders. On July 2, 1881, Garfield was shot by a disappointed office-seeker, Charles J. Guiteau, and died on September 19; he was succeeded by the Vice President, Chester A. Arthur, who was faithful to the party machine.

Reemergence of the Democratic Party

During Arthur's administration, several off-year elections in which the Democratic Party won important state offices alerted the Republican Party to the growing dissatisfaction with its partisan policies; notable among these Democratic victories was the election of Grover Cleveland as governor of New York. The Republican Party sought to placate this dissatisfaction by passing in 1883 a civil service reform bill, but national feeling had so turned against the Republican Party by 1884 that for the first time since 1856 the Democrats won the presidency. Grover Cleveland defeated the Republican nominee, James G. Blaine, after a campaign remarkable for the rancor with which the two parties attacked each other.

Domestic Affairs (1885-1920)


President Cleveland in his first administration (1885-1889) was confronted with five major domestic problems: the federal civil service, federal pensions, labor unrest, abuses in the business methods of the railroads, and the Treasury surplus and the tariff.

Cleveland was a strong advocate of a federal civil service with appointments based on merit. He often rejected the demands of Democratic Party leaders for federal jobs, earning him the animosity of party members. Eventually he agreed to remove arbitrarily numerous officeholders and to select replacements based on service to the Democratic Party; however, he did add 12,000 positions to the group based on merit. The administration was plagued by numerous private pension bills passed by Congress, chiefly in favor of Civil War veterans who could not get on the regular pension rolls; Cleveland vetoed more than 200 of these bills.

Beginnings of the Labor Movement


Cleveland's administration was also noted for the emergence of labor as an organized economic and political force in the United States. Trade unions were formed on a national scale between 1861 and 1866; and the first attempt to unite all trade unions into one federation took place in 1866, with the organization of the National Labor Union (see Trade Unions in the United States), which was disbanded in 1872 because of internal strife. It was succeeded by the Knights of Labor, organized in 1869. By 1886 this body was a national organization with more than 700,000 members. Its policy was to demand of state and national governments laws to ameliorate injustices inflicted on the working class by contemporary economic conditions and practices. In Cleveland's administration, labor for the first time in the United States made vigorous claims, through demands for higher wages and shorter hours, to a larger share of the national income than it had previously enjoyed. Such demands resulted in unprecedented conflict between capital and labor; in 1886 and 1887 an estimated 3000 strikes took place in the United States. The strike at the McCormick reaper works in Chicago occasioned the violent Haymarket Square Riot, which dampened support for the labor movement.

Railroad Regulation and the Tariff

In Cleveland's administration also, much criticism was directed at the railroads, which had practically a monopoly of freight transportation on western routes and practiced extortion and discrimination in setting freight rates. In 1887, as the result of agitation for federal control of the railroads, the U.S. Congress passed the Interstate Commerce Act to regulate railroads, establishing a precedent for similar regulation of other interstate commercial enterprises.

The most important issue in Cleveland's administration, however, was the tariff. On taking office, the president found a surplus of nearly $500 million in the Treasury; this sum had accumulated because of the high protective tariffs that had prevailed since the Civil War. Cleveland felt that bringing about a reduction in the tariff was in the interest of consumers and taxpayers; such a reduction would discourage Congress from making extravagant appropriations and would also lower prices on many commonly used commodities. Through his influence, the House of Representatives passed a bill reducing the tariff by 7 to 8 percent, but the bill was not passed in the Senate. The tariff was the principal issue of the presidential campaign of 1888. Although Cleveland was actually a proponent of a low tariff, the Republican Party made it appear that he favored a free-trade policy that would enable British manufacturers to undersell U.S. manufacturers in the U.S. market. Using this tactic, the Republican Party successfully brought about the election of Benjamin Harrison.


From Microsoft Encarta 97 "United States/History"