American Industrialization

Review: David Carlton on Richard Bensel

Richard Franklin Bensel, The Political Economy of American Industrialization, 1877-1900. Cambridge, UK and New York: Cambridge University Press, 2000. xxiii + 549 pp. $64.95 (cloth), ISBN: 0-521-77233-8; $24.95 (paper), ISBN: 0-521-77604-X.

Reviewed for EH.NET by David L. Carlton, Department of History, Vanderbilt University.
Published by EH.NET, August 2001.

Economics, Politics, and Region in the Making of Modern America

In The Political Economy of American Industrialization, 1877-1900, Richard F. Bensel further develops the argument he first outlined in Sectionalism and American Political Conflict (1984), and which he began to flesh out more intensively in Yankee Leviathan (1990): that the key to American politics lies in its role in shaping the enduring struggle for resources between "core" and "peripheral" regions.

In the present installment of his sweeping reinterpretation of American political history, Bensel focuses on the period lying between the end of Reconstruction and the threshold of the "Progressive Era" -- a period beginning with a rough balance between the two major parties, Republican and Democratic; proceeding through a period of increasing instability; and concluding with the consolidation of Republican dominance following what Walter Dean Burnham has called "the system of 1896."[1] Economically, it was also the era that saw the creation of the first modern industrial corporations, the consolidation of an integrated national economy, and the rise to dominance of an urban-industrial "core" region, the American Manufacturing Belt. To Bensel, as to numerous other observers, the political and the economic events are fundamentally related. Bensel's own twist is to contend that the economic developments are at bottom politically driven. The rise of the Manufacturing Belt he views as essentially the product of its expropriation of the surplus productions of the periphery, an expropriation advanced by the structure of national politics and directed, above all, by the Republican Party. The Republicans, he contends, built a carefully balanced program consisting of three parts: (1) tariff protection for "core" manufacturing, made more broadly popular by offering protection for western wool producers and tariff-financed pensions for Union veterans; (2) maintenance of the gold standard -- a less popular stance insulated from popular pressure by handing its administration over to the executive branch; and (3) creation of an "unregulated" national market, insulated even more from localistic impulses by consignment to the federal judiciary. By successfully juggling a coalition of constituencies not all of who accepted the full program, by fending off successive peripheral challenges to it, and by gaining crucial new support, by the mid-1890s the Republicans established their dominance of American politics as the party of the "core."

In building the party system around divergent regional interests, furthermore, American politics worked to fragment other potential opposition to the emerging political economy. The class bases of the parties, for instance, varied enormously by region; while nonsouthern immigrant workers and "subsistence" farmers supported the Democrats, lower-class southern blacks and Appalachian subsistence farmers voted Republican -- thus pitting against each other groups that might otherwise have been allies. The principal forms of class conflict in late-nineteenth-century America -- between sharecroppers and landlords in the South over control of the cotton crop, and between industrial workers and industrialists in the North over control of the workplace and division of its product -- had no partisan vehicle for expression in national politics. In the South, black sharecroppers were ruthlessly suppressed and increasingly disfranchised (as were many poorer whites). The major third-party movements of the period, the Greenbackers and the Populists, were mainly vehicles for petty independent agricultural producers. Despite their good-faith efforts to create a "union of the producing classes," their advocacy (and, by 1896, Democratic advocacy as well) of inflationary monetary policies that might reverse the redistribution of wealth to the Core wound up driving most industrial workers into the arms of the "Core" party, the Republicans. With politics focused on interregional struggles, industrial workers fought out class issues in the workplace rather than at the ballot box, making the United States unique in the western world for the frequency and violence of its strikes. Thus Bensel's answer to Werner Sombart's old question "Why is there no socialism in the United States?": regional conflict, not class conflict, drove American politics, and made it possible for a modernizing elite to advance a profoundly harsh and dislocating economic agenda while at the same time deftly managing potential democratic challenges.

The preceding summary cannot begin to do justice to the complexity of Bensel's argument, which goes into enormous (and, it must be said, often tedious) detail about the minutiae of party coalition construction and management. Taking heed of critics of his earlier work, Bensel explores at great length the problem of silver Republicans in the West and Gold Democrats in the East, and the paradox that the predominantly anti-gold standard Democrats could only win nationally by ceding monetary control to their pro-gold New York wing -- control that they fatally took back in 1896.

Among this book's other virtues can also be counted its description of the regional economies of the late nineteenth century. Building on his earlier work, which relates congressional voting behavior to "trade areas" constructed like those of the modern Rand McNally Commercial Atlases, Bensel demonstrates emerging regional disparities using a series of economic development measures standardized by population -- value added by manufacturing, patents, wealth, and adult male literacy -- and, most importantly for him, mortgage interest rates. His analysis here is subtle and complex, most especially in his exploration of fundamental differences between the two "peripheral" regions, the South and the West. The key variables, in his view, were capital flows among the regions. The major money-market centers, New York, Chicago, Boston, Cincinnati, and Cleveland, were of course in the "Core," as were the other capital-exporting trade regions. Western trade regions were major capital importing regions; however, as rapidly developing regions well integrated into eastern capital markets for mortgages and municipal bonds, their people were divided on monetary questions -- mining interests and farmers eager for silver, pro-development elites firm for gold. The South, on the other hand, remained isolated from national capital flows (at least apart from those needed to move its harvests into international markets); in this regard it remained very much a "conquered province." While Republicans were able to buy western support for their program of national consolidation, the economically and (increasingly) politically isolated South was open to "devastating" exploitation, notably through the protective tariff (p. 20). If the Manufacturing Belt was in fact built on massive interregional transfers of wealth, the South was its major victim, and the South was accordingly the region most firmly opposed to the Republican agenda.

And here this reviewer starts running into trouble. Bensel's argument is sweeping, but as one plods through its considerable length one increasingly fears that he is trying to carry the argument through bald assertion and repetition. (The book could be considerable shorter and less trying to read -- and, while I'm at it, may this middle-aged, bifocaled reader protest the tiny typefaces preferred by Cambridge University Press?) Especially disturbing is Bensel's cavalier treatment of the profound economic issues raised by his argument. To be sure, in 527 pages Bensel takes ample opportunity to state and restate his contentions, frequently in ways that qualify his stronger claims. But in the end he understands core-periphery relationships in late-nineteenth-century America to have been fundamentally predatory. Time and again he asserts that the Manufacturing Belt built its dominance by means of a "massive" and "harsh" redistribution of wealth from the periphery, mediated by the tariff, the deflationary gold standard, and Core control of the central institutions of national economy -- banking, railroads, and giant industrial enterprise.

An economic historian might well ask, "Just what was the precise impact of these policies on regional disparities?" Clearly the factors he identifies would work against the interests of the periphery and in favor of those of the Core -- but to what degree? What about countervailing factors? And how much regional disparity can be explained by factors internal to each region? In the case of the South, this reviewer finds it hard to credit the notion that the tariff impoverished the South to any degree comparable to the impact of the collapse of slavery -- the central factor in the eyes of most modern economic historians, but one that Bensel ignores in favor of reviving old, politically-driven polemics against the "colonial economy." Likewise, with respect to the tariff's impact on the "Core," I suspect that much of the tariff's redistributive impact was within the Manufacturing Belt (it only protected some industries, after all), and that it played much less of a role in the development of the Belt than did the workings of agglomeration economies, increasing returns to scale, and the awesome burst of technological and entrepreneurial innovation characterizing America in the Gilded Age. (Indeed, Bensel himself sometimes declares the tariff "ambiguous" in its effects (p. 465), treating it primarily as the political glue holding the Republican Party together -- only to reassert that it "clearly and radically" sucked wealth from the periphery to the core (p. 524).) Finally, as Bensel himself acknowledges at times, the nationalization of the American economy offered benefits to the periphery as well, through lowered prices on manufactured goods; new, urban markets for the meat and grain of the West; and even industrial opportunities for peripheral entrepreneurs in textiles, tobacco, and iron. In short, the evolution of regional relationships in the late-nineteenth-century United States requires a much fuller analysis than we get here. To be sure, such an analysis may be well beyond his skills (they certainly are beyond mine), and its sheer complexity may render it impossible even to an accomplished cliometrician. But such analysis, not bald assertion, is precisely what we need.

None of the above concerns should detract from Bensel's achievement; by reasserting the centrality of region to understanding American economic and political development, he has done us all a great service. Nonetheless, I would suggest that Bensel's basic data are compatible with a somewhat different interpretation than he offers: that the politics of the Gilded Age didn't drive economic change so much as they reflected it. Politicians are, after all, in the business of interpreting the anxieties of voters, diagnosing them as political problems and promising political solutions. Frequently, too, those diagnoses and solutions have been in effect diversionary, steering politicians and the electorate away from forthright confrontations of their own ambivalence about social change and toward convenient external "enemies." Thus in the 1850s anxieties over wrenching economic change were refracted into nativism and sectional conflict, demonizing "Romanists," the "Slave Power," and the "Black Republicans." [2]

In this view, in the late nineteenth century the tariff, and even to a degree the gold standard, were less causes of regional divergence than politically useful symbols of that divergence. National economic consolidation generated more regional disparity than either tariff or gold, and produced new class tensions in the burgeoning industrial cities of the Core. But, as Bensel notes, the policies underlying the national economy were largely carried through by the judiciary, and were thus insulated from electoral politics in much the same way that control of contemporary European consolidation has been insulated from popular opposition by its consignment to the bureaucrats of Brussels. Despite peripheral grumbling about this "government by judiciary," however, few Americans of any class or region were really willing to challenge the fundamentals of economic nationalization; those who were -- the Socialists, Greenbackers, and Populists -- were doomed to marginality, or, like African-Americans or Native Americans, were pushed out of the system altogether. Democrats and Republicans alike basically welcomed the consolidation of the national economy as potentially enhancing the prosperity of all; neither party repudiated the tariff altogether, and, given the central stabilizing role of the gold standard and its persistence through both Republican and Democratic administrations, one wonders how long even a Bryan Administration would have insisted on abandoning it -- especially given the speed with which the issue fell off the national agenda after 1896. Too many people had a stake in economic nationalization for it ever to have been threatened; the fears it generated, though, had to be expressed politically in a manner that was at once a plausible depiction of reality and an evasion of it.

In other words, at least some of the issues Bensel regards as central to the creation of the American political economy may have been, in large part, what radical critics of the American economy said they were: mere shadow-boxing, ploys by the political classes to distract voters from the fundamental issues of inequity in a capitalist political economy. Bensel could convince me otherwise, but only if he provides an economic analysis to match the subtlety of his political analysis.


[1] Walter Dean Burnham, Critical Elections and the Mainsprings of American Politics. New York: W. W. Norton, 1970, especially chapter 4.
[2] See, for instance, Michael F. Holt, The Political Crisis of the 1850s. New York: Wiley, 1978.

David L. Carlton is Associate Professor of History at Vanderbilt University, specializing in the history of the American South. His principal work-in-progress is a study of the industrialization of North Carolina, tentatively titled Strategies of Southern Development.

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Posted: 8 August 2001