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Inquiries Into American Wealth

ISSUE:  Spring 1941

The Triumph of American Capitalism. By Louis Hacker, New York: Simon and Schuster. $3.00. The Vanderbilt Legend. By Wayne Andrews. New York: Harcourt, Brace and Company. $3.50. John D. Rockefeller. By Allan Nevins. Two volumes. New York: Charles Scribner’s Sons. $7.50.

Two new books, “John D. Rockefeller,” by Allan Nevins, and “The Vanderbilt Legend,” by Wayne Andrews, add to the growing biography of American wealth. A third, “The Triumph of American Capitalism,” by Louis M. Hacker, seeks to explain the factors underlying the process of accumulation.

Mr. Hacker’s main argument runs as follows: The mechanics of commerce and land speculation shaped American development from the late Colonial period to the decade before the Civil War. The American Revolution itself was brought about by the efforts of Colonial capitalists to escape from the closed British mercantile system and its restrictions on shipping and Westward expansion. Successful in the war, Americans for the next fifty years engaged freely in commerce and speculation to their great profit, but by the ‘fifties these pursuits were proving unprofitable. The “uneven history” of American commerce, says Hacker, “is one of the most significant indicators we have of the nature of the cul-de-sac Northern enterprisers were finding themselves in. . . .” Industrial development then seemed the only open road to large profits, but the confidence of the manufacturers was sapped by unfavorable government policies. Protective tariff, railroad land grants, and a sound banking system were the essentials of industrial progress. In order to secure these, the hold of the planting aristocracy over national politics had to be broken, and that took a Civil War. The war, in turn, stimulated industrial growth by increasing demand and inflating credit. After the conflict, brilliant entrepreneurs like Andrew Carnegie brought about the complete triumph of industrial capitalism.

Any economic interpretation of history must be prepared to withstand two kinds of criticism; one, that it fails to give sufficient weight to the secondary or psychological off shoots of physical development; the other, that it is the wrong inter-; pretation from the immediate economic standpoint. There are, after all, as many different “economic” interpretations as there are psychological ones, and when both are combined the permutations become almost infinite. Although Mr, Hacker’s book cannot be demolished from either angle, after close reading, it emerges, as the British Admiralty would say, “slightly damaged.”

It will be hard to convince most scholars that the Abolitionist movement, as one of the secondary effects of economic development, had no important influence on the Civil War situation; or that there is not a “spiritual” desire for independence generated by all colonial situations that does not directly depend on the conflict of merchant capitalists.

But granting that in the present woefully primitive state of the study of mass psychology any man has a right to exclude the elements that he cannot handle, the crucial question remains: Can Mr. Hacker’s positive statements be supported? His major thesis seems to be reducible to the proposition that certain invariable characteristics of mercantile and industrial capitalism, respectively, have been responsible for the trend of our history. This may be susceptible to historical proof, but acceptance must rest upon more data than have been presented in “The Triumph of American Capitalism.” Mr. Hacker’s exposition has too much abstract theory and too little historical exemplification. One feels that each logically desirable piece fits too exactly into place, and in the process of fitting the reader detects enough stress and strain to make him question the overly neat pattern, Few events in the practical affairs of men seem to happen with the clean precision that Mr. Hacker insists on.

Lacking space to list specific differences of opinion, I must confine myself to a few major criticisms. Too much emphasis is placed upon the role of the Federal government in relation to mid-nineteenth century business, and too little is said about the more vital policies of the separate states, The analysis of the critical effects of the increasing cost of slaves during the ‘fifties seems to rest too confidently on the proposition that the small slave-cultivated farm lacked sufficient Negro women to provide for the reproduction of its own labor supply. Careful surveys of the population figures do not support this thesis. Too clean-cut a distinction is made between the Republicans as the party of industrial business and the Democrats as the agrarian opposition in the post-Civil War period. And finally, the analysis of Midwestern election returns does not seem to prove the point that military control of the South was abandoned only when “the old Northwest and a goodly part of the new far West began to vote Republican tickets in congressional and presidential elections, as they did after 1876. . . .” A scrutiny of Mr, Hacker’s own table shows that between 1872 and 1878, the years covering the final abandonment of Federal military efforts in the South, the Republican majority in the delegations from Illinois, Indiana, Michigan, Ohio, and Wisconsin fell from thirty-seven to fifteen, and had the table been extended to include 1882, instead of closing with 1880, it would have been necessary to record a large Democratic majority.

These criticisms, however, must not obscure the fact that Louis Hacker has written a challenging book of first-rate importance. The very attack upon his thesis that must be made by other scholars will greatly advance the economic interpretation of early American history.

Cornelius Vanderbilt, Senior, may seem, in Wayne Andrews’s account, to be an exception to Mr. Hacker’s thesis that the merchant capitalists failed to acquire large surplus capitals. Yet the fact that it took “Old Corned” forty odd years to acquire some fifteen millions from shipping, and only a dozen years more to add ninety millions from railroading illustrates the increased rate of accumulation in what was essentially an “industrial” enterprise. In addition, the Commodore’s crafty son, William Henry, quietly added another hundred million in but eight years through the improvement of good investments.

This first half of Mr. Andrews’s story is interesting business history. Unfortunately, however, the author was not able to unearth any new material. Newspapers had to be relied on for most of the information. No Vanderbilt papers were available. The old Commodore kept his records safe under his hat, and his son was reared in the same secretive tradition. As he proved in his much regretted “public be damned” interview, William Henry did not think of himself as a “public man.” He developed little of the feeling of public responsibility that prompted the extensive giving of Rockefeller and Carnegie. He would have regarded as sheer impertinence the present-day historian’s interest in his private affairs.

With the passing of William Henry in 1885, the Vander-bilts rapidly became “public characters” from a society standpoint. Stories of their parties crowded the pages of metropolitan dailies. They well illustrate the enervating force of great wealth unattended by any tradition of social responsibility. Their role, even as railroad directors, was almost entirely passive. Save in the accountings of estates, business is seldom referred to in the second half of “The Vanderbilt Legend.”

The broad outlines of the story of John D. Rockefeller and the Standard Oil Company must be known to all readers of American history. Allan Nevins has supplied many important new details without altering the familiar pattern. The full account of Rockefeller’s childhood, for example, shows clearly the origin of many characteristics of the later business man, though these emerge much the same as they did from the works of Flynn and Tarbell. His father is said to have boasted: “I cheat my boys every time I get a chance, I want to make ‘em sharp. I trade with the boys and skin ‘em, and just beat ‘em every time I can. I want to make ‘em sharp.” Small wonder that the sons brought little idealism to the market place.

The fact that Mr. Nevins, unlike Mr. Andrews, has had the advantage of all the evidence in the possession of the Rockefeller family throws the difficulty of writing business history into still bolder relief. Rising young business men do not preserve their opinions, letters, and records with the care of hopeful statesmen looking for the approval of posterity. Large sections of the Rockefeller story have had to be based on John D. Senior’s conversations with journalist William 0. Inglis, taken down a generation or more after the events took place. However, Mr. Nevins makes up for the scarcity of information regarding Mr. Rockefeller’s personal dealings by an unusually full treatment of the surrounding circumstances. The book is a mine of information on such diverse topics as the early history of petroleum, Eastern railroad practices, conditions in the oil business, the state of American education at the turn of the century, and business and politics during the Progressive drive against the trusts. Occasionally Mr. Nevins’s lack of familiarity with business or economic theory betrays him into minor slips, such as contending that Standard Oil’s earnings of $11,281,790 in 1883 “would have justified a capitalization of two hundred millions.” They would in fact have justified a capitalization of $112,000,000 at the most. Such matters are in themselves unimportant, but the same lack of interest prevents Mr. Nevins from adequately relating the practices of the oil industry to the general economic and business history of the period, despite hundreds of pages of detailed narrative.

Mr. Nevins’s admitted personal bias as “a convinced believer in a free competitive economy” has been admirably restrained in dealing with this arch-enemy of competition. Biographers of men like Rockefeller have been too prone to pass moral judgment on every occasion, until one gets the impression that the crucial questions are: Was the great magnate honest or dishonest, miserly or charitable, cruel or humane, good or bad? These matters obviously must be judged differently by every class and every age, and seem in any case to be of secondary importance. Mr. Nevins happily avoids such pronouncements. Where the same type of experience is repeated by scores of men the process is more im-portant than the deviations of the individual. If we must pass a judgment it should be on the social desirability of monopoly through successful competition, and the support of medical research and education from the tax levied on consumers by monopoly-supported prices. The career of a man who made a billion dollars from the country’s most spectacular monopoly, and then gave half of it away with care and precision illustrates this process on a grand scale, Mr. Nevins supplies ample ammunition for argument, either pro or con, but himself stays clear of the problem.


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