An Interpretation of American History—Civil War Through the Great Depression

Transcribed notes of Norman Rozeff, age 19, from an American History class at Boston
University, 1957. [With the passage of over a half century's time, revisionist history has
revealed numerous other interpretations of this period.]

The Civil War was either an irrepressible or repressible conflict. The South was sure it
would win if a war came to pass. In the first place the South didn't expect a war would
arise when it seceded. The war could only be avoided if the North gave in completely to
the South. Lincoln however would not give in.

The Southerners were confident because they psychologically believed that they lived a
better physical life, could buy off Northern soldiers, and felt that Northern politicians
were money-grubbing hypocrites. In addition the South believed: 1. cotton was "king"
and that because of this England and France would help it; 2. expected that states in the
Mississippi Valley would go in with it; 3. counted on discontent and disunity in the North
to weaken its moral strength; 4. thought that it had the military advantage.

In the end the North won because the South miscalculated on three of these four items.
1. England didn't need cotton as much as the grain that the North could supply. The
European nations desired to see the Southern aristocracy win. Napoleon was trying to set
up an American empire starting in Mexico and might have helped the Confederacy. The
English working man couldn't vote until 1867, therefore, though favoring the North,
could do little about it.
2. The Northwest did not want to leave the Union and subsequently gave its men and
resources to fight. The South had overlooked two things (a.) that the building of the
railroads in 1850 had a strong effect with the economic ties of the Northwest coalescing
with those of the Northeast and (b.) that the majority of people did not want to extend
slavery to the territories and had gone into the Republican Party.
3. Lincoln could use the war powers of the President to curb disunity.
4. That the South could win in a defensive war by holding out long enough. When the
war commenced the North had no military organization, but the South did because the
War Department of the U.S. was controlled by Southerners who upon the initiation of
hostilities reassigned themselves South. It took several years before the North weeded
out its incompetent generals.
The strategy of the North was to 1) blockade the southern coastlines, 2) divide the South
down the Mississippi River and down the Appalachian Mountains. Grant divided the
Mississippi by capturing Vicksburg in the Fall of 1863 and later Chattanooga, Tennessee
with its rail connections.

Because of the belief in states rights the Confederate government under Davis did not
have the full support of all the states in the confederacy. Some held back arms, men, and
supplies for their own use. An indifference to the war developed in the poorer men of the
South. The South lacked a leader such as Lincoln who provided the North the will to
fight.
There was, however, no unity in the North concerning the war. The Federal government
had no propaganda agency to indoctrinate the people. Lincoln's principle aim was to
preserve the Union, therefore upon the war's end he desired the South to be readmitted
quickly. The Negroes were to be slowly emancipated. Wade, Chandler, Stevens and
Wilson opposed Lincoln's plan on Reconstruction. They wanted a harsh peace. They set
up the C.C.W., committee on the conduct of the war. It became the father of the
committee on Reconstruction. The C.C. W. tried to dictate to Lincoln on his war cabinet,
etc. In 1864 it tried to sidetrack Lincoln for the Republican presidential nomination. The
men of the committee were sincere and of strong character, possessed strong wills and
strong beliefs. Concerns connected with them were:
1) Who should run the war and the peace—the President or Congress? Legislators
believed that they should;
2) Some had genuine concern for the Negro and wanted to guarantee freedom for the
Negro before the war ended;
3) They were interested in preserving the Union;
4) Were needed to support the Republican Party and thought Lincoln was too vacillating.
Abolitionists did not capture the Republican Party but strongly influenced it and often
criticized it and Lincoln.

The Democrats were divided into two parts. One had those such as Douglas and Johnson
who supported Lincoln's use of the military. The second group, mostly in the East,
wanted to save the Union but opposed Lincoln. Horatio Seymore, the governor of New
York, was in the second group and later ran as the Democratic presidential nominee in
1868. Yet another group believed in discussion and negotiation rather than war.

Copperheads gave aid to the South though still residing in the North. C. L. Vallandigham
was the most prominent copperhead. His talk was defeatism. He greatly criticized the
draft. Lincoln was personally attacked but paid no attention to these particular critics.

Many of the above opposed Lincoln's war powers such as the suspension of the writ of
habeus corpus and the use of military rule. Around 13,000 people had been arrested
under these terms. The Constitution does not say who has the right to suspend the writ of
habeus corpus in time of rebellion. Lincoln assumed that he had this right.

Democratic opponents opposed emancipation and the draft. They formed secret societies
to undermine the war effort by assisting the enemy, urging desertion and draft dodging.
In 1862 they were quite strong in the Northwest. By 1864 they caused "war as a failure"
to be written into the Democrat platform when McClellan ran for President.

To preserve the Union and vindicate democratic government were two reasons why the
war was fought. As to the question of slavery Lincoln wanted to see a) no further
extension of slavery, b) its ultimate abolition over a period of time. Lincoln emancipated
the slaves in the South to help the North. Once free they no longer had to work for their
Southern masters and once released they could possibly fight. Slaves were only
emancipated in rebellious areas, not in the North, the territories, and areas already
captured by Union forces. This action did not satisfy abolitionists nor middle westerners
who wanted to save the Union but not free the slaves. Many mid-westerners were former
southerners.

The significance of the Emancipation Proclamation was, in a short time, that slavery
everywhere would be abolished. The 13th Amendment was to free slaves everywhere.
Freed Negroes came into northern lines and fought with the North. They numbered
186,000. The way Lincoln had handled the problem was the greatest action showing his
astuteness and statesmanship. Appeasement would have meant giving in completely to
the South.

Lincoln began Reconstruction in 1862. It was to end in 1877. It has been called a period
and also a function. As the latter it was not a rebuilding but a new building of the South.
We learn that wars do not settle problems thereby making them a useful institution. Often
war set forth more problems than it solved. In this case it clarifies that 1) The United
States was to be one nation, its union to perpetual with secession not an option; 2)
Slavery in the United States is abolished by the 13th Amendment, a landmark for not only
this country but the world. 3) The war ended for some time the southern domination of
government leaving the East and Northeast to dominate. Power shifts with business also
occurred.

War created problems were:

1) What about the eleven states that seceded—were they in or out? If in, how would
governments be reformed? If out, how then would they be taken back in? There was
nothing in the Constitution regarding these questions.
2) Who was to have charge of Reconstruction, the President or Congress?
3) What was to be done about Negroes-status-position-actions to be done for them?

Superimposed on these questions was the fact that a large amount of hatred and bitterness
existed between the two entities. It had grown because it was a war between brothers.
Sherman's March to the Sea and associated destruction in addition to prison atrocities
exacerbated ugly sentiments. Add to this ever-present devastation, loss of manpower, and
a great diminution of Southern morale. The war had produced in the South a social and
economic revolution. In the North disunity, opposition, a conflict of powers did not help
matters. The Democrats seemed insignificant. Not the least was that the war was costly
and bloody. The cost in terms of humanity was very high, even higher than for the US in
World War II.
Here are some comparable statistics:

Civil War World War I World War II

Total population 30 million 120 million 140 million
Armies c. 4,200,000 1/7 4,000,000 1/30 10,000,000 1/14
Casualties c. 1,027,000 341,000 1,120,000

Battle of the Bulge Dec. 16, 1944 –Jan. 16, 1945 American troops 500,000
Casualties 53,000 (11%)
Gettysburg July 1-2-3, 1863 150,000 combatants Casualties 51,000 (33%)

In 1862 Lincoln put military governors over the captured territories to make way for civil
government. In December 1863 he announced his 10% idea. This was that as soon as
10% of the people swore to an oath of allegiance they could form a new state
government. The Wade-Davis Bill of 1864 wanted 50% of the people to take the oath
and all people who participated in the war to be outside of any state government. By the
time Lincoln died in April 1865, four states had been readmitted by Lincoln's 10%
decree. The Wade-Davis Bill was not signed by the President and died because the
Congress did not convene. The question revolved around whether the states ever left the
Union (Lincoln thought not) or whether the rebellious states did leave and had to be
readmitted. Lincoln did have one extraordinary power. This was the power to pardon
anyone convicted of a federal offense.

Andrew Johnson continued with Lincoln's 10% scheme and by December 1865 some
states were called Johnson Governments. He specified certain things such as a
repudiation of secession, a repudiation of public debt, and the abolition of slavery.
Congress, however, with the power to decide on the eligibility of the congressmen could
keep southerners out and did so. Thaddeus Stevens controlled the actions of many
congressmen by exerting his iron will. His determination showed up even as a boy. Born
with a club foot and unable to participate in childhood activities he tried all the harder in
his school academics.

The first phase of Congressional Reconstruction was February 1866 to March 1868. In
this period was put forth 1) the Freedman's Bureau, 2) the Civil Rights Act, and 3) the
XIV Amendment. Congress said that the Negroes were helpless in the hands of southern
whites. It gave as evidence the Black Codes. These state enacted restrictive codes
adversely controlling Negro society. While they legalized families, right to work, to sign
contracts, to own property, to travel, and to have legal rights, Negroes could not appear as
witnesses, vote, were restricted to certain professions, had vagrant clauses, could travel
and buy property only in certain areas.

The Freedmen's Bureau was the only relief agency for Negroes and even whites. It helped
starving people, started Negro schools, and taught them how to adjust to their new
freedoms. Johnson vetoed the first Freedmen's Bill, but Congress passed it over his veto.
His reasons for vetoing it were: it would set up a bureaucracy, it was like under military
rule, and it gave power to certain individuals.

The 14th Amendment has as its purpose to guarantee to the Negro his civil rights. It also
defined citizenship and limited states concerning citizenship. The North tried to pressure
the South into giving Negroes the right to vote. Representation in congress would be cut
down in proportion to those not voting. The 14th amendment was ratified in 1868. The
15th Amendment of 1870 gave the right to vote to everyone. In 1866 when the14th
Amendment was passed by Congress there were not enough votes to put in it a clause like
that in the 15th. The pardoning power was placed in the hands of Congress The 14th
declared the South's debt null and void; the North's debt to be paid.

Congressional Reconstruction lasted from 1867 to 1877. Congress took charge under
three acts. First was the Reconstruction Act (March). Second was the Tenure of Office
Act, and third was Command of the Army Act. Under the first the South was divided into
five districts, each under a general. His duties were to 1) register voters, 2) call
conventions and draw up new state constitutions abolishing slavery, ratifying the 14th
Amendment, and have people ratify it. Officials would be elected under the new
constitutions and finally the Congress would approve those elected and the new
constitutions.

Lincoln-Johnson Governments Readmission under Reconstruction Act of Congress

Carpetbag Rule Under Southern White Control

Virginia (1862) 1870 1869
Louisiana (1864) 1877*
Tennessee (1865) 1866 1869
Arkansas (1864) 1868
North Carolina 1868 1870
South Carolina 1877*
Georgia 1870 1872
Texas 1870 1873
Florida 1868 1877*

• Disputed election returns in National Election of Hayes versus Tilden

A carpetbagger is a type of person that makes a living off the misfortunes of others.
Carpetbag rules raised the debts of certain Southern states. The Negro idea of freedom for
a time was not to work. The prevailing attitude in the North was that all Negroes were
"Uncle Toms." Carpetbag governments had military rule to support them as well as the
14th Amendment, force acts, and laws that gave Federal officials the right to interfere to
ensure that elections were fair. Southern whites regained control by taking every
advantage offered to them, by threatening and intimidating Negroes, and hindering
Negroes from voting. In 1872 most whites were pardoned. The carpetbag governments
cracked of their own excesses.

Second Phase of Radical Program—attempt of Congress to curb and remove the

President. The Tenure of office Act and the Command of Army Act were passed to chide
Johnson into disobeying them. Johnson obliged the radicals by firing Stanton who was
working with them. During the war he had been very efficient. The moral to this story
may be that when you get into a high executive position, have a house cleaning and
appoint your own men. Grant was appointed in Stanton's place but quit when the Seanate
disapproved of him. Johnson wanted a Supreme Court decision, but Grant left the office
and made this impossible.
The next action was Johnson's impeachment. The House of Representatives impeaches
with a bill of indictment. The Senate tries the case. Ben Butler of Massachusetts was the
H. R. prosecutor. Johnson had able attorneys. The outcome was that 35 were for removal
and 19 against. This was one short of that needed for removal.

Congress was ready to overrule the Supreme Court. The first significant case was that
concerning government versus the right to infringe on people with military force. This
was ex parte Milligan (1866). It held that as long as civil law is functioning people are
subject to it and not to military rule. In 1867 Reconstruction Act provided with Military
courts and military rule in the South. Ex parte McArdle (1868) was the next important
case. McArdle was a newspaperman in Mississippi who criticized military rule and was
arrested by the military. He was bringing his case to the Supreme Court, and Congress
passed a law forbidding the Supreme Court from making decisions concerning
Reconstruction. The result was that the Supreme court was ineffective and never offered
a decision on the Reconstruction Act. The majority of people were behind Congress and
no the courts.

Overall results of Congressional Reconstruction: 1) It was a failure because whites got

back into politics and the "solid South" resulted. The South always voted Democrat, and
this resulted in a one-part system and rule by an oligarchy. Few outstanding leaders were
to be developed by the South. 2) The Negro while having Civil Rights did not have
equality and political rights. 3) Reconstruction intensified racial maladjustment with the
South resisting change because it might disturb the racial equilibrium.

Why did the Radicals oppose this program in the South? 1) Political reason—the radical
leaders knew the Republican Party was a sectional minority and that it might lose if
South came right back into the Union and vote Democrat. The South was also going to
get more Congressmen [3/5(=18) + 2/5(=12) =30]. The Radicals wanted the Negroes to
vote Republican. 2) Economic reason—the power in Washington is in the hands of the
industrial North and the agricultural West. The Republican leadership is in line with
economic progress and wants to see such things as high tariffs (1857 was 19%; 1865
46%), and didn't want return of state banks. The railroad policy consisted of government
subsidies which the South would oppose [1862 Charter for Union Pacific and Homestead
Act].
3) The humanitarian concern of Radicals for Negroes was another reason the Radicals
opposed the South. 4) Patriotic reason—radicals were genuinely concerned about the
South getting right back into power after having caused the war.

Why did the people support the Radicals against Johnson? Part was the psychological
effect of Lincoln's assassination. Another was Johnson's political situation which was
impossible because he was backing the part in power and had no party of his own. His
personality was stubborn, insecure, complex, and opinionated. He didn't know how to
compromise. Third the South played into the hands of the Radicals by not showing any
repentance. Southerners talked about their rights, wouldn't accept the 14th Amendment,
and started the Black Codes. Fourth the North sees that the people who brought on the
war were getting back into control {"Better vote the way you shot."}.Other North
attitudes were: {"righteousness complex"—vengeful peace can then become rightful,
{fruits of victory complex—we won the war, but where's the peace? In short the North
must do something to the conquered.

Reconstruction was humiliating for the South. Its social and economic condition had
been changed. Its aristocracy was gone. It could have been much worse in comparison to
what had gone on in other countries in the century. There were no purges, killings, and
false trials. There was no confiscation of property The new state constitutions and
governments were more democratic. It lead to public works and more interest in politics.

In the election of 1868 the results were:

Candidate Electoral Vote Popular Vote

Grant 214 3,000,000 [ In six Southern states 450,000
Seymour 80 2,700,000 Negroes voted.]

By 1869 among concerns of the radicals and others were the National debt, paper money
or greenbacks, taxation through excise income and tariffs. The National debt at that time
was in proportion to what it was in the mid-1950, also following a major war. In 1869
Congress passed a law that the debt should be paid in gold. In 17 years the debt was
wiped out. During the war $450,000,000 of paper currency was printed. The questions
about it were: Should it be 1. destroyed?, 2. kept?, 3. increased? Conservatives supported
the first option. Compromisers favored the second and the people, favoring cheaper
money, the third. In 1865 the paper dollar was worth 50 cents and in 1869 73 cents. It
could not be kept stable. Later France after its 1790 revolution and Germany after WWI
had worthless paper money. Worthless money eliminates the middle class.

The Resumption of Special Payment Act was passed in 1875. It stated that in 1879 the
government would keep in circulation $00,000,000 of paper money but specie could be
redeemed in gold. War nuisance taxes were eliminated except on liquor and tobacco.
Income taxes were repealed, but the tariff at 46% was retained.

In foreign affairs both Johnson and Grant were successful. Seward maneuvered the
Mexican situation well, and French soldiers were removed. He also was instrumental in
the purchase of Alaska. He had a concept of a large America. He envisioned a protective
ring, from Alaska to Hawaii to Peru to the West Indies, for the U.S. Secretary Fish settled
the outstanding disputes with Great Britain in the Treaty of Washington (1871). This
resolved the ownership of the San Juan Islands near Washington State (they went to the
U.S.); fishing rights off Nova Scotia and Newfoundland (U.S. got rights but reimbursed
money to Canada); U.S. paid two million dollars for damages done to British holdings. In
1872 in a Geneva conference the U.S. agreed to pay Britain agreed to pay the U.S. $15.5
million for damages caused by the Confederate warship Alabama constructed in
supposedly neutral Britain. Fish kept Grant from recognizing the belligerence in Cuba. In
Santo Domingo bondholders sought U.S. help in buying the island to increase the value
of their bonds.
Why was there so much scandal and corruption? The Gold Corner of 1869 shows the
unwise policy of government to big business and played into the hands of speculators.
Jay Gould and James Fiske were notorious for their lack of moral strength. They had had
the Erie Railroad war with Vanderbilt. They decided to corner the gold market by
convincing the Treasury not to release gold. They were able to boast the price from $132
to $165 an ounce and ruined many businesses. When the government then released gold
the price dropped to $135. Grant insiders had worked with Fiske and Gould who suffered
only minor losses when the government released $4 million in gold and the price
plummeted to $135.

The Internal Revenue Department, a branch of the Treasury, collected taxes from
whiskey. A collector in St. Louis made a deal with certain whiskey manufacturers that
they would not be taxed in return for gifts made to him. Secretary Bristol detected this
skulldugery with outside assistance. It involved Grant's own secretary.

The answer to the question has three major facets. The first involves the atmosphere of
the times. After a war is a usual period of letdown in morale and morals. War has its
brutalizing effects that carry over into the peace. Secondly, the 1860s was a period of
violence in business enterprises with the Erie Railroad as one example, in the city with
the Tweed Ring as an example, and in the West with holdup men. The rise of big
business meant more contact between it and government, for the government has charter
rights, right-of-way rights, tariff control, and may regulate or not. Business could mean
the rise to power of the burgeoning newly wealthy seemingly without the restraint of
good breeding and as sense of civic responsibility. The public could not deal with this
new scheme of things either. Thirdly, much depended on leadership and on the President.
Grant was unfit in terms of his mental equipment. He couldn't judge men, was ignorant
of law, and of politics. His lack of caliber permeated to all his subordinate posts.

The fact of the Liberal-Republican (L-R) movement meant that reform was wanted.
Many of the leaders were connected with journalism. Papers and magazines were shaped
by their editors. L-R wanted to 1) jack up the quality of work and the workers in the civil
service, 2) end corruption, 3) lower protective tariffs, 4) change South's policy of party
(end carpetbag rule and federal troops in the South).

In 1872 there was Horace Greeley and the L-R Party and Grant's Republicans. There was
no Democrat Party present. Reform failed because the majority of people were not
convinced of its need. The reform movement was that of leaders, not the people. The
leaders were pretty much amateurs in politics. They choose the wrong man in Greeley.
Davis, Trumbull or Adams would have done better. Greeley promoted radicalism during
the war therefore Democrats and the South would not vote for him. Greeley was unstable,
eccentric, and erratic.

In 1876 the Republicans knew that the election would be close because the House went
Democrat in 1874. They selected a party regular, an honest man, general, vote-getter,
and governor of a critical state—Rutherford Hayes. Democrats nominated the reformer
Samuel J. Tilden. The contested results of the election brought a complicated resolution.
The initial results were:

Candidate Popular Vote Electoral Vote

Tilden 4,284,265 184 (needed one more for election)
Hayes 4,033, 295 166 (needed 19 more for election)

Votes in dispute were 19 from South Carolina, Florida, and Louisiana.

Congress decided that a special electoral commission of 15 would be appointed to settle
the dispute. From the House would be 3 Democrats and 2 Republicans. From the Senate
would be 2 Democrats and 3 Republicans. From the Supreme Court would be 2
Democrats and 2 Republicans. These latter four were to chose another judge to bring the
commission total to 15. The expectation was that David Davis would be appointed but
the legislature of Illinois elected Davis as Senator so Davis resigned as a Supreme Court
judge and another judge, a Republican, was chosen. That made the alignment 8
Republicans and 7 Democrats. The commission settled it by awarding Hayes 185 and
Tilden 184 electoral votes. The Republicans got the presidency, but the Democrats got
three states because Hayes would have to withdraw from them.

There was a frontier in North America from 1607 (Jamestown) to 1890. By 1865 the
frontier was up to North Dakota, South Dakota, Nebraska, Kansas, and California and
Oregon in the West. One third of the country, known as the Great American Desert, was
unconquered. In 25 years, 1865-1890, this area was settled. The area could only support
a limited number of people namely 2-6 people per square mile. The pioneers here had
little timber, stone, and water. The first pioneers constructed sod houses. Only oxen and
strong plows could break the sod. When this was done, it opened the way to dust storms.
For fuel prairie grass (6" high) that was twisted was used, also buffalo chips or dried
manure. Barbed wire, instead of stones, was used for fencing. As a source of water, deep
wells and windmills were utilized. Both irrigated and dry land farming came into effect.

First to enter this territory were miners. In every decade new discoveries of minerals were
found. In the Pike's Peak area (1859) gold was found as it was in Nevada the same year.
The Comstock Silver Lode was found. In 1860 mines opened in Idaho and Utah. In the
Black Hills of North Dakota gold veins were uncovered. While this was Indian Territory
whites encroached, and war was to ensue. Silver, lead, and copper mines were opened on
Montana and other states. Many of the settlements were only temporary, but a few
became permanent and fairly quickly civilized. Mining soon became corporate and big
business because gold, silver, and copper couldn't be adequately mined except by costly
processes.

The packing industry began with the growth of cattle raising. The stable meat had been
pork, especially salt pork. Texans drove cattle north to Kansas where the railroad took
then to St. Louis and Chicago where they were slaughtered, refrigerated, and sent east.
This began in 1867 with Abilene, Kansas as the first cattle town. For 20 years this route
was followed. Then came the era of the closed range. This signaled the end of the
romantic cowboy. "Big business" began in this industry also. Cattle were changed from
long-horned, thin tough breeds to short-horned tender species. Scientific breeding
brought this about.

The Big Four and James J. Hill were the railroad builders of the west. The difficulty in
raising money for the transcontinental route held up railroading until 1865. Then the
government would lend thee railroads money and give land for every mile of track laid.
Revenues did not come in however, so the government took a second mortgage on roads,
giving the Union Pacific a chance to issue bonds and obtain more land. The obstacles in
construction included that of surveying, passing through the mountains, the matter of
Indians, no water, supplies having to come from the East, high cost of supplies, railroad
ties having to come from New York and Pennsylvania, and food for 5,000 men had to be
brought in. The Central Pacific builders had an even harder problem with construction
added to its money shortages. Labor availability was its worst problem. There was a
scarcity of manpower. This was solved with the importation of Chinese coolie labor.
The superintendent was at first skeptical of the little Chinese, but they were steady, sober,
dependable, and of no problem. In the Sierra Nevadas existed the problem of steep grades
which could be solved by tunnels, making cliffs, and filling in ravines. Tunnel digging
was very slow. Everything had to be brought from the East around Cape Horn. Snows
hindered operations part of the year. On May 10, 1869, the two railroads met.

How were they paid for? European capital—Dutch, German and English was used to
finance them through J.P. Morgan. The Northern Pacific was supported by the Dutch, the
Santa Fe by Boston money, and the Great Northern by English and Canadian support.
States granted free land to the railroads, allowed them to be tax free, and bought stocks in
them. The Federal government gave to seven railroads 242,000 sq. miles (the size of
Germany and France together). The Union Pacific got 20 million acres. The Northern
Pacific received as much land as the area of New England. The Union Pacific and Central
Pacific were each lent about $27 million. The railroads often defaulted on interest but the
government did nothing.

The railroads were the first big enterprises in America.

1. financial methods used in constructing railroads—contractors got too much money
while the stockholders received no dividends. Example: for the Union Pacific the cost to
the railroad was $93,000,000 and the cost to contractors $50,000,000; for the Central
Pacific $120,000,000 and $58,000,000 respectively; the differences represent profits to
the contractors. To be considered are1) the tremendous risks and tasks in building, 2) how
in a free society one can judge how much profit should be. [Credit Mobilies—builders
first let out contracts to contractors to build portions of road, but this didn't work so the
directors of the railroads became directors of their own contracting companies. When
they became contractors as well as directors they let out contracts at high prices and made
profits. C. M. got into difficulty by offering stock to politicians to get favors for their
railroads.]
2. numerous railroads were managed in an irresponsible manner—stock watering or
issuing stock beyond capital assets and business potential of the railroad was common.
Even the NY Central was watered, $50,000 for every mile of track. When depression
came, roads easily went into bankruptcy.
3. pooling--this was the answer to competition. A pool was an agreement that business
profits would be pooled. The pool of 1877 concerning several lines allotted the following:
the NY-Chicago Erie 33%, Pennsylvania 25%, B&O 9% and NY Central 33%.
4. rate discrimination—the railroads gave the best rates and often rebates to large
concerns and shippers; this hurt the little fellow. The railroads often charged more for
short hauls than for long distances. An example was Rochester, NY to Wilkes Barre, PA
cost $60 while continuing on another 146 miles to Philadelphia was only $48 all told.
5. Railroads had too much interest in politics—lobbies were used to get legislative wants.
The best lawyers were used by the railroads in government cases. Free passes were
handed to certain influential people. In 1872 Oakes Ames, a Massachusetts U.S.
Representative, was exposed for giving sweetheart deals to other congressmen in
exchange for votes on railroad legislation.
All of the above were reasons for the passing of railroad regulation legislation.

Opposition to railroads was greatest in the West. Farmers formed political parties and
influenced state governments to pass controlling laws. Usually commissions for
regulation were established. The railroads in response said that interstate commerce could
be regulated only by the Federal government, and they sought protection in the 14th
Amendment (No state shall deprive any person [corporation] of any property or rights
without due process of the law.). In 1876 Granger cases came to the court. Munn vs.
Illinois laid down 1) state had right to regulate any public utility for public concern; 2)
charters that railroads have cannot protect them from regulation; 3) state can regulate
commerce when there are no federal laws to do it; 4) legislators had right to do as they
did. In 1886 the Supreme Court reversed itself in the Wabash Case. Uin this year a
committee of Congress issued a report that Congressional legislation was needed for
regulation. This same year a minor depression occurred. In 1887 a federal Interstate
Commerce Act (ICA) was passed. It provided for: 1) just and reasonable rates; 2) no
discrimination between persons or places—also no pooling; 3) railroads would have to
provide 10 days notice before changing rates; 4) a commission of five men would carry
out the law and , if necessary, could take cases to court. The ICA wasn't effective because
it didn't get support from the President or Congress after it was passed. The Supreme
Court was too conservative in its decisions. It ruled that the five commission members
did not have the right to judge rates and decide when they were discriminatory. These
actions had significant implications in what was to follow. A. From this point on the
people knew more about regulating a big business; B. people knew more about railroad
rates; C. that knew that the laws needed revision and improvement. It took until 1906 that
the first effective law was passed and the Commission controlled rates and for over a half
century had great authority; D. It was the first law passed by the government concerning
economic matters in business. It signaled the end of laissez-faire and the beginning of all
regulatory acts continuing to this day. The Sherman Anti-Trust Act was the grandmother
of all.

Farmers had a problem. The reason for it was that the American farmers believed
themselves to be independent landowning middle class and entitled to the same
improvements that the city middle class were obtaining. The U.S. was the only country in
the world that this was so. In summary the problem was "How could the American
farmer maintain his middle class American standard of living and not become a peasant?"
How did this problem arise after the Civil War?

The Business Aspect

Agriculture in America went through great changes in methods. Farming after the Civil
War became more of a business and less of a way of life as the country expanded and
farming increase. The farm area in 1850 was 293,000,000 acres, in 1860 407,000,000 and
in 1900 841, 000,000. Farms became larger and larger. This required greater managerial
ability. Farmers needed more than 160 acres that the government offered, so they bought
additional acreage. Farmers then needed to use "big business" procedures. Machinery
was needed, and it was expensive. To keep on farming they bought it and went into
mortgage arrangements to obtain funds. They became tied in with banks. Farmers with
large- scale operations began to specialize. This meant that they were staking everything
in one crop commodity. The rise of land values was good for people who owned land.
Most farmers had to buy land however, and it cost them much.
The Physical Aspect
In the South the farmer had to contend with erosion, and soil exhaustion; in the West with
too many farmers working sub-marginal lands where they shouldn't have gone because of
lack of moisture. They struggled and dust storms resulted from breaking the prairie sod.
Floods periodically affected the farmers everywhere in the mid-west. Some of these were
manmade. Superimposed on these environmental factors were plant diseases, insects, and
pests that inflicted the crops. The fact is that the more people inhabit a given area, the
more the diseases and pests become evidenced.
The farmers and especially their women folk had to face the social problems of isolation
and loneliness. Insanity in women of the plains ran high. The severity of nature—long
hot, windy summers and winter snows took their toll.
Economic Phase
Farmers always claimed the transportation costs were too high. The things he purchased
cost too much. The things he sold went to market by railroad, and the farmer charged that
it discriminated against him. The cost of storing grain in warehouses and silos was great.
Purchasing agents were often unfair. The farmer thought that the manufacturer from
whom he bought equipment had two advantages: 1) the advantage of organization-
monopoly-trust; 2) the manufacture was protected by tariffs.
The decline in the price levels of farm goods was the most pressing problem Wheat in
1866 brought $1.60 a bushel, in 1869 this had dropped to $.76, by 1889 .69 and then to .
50 by 1894. By the year 1900 it had risen to $1.00. In this period there was an increase in
farm tenancy.
Why did the prices fall? The prime reason was the increase in production the world over.
Some farmers went into politics and supported third parties which turned out to be
transient. In 1878 many farmers went into the Greenback Party which strived to relieve
low prices for farm commodities. In the state elections of this year over a million people
voted for the party. In 1867 farmers had attempted to organize with help by the Grange
movement. It was interested in 1) political program—Grange laws—worked through 3rd
party; 2) tried to organize economically—farm cooperatives would save money but (a)
farmers didn't appreciate the business management of cooperatives, (b) private businesses
opposed them, (c) farmers didn't put spirit into the movement; 3)social activities—
Grange provided high spots in the lives of farmers. The Grange was significant because it
was the first attempt of farmers to organize. It showed the beginnings of class lines.
When the Grange started to decline, farmers went into Farmers' Alliance which reached
its height in the 1880s. In 1890 farmers' interest was shown through Populist's movement
and concentrated in election of 1892. In this year Cleveland beat Harrison while third
party candidate Weaver received 1,041,00 popular votes and two electoral college votes.
The Populists also elected ten congressmen, nine senators, and 50 state officials. In 1896
the Democratic Party was captured by westerners, and William Jennings Bryan was
nominated. The Populists were absorbed by Democrats.

By 1900 the US, in 35 years, had become a great industrial power.

1) The US had a great domestic market unencumbered by tariffs—markets could be
standardized and mass production could take place resulting in cheaper costs;
2) The US was blessed with natural resources—minerals, ores, lumber, and oil were
present;
3) Plenty of available labor was a help. The population in 1865 was around 35 million
and by 1900 had doubled. [In 1950 it was 150 million] Increase was from both the people
here and from immigration. Labor here was fluid and mobile (laborers would go
anywhere where factory was put up—movement was up and down);
4) Atmosphere and psychology of the time was laissez faire and people were proud of
America;
5) Business leadership and ingenuity to conceive and carry out plans for industrialization.
Leaders had brains, intellectual ability, spirit of optimism, vision imagination and
conviction.

Individual Business—Giant Corporation, both contributed greatly

The corporation before the law was considered a business person. People entered into a
corporation because it was a much better way of doing business and could be easily
expanded. A person who invests in a corporation is only liable fro the amount he invests.
Competition—succeed or fail
Cooperation—pools (resources, selling potential) were a fact of the 1870s
Combination—trusts arose in the 1880s
Consolidations—holding companies came about in the 1890s with interlocking
directorates (community of interests).

Pools kept price levels steady. Sometimes each corporation was given a territory (cast
iron, pipe industries). There were also pools to control patents. When the Interstate
Commerce Act was passed railroad pools became illegal. [In the 1950 were international
pools as for wheat, tin, and coffee] The Sherman Anti-Trust Act termed combinations
bringing about monopolies as illegal.
An alleged example was the Standard Oil Trust. Nine trustees oversaw 40 companies The
trustees got hold of stock of other companies and gave people trust certificates. They ran
all businesses as a unit.
In 1901 the United States Steel Holding Company had a Board of Directors consisting of
24 individuals who oversaw 12 companies. The directors purchased only enough stock to
control a company.
A director may be a director of several companies thus an interlocking directorate
develops. Combinations could evolve as trusts and holding companies. Up to the year
1890 there were 24 combinations with total capital of $400 million.
In 1850 there were 50 telegraph companies; by 1884 only two. In 1880 there were 14
telephone companies; by 1900 only one. From 1890 to 1897, 86 combination came into
existence with a total capital of $1,414,000,000. Between 1898 and 1900 the number had
risen to 149 combinations with a total capital of $3,784,000,000. After 1901 the number
dropped to 127. US Steel at this time was capitalized at $1,400,000,000. Still later the
number dropped to 86 of which only 20 were monopolies.
Early combinations still in existence are Western Union Telegraph, the American Sugar
Refining Company, the American Tobacco Company, United Shoe Machinery, Otis
Elevator, 1901-1904 U.S. Steel, Diamond Match Company, 1898-1900 International
Silver Company, International Harvester, International Nickel, DuPont, and Eastman
Kodak.
After 1904 there was no increase in combinations since most companies had already gone
through the process. After WWI it began again with new industries. The movie industry
is an example of a new combination as is the automotive industry. Radio never had a
chance to go through competition. Since 1930 retailing has started to combine in chains
as drug stores, groceries, etc.
The purpose of the Sherman Anti-trust Act was to restrain combinations that were too
powerful. It did this by dissolving them. Starting in 1900 and through 1933 industrial
capitalism was passing into the hands of financial capitalism (banks). Financiers were
interested in profits and stability, not creativity. State capitalism after 1933 started taking
the place of financiers.

Political Situation Up to 1890

1. The Republican Party after the Civil War lost its humanitarian interests and came
under the control of business interests—this was only natural.
This party had a strong hold on people from 1861 to 1913 except for Cleveland's
administrations. Its war record gave it the control (bloody shirt).
2. The Democrat Party was discredited because of its war record but did not die out.
Twenty years later it won Cleveland's election. It recovered because of a) the "Solid
South" and 120 electoral college votes, b) by 1885 there is a new generation of voters
interested in different things including reform, c) the immigrant vote, d) the party in
power developed factions within it—"stalwarts" led by Conklin support Grant and were
cool to reform--"Half-breeds by Blaine—reformers were a third group and a minority.
3. This was a period of intense party rivalry a) leaders were interested in obtaining office
for patronage, b) parties didn't differ too much on the issues even the civil service issue of
merit service.

The period of 1865 to 1913 is one of high protective tariff levied mostly by Republicans.
Cleveland tried to lower the tariffs, but party-crossing stopped him. The attitude towards
labor was the same in both parties. Hayes and Cleveland both advocated use of Federal
troops. The elections were always close despite (or because of?) little party differences..
In 1888 Harrison received 5,444,000 popular and 233 electoral votes while Cleveland
received 5,550,00 and 168 respectively.
In this period are comparatively weak Presidents who didn't dominate Congress. Few
outstanding laws were passed. The important ones are:
Pendleton Act of 1883—merit system of civil service;
Dawes Act of 1887—dealing with Indian problem; gave land to Indians and granted them
citizenship if they cultivated it, but the Indians were not use to individualism and private
property;
Interstate Commerce Act of 1887—regulated railroads;
Sherman Anti-trust Act of 1896—regulated business.

Knights of Labor 1869-97, American Federation of Labor 1886- , CIO 1937- were early
labor organizations. The first was also the first to be successful. It had high ideals and a
broad humanitarian approach. Its purpose was to raise the position of labor everywhere. It
failed because 1) of the kind of organization it had. It has too many diverse and
heterogeneous units in each union district, 2) it was theoretically highly centralized.
Teren V. Powderly was its best leader but the district unions got out of hand, 3)It never
had adequate financial program, 4) Powderly was good, but he was too sensitive to be
successful.
The AF of L succeeded because 1) it was discriminatory, being restricted to only skilled
workers (unions were organized according to trades and could do as they pleased), 2)
Heads had only vague and advisory powers, 3) High dues kept its treasury adequate, 4)
Gompers was a hard headed leader who knew his goals and stuck to them. The AF of L
became conservative when William Green took Gompers place in 1924. After the
Depression its membership dropped in half.
John L. Lewis saw the opportunity to organize such unorganized mass industries as steel,
auto, and rubber. He formed in 1932 the Congress of Industrial Organizations. By 1937 it
had its independent existence. It resembled somewhat the K of L. It was centralized and
organized on industries, not crafts.

The Pullman strike occurred in 1894, a year of depression. The company had cut wages
of the workers whereupon they sent a committee of protest to management. The company
refused to meet with it and fired the participants. The workers then struck and were
locked out of the plant. At the time of the strike the American Railway Union was
meeting in Chicago. It was founded by Eugene Debs as an industrial union. It voted to
boycott all trains carrying Pullman cars if the strike wasn't settled. The public to this
point was sympathetic to the workers but became worried that the unions were getting too
powerful and felt that Federal troops should be brought in. Olney, the attorney general,
was sympathetic to the railroads. He issued an injunction and sent in Federal troops. Debs
kept urging the continuation of the strike, so he was arrested for violating the injunction.
The strike, without leadership, then collapsed.
From this point on one finds more use of injunctions, which are simply a court order
restraining some kind of action. If it is violated, a person may be convicted of contempt
of court and be fined or jailed. No trial is needed. Under President Hoover in 1932 was
passed an anti-injunction act by Congress. When WWII came, this act was nullified. An
injunction was thought to act as a counter to things paralyzing the country.
In sending troops into a state the government used the excuse of keeping interstate
commerce clear. In the Constitution it states that Federal troops cannot be sent into a state
without permission.

In 1896 William Jennings Bryan's campaign was for the "free and unlimited coinage of
silver" at a ratio of 16 to one. It is a period of rapidly expanding activity. Money is
frequently scarce. The decline of prices for farmers occurs during this period. The
farmers wanted cheap money to raise prices. From 1866-96 is a period of deflation while
farmers want inflation. The government was following a deflationary process.
1860—debt to be paid in gold
1873—demonetization of silver ("Crime of '73)
1875—Resumption of Specie Payment as of 1879
1878—number of greenbacks limited to $340 million
1878---Bland-Allison Act-government to buy $2-4,000,000 of silver and coin it;
Congress passed it over Hayes veto; govt. later bought the minimum amount
1890---Sherman Silver Act—govt. to buy 4 ½ million ounces of silver and print legal
tender notes equivalent to this amount; this meant more purchasing
1893---Cleveland demands repeal of Sherman Act because he believed it caused a
depression but its repeal didn't alleviate the depression
1900---Gold Standard Act put the US on a gold standard
1933---US went off gold standard, New Deal wanted refation:
1) nationalize gold and cancel all gold contracts, 2) President could issue 3 billion dollars
of paper money, 3) govt. authorized to buy silver at price higher than market price and
cut silver content of dollar to 59.06 cents; Only World War II brought back prosperity.

Slogan means 1) govt. will put all silver mined into coin without expense to miners, 2)
ratio of 16 to 1 means they wanted 16 parts of silver to 1 part of gold. The amount of
silver in the world at this time is increasing and its value is going down. The actual ratio
of silver to gold in 1870 is 15.57:1 (private) and 16:1 (govt.). Silver was going into
private hands as the govt. stopped buying it and the price dropped. In 1874 the ratio for
private interest was 16.7:1; by 1893 26.49:1. If silver was coined at 16:1 the dollar would
be worth 60 cents.
The money question is a sectional one as shown by the Sherman Silver Act voting. The
repeal pitted Eastern Democrats and Republicans against Western Democrats and
Republicans.
In 1878 the gold reserve was $10,000,000; 1890 $190,000,000; 1893 $100,000,000;
1893 (end) $68,000,000; 1895 $41,000,000.
This last year saw in circulation silver $316,000,000, greenbacks $346,000,000 and
Sherman Act legal tender notes $147,000,000 for a total of $809,000,000. This according
to law could be exchanged for gold, and wise people did so, fearing gold dollars would
disappear. Gold reserves declined. Cleveland then borrowed from J. P. Morgan
$160,000,000 in gold. The gold standard was in place between 1900 and 1933.
There were depressions in 1893, 1907, 1913, 1921 and 1933. The latter was the deepest
of all. Prosperity peaked in 1900, 1913, 1920, and 1929. Each peak was slightly higher
than the preceding one. The economy by 1937 had recovered but not to the 1929 level
and was to dip slightly the following year. A war economy finally lifted the country out
of the Great Depression.
Wars in the world in 1900 stimulated prosperity. Cleveland's remedy was conservative
and didn't work. During WWII the country had regulations on prices, wages, priorities,
and production to keep inflation from going too far. In the post-war Eisenhower
committed to a conservative policy.

Rise of the U.S. to a Position of a Great Power

Up until 1890 foreign affairs were of secondary importance to people and a continuity of
policy had been present in the State Department. Things were left primarily in the hands
of the Secretary of State. Seward, Fish, Blaine, and Hay were first grade men. After 1900
foreign policy was directed by the Presidents. The US became involved with Midway,
Wake, Guam, and Samoa, also Hawaii. After 1898 and the Spanish American War Cuba
and Puerto Rico along with the Philippines came under its sway. With the East there was
involvement. With Europe there was insolation and non-involvement. The Monroe
Doctrine told Europeans to steer clear of Latin American involvement. From 1861 to
1867 however the French in Mexico challenged the doctrine. Seward got the French out.
Blaine tried to build up Pan Americanism through economic ties. The Us opposed
building of a canal by a foreign power. The 1850Clayton-Bulwer Treaty that touched on
a joint canal venture between the US and Great Britain later became a hindrance to the
US. In 1901 Britain gave up its claims in the Hays-Pauncefort Treaty. A French company
tried to build a canal but failed.
In the 1780s America was involved with China in trade. Restrictions were set up by the
Chinese. In the 1840s is the first Opium War when Britain and France force her to open
more ports for trade. It was in 1844 that the Chinese-American Treaty gave Americans
the same trading rights that the British and French had. These two fought the Chinese
again in the 1850s and again won. The US through new treaties gained openings to new
Chinese ports. This was termed the "open door" policy. During 1898 the European
countries tried to extort from China a "sphere of influence." The Russians got P_ort
Author, the British Wei-Hai-Wei, Germany Shantung, and the French Kwang-Chow.
This precipitated the John Hay's "open door" notes which stated that the US did not like
these exclusive spheres. Countries then agreed to open trade to other countries.
In was in 1853 that Perry forced Japan to allow Americans there. In the North Pacific
American traders needed a port for supplies and maybe there would be trade there though
better American-Japanese relations were needed. [This is why Americans went there in
the first place for it was in 1620 that the Japanese had told foreigners who were
missionaries and traders to get out. Only the Dutch were allowed in.] Good American
diplomats established a period of good will that lasted until 1905.
The Samoan Islands, which was 2000 miles south of Hawaii, were right on the trade
routes. Pago-Pago had an excellent harbor that in 1878 the US received a right to use. In
the period 1879-1889 there existed a rivalry of British, US, and German interest in the
islands. In 1889 the joint protectorate was broken up with Germany and the US each
receiving some islands.
Hawaii was always of interest to the US. The connection began in 1875 with a trade
treaty of reciprocity. Hawaii's economy was in the hands of Americans. In 1892 came a
revolution engineered by Americans. Later Queen Liliuokalani wanted to diminish and
take away the power of the Americans, so they revolted again. The Hawaiian Republic
was established and soon asked for annexation by the US. Cleveland didn't buy this
transparent political move. He wasn't an imperialist and thought that the US might be
accused of bad acts. It took until 1898 under McKinley that the islands were annexed.

Why we became expansionists. Thus is the age of imperialism due to the industrial
development of the 19th century. Drivers were: raw materials, markets, places to invest
surplus capital. Roosevelt, Lodge, and Mahan influenced the United States concerning
expansion. 1) prestige was a factor, 2) defense and strategy, 3) many people were
concerned with backward countries[humanitarians]. Cleveland gave this sentiment a
setback. It was a period of depression, and he was an anti-expansionist. He forced Great
Britain to arbitrate with Venezuela. The Republican platform of 1896 provides evidence
of rising imperialist feelings.
1) Cuba was subject to critical Spanish mismanagement. 2) Americans had long been
interested in Cuba. In 1895 began a depression and the sugar market dropped [The high
McKinley tariff had sugar on its free list—this boosted production in Hawaii and Cuba—
America had a 2 cent/lb. subsidy—Hawaiian revolution resulted in order to get the
republic into the US.] The Wilson-Gorman Tariff put 40 % tariff on foreign sugar and
threw Cuba off the free list. Guerilla uprisings ensued. Cubans were placed in
concentration camps. Newspapers here stirred the people. In 1898 the USS Maine blew
up in Havana Harbor. The exact cause was unknown at the time. Spain was willing to
give in, but McKinley ,influenced by the people's response to the naval deaths, asked for
the use of force. The US Navy went on to win the two important battles of the Spanish
American War The outcome was important for the US overnight became a world power.

From 1900 American policy towards Europe was "keep out of European messes." From
1937 Roosevelt became internationally minded. After WWII the US became
internationally interested. Treaties were drawn between the US and Australia, Japan, and
the Philippines. The Marshall Plan was implemented, NATO was formed, and the
Truman Doctrine formulated.
Theodore Roosevelt felt that the US should be the policeman in the case of South
America and Venezuela debt. Into everything entered the question of defense. T.R. sent
naval forces to Santo Domingo in order to control custom house revenues used to pay
foreign debts. The Hay-Pauncefort Treaty of 1901 nullified the Clayton-Bulwer Treaty of
1850 thereby giving the US the right to build an inter-ocean canal alone. Britain steps out
very easily because she is concerned over Germany's growing navy and wants to
concentrate mainly in Europe. The Hay-Herran Treaty of 1903 gave the US the right to
build a canal and lease the land from Colombia together with a $10 million down
payment while the Panama Canal Co. was getting $40 million. The Colombian senate
turned down the treaty, but a revolution started and Panama became an independent
country. The Hay-Buena-Varilla Treaty of 1903 was with the newly established Panama
and gave the US permanent rights to build and operate a canal. In 1921 the US Senate
gave Colombia $21 million for oil rights or maybe as "conscious money". In 1916 a
treaty with Nicaragua gave the US rights to build a canal through that country.
Taft intervened once in Cuba and once in the Dominican Republic. He negotiated treaties
with Nicaragua to pay debts and did the same with Honduras. This was called "dollar
diplomacy" because Taft may have done this to help some US businesses. While Wilson
didn't believe in intervention he did go into Mexico, Cuba, and the Dominican Republic.
In 1915 the US took over Haiti to cure its debt situation and FDR drew up a new Haitian
constitution. We stayed in Haiti until 1934. Many Americans feared the Germans, and
this explains in part light criticism of US interventions.

In 1920 comes "shelving the big stick", withdrawing Us Soldiers from South America.
The "Good Neighbor Policy" initiated by Hebert Hoover takes its place. In the 1930s
FDR tried to develop hemisphere solidarity. When WWII commenced all S.A. countries,
except two, broke off relations with Germany and declared war. Under Truman the policy
deteriorated. Argentina and Chile are less influenced by the US than other countries.

T.R. knew that the US would have to act as a world power The Open Door Policy to
prevent the partition of China and institute spheres of influence was initiated by Hay. T.R
realized that the Russians didn't obey the policy. Japan asked T.R. what could be done,
and he replied that we were prepared to use force. After the Russo-Japanese War, T.R.
sided with Japan. In 1905 the Treaty of Portsmouth was contrived because T.R. inclined
to keep a balance of power in the Far East. 1) Japan received the Russian sphere and a
railroad; 2) Japan received one half of Sakhalin Island; 3) it didn't get the other half of the
island; 4) an indemnity. Japan was no longer friendly to the US after 1905 because she
realized that the US would not be gracious when Japan expanded. T.R. made two secret
agreements with Japan. The Taft-Katsura Agreement said that the US would recognize
Japan's special interest in Korea and Japan said it had no special interest in the
Philippines. In the 1905 Root-Takahira Agreement the US recognized Japan's interest in
Manchuria and again Japan promised no aggression on the Philippines. T.R. sent the US
Navy around the world as a hint to Japan to watch its step.
President Taft when he came into office favored "Open Door" in Manchuria. US desired
to build railroads in Manchuria. Japanese were angered over this and suspicions in-
creased. Wilson didn't believe in governmental support of dollar diplomacy. In World
War I Japan was an ally to Britain. Together the victors took the German islands in the
Pacific and the German sphere of influence in China. Japan gave China 21 demands, but
China protested as did the US. The Lansing-Ishii Agreement (1917) recognized the
Japanese special interests in China as well as pledging both parties to uphold the Open
door policy for China. This was effected to keep Japan from going to Germany's side.
However after the war President Wilson could not get the Japanese out of China.
In 1821under President Harding the Washington Naval Conference was held because of
war fears. Results were: 1) naval disarmament provided that the big nations would limit
the number of battleships and total tonnage of warships. The ratio was 5:5:3 US: Britain:
Japan; 2) The Four Power Treaty resolved that the nations involved in the Pacific would
respect the status quo; 3) Nine Power Treaty dealt with nations accepting the sovereignty
and Open Door in China. The conference was successful in 1) stopping the armament
race and resulted in ten years (1921-1931) of better feeling in the Pacific basin; 2) gave
Japan prominence as a power in the Pacific because the US cut off having a navy
presence adequate in the Pacific to check Japan and promised not to fortify Pacific island,
a promise kept by the US but not Japan.
In 1931 Japan, when its military won control of its cabinet, showed its aggression to
China. This year was chosen because China was becoming united and Europe in the
throes of an economic depression was thought not to object. By 1940 Japan forces had
expanded control to South China and were therefore seen as a threat to the rubber, tin,
and oil production of the East Indies. Franklin Delano Roosevelt and Winston Churchill
agreed that before Japan took further action they would act, but the Japanese attack on
Pearl Harbor, Hawaii came too soon. The US couldn't take action sooner because of
strong isolationist sentiments. It was only in 1937 that F.D.R. became internationally
minded.

Period 1900-1915. Progressives were aware that America was changing in such aspects
As urbanization, interdependency because of growing industrialism, retrogression of city
governments. They believed in some reforms for improvement, hence the name
progressive. Reform began in the individual states then rose to the federal government.
The initiative and referendum were supported as was the direct election of Senators,
direct primaries, maximum hour laws, minimum wage laws, child labor laws, prohibition
laws, women suffrage. The movement was of the middle class who didn't see that the
things it desired were leading a socialist state. Teddy Roosevelt, Taft, and Wilson were
progressives. During their years in office there was an increase in government interests
and controls in old areas such as tariff, trusts, monopolies, etc. plus in new areas as labor
activities, child labor laws, health in Pure Food and Drug Act. The government became
re-interested in banks and banking. Postal savings banks were established. The parcel
post system began to bring down express charges. Conservation was a new direction as
Teddy Roosevelt (TR) took a great interest in it. The Corrupt Practices Act was passed to
prevent the excessive use of money to influence government. Starting in 1913 four
amendments, the first since the Civil War, were added to the Constitution. The 16th
Amendment allowed the federal government to levy an income tax. The 17th provided for
the direct election of Senators, 18th for prohibition of alcoholic beverages, and 19th for
women's suffrage.
TR came from a wealthy family and went into politics almost immediately after college.
He was elected a Representative, served as assistant Secretary of the Navy, and later
Vice-President. He was always for reform but somehow always got along with
conservatives. He was a popular President with a great personality. He was super
patriotic and a foe of "malefactor wealth." As a reformer he solidified the idea of the
"square deal." He had the support of "big business."

William Howard Taft had always been in appointed offices as judge, solicitor general,
Secretary of War, and the like. He was adverse to criticism and hence unhappy as
President but not so later as Supreme Court Judge. Taft was a conservative progressive
hindered by the split in his party.

Woodrow Wilson was the moral crusader type shaped by a minister father. As a teacher
he could moralize without opposition. He taught at Wesleyan, a woman's school and then
Princeton. As an administrator of the university he was quite apt. In 1910 he became
governor of New Jersey. In 1912 thanks to William Jennings Bryan and the splitting of
the Republican Party he was elected President.

While TR avoided the tariff issue, Taft was in office when the Payne-Aldrich Tariff was
passed and it was still a high one. Its predecessors were: the Republican 1890 McKinley
Tariff; 1894 Wilson-Gorman Tariff (D); 1897 again Republican Dingley Tariff and in
1913 following Payne-Aldrich would be the Underwood Tariff. These led progressives in
the Republican Party to form the Progressive Party. When Wilson became President he
personally told congress he wanted the tariff reformed. The result was the Underwood
Tariff, the first one since the Civil War to make a significant change. It lowered tariffs
protecting textile, steel, and sugar. W.W. exercised Presidential leadership in this matter.
He fought off lobbyists by using publicity. After World War I however Republicans
raised tariff rates higher than before in passing the Hawley-Smoot Tariff of 1930. In 1933
the Reciprocal Trade Program was granted giving the President power to raise and lower
tariffs within the range of 50%. "Now we need trade, not aid."

TR was the first President to successfully use the Sherman Act. His administration won
the Northern Securities case. It started 44 cases. Notable were those against the meat-
packing and tobacco trusts as well. Taft's administration started 90 suits and won against
Standard Oil and the tobacco trusts as well as that versus the U. S. Steel Corp. Wilson's
administration passed the Clayton Act and established the Federal Trade Commission
which tended to guide big businesses. Interlocking directorates were banned as were
tying contracts. During the war little federal action was exhibited so during the 1920s
various business combinations began again.
In TR's time the Elkins Act and the Hepburn Act gave the government authority over
railroads. The Hepburn Act gave the Interstate Commerce Commission permission to
regulate railroad rates. By Wilson's time there was effective regulation of the railroads.
During WWI the government took over the railroads because they wouldn't and couldn't
cooperate.
By the year 1900 ½ million workers were members of the American Federation of Labor
(A F of L). TR furthered the eight hour work day in government, started the Department
of Commerce and Labor, improved working conditions, favored the miners in the coal
strike and won. The Clayton Act immunized labor from the Sherman Anti-Monopoly
Act.
Under Wilson the Seaman's Act of 1915 gave sailors benefits. Wilson sponsored the eight
hour day for railroad workers. After the war ended Wilson's administration used an
injunction then troops against the railroads. The progressives however failed in their
effort to eliminate child labor because of Supreme Court decisions. In 1924 an
amendment was passed by Congress to eliminate child labor. It went nowhere. Under the
Fair Labor Standard Act of the New Deal, child labor was eliminated.
The passage of the Meat Inspection and Pure Food and Drug Acts tended toward health
improvements. They were passed over the strenuous opposition of the meat packers.

The reaction to the World War in the United States was 1) surprise and amazement that
such a thing could happen; 2) universal desire of Americans to keep out of it. When the
US did enter the wear, people believed that this was "the war to end wars."
Why we entered the war:
1. Psychological factor—many Americans had a sentimental attachment to Great Britain
and France. Our cultural ties favored England. With France it was an attachment going
back to Lafayette. Americans felt suspicious of Germany [Germany in Manila Bay,
designs on Venezuela, the Kaiser's strutting militarism]. The code of conduct of war was
obliterated when Germany didn't recognize Belgium's neutrality. Wilson's administration
was pro-British. William Jennings Bryan was the only neutral, but he soon resigned.
Articulate people were mostly predisposed to the Ally cause. People of German, Italian,
and Irish ancestry were generally ant-British. Hearst and his Chicago Tribune were anti-
ally. The British had the advantage in propaganda.
2. Economic factor—The US had more economic ties with allies as the war went on. At
first Wilson opposed loans to the allies, but he changed direction in 1915. Our economy
came to depend on the war effort.
3. Controversy over Neutrality Rights—some rights were agreed upon such as (1) a paper
blockade being illegal, (2) contraband goods could be seized by belligerents; non
contraband goods could go to either belligerent. Neither Britain nor Germany would
observe these rights. Britain put up a paper blockade and took all goods contraband or
not. Germany retaliated by using submarines and setting up a war zone. Violation of trade
with Germany involved property, money, rights while violation of trade with Britain
involved those plus lives. Wilson maintained that the Neutrality Rights included the
rights of Americans to travel on belligerent vessels. In May 1916 Germany agreed to stop
sinking if the US agreed to hold Great Britain its strict accountability. In 1916 Wilson
tried further to end the war. Neither Germany nor the Allies wanted a peace conference.
Hughes and his Republicans put up a poor campaign, so Wilson won in 1916. In January
1917 he gave his "peace without victory" speech. In February came the end of neutrality
because Germany thought that a sudden military campaign would finish Britain. In April
Wilson called for the country to enter the war. Wilson might have 1) insisted that Britain
maintain the rights of neutrality, and 2) reconsider his unsound position concerning
Americans on the vessels of belligerents.

In the 1930s the isolationist spirit was responsible for laws to keep us out of World War
II as it was approaching. Such were the Neutrality Laws of 1935, -36 and -37. They were
based on the premise that wars were not good for the country.
The troubles began at the end of the Great War, in measure because Wilson had different
peace aims than the Allies. While the European peoples looked upon Wilson as a saint,
their governments resisted his ideas. Wilson prevented 1) the outright division of spoils
and forced the Europeans to accept the mandate idea, 2) he moderated claims of France,
Italy and Poland, 3) started the League of Nations. At first public opinion favored the
treaty that Wilson brought back to the US. There was some opposition. In the Senate
were a considerable number of Democrats and Republicans in favor and some in favor
with a few changes; a few were definitely opposed to the treaty. As opposition grew
Wilson went on a domestic trip to rouse enthusiasm, but he failed to do so.
Three votes were held in the Senate with these results:
For Against
1) for the treaty with reservations 39 55
2) for the treaty without reservations 38 53
3) for the treaty with reservations 49 35

On vote 1) the Democrats voted against the proposal because Wilson didn't want
reservations, On vote 2) the Democrats voted for and on 3) Republicans and a few
Democrats voted for. The elements that helped to defeat the treaty's passage were: (1)
partisan politics, (2) senatorial prestige, (3) moral letdown coupled with isolationism, (4)
Wilson's physical collapse, and (5) the mistakes of the Wilson administration including a)
not allowing the free airing of peace and war propositions, b) failure to get commitments
from Allies before he went into the war, c) his push in 1918 to have Democrats reelected
to Congress, d) going to the peace conference possibly being a mistake to begin with, e)
choosing no Republicans or Senators to accompany him to Paris, f) his refusal to
compromise The Treaty of Versailles. Peace could come in three forms: 1) peace without
victory, 2) a peace destroying the enemy completely, and 3) a compromise peace. In the
end Germany was left physically sound, but she was to be disarmed and to pay for the
war. This was later to contribute to her economic collapse. The Allies however failed to
insist that the terms of the treaty be carried out regarding rearming and supervision.

The 1920s and the Crash

The increased confidence of the 1920s was characterized by rising prices, wages going
up, stock prices going up, and increased bank loans. With the stock market crash of
October 1929 and its aftermath came tight credit, a drop in prices, reduction of wages,
and increased unemployment.
The depression was severe because 1) many areas were already depressed such as
farmers, coal mining, transportation, and the leather industry; they dragged down others,
2) over expansion of credit and use of it in unsound fields. The Federal Reserve Banks
had an easy money policy. FDR didn't check the over expansion of credit because his
advisors didn't believe that it was necessary, 3) installment buying was bad for creditors,
4) the fairly unsound idea of technological employment, 5) loss of international trade, 6)
tariff restrictions, 7) the nature of the American economy: a) capacity to produce was
increasing faster than capacity to consume, b) too much money from industry went into
profits and stocks, not into wages or maladjustment of income. The New Deal played up
No. 7.
42% (16,000,000) of the families ($1500) received 13% of the national income while .
23% (600,000) of the families ($50,000) received 14.8% of national income.
Breakdown for: 1939 1953__
Top 1% 12.0% 8.3%
Next 6% 15.8% 12.2%
Remaining 93% 72.2% 79.3%
Place in the National Picture

1870 1930

agriculture & raw material 54% 23%

manufacturing 22% 29%

service industries 24% 48%

Some believed that the service industry sector could be dispensed with when times got
dull because it produced nothing tangible. However the reality was that as the percent of
this sector increased the depressions each time became more severe.

Things leading to the Great Depression and the New Deal

The 1920-21 depression was brief. It was initiated by the succession of the World War
together with 1) foreign loans to European countries, 2) development of new industries
that expanded rapidly in the US i.e. auto and road building; electrical equipment; a
building boom; the growth of installment buying. Agriculture did not share in this
prosperity. Acreage had been expanded during the war, so production after the war was
surplus to requirements, especially that overseas. In addition tariffs here and abroad hurt
the farmer.
There was also changes in diets in the 1920s, a shutting off of immigration, and increased
farm mechanization. Property values diminished while mortgages remained high.
Bankruptcies ensued. Plans were proposed wherein the government would help to market
products abroad. These were vetoed. In 1929 the Agricultural Marketing Act was passed.
Cooperatives would sell products in an orderly fashion. The government would set up a
stabilization board with funds to buy surplus crops from farmers and sell them when
markets were good. When the New Deal came along and the Agricultural Adjustment Act
was initiated, the government would take surpluses and hold them, but in turn the farmers
would have to curtail production and for this they would get paid in proportion to their
reductions. At the first attempt farmers were paid benefit payments for acreages not
planted. But farmers still increased yields by producing more per acre. Quotas were then
established and if the farmer kept within them he would receive benefits and if not he was
fined.. After WWII farmers were guaranteed the parity, a fair price. When the price of a
given product drops below a certain parity, the government has to go out and buy that
product. This resembled the mechanism as it was under Hoover.
The depression was first noticed in the stock market when people stopped buying and
started selling. Naturally the result was that prices of shares dropped. Here is what
happened to General Electric stock prices over time:
September 1929 $396.25
October 1929 $210.00
1932 $ 34.00
1949 $ 37.25
1953 $ 74.00
Shares traded showed how the market had grown with a decade:
1921 171,000,000 1928 920,000,000 1929 1,124,000,000

During World War II high aims with idealism were expressed by the allied countries.
Even before the war ended the United Nations was established with the US leading the
way. The Potsdam Conference decided the fate of Germany. Germany was so physically
diminished by the war's end that it didn't care what was put upon it; the Nazis had known
how to efficiently run the government. Germany was partially de-industrialized. The
Russians went their own way in handling Germany and didn't cooperate with the other
allies.
The Cairo Conference tried to decide the fate of the Far East. The Yalta Conference let
Russia enter the war against Japan and subsequently allowed Russia to establish a sphere
of influence that hadn't previously existed.