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American History II


Politics and Economics: Reconstruction and Its Aftermath


            In the two years following the Civil War, the major development going on politically in the United States was the battle between Congress and two presidents over Reconstruction. The Constitution identifies the powers and duties of the legislative, executive, and judicial branches; but it is much more specific about the powers of Congress than about those of the president and the courts. Power is jealously guarded by those who have it because power is the instrument by which groups and individuals achieve their objectives. The framers of the Constitution did not and could not have foreseen the circumstance that the nation was in during and immediately following the Civil War, and had made no specific provision for "readmitting" states or "reconstructing" states. But both the executive branch and the legislative branch read the Constitution in such a way that each believed it had the authority to deal with the situation as it existed. When Lincoln was assassinated, he and the Radical wing of his own party, which controlled Congress, were at loggerheads over reconstruction policy. Lincoln had succeeded in defeating the Wade-Davis bill, but Congress refused to re-admit a Lincoln-reconstructed Louisiana. At the heart of the controversy was the fact that Lincoln and Congress had different objectives. Lincoln was trying to rebuild a union quickly; Congress was trying to do rebuild the union in such a way as to ensure that Republicans retained power after the 1866 Congressional elections and the 1868 presidential election. As a minority party which had come to power only because the issues of slavery and war had divided its opposition, Republicans knew that disenfranchising large numbers of Democrats was the only way they could hope to maintain power.

            It had been Lincoln's policy that as the Southern states were subdued, he appointed military governors to supervise their restoration.  Perhaps the most vigorous and effective of these military governors was Andrew Johnson, a "War Democrat" whose success in reconstituting a loyal government in Tennessee led to his nomination as vice president on the Republican ticket with Lincoln in 1864.  Johnson had served in both houses of Congress as representative and then senator from Tennessee before the war broke out and continued to occupy his Senate seat during the war. The Radical Republicans initially thought that they could trust Johnson because he was former representative and a former senator, and he understood congressmen.  He was also a loyal Unionist who had stood by his country at the risk of his life when Tennessee seceded.  They believed he would do nothing to compromise with secession. Furthermore, his experience as military governor showed him to be politically shrewd and tough toward the slave holders. But such Radical trust in Johnson proved to have been misplaced.  First of all, the new president was a Southerner who shared many beliefs and values of southern culture.  He was also a Democrat who hoped for the restore of his political party--partly as a step toward his own re-election to the presidency in 1868. Most important of all, Johnson shared the white Southerners' attitude toward the Negro, considering black men innately inferior and unready for equal civil or political rights.

            Johnson and the Radicals were soon also at loggerheads. On May 29, 1865, Johnson issued a general proclamation of pardon and amnesty for most Confederates and authorized the provisional governor of North Carolina to proceed with the reorganization. Shortly afterward he issued similar proclamations for the other former Confederate states. In each case, a state constitutional convention was to be chosen by the voters who pledged future loyalty to the U.S. Constitution. These conventions were expected do three things: to repeal the ordinances of secession, to repudiate the state's Confederate government debt, and to accept the Thirteenth Amendment, abolishing slavery. The president did not, however, require them to enfranchise the blacks.

            Given little guidance from Washington (although Johnson warned many Southern leaders to be careful), Southern whites turned to the traditional political leaders of their section for guidance in reorganizing their governments; the result was that the new regimes in the South were very much like those of the antebellum period. Slavery was abolished; but each "reconstructed" Southern state government proceeded to adopt a "Black Code," regulating the rights and privileges of freedmen. Black Codes varied from state to state; but, in general, they treated blacks as inferiors, relegating them to a secondary and subordinate position in society. Black people's right to own land was restricted; they could not bear arms; and they might be bound into servitude for vagrancy and other offenses. White Southerners thus indicated that they were not prepared to guarantee even minimal protection of freedmen's rights. In riots in Memphis (May 1866) and New Orleans (July 1866), black persons were brutally assaulted and indiscriminately killed.

            Congress attempted to protect the rights of blacks by extending the life of the Freedmen's Bureau, a welfare agency established in March 1865 to ease the transition from slavery to freedom. Johnson vetoed the bill, but Congress passed it over his veto. An act to define and guarantee the blacks' basic civil rights met a similar fate; but, again, Republicans succeeded in passing it over the president's veto. These vetoes and an intemperate public remark from Johnson denouncing the leaders of the Republican Party as "traitors," motivated Congress to formulate its own plan to reconstruct the South. Congress' first effort was the passage of the Fourteenth Amendment, which guaranteed equal protection of the civil rights of all citizens, regardless of color. Congress also tried to persuade the Southern states to enfranchise blacks by threatening to reduce their representation in Congress. But the president, the Northern Democrats, and the Southern whites all rejected this Republican plan of Reconstruction; Johnson went so far as to urge Southern legislatures not to ratify the Fourteenth Amendment. All of the Southern states except Tennessee did reject it. Aware that Democrats were being considered traitors by many voters, Johnson also tried to organize his own political party, the National Union Convention, which met in Philadelphia in August 1866. In August and September of 1866, he visited many Northern and Western cities in order to defend his policies and to attack the Republican leaders.

            Victorious in the congressional elections of 1866, congressional Republicans moved during the 1866-67 session to devise a second, more stringent program for reconstructing the South. After long and bitter quarrels between Radical and moderate Republicans, the party leaders finally produced a compromise plan in the First Reconstruction Act of 1867. Expanded and clarified in three supplementary Reconstruction acts, this legislation did away with the state governments the president had set up in the South, put the former Confederacy back under military control, called for the election of new constitutional conventions, and required the constitutions adopted by these bodies to provide for Negro suffrage and to disqualify former Confederate leaders from holding office. Under this legislation, new governments were established in all the former Confederate states (except Tennessee). By July of 1868, Congress agreed to seat senators and representatives from Alabama, Arkansas, Florida, Louisiana, North Carolina, and South Carolina. By July of 1870, the remaining Southern states had also been reorganized and readmitted. But the reconstruction process went on for another seven years.

            During the two administrations of  President Grant, there was a gradual wearing down of Republican strength. Grant was fairly passive as a president, exhibiting none of the brilliance or initiative he had shown on the battlefield. Grant's administration was tarnished by the dishonesty of his subordinates, whom he loyally defended. The old Radical leaders like Charles Sumner, Benjamin Wade, and Thaddeus Steven died or retired; and the leadership in the Republican Party fell to men like Roscoe Conkling and James G. Blaine. Efforts to shore up the Radical regimes in the South grew increasingly unsuccessful.

            Northerners were growing tired of the whole Reconstruction issue and the annual outbreaks of violence in the South that required repeated use of federal force. Their disillusionment with Radical Reconstruction and with the Grant administration gave birth to a new Liberal Republican movement in 1872.  The Liberals nominated Horace Greeley for president.  Greeley, whose abolitionist credentials were impeccable and whose personal influence in the antebellum period had been immense, by the 1870s was erratic and abrasive. Grant was overwhelmingly re-elected, which to some extent masked the true extent of Northerners' disaffection with the Radicals.  But the true temper of the country was demonstrated in the congressional elections of 1874, which gave the Democrats control of the House of Representatives for the first time since the outbreak of the Civil War. Despite Grant's hope for a third term in office, most Republicans recognized by 1876 that it was time to change both the candidate and his Reconstruction program.

            The Republicans nominated Rutherford B. Hayes of Ohio, a moderate Republican of high principles and of deep sympathy for the South, marking the end of the Radicals domination of the Republican Party.  In an election marked by widespread fraud and many irregularities, the Democratic candidate, Samuel J. Tilden, received the majority of the popular vote; but the vote in the electoral college was long in doubt. Several southern states had certified two sets of electors. Unlike the 2001 election, in which the Supreme Court, determined what counting was to be considered legitimate and thus who would receive Florida's electoral votes, in the election of 1876, a special Commission on Elections was empaneled to decide who got the disputed electoral votes. In order to resolve the impasse, Hayes's political allies had to enter into agreement with Southern Democratic congressmen, promising to withdraw the remaining federal troops from the South, to share the Southern patronage with Democrats, and to grant Southerners' demands for federal subsidies for the building of levees, railroads and other public works. The Election Commission then awarded all disputed electoral votes to Hayes.

            The circumstances surrounding the disputed election of 1876 strengthened Hayes' intention to work with the Southern whites, even if it meant abandoning the few remaining Radical regimes in the South. Hayes' inauguration marked, for all practical purposes, the restoration of "home rule" for the South. What this meant was that the North would no longer interfere in Southern elections to protect the blacks and that the Southern whites would again take control of their state governments. Within a relative short period after the end of Reconstruction, all of the former Confederate states had moved to find ways to restrict the rights of blacks. "Jim Crow" laws of various kinds required licenses for a number of skilled occupations, imposed restrictions on freedom of movement and residence, etc.

            Unlike the Black Codes, which overtly stated they applied only to blacks, Jim Crow laws generally looked neutral on their face; but they were applied in a discriminatory manner. For example, if one of these laws required barbers to be licensed, white applicants for barber's licenses would get licenses; blacks applicants would be denied. "Literacy tests" came to be required in order for someone to qualify to vote in many Southern states. In theory, all citizens were required to be literate; but some literacy test laws exempted all persons whose grandfathers had voted (i.e., "grandfather clauses" exempted  illiterate whites, but almost all blacks' grandfathers were slaves) or contained other loopholes exempting large numbers of whites (many of whom were illiterate). The officials determining whether or not someone could read also more often than not based their decisions on the race of the person, not his literacy. A black Ph. D. in Political Science could be told he could not read and, therefore, could not vote by a white election official with an eighth grade education for whom the literacy test had been waived because his grandfather had voted. Segregation of public facilities and neighborhoods and schools was soon to follow. These sorts of measures creating second-class citizenship for blacks were to remain in place until they began to be dismantled by court order, federal legislation, and Constitutional amendment starting in the mid-1950s.


            During the turmoil of Reconstruction, Southern whites and blacks began to work out ways of getting their farms back into operation and of making a living. Without land or money, most freedmen had to continue working for white masters; but they were now unwilling to work in labor in gangs or to live in the old slave quarters under the eye of the plantation owner. Contract labor systems were developed in which former slaves worked as wage workers for fixed terms, usually in work gangs, often living in employer-provided housing. Now free to marry and form stable family units, freedmen were not really satisfied with the contract labor system and sought to have housing of their own and to work land on which they could make their own decisions. Thus, sharecropping gradually became the accepted labor system in most of the rural South. Blacks preferred it because they could live in individual cabins on the tracts they rented and because they had a degree of independence in choosing what to plant and how to cultivate. Planters, short of capital, favored the system because it did not require them to pay cash wages, although they often had to advance tenants money for seed and other necessities to get them started.

            The South as a whole was desperately poor throughout the Reconstruction era; and a series of disastrously bad crops in the late 1860s, followed by the general agricultural depression of the 1870s, hurt both whites and blacks. Tindall notes that agricultural production rose substantially during the 1870s, which may raise questions about how there could have been so much poverty. Prices for agricultural goods are very sensitive to demand. So, high crop yields can and often do result in the farmer's getting lower prices for his crops than he would if crop yields were generally lower. In the case of cotton, the situation was further complicated by something that had developed because cotton production was very low during the war years: European customers for American cotton found a new source, Egypt. Egyptian cotton was a long staple cotton that produced a finer-textured cloth, and it became preferred by Europeans for some products, thus reducing demand for American short-staple cotton. Prices declined as demand dropped.

            The fact of the poverty of white small farmers led them to political action. The white small farmers in the South, resentful of planter/business dominance in the "Bourbon Redeemer" group that had come to power in the South , residents of the hill country outvoted by Black Belt constituencies, and politicians excluded from the ruling elites tried repeatedly to overthrow the conservative "Bourbon" regimes in the South because these governments had often repealed measures designed to help the poor and give tax relief to small farmers. During the 1870s the small farmers supported Independent or Greenback Labor candidates, but without notable success. In 1879 the "Readjuster" Party in Virginia, so called because its supporters sought to "readjust" Virginia's huge state debt redemption so as to lessen the tax burden on small farmers, gained control of the legislature and elected its leader, General William Mahone, to the U.S. Senate in 1880.  But it was not until 1890 that there was an effective challenge to the conservative hegemony of the Bourbons.  In 1890, the powerful Farmers' Alliance, until then devoted exclusively to the promotion of agricultural reforms, dropped its ban on running political candidates.  The Farmer' Alliance made perhaps its most effective assistance to farmers when it became politically active.  In the next decade, Alliance backed candidates did, in fact, win many governorships and seats in state legislatures. As a result, there were some legislative measures to give relief to small farmers.

            The Homestead Act (May 20, 1862) had set in motion a program of public land grants to small farmers. Before the Civil War, southern states had regularly voted against homestead legislation because they (correctly) believed that the law would speed up the settlement of western territory, and ultimately add to the number and political influence of the free states. This opposition to the Homestead bill, as well as to other internal improvements that had the potential to hasten western settlement, had deepened sectional conflicts.  The vision of independent yeomen establishing homesteads on the prairies conjured up by politicians in the 1850s was presented in vivid contrast to the degradation of slave labor on southern plantations.  In 1860, the Republican platform included a plank advocating homestead legislation.  After the southern states had seceded, homestead legislation was high on the Republican agenda.  The Homestead Act of 1862 provided that any adult citizen (or person intending to become a citizen) who headed a family could qualify for a grant of 160 acres of public land by paying a small registration fee and living on the land continuously for five years. If the settler was willing to pay $1.25 an acre, he could obtain the land after only six months' residence. This price was too high for many people, although the price was no higher than had been set for much of the land in the Northwest territory in the early 1800s.

            The myth of the "Great American Desert" had dissuaded many potential western settlers. The term "Great American Desert" did not apply to the desert of the American Southwest but rather to the Great Plains. Americans were unaccustomed to unsettled land that had few trees and generally applied the term "desert" to such areas as well as to what we consider deserts today. But that began to be countered by the "Myth of the Garden," used by boosters to encourage settlement in the west. Charles Dana Wilber is credited as the central builder of this myth. In "The Great Valley," and "Prairies of the Northeast and Northwest," Wilber described the Trans-Mississippi West as a "Garden," using "scientific" evidence that "rain follows the plow." (That is, If the land is plowed, the amount of rainfall would increase. The theory is utter nonsense, of course.) This countered both Long's "Desert" myth and the central problem of settling the Plains--aridity, or dryness.

            Thousands of settlers streamed into the West on railroads and in Conestoga wagons. By the end of the Civil War, 15,000 homestead claims had been established; many more followed in the postwar years. At least a part of the reason for the passage of the Homestead Act was the expectation that free farm land would provide a new beginning for urban slum dwellers. But the result was considerably less reduction in urban poverty than some had hoped. Few urban poor families had the resources or the knowledge to start farming, even on free land. The homestead land grants did give new opportunities to many impoverished farmers from the East and Midwest. But much of the land granted under the Homestead Act fell quickly into the hands of speculators, who offered cash payment for their land to farmers who were failing  (at considerably less than $1.25 per acre). Ultimately, the whole idea of a West of yeoman farmers was doomed. Growing mechanization of American agriculture, already beginning to take place, would led to the replacement of individual homesteads with a smaller number of much larger farms.

            As it happened, purely coincidentally, the credibility of the Garden myth was strengthened by the unusually high levels of rainfall recorded throughout the 1870s and early 1880s, which further encouraged settlement. But by the mid 1880s, the Great Plains entered a period of low rainfall; and massive out-migration began. Farm after farm failed because there was too little rainfall to produce decent crops. Families began to leave with signs on their wagons such as "In God we trusted, in Kansas we busted."

            The "Old West" was largely a post-Civil War phenomenon from roughly 1865-1890. It included the settlement of more than 430 million acres of land. (More U. S. land was settled during this 25 year period of time than in the between 1607 and 1860.) In essence, the land area occupied by the United States doubled. In the "Old West," three economic "empires" rose--and collapsed--between 1865 and 1890: Mining (especially gold and silver), farming, and cattle.  Life during "boom" times was good for those who were in the industry on the rise.  There was plenty of money and plenty to spend it on.  Life in the "bust" periods was dreadful.  Banks foreclosed on loans and mortgages, banks sometimes failed leaving their depositors destitute (there was no FDIC or its equivalent to protect people's deposits), and there was no welfare system or social service system to assist those who were impoverished.

            In American cities, the working poor and tens of thousands of new immigrants who came to the United States between 1870 and 1910 lived in incredible poverty. The tremendous immigration, primarily from Southern and Eastern Europe, occurred largely because of land reform and the beginnings of mechanization of agriculture in those regions.  Tenant farm families, who had often worked the same land for generations, were suddenly being released from the land. The industrial revolution in Southern and Eastern Europe was in its infancy, which meant that there were not enough industrial jobs in their native countries for them to move into. Thus, they came to the United States, sometimes in response to labor recruitment campaigns to get workers for the factories and mines of the northeast or for railroad construction. Often these workers were the victims of deceptive and outright false characterization of what life was like in American cities. As one immigrant to New York City put it, "Not only were the streets not paved with gold--they were not paved. And they expected me to pave them." American cities were full of over-crowded housing, plagued by garbage piling up in the streets, and, in general, very undesirable places to live in the 1860s and 1870s. It was already known that the urban poor had high rates of illness. A theory advanced by several doctors that the stench from urban streets made people ill, although incorrect, played into an incipient public health movement. Garbage removal and the construction of adequate sanitary sewers were critical to removing the stench; and thus it happened that the real cause of the illness, the garbage and human waste itself, began to be cleaned up in major American cities.

            The owners of American factories had followed the lead of  European industrialists in operating as a single shift what would now be two shifts: 15-16 hour work days. The effect of these long work shifts was to reduce the number of jobs available.  Because the population was growing, unemployment was high and the poverty rate was high.  Because there were no minimum wage laws, the laws of supply and demand governed wages; workers were paid as little as possible. Workers who complained or tried to unionize or got sick or were hurt on the job were simply replaced from the pool of unemployed workers who regularly stood outside the factories' personnel offices waiting to be hired. As was the case with British factories, wages paid were sufficiently low that wives and children often also had to work in order for the family to make enough money to afford their rent, food, and clothing.

            In the United States between the Civil War and 1900, however, there were huge contrasts between the wealthy and the poor.  For most of American history before the Civil War, the basis of the greatest wealth was large scale agriculture and commerce (shipping, etc.).  Partly because of the war, the basis for the greatest wealth was shifting to railroads and industry.  A new crop of industrialists and entrepreneurs was springing up, and men like Cornelius Vanderbilt (New York Central Railroad), John D. Rockefeller (railroads and oil), Andrew Carnegie (seel), and J. P. Morgan (investment banking) were developing vast fortunes that made the wealth of the pre-war rich look small by comparison.  In an era that became known as the Gilded Age, a time of economic transformation for the United States, American industrial output became greater than that of any nation on earth except Great Britain.  Two major factors precipitated this rise of industry.

            The first of these was a new type of businessman.  Two contrasting images of American history can help us understand this new breed of businessmen of the Gilded Age and why they were important.  The first image is that of "Captains of Industry"--the view that the late 19th century industrialists were ingenious and industrious leaders transforming the American economy with their business skills.  These "Captains" were the folk heroes of their day--what sports stars are in our own day.  These men seemed to embody the American dream of "rags to riches." Most were born into families that were poor or of very limited means; yet they became the richest men of their time.

            The other image is that of "Robber Barons"--the view that the Gilded Age industrialists were immoral, greedy, and corrupt. Evidence to support such a view is not very difficult to find. Bribery, illegal business practices, and cruelty to workers were not uncommon in this period, and many of the most respected industrialists were also the most feared and hated.  The Erie Railroad Wars are an example of the unscrupulous and often illegal business activity that dominated the Gilded Age. The "war" involved four men: Daniel Drew, Jay Gould, Jim Fisk, and Cornelius Vanderbilt. Drew had begun his career in the cattle business where he developed a reputation for "stock watering," feeding salt to cattle which had been driven to market so that they would drink huge quantities of water, thus increasing their weight just long enough for Drew to get more for them (because they were paid for by weight) than they were actually worth. Later in his career, when Drew became a director of the Erie Railroad, he "watered stock," in the modern financial sense of the term, to squeeze more profit for himself out of the company.  Jay Gould began his business career in the tannery business. He soon began to speculate in railroad stock and eventually became a director of the Erie Railroad, where he participated with Drew and fellow director Jim Fisk in stock watering and various bribery schemes.  Eventually, Gould came to control half the railroad mileage in the Southwest. Jim Fisk began working as a waiter and circus ticket agent. He gained an early reputation for flamboyant trading on Wall Street. Far more than most of his contemporaries, Fisk lived a self-indulgent and profligate life style apart from his business activities, and was shot to death at the age of 38 after an argument with an associate over a business deal and a mistress.

            Vanderbilt, about 40 years older than Fisk and Gould, made his first fortune with a shipping line, which he started with money he made transporting goods for the government during the War of 1812.  He began to invest in railroad stock early in the Civil War.  Vanderbilt and Drew were contemporaries, both born the 1790s. But unlike Drew, who bought into companies and bled them of assets, Vanderbilt invested heavily in improving his enterprises by, for example, upgrading the quality of railroad beds and railroad cars. Drew and Vanderbilt had clashed several times as rivals for control over several smaller railroads; Vanderbilt won these early skirmishes and merged the smaller lines into his developing New York Central railroad network.

            But Vanderbilt was something of a monopolist; he believed he had to either buy out his competition or drive it out of business. The Erie Railroad Wars began when Vanderbilt began buying shares in the Erie Railroad Company in an attempt to drive his only competition out of business. As treasurer of the Erie Railroad, Drew saw an opportunity to bilk Vanderbilt out of millions of dollars. Drew, along with Jay Gould and Jim Fisk, had $100,000 worthless stocks printed up, which Vanderbilt promptly bought. Vanderbilt soon realized the stocks had no value called on the authorities to have Fisk, Gould, and Drew arrested. Fisk, Gould, and Drew, hearing of their impending arrest, took a short "vacation" to New Jersey where the laws of New York did not apply to their situation. Fisk made a public statement claiming that their trip to New Jersey had been prompted by "a desire to do better business."  Meanwhile, Gould bribed enough members of the New York state legislature (to the tune of half a million dollars) to get a law passed making the sale of the watered stock to Vanderbilt legal. The result was that Drew, Fisk, and Gould ended up $7 million richer at Vanderbilt's expense. They also managed to carry on a successful propaganda campaign in the press depicting Vanderbilt as a monopolistic power-monger.  At the time, the American public had little understanding of corporations and how their financing worked and did not realize that if their choice was between Vanderbilt, who made job-producing investments with companies' capital, and Drew,  Fisk, and Gould, who realized that the easiest way to rob investors was to buy a company and loot it from the inside, they were better off with Vanderbilt.

            The second factor precipitating the rapid rise of industry was a different kind of company.  Corporations had advantages over proprietorships and partnerships as business forms because they limited the liability of investors for the debts of the company to a percentage equal to their share of the company. They were not exactly a new form of business activity in the mid-1800s. But the way in which corporations were operated changed considerably from the period before the Civil War to the post-war period. Early corporations had relatively few investors and all or most of them maintained a great deal of involvement in how a company in which they owned stock was operated. Early corporations also tended to local or regional, with the investors living in the community or area in which the company did business. But in the mid-1800s, companies tended to "go national" and "public" as their stock became traded on a stock market. In addition, the power in corporations shifted from the small total group of investors who were active in management to a board of directors and salaried managers who made operating decisions presumably on behalf of the large and disparate group of investors too numerous and too scattered to meet regularly to oversee corporate operations. The shift in power was tailor-made for unethical businessmen to increase their own wealth with little risk to themselves by pursuing courses of action that were in their personal interest rather than in the best interests of the majority of stockholders. And increasingly, directors of companies began to do precisely that. The interests of the workers, the communities in which companies did business, the environment--indeed any interest other than that of the major stockholders--often became casualties of this new method of corporate management.

            Corporations were formed by obtaining charters from state legislatures. Some states granted greater rights to corporations or imposed fewer restrictions than others. Those states became the states of choice for incorporation by the businessmen with the fewest scruples. Once formed, however, a corporation could do business anywhere, not merely in the state granting its incorporation. What states could not do effectively was to enforce the responsibilities on corporations that were supposed to be conditions of its accepting the privileges and benefits of incorporation. Congress was reluctant to intervene and impose regulation because the dominant economic ideology of the time was that the economy would work best when government kept its hands off. Of course, government had stopped "keeping its hands off" when it came to assisting business enterprise because it was subsidizing railroads, granting lands, etc. Increasingly through the post-war period, it only kept its hands off when it came to regulating business practices and curbing abuses.

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