CHAPTER V

THE ECONOMIC DEVELOPMENT OF THE UNITED STATES

Economic Stages in American Industrial History. The transit of civilization from Europe to America, as an American historian has finely phrased it, thrust the European laws, customs, and industrial technique of the seventeenth century into the primitive environment of a wilderness, and for the moment the wilderness dominated. Industry was forced to begin at the beginning and retrace as the child is said to retrace the mental development of mankind—the industrial evolution of the race.

The American people have thus, during the comparatively brief historical period which has elapsed since the settlement of this country, run the whole gamut of industrial evolution, passing with striking rapidity through all the stages differentiated in the preceding chapters. There was slaughter of captives in the Indian wars, enslavement of Indians, particularly - but not only in the Spanish colonies, later the introduction of negro slavery and modified serfdom in the indentured servants, then the individual wage contract, still supreme among agricultural laborers, and finally, collective bargaining through the great trades unions of the present. In a similar way, practically all the stages differentiated in the table given on page 45 may be traced in the industrial evolution of the United States.

Naturally it is not to be supposed that American industrial society worked its own way unaided through all those economic stages which the race, with " painful steps and slow," has laboriously traversed in its upward march. Stimulated by European 1 Edward Eggleston, Transit of Civilization.

culture, we hurried through the earlier stages, for the most part, retracing them merely as an incident of frontier conditions, and skipping some such as the pastoral stage in many sections of the country. On the other hand, it must not be inferred that we have everywhere passed beyond the so-called primitive stages. Barter may still be found in some parts of the country, and there are comparatively few rural districts in which credit transactions have in the main taken the place of money transactions. It is interesting to observe that, owing to the progressive western movement of the population of the country, the stages in the history of man's productive efforts appeared in regular order from west to east. Thus, a few years ago, the country of the frontier was occupied by hunters and trappers; next were great stretches of country almost entirely devoted to grazing; farther east, agriculture predominated; trade and commerce were active, especially in the country east of the Mississippi; manufacture on a large scale was prominent in the North Atlantic and North Central groups of states; while finally the large industrial combinations which mark the latest step in development were confined (with respect to legal residence at least) to the Atlantic seaboard. "The United States lies like a huge page in the history of society." 1

Sectionalism. This phenomenon of the contemporaneous existence of several industrial stages, side by side, under the same government, has laid upon this country some of the hardest problems which it has had to solve. The ever present but ever receding frontier has continually created a set of interests antagonistic to those of the settled industrial and commercial communities. Shays's Rebellion in 1786 was in part a protest of the more thinly settled debtor communities against the determination of the commercial centers to introduce the sound currency which a developed commerce requires. The federal Constitution was adopted and the present government created in order, largely, to strengthen national credit, insure taxation, remove trade barriers, and provide a sound currency; and the opposition to the ratification of the Constitution came largely

1 F. J. Turner, The Significance of the Frontier in American History.

from those agricultural and thinly settled communities that wanted to keep paper money, evade debt payment, and resist the collection of taxes. During the earlier history of the country wildcat banking and inflated currency regularly followed in the wake of the frontier.

Tariff legislation, with its different appeal to the agricultural and industrial sections of the country, has been another prolific source of territorial conflict. After the War of 1812, the manufacturing centers of the North redoubled their efforts for protection. This was strenuously resisted by the South, where manufactures had practically gained no hold, and the struggle of the sections over the tariff led to Nullification in South Carolina and the acceptance by the South of the doctrine of secession. The Civil War itself was largely a sectional quarrel growing out of ceaseless friction between a section which had reached the industrial stage and a condition of free-wage contract with a section which had been held in the agricultural stage by the retention of slavery. As a more recent illustration of sectional conflict arising from the natural clash of districts in different stages of economic development, we have the free-silver campaign of 1896, when the mining, agricultural, and debtor communities of the West and South arrayed themselves against the industrial and creditor communities of the East and North. The typical political struggles of the past have been territorial, and sectional problems will always remain. Now that the frontier has disappeared, however, the typical political struggles of the future will take the form, probably, of class against class. Characteristics of the American People. Although the frontier has disappeared, the pioneer work of "winning a continent from nature and subduing it to the uses of man” has left an indelible impress upon the American character. In the beginning the dangers and hardships of the frontier acted as a powerful selective force in determining the character of our earlier immigrants, giving us an unusually restless, mobile, and enterprising people. The process of settlement which followed merely emphasized these qualities and added others of a kindred nature. The primitive settler, following the trapper and the

trader into the wilderness, was forced to depend upon himself for protection and subsistence; he expected little aid from the government, was unused to the restraints of law, and a little contemptuous of its possibilities, either for good or for evil. The process of settlement, then, merely confirmed the American in that excessive individualism which has made him independent and resourceful, to be sure, but partial to the spoils system, tolerant of lynch law and labor violence, indifferent to waste and weakness in the administration of his government.

At the same time the great natural wealth of our land and the ease with which it could be secured from the government have taught our people, particularly in the West, to regard nature rather than thrift as the source of wealth, to exploit rather than create, to work and study as we farm, extensively. As a people, we are optimistic but careless, generous but wasteful, buoyant but boastful. Industrially, we have risen to our exceptional opportunities with spirit, playing the commercial game at times with excessive energy and devotion; but we have come to emphasize quantity rather than quality, product rather than finish. We"lead the world" in the use of labor-saving machinery, but depend largely upon Europe for our skilled artisans.

Growth of Population. The mere growth of the American people has been as striking as it is familiar. In 1640 there were about 25,000 persons, excluding Indians, in British North America; about 260,000 at the end of the seventeenth century according to Bancroft; according to the same authority the million mark was reached in 1743; and in 1790 the first federal census showed a population of 3,930,000 in the United States alone. In the next hundred years the population doubled every twenty-five years on an average, and although the rate of increase has fallen off somewhat since the Civil War, we are still growing at a remarkable pace, the population of continental United States being 91,970,000 in 1910.

Despite this enormous increase, the population of this country has not multiplied more rapidly than the means of subsistence. This does not mean that every one receives enough to live in

comfort. On the contrary, great masses of people live in poverty. Neither does it mean that society as a whole produces enough to support every one in comfort, if the wealth produced were equitably or evenly divided. On the latter point there is deep difference of opinion. But with respect to the movement over long periods, say during the preceding century, there can be no doubt that wages and real income have risen, not without interruption, but with comparative steadiness.

The dismal predictions of overpopulation which were so common in the first half of the nineteenth century have been signally discredited as practical propositions applicable to the American people of this epoch. The exploitation of national wealth, the improvement of business organization, and the invention of labor-saving machinery have more than kept pace with the population; and it appears that over long periods prosperity and high wages tend to depress rather than to raise the birth rate, even of the wage-earning population. We are in no danger of a "devastating torrent of children."

On the contrary, the real problem of the twentieth century, or at least the problem that has evoked the greatest discussion, is found in the steady decline of the birth rate. According to some eminent authorities, the race is dying at the top, the ablest and most successful people have the smallest families; and this constant sterilization of the ablest stock is, in the opinion of such authorities, second in importance to no problem which Western civilization is called upon to solve. It is not that we want more people. Population is still increasing with sufficient rapidity. The problem lies in the apparent failure of the most efficient individuals to multiply as rapidly as certain classes' of the less efficient. Other authorities, it should be added, maintain that this "race suicide" has been going on for centuries, that it has not in the past, and will not in the future, lower the vitality or general efficiency of the race. Such writers view with complacency the ceaseless sterilization of the upper classes, maintaining that the process stimulates the ambition. of the abler members of the lower classes by creating room at the top, and that so long as the habits and ideals of the upper classes