Americans Didn’t Always Yearn for Riches
Nov 1, 2012
15 Min read time
There was a time when Americans valued "competency" over riches and saw wealth as the cause of poverty.
Speaking in New Haven in 1860, Abraham Lincoln told an audience, “I am not ashamed to confess that 25 years ago I was a hired laborer, mauling rails, at work on a flat-boat—just what might happen to any poor man’s son.” After his death, Lincoln’s personal trajectory from log cabin to White House emerged as the ideal American symbol. Anything was possible for those who strived.
But the goal of this striving was not great wealth. Perhaps the most revealing memorial to Lincoln and his world is found in one of the most mundane of American documents: the census. There he is in the Springfield, Illinois, listing of 1860: Abraham Lincoln, 51 years old, lawyer, owner of a home worth $5,000, with $12,000 in personal property. His neighbor Lotus Niles, a 40-year-old secretary—equivalent to a manager today—had accumulated $7,000 in real estate and $2,500 in personal property. Nearby was Edward Brigg, a 48-year-old teamster from England, with $4,000 in real estate and $300 in personal property. Down the block lived Richard Ives, a bricklayer with $4,000 in real estate and $4,500 in personal property. The highest net worth in the neighborhood belonged to a 50-year-old livery stable owner, Henry Corrigan, with $30,000 in real estate but only $300 in personal property. This was a town and a country where bricklayers, lawyers, stable owners, and managers lived in the same areas and were not much separated by wealth. Lincoln was one of the richer men in Springfield, but he was not very rich.
Not only was great wealth an aberration in Lincoln’s time, but even the idea that the accumulation of great riches was the point of a working life seemed foreign. Whereas today the most well-off frequently argue that riches are the reward of hard work, in the Civil War era, the reward was a “competency,” what the late historian Alan Dawley described as the ability to support a family and have enough in reserve to sustain it through hard times at an accustomed level of prosperity. When, through effort or luck, a person amassed not only a competency but enough to support himself and his family for his lifetime, he very often retired. Philip Scranton, an industrial historian, writes of one representative case: Charles Schofield, a successful textile manufacturer in Philadelphia who, in 1863, sold his interest in his firm for $40,000 and “retired with a competency.” Schofield, who was all of 29 years old, considered himself “opulent enough.” The idea of having enough frequently trumped the ambition for endless accumulation.
As the men and women of Lincoln’s and Schofield’s generations aged, they retained the ideal of progress from poverty to competency. Later in the century, midwestern publishers created county histories that featured images of their subscribers’ homesteading progress, from “first home in the woods” to comfortable farm. The “mug books”—so called because they included images not only of cabins and farms but also of their owners—captured the trajectory of these American lives and the achievement of their economic ambitions: the creation of prosperous homes. They built them, but they could build them because they were citizens of a democratic republic. The opportunity to build secure homes was part of the purpose of the economy.
For a moment at the end of the Civil War, it seemed the liberal ideal of a republican citizenry, in which autonomous individuals build a society based on contracts, would reach fruition in a United States where extremes of wealth and poverty were largely nonexistent. Instead, by 1900, extremes of the sort that hadn’t been seen since the abolition of slavery were de rigueur. In 1860 there was only one Cornelius Vanderbilt, but 40 years later, the concentration of wealth in the corporate form ensured an enlarged class of the super-rich.
The change came during the Gilded Age, which reached its high point in the 1890s. This era is familiar to us because in many ways we replicate its conditions. Now, as then, the rich get richer and most everyone else gets poorer. Today the top 1 percent of the American population controls 42 percent of the country’s financial (non-home) wealth, while the bottom 80 percent possesses only 5 percent. Median household income adjusted for inflation has fallen by 8 percent since 2007. In the late nineteenth century, as today, new technologies transformed the economy and boosted productivity even as life for many Americans grew worse. Henry George entitled his late nineteenth-century bestseller Progress and Poverty; it seems a title for today. Nineteenth-century Americans deeply distrusted corporations, and although our recent presidential candidates gush over our contemporary style of free enterprise, most Americans are more suspicious. Sixty-two percent believe corporations are routinely corrupt. Only 20 percent trust the banks. This was not supposed to happen then or now.
Obama and Romney both recognized that Americans seek economic security, dislike economic privilege, and desire equal opportunity.
Most Americans have come to think of the American dream not as a competency but rather as the accumulation of great wealth. However, in the presidential campaign there were echoes, admittedly faint, of a Gilded Age critique of plutocracy. Back then many Americans believed that great wealth was the cause of poverty, in the sense that the conditions that produced great fortunes were the same conditions that generated large numbers of poor people. The 30- to 60-second spots that dominated the airwaves during the election cycle might seem a strange place to detect older beliefs about equality of opportunity and condition, but both campaigns recognized that Americans seek economic security, dislike economic privilege, and desire equal opportunity and independence. Romney’s “47 percent” and Obama’s “you didn’t build that” moments provided each side with opportunities to appeal to older ideals.
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Still, there is no denying that conceptions of the American dream have changed dramatically since Lincoln’s time. How did this happen?
In 1860 there was a great deal of consensus across the political spectrum on the basic goal of competency and on the view that wealth created poverty, because both conservatives and radicals derived their views from small-l liberalism, with its belief in contract freedom, individualism, a minimal state, and laissez faire. The classical liberalism of Thomas Jefferson or Adam Smith feared government intervention in the economy as always and necessarily favoring the rich. Liberalism valued property because its possession bestowed more than access to things. Property, as R. Jeffrey Lustig put it in Corporate Liberalism (1986), allowed “a stake in productive wealth, a chance to exercise initiative, do valuable work and earn standing in a community.” These values seemed precisely what corporations and corporate property threatened because corporations made people dependent. They picked winners and losers by giving advantages to some and not others.
The 1860s liberals, whose most direct political descendents today are Ron Paul and his followers, packed considerable cultural punch. When the Northern commercial middle class went to their Congregational, Presbyterian, Unitarian, and Universalist churches, their preachers were liberals. When their children attended universities, their professors were liberals. When Americans read the elite journals of the day, such as E. L. Godkin’s The Nation, they read the writings of liberals. Liberalism provided the central point of reference for thinking about wealth and poverty.
But by the end of the nineteenth century, liberalism found itself confined to an intellectual tightrope. It leaned one way, denying its own failure and claiming that the world Lincoln described and lived in existed still. And it leaned the other, justifying the harsher world of the Gilded Age as rewarding the deserving and punishing the morally flawed.
Of course, there was no single homogenous liberal. Many people occupied that tightrope and leaned in different directions.
One leaner was Horatio Alger, who famously wrote a series of didactic juvenile novels in the years following the Civil War. Alger, who was a failed minister and a child molester, had a vast audience. In Muncie, Indiana, where the library records from 1891 to 1902 survive, 5 percent of the books checked out during this period were written by Alger.
Alger took the ideas of contract freedom and individualism so resonant with Lincoln and applied them to a new urban and industrial society. His plots usually center on an honest street urchin aided by middle-class sponsors. In Ragged Dick the hero is an orphan selling newspapers and living in a wooden box in an alley. Dick meets a middle-class boy, Frank, and his uncle. The uncle tells him, “Remember that your future position depends mainly upon yourself, and that it will be high or low as you choose to make it.”
This might seem to be astonishingly unhelpful advice for an orphaned, illiterate child living in a box, but in Alger’s world, it is sufficient. Dick learns the “advantages of his steady self-denial” and becomes a lawyer. Ragged Dick is now Richard Hunter, Esq. “He has taken a step upward, and is determined to mount still higher.”
The idea of having enough frequently trumped the ambition for endless accumulation.
Alger’s and similar novels are often described as rags-to-riches stories, but they can be more accurately read as rags-to-competency stories. Dick is not wealthy at the end of the novel. He merely has a job and the chance to rise further.
Alger was liberalism swaying to one side of the tight rope, denying that anything had changed. His novels were meant to teach the values suited to individualism and contract freedom. Ragged Dick teaches hard work, ambition, self-discipline—values Lincoln would have espoused—but Alger claimed they were just as sufficient in an industrializing and urban world, where production took place in larger and larger units, as they had been in Lincoln’s.
William Graham Sumner was as tough-minded as Alger was sentimental. Sumner was liberalism swaying to the other side. An influential free-market theorist, he taught at Yale from 1872 through the rest of the century and was a major figure in the early development of sociology. In 1883 he wrote What Social Classes Owe to Each Other, concluding that what they owe each other is nothing. Society in his view is not made up of classes or any other collectivity, but of individuals.
Where Jackson and Jefferson had been liberals because they thought that laissez faire and small government would yield a society of largely equal white men, Sumner made laissez faire and small government goals in and of themselves, despite rising inequality. “Let it be understood,” he wrote in Social Classes,
that we cannot go outside of this alternative: liberty, inequality, survival of the fittest; not-liberty, equality, survival of the unfittest. The former carries society forward and favors all its best members; the latter carries society downwards and favors all its worst members.
The price of liberty and progress was inequality.
Sumner’s poor had nobody to blame but themselves. But if Sumner attacked the poor, he did not praise the rich. His heroes were largely people of middling wealth. The rich remained something of an embarrassment. Eventually, as the liberals of Sumner’s time evolved into conservatives, they would make their peace with rich people.
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The 1860 census schedule for Springfield, Illinois, lists Abraham Lincoln (with arrow) living alongside a bricklayer, a stableowner, a teamster, and a secretary. The president and his neighbors were not much separated by wealth. / National Archives
While many liberals swayed in the nineteenth century, some got off the rope. These recovered liberals had viewed liberalism as a route to a largely egalitarian society, and once liberalism ceased to serve that purpose, they saw less and less need to defend contract freedom, laissez faire, or individualism in their pure forms.
Recovered liberals’ main target was the rich, though this does not mean they were particularly kind to the poor, especially the non-white poor, whom they often depicted as tools of the wealthy. Recovered liberals drew on Jefferson and Jackson in seeing great wealth as a symptom of decay, the result of power, privilege, and discrimination.
In spite of their commitment to equality, recovered liberals were not socialists. Instead, they were antimonopolists, who, with their sympathizers, probably formed the majority of the American electorate but were at any given moment divided between the Republicans, Democrats, and third parties. Antimonopolists were most likely to be found among skilled workers, small businessmen, and farmers of cotton and wheat, commodities sold on national and international markets.
Monopoly meant something different to these erstwhile liberals than what we think of today: it was synonymous with corporations. Antimonopolists were utopian capitalists who had once believed that ideally capitalism and fair competition would yield a society akin to Lincoln’s. Recognizing that capitalism had failed to live up to that ideal, they were bent on reforming it so that great wealth and poverty would once again become anomalies in American life.
Henry George, of Progress and Poverty renown—the book was one of the most widely read pieces of secular nonfiction in nineteenth-century America—was one such antimonopolist. He came up hard against the paradox embedded in his title. How, he asked, could a competitive system that was supposed to prevent extremes of wealth and poverty generate a growing mass of poor people despite economic progress? And how, in a system of small producers, was the economy at the mercy of large corporations and plutocrats such as Leland Stanford, Collis P. Huntington, Andrew Carnegie, and John D. Rockefeller?
Antimonopolists lost faith in competition as a route to an egalitarian society.
Antimonopolism evolved over the course of the late nineteenth century. Even as antimonopolists lost faith in competition as a route to an egalitarian society, they retained many older liberal values, remained devoted to equity and freedom, and hated privilege. Antimonopolists argued that favors bestowed by the government—such as corporate charters, subsidies, tariffs, and special treatment in the courts—had opened the barn door and let monopoly run loose, trampling ordinary citizens.
Initially the Supreme Court took a similar view of monopoly. Its decision in the so-called Granger cases of 1877 found that the railroads, which formed the overwhelming majority of corporations at the time, held monopoly power because the public had no choice but to make use of their services. Fares set by railroad bosses, not individuals in competition, determined which farmers and businesses would win and lose.
At the heart of the antimonopoly argument was a single word: discrimination. Corporations, and the wealthy who controlled them, had the power to discriminate and therefore posed a danger to the republic. An 1886 report from the Senate Select Committee on Interstate Commerce concluded that the “essence of the complaints” against railroads was “the practice of discrimination in one form or another.” The “great desideratum is to secure equality.”
The desire to secure equality started men such as Henry George, who began from conventional liberal premises, down a road that first condoned government regulation and then embraced government ownership in order to restrain the power of corporations and the wealthy. In promoting these solutions, George and other antimonopolists abandoned liberal means but sought to maintain liberal ends.
Chief among those ends was not the maximization of wealth or minimization of poverty, but rather the production of republican citizens who had the education, leisure, and economic independence to participate in the affairs of the nation. The goal, as expressed by George McNeill of the Knights of Labor, was “to engraft republican principles into our industrial system.” As a miner in a Union Pacific coal mine in Rock Springs, Wyoming, put it, corporations tried to force him to sign away “his free speech, his liberty and his manhood.”
Antimonopolism simultaneously opposed great wealth and those poor workers whom they thought threatened manhood—specifically white manhood: great poverty was linked in antimonopolists’ minds to contract labor, which they racialized. The likes of Carnegie, with his “gospel of wealth,” and Stanford, in founding the university named for him, attempted to counter this opposition. But these salvos from the rich came largely at the end of the century, and were not even particularly convincing to the rich themselves.
While the antimonopolists focused on the hazards that corporate-induced inequality presented to the average citizen, some of the most searing critiques of wealth instead considered the kinds of men it rewarded. Those making the critiques were well-to-do themselves. Charles Francis Adams Jr., a politician and grandson of John Quincy Adams, wrote:
Business success—money getting. . . . comes from a rather low instinct. Certainly, so far as my observation goes, it is rarely met with in combination with the finer or more interesting traits of character. I have known, and known tolerably well, a good many ‘successful’ men—‘big’ financially—men famous during the last half-century; and a less interesting crowd I do not care to encounter. Not one that I have ever known would I care to meet again, either in this world or the next; nor is one of them associated in my mind with the idea of humor, thought or refinement. A set of mere money-getters and traders, they were essentially unattractive and uninteresting.
Charles Francis Adams Jr. would have had little in common with the late Gore Vidal except to agree that “the more money an American accumulates, the less interesting he becomes.” Antimonopolists, of course, believed the wealthy were not just boring but dangerous, and were therefore closer to the heart of the Gilded Age.
The antimonopolists’ devotion to a republican economy is attractive, but it can hardly be imported without change into the 21st century, given its appeal to white manhood. Antimonopolists identified white manhood so closely with the republic that the two could not be disentangled. White manhood could justify resistance to corporations, but it also could justify the Klan and the virulent Sinophobia of the Knights of Labor. Racism wasn’t just a disfiguring sore upon the body of antimonopolism; it was part of its very makeup.
The best and worst of the country, then and now, often come in a single package.
Editor’s Note: This article was published in collaboration with the Center for Ethics in Society at Stanford University.
November 01, 2012
15 Min read time