The Development of Democratic Pluralism
excerpted from the book
The Paradox of American Democracy
by John B. Judis
Routledge Press, 2001, paper
In 1831, when Alexis de Tocqueville set sail for America, four
of five free Americans who worked owned property. Americans saw
politics and political democracy as a means of protecting that
rough equality through preventing the rise of state-sponsored
monopolies. They viewed the state not as a protective institution,
but as an instrument of monopoly. The "true strength"
of government, Jackson declared in his 1832 veto of the charter
of the Bank of the United States, "consists in leaving individuals
and state as much as possible to themselves."'
That vision of democracy was undermined by the rise of the
large corporation. As America industrialized in the late nineteenth
century, the joint-stock corporation eclipsed the individual proprietorship.
Through being able to raise capital without threat of liability
for losses, it made possible businesses on a scale that dwarfed
those in Tocqueville's day. An initial wave of mergers in the
1870s consolidated the railroads. Another wave at the century's
end dealt a final blow to Tocqueville's America. In 1893, there
were twelve great companies with capitalization of less than half
a billion dollars. By 1904, there were 318 giant companies, and
U.S. Steel alone was capitalized for $1.4 billion. The top 4 percent
of companies produced 57 percent of the total industrial output.
The growth of the corporation led to a small group of managers
overseeing thousands of workers, many of whom were immigrants.
It created a rigid class system of a kind that Tocqueville had
foreseen, but had discounted:
I am of the opinion, on the whole, that the American manufacturing
aristocracy which is growing up under our eyes, is one of the
harshest which ever existed in the world, but at the same time,
it is l one of the most confined and least dangerous. Nevertheless
the | friends of democracy should keep their eyes anxiously fixed
in this | direction; for if ever a permanent inequality of conditions
and aristocracy again penetrate into the world, it may be predicted
that this is the channel by which they will enter.
By I900, the channel had become a raging torrent. There were
more workers in manufacturing, transportation, communications,
and public utilities than in agriculture, and America, like Europe,
appeared headed toward a two-class society divided between a small
bourgeoisie and a large, unruly proletariat.
Tocqueville, and the Jacksonians, viewed political equality
as an outgrowth of economic equality, but by the late nineteenth
century, growing economic inequality was undermining political
equality. Political equality had become merely an abstraction.
In fact, who was elected and what elected officials did were increasingly
dictated by the industrialists and bankers who financed and sometimes
bribed the politicians. (Civil service reform in 1883, which prohibited
federal workers from contributing money and time to campaigns,
had the perverse effect of making politicians more dependent on
business for cash and campaign workers.) By controlling politicians
and also judges, business was able to bend laws and regulations
to its own purposes. Economic inequality had spawned political
Corporate leaders and sympathetic economists insisted that
the new economic institutions were merely fulfilling the promise
of the market and warned that the imposition of state regulation
could undermine prosperity and freedom. Beginning in the 1870s,
farmers, small businessmen, workers, and intellectuals fought
back against the new corporate system. Grangers, Knights of Labor,
members of the Greenback Party, and Populists campaigned to regulate
or even break up the new corporations. These movements didn't
see the federal government as an instrument of monopoly and tyranny,
but as a means of curbing private monopolies. They saw the corporations
as the enemy. Senator John Sherman, the sponsor but not the author
of the Sherman Anti-Trust Act in 1890, quipped, "They had
monopolies and mortmains of old, but never before such giants
as in our day."
The movements of the late nineteenth century demanded a host
of reforms from government, including the setting of railroad
rates, the establishment of an eight-hour work day, the abolition
of child labor and of night work for children and women, the setting
of a minimum wage, the supervision of collective bargaining, and
the provision of cheap credit. In some Midwestern and Western
states, they actually got some of what they wanted, but business
was able to stop them in the courts. The courts adopted a principle
of "corporate individualism," according to which it
defined corporations as "persons" and exempted them
from regulations. Nationally, Populists and other reformers were
totally stymied by business's control of the Senate (dubbed the
"millionaires' club" in the late nineteenth century),
the Supreme Court, and the White House. The stage was set, however,
for a series of reform battles- extending over the first four
decades of the twentieth century-that would attempt to resolve
the looming contradiction between corporate capitalism and America's
democratic ideals. The Progressive Era would etch in the outlines
of a solution, which business and the Republicans would then attempt
to erase during the 19205, only to have the outline redrawn and
filled in during the New Deal of the 19305. The result would be
a new vision of democracy that depended on the power of organized
workers and consumers, working often through the government, to
contest the new power of the corporations and their managers.
This new vision would be democratic pluralism.
The Progressive Era
The two great reform eras of the early twentieth century would
both be precipitated by severe economic depressions that unsettled
the existing configuration of political power and gave rise to
new political movements. The Progressive Era dates from the depression
of the I8905 and the political reaction to it. This depression
saw the emergence of nationally organized interest groups and
elite policy organizations and the predominance of what was called
the "labor question" in American politics.
Like most severe economic downturns, it was unexpected. On
the eve of leaving office in early 1893, President Benjamin Harrison
told Congress, "There has never been a time in our history
when work was so abundant, or when wages were as high, whether
measured by the currency in which they are paid, or by their power
to supply the necessities and comforts of life." But that
May, a financial panic occurred, and by the end of the year 500
banks and over 16,000 businesses had gone under and unemployment
was about 20 percent. The economy picked up in 1895, but then
plunged again the next year. It did not fully recover until I901.
Before the depression, there had already been serious signs
of political unrest. In the 1892 presidential race, the Populist
Party, formed out of Southern and Western Farmers' Alliances,
polled over a million votes- about 9 percent of the total-and
won twenty-two electoral votes, more than any third party since
1860. The American Federation of Labor was organized in 1886 and
by 1893 had increased its membership from 140,000 to 275,000 workers.
In 1892, AFL unions went on strike against Carnegie Steel at Homestead
near Pittsburgh. The depression brought still greater unrest.
In 1894 alone, about 750,000 workers were out on strike. The most
important strikes were by railroad workers. In 1893, Eugene V.
Debs organized the American Railway Union out of the feuding craft
unions. Within a year, it had 150,000 members and had struck successfully
against James J. Hill's Great Northern Railway. Debs then led
a strike against the Pullman Company, a strike that was finally
broken with a government injunction.
In the 1894 Congressional elections, the Populists garnered
a million and a half votes, or 11.2 percent of the total. Populist
Congressmen introduced reform bills in the House of Representatives.
In Ohio, Populist Party supporter Jacob S. Coxey, a small businessman
from Ohio, organized a march on Washington to demand federal relief
for the unemployed. While Coxey's Army ended up with only 500
marchers by the time it arrived in the capital, it was greeted
by 15,000 cheering onlookers.
By the end of the depression, the Populists had been absorbed
into William Jennings Bryan's Democratic Party, and Debs's American
Railway Union had been destroyed by its defeat at Pullman, but
labor and the left drew conclusions about the need for organization
and national political action out of the experience. Debs helped
found the American Socialist Party in I901. It grew from ... to
118,000 members by 19l2, when it elected l,200 public officials
and published over 300 magazines and newspapers. In 19l2, Debs
got 6 percent of the vote for the presidency even though Theodore
Roosevelt ran that year as the candidate of the Progressive Party.
In 1905, dissident trade unionists including Debs and Big Bill
Haywood founded the International Workers of the World (IWW).
The IWW's largest single group was the Western Federation of Miners.
By 1906, the AFL, prodded and embarrassed by its city and state
labor councils, had begun to take positions on national politics
and to support candidates and lobby for national legislation.
Business was equally active in the years following the 1893
depression. It undertook massive consolidation at the beginning
of the century with the hope of stabilizing production and preventing
overcapacity. Businesses also worked closely with Congress and
the White House to pass banking, tariff, and trust legislation
that, they hoped, would make panics less likely. At the same time,
business leaders organized politically in response to the depression
and the growth of labor and the Populist, and later, socialist
left. They feared that as capitalism suffered deeper crises, workers
would become more organized. The parties would be divided by classes,
and the country would be engulfed by class war. Socialists themselves,
imbued with Marx's prophecies, did nothing to allay these fears.
Wrote socialist Upton Sinclair in an open letter to multimillionaire
Vincent Astor, "I tell you that this country is moving today
with the speed of an avalanche into one of the most terrific cataclysms
in the history of mankind."
Businesses organized lobbies that would unequivocally stand
up for their interests against labor. The National Association
of Manufacturers (NAM) was founded in 1895 at a meeting in Cleveland
at which William McKinley, then the governor of Ohio, was present.
It was initially intended as a lobby for trade protection, but
in 1903, its leaders were ousted by three Midwestern manufacturers,
David M. Parry, John Kirby, Jr., and James W. Van Cleave, who
focused on combating the spread of unions. In 1906, the organization's
leaders accused the National Civic Federation of being "part
and parcel" of the AFL and an exponent of "the most
virulent form of socialism, closed shop unionism." The NAM
got deeply involved in Republican politics, backing Taft in 19l2
when Roosevelt bolted the party.
The NAM was soon joined by other business organizations. At
the urging of President Taft and his Secretary of Commerce and
Labor, the U.S. Chamber of Commerce was formed in 1912 out of
local chambers of commerce. By 19l3, according to the Department
of Commerce and Labor, there were 240 regional and national trade
associations. The Chamber itself was more politically diverse
and its Washington office more inclined to seek a modus vivendi
with the administration in power than the NAM, but in 19l4, the
Chamber lined up with the NAM and other business organizations
to oppose an AFL proposal to exempt labor unions from monopoly
injunctions under the Sherman Anti-Trust Act - the kind of injunction
that had destroyed Debs's American Railway Union.
Business enjoyed considerable influence in these years. Standard
Oil kept Ohio Senator Joseph Foraker on a retainer. Senators Nelson
Aldrich of Rhode Island and Orville Platt of Connecticut allowed
bankers from the Morgan and Co. and Kuhn, Loeb and Co. to draft
their bills. U.S. Steel received regular intelligence from Pennsylvania
Senators Donald Cameron and Matthew Quay. Taft and his cabinet
solicited the NAM's advice on appointments. But the major legislation
passed during the Roosevelt, Taft, and Wilson administrations
represented a compromise between these business groups and labor
and the left. That reflected the relative power of the competing
groups, but it was also the result of intervention by an entirely
different kind of organization: the elite policy group.
Some business leaders like Ohio industrialist Mark Hanna,
Boston department store magnate Edward Filene, and Morgan and
Co. partner George Perkins found common cause with the progressives
who sought to craft what Woodrow Wilson called a "middle
ground" between socialism and corporate individualism. They
opposed both the intransigence of the NAM and the revolutionary
objectives of the Socialists and the IWW. They sought to eliminate
or transcend class differences by accommodating what was most
reasonable in the demands of the opposing classes. Theodore Roosevelt
and Wilson, both of whom were intellectuals as well as politicians,
exemplified two sides of the movement-Roosevelt was far less wary
than Wilson of using governmental power-but they shared these
objectives. Roosevelt told journalist Jacob Riis in 1904:
"I am for labor," or "I am for capital,"
substitutes something else for the immutable laws of righteousness.
The one and the other would let the class man in, and letting
him in is the one thing that will most quickly eat out the heart
of the Republic.
And Wilson declared in 1916:
What I have tried to do is to get rid of any class division
in the country, not only, but of any class consciousness and feeling.
The worst thing that could happen to America would be that she
should be divided into groups and camps in which there were men
and women who thought that they were at odds with one another.
What united the progressive economists, politicians like Roosevelt
and Wilson, businessmen like Hanna and Perkins, social reformers
like Jane Addams, and social gospel theologians like Rauschenbush
was a belief in the power of government-whether as an expression
of expert knowledge or popular will-to overcome the inequity and
irrationality that was endemic to a pure market capitalism. They
saw democracy as a social system in which the government itself
would attempt to mitigate economic inequality. Wilson and Roosevelt-or
Roosevelt and Debs-disagreed about the extent to which government
could or should intervene in the market, but they shared this
conception of positive government.
The clearest statements of the progressive faith were Herbert
Croly's book The Promise of American Life and Roosevelt's speeches
for the Progressive Party, which Croly helped to write. Croly
argued that the older Jeffersonian and Jacksonian view of democracy
and government, which had been meant to sustain an egalitarian
society, had unwittingly encouraged the growth of trusts and robber
barons. Unfettered competition had spawned industrial concentration
and consolidation. In this way, the older faith "in individual
freedom has resulted in a morally and socially undesirable distribution
of wealth," he wrote. To keep the promise of American life,
"the national government must step in and discriminate; not
on behalf of liberty and the special individual, but on behalf
of equality and the average man."
The progressive movement found important allies in elite organizations.
These included national policy groups such as the National Civic
Federation and the American Alliance for Labor and Democracy,
local and regional groups such as Edward Filene's Cooperative
League, and foundations such as Russell Sage, Rockefeller, and
Carnegie. And they included many local and state organizations,
often founded by upperclass women, such as the Child Labor Committees,
Consumers' Leagues, Charities Aid Societies, and church organizations.
In the end, this larger progressive movement won out. It stood
between the specter of European revolutionary socialism and the
social Darwinism of the selfish rich.
Wilson's career demonstrates the triumph of progressivism.
Before he became governor of New Jersey and president of the United
States, Wilson's views on democracy and government sometimes sounded
closer to those of the NAM than to the progressives. In a 1907
essay in the Atlantic Monthly, Wilson condemned any kind of government
regulation of the economy as "socialistic." He was also
hostile to labor unions and supported the use of injunctions against
strikes. But faced with political pressure from below and the
arguments of progressives in Congress, Wilson established a record
as president that put him clearly in the progressive camp. He
compromised on the Clayton Anti-Trust Act, forbidding the use
of labor injunctions except when "necessary to prevent irreparable
injury to property." He signed bills-uniformly opposed by
the NAM-providing workers' compensation for federal employees,
making child labor illegal, and establishing an eight-hour day
for railway workers. During World War I, he put into practice
the Civic Federation's tripartite model of government, establishing
government boards that included business, labor, and academic
representatives to oversee the war effort.
The Progressive Era came close to what the pluralists called
"balanced government." In the battle among interest
groups, business held the upper hand, but its power was checked
by elites and their organizations and by progressive, socialist,
and populist political movements. The result affirmed a spirit
of accommodation and class cooperation. As World War I came to
a close, Herbert Croly and other progressives believed that these
pluralist principles, which Wilson put into practice during the
war, would govern America's future. But the end of the war brought
instead the beginning of a very different era-one that repudiated
the underlying tenets of the Progressive Era and changed the political
balance of power in the country.
The Age of Mellon
The 1920s were one of the most inventive and interesting periods
in American history. They saw the rapid growth of industry and
manufacturing, highlighted by Henry Ford's Model T, the birth
of consumer capitalism and the installment plan, and the growth
of a national market for popular entertainment. But it was a much
less positive time for American politics and democracy. The popular
movements and elite organizations of the Progressive Era receded,
as business leaders and organizations reclaimed control of the
political system. Politics sustained economic growth, but in its
blind subservience also hampered it, and contributed to its destruction
in the Depression.
The conclusion of the Progressive Era was precipitated by
business's sharp reaction to the specter of class war and the
looming threat of revolution. While the IWW was destroyed by wartime
repression, the AFL grew dramatically during the war, thanks to
government-supervised bargaining agreements. In two years, its
membership doubled from two million to four million. The Socialist
Party, which opposed the war and had its mails confiscated, its
rallies disrupted, and its leader jailed, still held its own in
the 1918 elections, electing 32 state legislators, compared to
20 in 1912 and 33 in I914. The Russian Revolution, which had climaxed
with the Bolshevik takeover in October 1917, also roused revolutionary
hopes. The Soviet leadership had organized the Communist Third
International in March 19l9 to spread the revolution. Karl Radek,
its executive secretary, declared that the money the Comintern
sent to Germany was "as nothing compared to the funds transmitted
to New York for the purpose of spreading bolshevism in the United
States." William F. Dunne, a Socialist Party member who was
elected to the Montana state legislature in 1918, contended that
revolution was on the horizon. "Unemployment will increase,
there'll be starvation, and some day the banks will fail and the
people will come pouring out on the streets and the revolution
Most of the AFL leaders were opposed to the Russian Revolution,
but some of them were impressed by the British Labor Party, which
after the war drafted an ambitious plan to nationalize industry.
In 19l9, railway unions adopted a program, called the Plumb Plan,
to nationalize the railroads, which the AFL endorsed. That year,
too, workers went on strike in the textiles, clothing, food, transportation,
steel, and coal industries. In January, after 35,000 Seattle dockworkers
went out on strike for higher wages and a shorter workweek, the
Central Labor Council declared a general strike on their behalf.
In September, Boston policemen went out on strike after nineteen
policemen had been fired for belonging to a union. Two days later,
steelworkers, who were working twelve-hour days and seven-day
weeks for an average of $28, struck. Soon afterward, 394,000 miners
went out on strike.
Businesses responded to these strikes by standing firm. They
won the support of city, state, and national officials, including
Wilson's Attorney General A. Mitchell Palmer, who linked the strikes
to the Russian Revolution. Seattle's general strike lasted five
days until the mayor, charging a Communist plot, crushed it. When
Massachusetts Governor Calvin Coolidge urged intransigence against
the police strikers, Boston's mayor successfully replaced the
entire police force. In October 19l9, with the war over and 365,000
steelworkers out on strike, Wilson called for a National Industrial
Conference to enshrine the collaborative principles of collective
bargaining that had been practiced during the war. He appointed
seventeen representatives of employers, including Elbert H. Gary,
chairman of U.S. Steel, and nineteen representatives of unions.
But when the labor representatives asked for the government to
arbitrate the strike, Gary balked. When the labor representatives
called for collective bargaining to become the peacetime norm
between unions and management, the employers also balked. The
conference broke up without reaching any agreement. With Palmer
branding the strikers as reds, the steel owners held out for two
months until the strikers returned to work without gaining any
of their demands.
Business's reaction to the strike wave in 19l9 established
a precedent for the next decade. The NAM's strategy of attempting
to block and destroy unions became widely accepted. Businesses
organized local and national groups to back what they called the
"American Plan." They branded collective bargaining
as "un-American" and sought to establish company unions
and to force workers to sign "yellow dog" contracts
agreeing not to join a union. Hundreds of American Plan groups
sprouted up in the early 19205-forty-six in Illinois alone. The
companies used force and subterfuge, when necessary, to prevent
unionization. They blacklisted potential union organizers, they
sent spies into shops and factories-according to one estimate
there were 200,000 spies employed by 1928 - and hired firms that
specialized in busting picket lines. One organization, the National
Metal Trades Association, was set up after the war expressly to
During the Progressive Era, business and businessmen had sometimes
been looked upon with disfavor. To win public acclaim, corporations
began employing public relations specialists. The first American
"PR" agent was Ivy Lee, a former journalist who convinced
the anthracite coal operators in 1906, after they had lost a strike,
that they needed his services. Lee was subsequently hired to burnish
the reputations of the Rockefellers after soldiers killed wives
and children of striking miners during the 1914 Ludlow massacre.
But it was the experience of World War I that convinced many business
leaders that public relations could work. Former journalist George
Creel, whom Wilson hired to run the government's Committee on
Public Information during World War I, succeeded brilliantly in
turning the public against the "Hun." Afterward, every
company had to hire a PR man. Said businessman Roger Babson in
1921, "The war taught us the power of propaganda. Now when
we have anything to sell to the American people, we know how to
sell it. We have the school, the pulpit and the press."
Every large bank and corporation hired a PR man to put out
company newsletters and manage press relations. Companies began
using polling techniques to test public opinion; businesses bought
radio stations, endowed university chairs, and pressured schools
to fire teachers they deemed subversive. The guru of the new public
relations men was Edward Bernays, a nephew of Freud, who worked
for Creel during the war. Wrote Bernays in Propaganda, "As
civilization has become more complex, the technical means have
been invented and developed by which opinion may be regimented."
... Under pressure from business, Harding appointed Pittsburgh
banker and industrialist Andrew Mellon, one of the richest men
in America and a major contributor to the Republican Party in
Pennsylvania, as Secretary of the Treasury. The prim and dour
Treasury Secretary became the leading member of the Harding, Coolidge,
and Hoover administrations. Much more than Hoover, a former progressive
who still retained the older commitment to a society that accommodated
labor, Mellon was a representative of his class and narrow business
interest. He single-mindedly went about reducing the tax burden
on business and the wealthy, which he claimed was imperiling investment.
His efforts initially encountered sharp resistance from progressives
in Congress when he tried to undo Wilson's progressive tax code,
but in 1926 he finally succeeded in revamping it. He drastically
reduced tax rates for the wealthy, cut the estate tax in half,
eliminated the gift tax, and reduced taxes on corporations. In
1928, he got Congress to cut corporate taxes again. After the
crash of 1929, Democrats discovered that Mellon had been secretly
granting tax credits and subsidies to many of the largest corporations,
including those in which he and his family had significant holdings.
He had even gotten the commissioner of Internal Revenue to provide
him with a memo about how he could legally evade taxes. He then
hired the author of the memo to advise himself and his family.
Heeding Mellon, the government also curbed spending on health
and welfare and public works, while services to business, shipping
subsidies, and law enforcement rose. "The government is just
a business and should be run on business principles," he
Business also won the battle for public opinion. One of the
best-selling books of the 1920s was advertising man Bruce Barton's
The Man Nobody Knows, a portrayal of Jesus as a businessman and
the apostles as his salesmen. "He picked twelve men from
the bottom ranks of business and forged them into an organization
that conquered the world," Barton wrote. He described Jesus's
parables as "the most powerful advertisements of all time."
Political scientists adjusted their view of business and its representatives.
While they had earlier described lobbyists as representatives
of "the interests"-a term carrying the same thrust as
"the syndicate" or "the mob"-they now called
them "legislative agents."
In winning over the public, business succeeded in redefining
democracy. Business and its Republican allies envisioned the captain
of industry as a "rugged individualist" and government
as the enemy of prosperity and equality. Corporate capitalism,
if left to its own devices, would eliminate class differences.
"We are reaching the position," Calvin Coolidge declared,
"where the property class and the employed class are not
one but identical." Harding, Coolidge, and Hoover rejected
the progressive view of the state. "It does not at all follow
because abuses exist," Coolidge said, "it is the concern
of the federal government to attempt their reform." Government
intervention, Hoover warned, "would increase rather than
decrease abuse and corruption. It would stifle initiative and
invention. It would undermine the development of leadership. It
would cramp and cripple the mental and spiritual energies of our
Business was so successful in pressing its case partly because
it was far more united than it had been during the Progressive
Era. The threat of Bolshevism and the strike wave of 19l9 had
united large and small employers. The NAM and the National Civic
Federation no longer were at r odds. During the 19205, Civic Federation
director Ralph Easley became obsessed with the menace of Bolshevism
to the exclusion of all other interests. The federation's most
active committee was its Department on the Study of Revolutionary
Movements, which championed legislation to prevent Communist infiltration.
Much of the old progressive movement became transmuted into civic
boosterism. The child labor and good government associations of
the 1910s were replaced by business service clubs, which cheered
the new individualism. The Rotary Club, founded in 1905, had 150,000
members by 1930. The Kiwanis Clubs grew from 205 in 1920 to 1,800
in 1929. The Lion's Club was founded in 1917; by 1930, there were
Business also benefited from having deceptively weak opponents.
By 1920, the American socialist left had virtually disintegrated.
It blamed its fall on the Palmer raids, which resulted in the
deportation of several hundred foreign-born Soviet sympathizers,
but the real culprit was the mindless revolutionary fervor created
by the Russian Revolution. In 19l9, about half the Socialists
quit the old party, which they denounced as "right-wing,"
to form two new pro-Bolshevik Communist parties, a Communist Party
dominated by recent immigrants, many of whom did not speak English,
and a smaller Communist Labor Party led by John Reed and other
native-born leftists. The Communists called for immediate insurrection.
When Palmer initiated his "red scare," both parties
went underground in imitation of the Bolsheviks. At the beginning
of 19l9, the Socialist Party had boasted 106,000 members. By the
year's end, the three parties-Communist, Communist Labor, and
Socialist-had only 36,000 among them. The socialist left would
never fully recover from this disastrous split. What was politically
viable (and not merely revolutionary fantasy) in the socialist
movement would become part of the old progressive movement, which
would attempt unsuccessfully to stage a comeback in 1924 when
Robert M. La Follette ran for president on a third-party ticket.
The progressive movement would not revive until the 1930s.
The labor movement fared almost as poorly as the socialist
left. Union membership peaked at 5,047,800 in I920. It fell to
3,622,000 in I923 and to 3,442,600 in I930-from I9.4 percent of
the nonagricultural workforce in I920 to only I0.2 percent in
I930. Business intransigence took its toll, but so did the inability
and unwillingness of the AFL's leadership to adapt to an economy
and workforce different from that of the late nineteenth century,
when the AFL began. Except for the miners, the AFL was organized
primarily along craft lines-such as cigar makers (from whom Samuel
Gompers came), carpenters, horseshoers, and plumbers (from whom
later AFL-CIO leader George Meany came). Even though modern industries
had eliminated many crafts, replacing the craftsman's tool with
a machine and the craft worker with the assembly line worker,
the AFL was unwilling to organize by industry. (When the AFL tried
to organize the steelworkers in 1919, they had to appoint an unwieldy
committee to oversee the twenty-four craft unions that claimed
members in the steel factories.) As a result, during the 1920s,
the federation held its own in construction and the remaining
crafts, but lost the few members it had gained during the war
in the great auto, steel, rubber, electrical utility, and chemical
Business also benefited from the peculiar economy of the 1920s.
After an initial panic and recession in 1920, the economy enjoyed
rapid gains in output and productivity. National income rose 21
percent between 1923 and 1929. The gains were sufficiently dramatic
to defuse protest and anger against employers, but they were not
dramatic nor secure enough to sustain the kind of confidence that
buoyed protest militancy in the 1960s. Wages never kept pace with
salaries and dividends. The highest percent of income recipients
increased their share of national income 19 percent from 1923
to 1929. According to a Brookings study, unemployment was surprisingly
high, due in part to automation on farms and in factories-up to
13 percent in 1924, 1925, and 1928. As a result, there were pockets
of progressive, socialist, and populist resistance to the reign
of business, but for the most part, workers simply ignored politics.
In all, the Age of Mellon represented a triumph of business over
labor and over politics itself.
Voter turnout dropped precipitously - from 61.8 percent in
1916 to 48.9 percent in 1924, due only in part to woman suffrage.
There was a prevailing cynicism about politics and about government.
In lectures given in l929, Felix Frankfurter reflected, "Perhaps
the dominant feeling about government today is distrust."
Americans believed that "ineptitude and inadequacy are the
chief characteristics of government." Where the electorate
was mobilized, it was at the margins over social issues. Wrote
Walter Lippmann in 1927:
There are no parties, there are no leaders, there are no issues....
The questions which really engage the emotion of the masses of
the people are of a quite different order. They manifest themselves
in the controversies over prohibition, the Ku Klux Klan, Romanism,
Fundamentalism, immigration. These, rather than the tariff, taxation,
credit and corporate control, are the issues which divide the
The elite organizations fared as poorly as labor and the left.
During the Progressive Era, they had served as respected intermediaries
between the classes, but business groups made clear from the beginning
that their services were not required. John D. Rockefeller, Jr.,
humbled by the calumny heaped upon his name after the Ludlow massacre,
established an Industrial Relations Department at the Rockefeller
Foundation, headed by former Canadian Labor Minister Mackenzie
King. But when Rockefeller urged U.S. Steel's Henry Clay Frick
and Judge Elbert Gary to consider collective bargaining or employee
representation during the 19l9 steel strike, he found them "utterly
opposed" to "representation of any kind." Herbert
Hoover was rebuked when he called a meeting with industrialists
at New York's Metropolitan Club to urge them to "establish
liaison" with Gompers and the AFL.
Elite organizations by no means disappeared, but these groups
had little effect on the policy during the Age of Mellon. The
pursuit of the national interest became reduced to the enactment
of business's American Plan. In The New Republic, Herbert Croly
lamented that "Americanism itself [has] finally [become]
popularly confused with a combination of optimism, fatalism, and
conservatism." During the 19205, the ideal of the disinterested
public servant was displaced by the image of the businessman as
savior. Croly's former colleague Walter Lippmann looked upon this
new governing class with scorn:
Our rulers today consist of random collections of successful
men and their wives.... They give orders. They have to be consulted.
They can more or less effectively speak for, and lead some part
of, the population. But none of them is seated on a certain throne,
and all of them are forever concerned as to how they may keep
from being toppled off. They do not know how they happen to be
where they are, although they often explain what are the secrets
of success. They have been educated to achieve success; few of
them have been educated to exercise power. Nor do they count with
any confidence upon retaining their power, nor in handing it on
to their sons. They live, therefore from day to day, and they
govern by ear.
America, of course, paid a large price for the unwillingness
of its leaders to see beyond their balance sheets. Mellon's economic
policies favored profits and dividends over wages and encouraged
both the industrial overcapacity and the speculative frenzy that
led up to the stock market crash of 1929. American foreign policy
during the 19205 also contributed to, or at least did little to
stem, the gathering storm in Europe.
The New Deal
The stock market crashed in October 1929. By 1932, unemployment
had climbed to 24.1 percent. There were 660,000 unemployed in
Chicago and a million in New York City. In Cleveland, 50 percent
were out of work, in Akron and Toledo 80 percent. Manufacturing
output was 54 percent of what it had been before the crash. Treasury
Secretary Andrew Mellon declared the crash a blessing. "It
will purge the rottenness out of the systems. People will work
harder, live a more moral life," the tribune of the rich
declared. But the initial victims of the purge were Mellon and
The crash and the Depression destroyed in one stroke the edifice
of wisdom and invincibility that businessmen had erected for themselves.
Wrote Gerald Johnson in 1932, "It will be many a long day
before Americans of the middle class will listen with anything
approaching the reverence they felt in 1928 whenever a magnate
of business speaks." Many Americans took a harsher view.
At Congressional hearings, Senator Burton Wheeler told Charles
Mitchell of the National City Bank "The best way to restore
confidence in the banks would be to take these crooked presidents
out of the banks and treat them the same way as w treated Al Capone
when he failed to pay his income tax."
The crash itself was the immediate result of the speculative
frenzy of the late 1920s, which took place amid a national and
world economy that was already beginning to slow. But there were
deeper factors at work that turned the crash into a full-fledged
depression. The boom of the 19205 had been based on rapid increases
in productivity that had occurred because of the replacement of
steam by electricity and the introduction of scientific management.
This created the danger of more goods being produced than workers
had the income to purchase-what John Maynard Keynes would call
a problem of effective demand. The danger was realized by the
late 19205 as a growing proportion of income went to profits rather
than to wages and to purchasing stocks and real estate rather
than consumer goods.
In this sense, the Depression gave the lie to the widespread
assumption that the success of capitalism depended on the sacrifice
and even misery of the working class. It suggested that policies
that improved workers' ability to purchase goods-and their standard
of living-could also improve the overall economy. Stuart Chase,
a journalist and not a professional economist, was a prophet of
the new order. Writing in 1932, Chase argued the Depression was
caused by a malfunction in the distribution, not the production,
of goods. The only answer to depressions, Chase maintained, was
"a dependable supply of purchasing power." Such an argument-which
would be made in more sophisticated form by Keynes and become
widely accepted by economists and business leaders-would have
been ridiculed in the Age of Mellon.
The onset of the Depression also fueled a heated rejection
of Hoover and business's rugged individualism. Historian Charles
Beard wrote in 193l, "The cold truth is that the individualist
creed of everybody for himself and the devil take the hindmost
is principally responsible for the distress in which Western civilization
finds itself." In an article in The Nation, economist Ernest
Gruening, later a senator from Alaska, reaffirmed what Croly and
Theodore Roosevelt had argued about the government and the corporation.
Gruening wrote that in order to create a "self-governing
democracy, the people will proceed from control of the political
state, and by means of it, to control also of the now uncontrollable
economic super-power, a conquest essential if we would make 'life,
liberty, and the pursuit of happiness' other than a travesty."
After he was reelected in 1936, Roosevelt made a similar argument.
"The power of a few to manage the economic life of the Nation
must be diffused among the many or be transferred to the public
and its democratically responsible government."
The rejection of business and their Republican backers registered
at the polls. In the 1930 election, Democrats picked up 49 House
seats and 8 Senate seats. In 1932, a coalition of progressive
Democrats and Republicans passed the Norris-La Guardia Act forbidding
the use of the injunction against strikes and outlawing the yellow
dog contract. That year, veterans also staged a "Bonus Army"
march in Washington, but political activism was slow to take hold,
as the Depression's initial impact was shock and despair. The
transformation of politics only began in earnest after Franklin
Roosevelt's landslide victory for the presidency in November 1932.
The 1932 elections and even more so the 1934 Congressional
elections- gave a coalition of progressive Democrats and Republicans
major influence over Congress. These legislators-Republicans like
Hiram Johnson, Robert La Follette, Jr., and George Norris, and
Democrats like Robert Wagner, Sam Rayburn, and Hugo Black-included
both the heirs to pre-World War I progressivism and a large number
of urban progressives elected from districts created by Congressional
reapportionment in 1930. These politicians became closely linked
to the growing industrial labor movement. In 1934 and 1935, a
number of populist and socialist movements also threatened to
challenge the Roosevelt administration from the left. In 1934,
Louisiana Senator Huey Long founded an organization called "Share
Our Wealth." By February 1935, Long claimed more than 27,000
clubs and a mailing list of 7.5 million. A poll by the Democratic
National Committee showed that if he ran for president on a third-party
ticket in 1936, he would win between three and four million votes.
In 1934, the labor movement, inspired by the National Recovery
Act, which called on employers to establish unions (without stipulating
whether or not they would be company unions), awoke from its decade-long
slumber. There were 1,856 strikes involving l,470,000 workers.
Strikes engulfed Toledo, Minneapolis, and San Francisco. Garment
workers, coal miners, truck drivers, and West Coast longshoremen
scored significant gains, but other workers in steel, textiles,
and rubber were defeated, partly because of the indifference of
the AFL leadership, which rejected pleas to organize on industrial
rather than craft lines.
The Depression also revived the elite networks and organizations
that had flourished in the Progressive Era but floundered in the
1920s. The Russell Sage Foundation, the American Association for
Labor Legislation, the Taylor Society, founded by industrial engineer
Frederick Taylor, and the Twentieth Century Fund, established
by Edward Filene and manufacturer Henry Dennison, encouraged social
scientists to meet with businessmen and with labor leaders to
develop programs that would arrest the Depression, partly through
improving the workers' lot. Much of the major legislation in Roosevelt's
first term-from the National Industrial Recovery Act to the Social
Security Act-came out of studies from these groups. Many of the
intellectuals who assumed key policy positions had worked closely
with these groups.
Another important elite network was organized around Harvard
Law professor Felix Frankfurter. After graduating first in his
class at Harvard Law School in 1906, Frankfurter had joined a
prestigious Wall Street law firm. Bored by corporate law, he had
gone to work under U.S. attorney Henry Stimson, even at a considerable
loss in salary. Frankfurter followed Stimson to Washington when
Taft made him Secretary of War. In Washington, he made the acquaintance
of Brandeis, who helped get him an appointment at Harvard Law
School. Like Brandeis, he was a progressive deeply interested
in the "labor question." He was close not merely to
Brandeis and Oliver Wendell Holmes, Jr., but also to Croly and
the editors of The New Republic. When he served during World War
I as chairman of the War Labor Policies Board, he became friendly
with Assistant Secretary of the Navy Franklin Roosevelt.
At Harvard, Frankfurter encouraged his students to take on
social causes and enter public service. He disdained the lawyer
as businessman, and championed the cause of public administration.
"The difficulties of our social-economic problems will not
abate with time," Frankfurter wrote just after the stock
market crash. "One may be confident that they will become
more complicated. They will make increasing demands upon training
intelligence. If government is to be equal to its responsibilities,
it must draw more and more on men of skill and wisdom for public
Once Roosevelt became president, Frankfurter operated as a
kind of personnel agent for the New Deal, acting not merely to
advance his own standing and pet causes, but also to further the
ideal of disinterestedness.
"He has a passion for good, disinterested, inconspicuous
work in government," the columnist Joseph Alsop observed.
Many of the Roosevelt administration's key bills were written
by Frankfurter's students and protégés, whom he
helped get jobs with the administration. These included Benjamin
Cohen and Thomas Corcoran, who wrote the laws creating the Securities
and Exchange Commission and regulating utility holding companies
and who became key White House advisors; James Landis, who became
SEC commissioner; State Department official Dean Acheson; White
House official James Rowe; Tennessee Valley Authority director
David Lilienthal; Labor Department counsel Charles Wyzanski; and
State Department official Herbert Feis. These men didn't necessarily
agree about every administration policy, but they shared Frankfurter's
ideal of public service and his opinion of the failure of business
rule during the I9205. One administration critic described Frankfurter's
recruits as "boys with their hair ablaze," but Frankfurter
defended them as "public servants of higher grade."
Business organizations were divided over how to respond to
the New Deal. The NAM was one of the few to maintain its old stance.
NAM president John Edgerton blamed the Depression squarely on
the workers. If workers "do not practice the habits of thrift
and conservation . . . is our economic system . . . to blame?"
he asked in I930. The NAM opposed Social Security as the "ultimate
socialistic control of life and industry." A few businessmen
like Filene and Dennison worked with the elite organizations and
with the Business Advisory Council, which the Roosevelt administration
established in June 1933 to provide advice from, but also to marshal
support among sympathetic business leaders. The council included
GE's Gerard Swope; Walter Teagle of Standard Oil; Pierre S. Du
Pont, board chairman of E. I. Du Pont de Nemours & Co.; and
Alfred P. Sloan, chairman of General Motors. It backed the administration's
early efforts, but many of the members resigned during the "second
hundred days" of 1935 to join the NAM and Du Pont's Liberty
League in unequivocal opposition.
By 1935, there was a unique political situation: business
and businessmen lacked decisive influence, even a veto, over policy;
and an assortment of labor leaders, socialists, populists (led
by Long and his movement), and progressive politicians and social
scientists (with a smattering of businessmen) were demanding dramatic
change. That was the basis for Roosevelt's climactic "second
hundred days" in 1935. Roosevelt's legislation that year
established a high-water mark of progressivism. It included the
Social Security Act, which eventually became the centerpiece of
a new welfare capitalism; the Wagner Act, which granted workers
the right to join unions without obstruction from employers; a
wealth tax that increased estate, gift, and capital gains taxes
and levied an excess profits tax; a Public Utility Holding Company
Act that ended the utility empires of the 1920s; and major new
spending programs, including the Rural Electrification Administration
and the Public Works Administration.
The New Deal initiatives furthered the integration of government
and economy that had begun during the Progressive Era. The reforms
made the government, and not merely the courts or militia, a witting
party to the relations between business and labor. The Wagner
Act was based on the central contention of the new economics:
that whatever prevented workers from improving their standard
of living contributed to the Depression itself. "The inequality
of bargaining power," the act stated, "substantially
burdens and affects the flow of commerce and tends to aggravate
recurrent business depressions." But it was also based on
an explicitly pluralist view of democracy. By making it more difficult
for employers to impede workers' organization, the Wagner Act
sought to redress the "inequality of bargaining power between
employees who do not possess full freedom of association . . .
and employers who are organized in the corporate or other forces
Jefferson and Jackson had seen government itself as a threat
to liberty and equally. Citizens could meet that threat through
their participation in politics. But the rise of corporate capitalism
had undermined the power of the individual citizen to affect history.
The ordinary worker, forced to sell his labor power to a large
company, was no match for the managers and financiers of the new
capitalism. The Wagner Act was the first piece of legislation
to acknowledge that economic and political equality depended upon
workers organizing to counter the power of the corporations and
their managers. Democracy depended on the countervailing power
of groups, without which democracy would be a sham.
But the Wagner Act did more than acknowledge the power of
groups in politics. It made government responsible for ensuring
that the power of business would be challenged, or perhaps even
matched, by that of labor. The pluralist theory of government-as
spelled out by Bentley and his disciples-was a theory of might
is right. The democratic pluralism of the New Deal was entirely
different: its premise was that a society in which the power of
business overwhelmed that of labor was wrong and that it was the
responsibility of government to counter the power of business
with that of labor-and by extension, the ordinary American.
The legislation of the second hundred days also expanded the
scope of government and the meaning of democracy. It implicated
the national government in the broader welfare of American workers.
It became responsible, along with employers, for Americans' standard
of living. In its initial form, Social Security was a carefully
wrought insurance scheme that merely transferred income from workers
to retirees, but by replacing private with government insurance,
the Roosevelt administration opened up the question of government's
greater responsibilities. Equally, the New Deal's initial relief
programs were targeted at the emergency created by the Depression,
but they, too, created a presumption that the government would
now seek to prevent large-scale unemployment. In this way, the
second hundred days didn't merely shift the balance of power between
business and labor; they also broadened the terrain on which the
two sides would contest for power, income, and benefits.
The immediate political effects of legislation were dramatic.
The Wagner Act speeded changes already taking place in the labor
movement. In November I935, John L. Lewis, the leader of the United
Mine Workers, led a walkout of the fledgling industrial unions
from the AFL, establishing the Congress of Industrial Organizations
as a rival federation. The CIO formed Labor's Non Partisan League
to mobilize union members behind Roosevelt's reelection. In spite
of almost united business opposition, Roosevelt won by another
landslide, and Democrats and progressive Republicans increased
their margins in both the Senate and the House of Representatives.
Union organizers from both the CIO and the AFL unleashed another
strike wave. From September I936 to May I937, 484,711 workers
were involved in sit-down strikes, where workers would take over
the factories. Roosevelt and Democratic governors like Michigan's
Frank Murphy refused to heed the companies' requests for troops
to reclaim their factories. In February I937, General Motors,
the biggest prize of all, fell to the United Auto Workers. At
the height of the New Deal, progressive politics and a revived
labor movement proved a match for business and set the agenda
for the elite organizations.
The legislation of the second hundred days created a long-term
constituency for Democrats, progressives, and liberals. Programs
like Social Security and rural electrification became symbols
of progressive and liberal commitment to Americans' well-being.
Even during the backlash to the New Deal in the late I9305 and
to the welfare state in the I980s, politicians who attempted to
overturn these programs risked almost certain defeat in the polls.
As a result of the New Deal, American politics shifted decisively
away from the underlying assumptions about the limits of government
that prevailed during the Age of Mellon. It would be another four
decades before these new assumptions would be effectively challenged.
of American Democracy