III. Conservative Republicans and Liberal Democrats in 19th Century America

If the Federalists were the first American conservatives, the Jeffersonians were the first American liberals.²⁷³ As Ekirch observes, "Better than any other single document, the Declaration of Independence stated the liberal political philosophy on which the ideology of the Revolution was based." Thus, as author of the Declaration of Independence, Thomas Jefferson had better claim than most other leaders of the rebellion to be considered the ideal American spokesman for liberalism. Of the remaining Founding Fathers, only Thomas Paine could rival him for that position of honor. Yet, as Ekirch notes with sorrow, neither the Federalists nor the Jeffersonians "was able to preserve a consistent liberal approach" to public policy. On balance, however, he argues, "the Jeffersonian Antifederalists adhered more closely to traditional liberal tenets."²⁷⁴ Vidal dissents from this view of the situation. "In 1800," he writes, "the Hamiltonian view was rejected by the people and their new President Thomas Jefferson. Four years later, the Hamiltonian view had prevailed and was endorsed by the reelected Jefferson. 'We are all Hamiltonians now!' he might have exclaimed had he had the grace of the Thirty-Seventh President."²⁷⁵

In his first inaugural address, Vidal points out, Jefferson called for "a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuit of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government...." "In other words," Vidal says, "no taxes beyond a minimal levy in order to pay for a few judges, a postal service, small executive and legislative bodies." In other words, the policy prescription of a classical liberal.

In his second inaugural address, as Vidal tells the story, Jefferson changed his tune considerably. Now he called for federal expenditures for "rivers, canals, roads, arts, manufactures, education, and other great objects within each State." Very Hamiltonian, no? And where Hamilton had advocated creation of a U.S. "military force capable of making itself felt in world politics," the Jefferson of the second inaugural address acknowledged that "injustice, by ourselves or others, must sometimes produce war." As Vidal comments,

[t]he idea of the rich empty continent best exploited by men unbugged by a central government had now been succeeded by the notion that government ought to pitch in and help with those roads and schools, but of course that's going to take money, so taxes must be raised to pay for these good things which benefit us all equally, don't they?"²⁷⁶

The twelve years of Federalist rule—the Washington and Adams administrations—were followed by forty years of rule by Jefferson's party, the Democratic-Republicans, later the Democrats. Not a few were born, grew to maturity, and produced children of their own without ever knowing of a president or vice president who represented a different party. By the time the Democrats finally fell from power in the election of 1840, their opposition, the Federalists, had long since withered away and died.

They were replaced by the Whigs, a new conservative party that began life as a faction within the Democratic-Republicans. The Whigs were "liberals of a more conservative persuasion" with a vengeance; they favored what their most influential man on Capitol Hill, Henry Clay, called, with rare prescience, the "American system"—a package of policies that included "a national bank, protective tariff, internal improvements, and generous land policy," an updated version, according to Ekirch, of "the old Hamiltonian economic program in order to give it a greater mass appeal."²⁷⁷ The Whigs managed to win the elections of 1840 and 1848, but both presidents they elected died within their first year in office, and their terms were filled out by their lesser-known and generally undistinguished vice presidents. By 1856, the Whigs had ceased to exist, following the Federalists into oblivion.

They were replaced by the Republicans, who fielded their first candidate for the presidency in 1856 and won their first presidential election with their second candidate, Abraham Lincoln, in 1860. As the Whigs were merely the Federalists dressed up in more modern clothing, so the Republicans were merely the Whigs with an anti-slavery veneer. Meet the new opposition party, same as the old opposition party. As University of South Carolina historian Clyde Wilson puts it,

Apparently millions continue to harbor the strange delusion that the Republican party is the party of free enterprise [...]. In fact, the party is and always has been the party of state capitalism. That, along with the powers and perks it provides its leaders, is the whole reason for its creation and continued existence. By state capitalism I mean a regime of highly concentrated private ownership, subsidized and protected by government. The Republican party has never, ever opposed any government interference in the free market or any government expenditure except those that might favour labour unions or threaten Big Business.

As Wilson tells it, "[t]he very name of the Republican party is a lie. The name was chosen when the party formed in the 1850s to suggest a likeness to the Jeffersonian Republicans of earlier history. This had a very slender plausibility." The first problem was that "the Northern Republicans were totally committed to a mercantilist agenda, every plank of which Jeffersonians had defined themselves by being against. The Republicans of the 1850s exactly represented those parts of the country and those interests that had been the most rabid opponents of Jefferson and his Republicans." What the new Northern Republicans were offering was really nothing more than a repeat of "the Whig program—raising the tariff up again, re-establishing the national bank, and distributing lavishly from the treasury to companies that promised to build infrastructure." And

[a]s for the glory of emancipation that so long lent righteousness to their war, as Frederick Douglas pointed out, Lincoln's party was preeminently the party of white men. Before, during, and after the war the Republicans never did anything with a primary motive of the welfare of the black people. The black people were for use for higher purposes, for keeping down the South and keeping the Republicans in power. Most importantly, they were to stay in the South. Millions of acres of vacant western land could be given away to corporations who could provide the representatives of the people with the proper cash incentives, but there was not a patch for the freedmen.²⁷⁸

Quite aside from the Republicans' reasons for prosecuting the war and freeing the slaves, however, the fact remains that to prosecute the war at all constituted pursuit of an illiberal policy. For, as Ekirch reminds us,

any war, even one fought over some great moral principle, involves the use of methods essentially illiberal; for the very substance of liberalism—its emphasis on reason, on toleration and respect for individual and minority rights, and on progress by evolution instead of revolution—is bound to suffer in wartime. But this incompatibility of war and liberalism becomes even more true in the case of a vast internal conflict such as the American Civil War.²⁷⁹

The Civil War, Ekirch writes, "resulted in[...] widespread violation of fundamental civil liberties," for, "although neither Lincoln nor Jefferson Davis aspired to become a dictator in the twentieth-century sense of the term, before the close of their long struggle the governments of both the North and the South verged closely upon military despotisms." During the war, "[t]he Anglo-Saxon heritage, which emphasized the rule of law and held the military in strict subserviency to the civil power, was challenged by the argument that the Constitution no longer operated and that 'military necessity knows no law.'" Partisans of this latter "argument"—i.e., the Republicans of the time—authorised "arbitrary arrests" and had

persons [...] seized and confined on the suspicion of disloyalty or of sympathy with the southern cause. Thus, in the course of the Civil War, a total of thirteen thousand civilians was estimated to have been held as political prisoners, often without any sort of trial or after only cursory hearings before a military tribunal.²⁸⁰

Nor was this all. "The arbitrary arrest and imprisonment of civilians by the military and executive departments of the government," Ekirch maintains,

was the chief violation of civil liberties during the Civil War, but the rights of individuals were also invaded in other ways. In the South, the Northern Confiscation Acts resulted in the seizure of private property on the ground that it was being used to aid the cause of the Confederacy. Thus, for the first time in modern history, war was officially waged against individual citizens, an illiberal tactic destined to become a commonplace of total warfare.

Then there were the "teachers dismissed or[...] forced to resign for alleged disloyalty or because of a lack of what was deemed a proper enthusiasm for the northern cause." There was also "military conscription, put into practice on a large scale for the first time in American history during the Civil War." This disgracefully anti-liberal measure, Ekirch writes, "affected virtually every American household" and was "significant in encouraging the idea that the rights of the individual should be subordinated to the needs of the state."²⁸¹

Rothbard agrees with Clyde Wilson's contention that the GOP was never a liberal party. "The classical liberal party throughout the nineteenth century was not the Republican, but the Democratic party," he wrote in 1980, "which fought for minimal government, free trade, and no special privileges for business."²⁸² Steven R. Weisman of The New York Times sees much the same thing when he examines the historical record for the mid-19^th Century. In his 2002 book The Great Tax Wars: Lincoln to Wilson—The Fierce Battles over Money and Power That Transformed the Nation, Weisman writes that under Lincoln and the Republican party "the North's economy rested on a kind of state capitalism of trade barriers, government-sponsored railroads, coddling of trusts, suppression of labor and public investment in canals, roads and other infrastructures." It was "the Democratic Party," he points out, that rose "to define itself as the main challenger" to this perpetuation of Clay's "American system."²⁸³

The libertarian historian Thomas J. DiLorenzo, in a recent online discussion of Weisman's book, commented that Clay was "Abraham Lincoln's political idol. Lincoln devoted his entire involvement in politics prior to becoming president to pursuing this agenda first as a Whig, then as a Republican. He became the Republican Party nominee precisely because of his long record as a 'state capitalist' or mercantilist[...]."²⁸⁴ After Lincoln's assassination in 1865, the Republican party held the White House for almost the entirety of the next half century and consistently pursued its Hamiltonian, Clayesque economic policies throughout that period. Republicans were only ousted from the presidency twice between 1865 and 1913, both times—in 1884 and again in 1892—by Democrat Grover Cleveland.

It is instructive to examine those two Cleveland administrations and contrast Cleveland's policies with those of his Republican rivals. The Republican nominee in 1884 was James G. Blaine, a former newspaperman who had entered Congress during the Civil War and served as Speaker of the House during the two notoriously corrupt Grant administrations. Blaine was widely suspected of corruption himself; specifically he was suspected of pocketing substantial sums as a direct result of his highly successful efforts to secure lucrative federal land grants for various railroads. Cleveland, a former mayor of Buffalo and governor of New York, had made his reputation as an opponent of government corruption and special favors to big businesses, including tariffs. The electorate responded to his image as a man of "honesty and courage" and made him the first Democratic president since James Buchanan left the White House in 1861. Once in office, Cleveland not only worked to abolish tariffs; also, "[s]eeking to restrain governmental expansion, he vetoed over two-thirds of the bills passed by Congress, more than all his predecessors combined."²⁸⁵

In 1888, Cleveland narrowly lost his bid for re-election. As Gregory Dehler notes, "Benjamin Harrison [emerged as the] victor of the 1888 election, although he had a minority in the popular vote[...]." Determined not to have to win another election in such fashion, Harrison

worked with Republican Speaker of the House Thomas Reed of Maine to craft a new majority. Reed adopted strict rules in the House that earned him the nickname, "the czar" and gave him the power to get legislation through with lightning speed. The result was the "Billion Dollar Congress." Lacking imagination and devoid of luck, the Republican majority in 1890 simply tried to buy their way to a new majority. A surplus created by the protectionist policies they avowed had come to be viewed by the public and pundits alike as a dangerous hoarding of money in the deflationary economy. Since the Republicans did not want to lose the protective nature of their tariff, they turned to the next best way of getting rid of the money; they spent it.

Dehler presents several examples of the GOP-controlled Billion Dollar Congress's expenditures. Among them was a nearly fifty percent increase in federal spending on benefits for veterans of the Civil War. As Dehler reminds us, this was already the largest category of "social spending" by the federal government at that time. The big increase in such spending that the Billion Dollar Congress pushed through was designed

to include parents, widows, and children of veterans as eligible recipients for pensions. Next they tried to buy off the West and the Mountain states by enacting the Sherman Silver Purchase Act which required the federal government to purchase almost the entire output of the nation's silver mines. Reformers were wooed with the Sherman Anti-Trust Act designed to break up large business concentrations.²⁸⁶

But doesn't this last item in Dehler's list introduce a kind of flaw into the larger picture I've been trying to coax into emergence? Didn't I argue only a few pages ago that the Republican party has always been a consistent champion of big business? How, then, am I to account for Republican support for antitrust legislation? The New Left historian Gabriel Kolko posed this question to himself back in the 1960s and published his answer in his remarkable and influential book, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 (1963).

The Sherman Antitrust Act, Kolko points out, was "vague and subject to broad interpretation." It never even attempted "a legal definition of monopoly power," relying instead on the common law understanding of that concept, "which was as vague and multidimensional as the last lawyer's intepretation." Such a law could be used against virtually any commercial combination and would thus be most likely to affect those with the least political power. "Despite Sherman's disclaimer that the law would not be applied to trade unions or farmer organizations," Kolko writes, "many of his colleagues in the Senate predicted that 'It would be a weapon in the hands of the rich against the poor,' and they anticipated the law's subsequent use against unions."²⁸⁷

In any case, businessmen, both large and small, were far from averse to the idea of government regulation of their enterprises. As Kolko puts it, "the dominant tendency in the American economy at the beginning of this [the 20^th] century was toward growing competition." Furthermore, "contrary to the consensus of historians, it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it."²⁸⁸ As Glenn Porter notes, "although big businesses [late in the 19^th Century] were resistant to the effects of competition as it was known in earlier decades, they were not completely immune" and "if the corporate giants set prices extremely high and reaped outrageously excessive profits, there was some chance that others would be tempted to enter the industry and compete."²⁸⁹ The experience of the corporate giants in creating cartels and other voluntary cooperative systems with their competitors was that it was impossible to establish and sustain a profitable monopoly in the American economy— unless government could be induced to do it. So they thereupon set about building popular and political support for government action to create the monopolies they had sought but had been unable to achieve without the use of force.

It is worth noting that while most of the corporate giants had been unable to sustain profitability after growing to mammoth size, many smaller firms were prospering. According to Roy A. Childs, Jr., "economic forces indicated that centralization was inefficient and unstable. The push was towards decentralization, and smaller railroads often found themselves much less threatened by economic turns of events than the older, more established and larger business concerns." "Over-centralization," he notes, "inhibited[...] flexibility of action, and hence[...] ability to respond to changing market conditions." Inevitably, then, the world of business came to be sharply divided along political lines. "The larger capitalists saw regulation as being in their interest, and competition as opposed to it; with the smaller businessmen, the situation was reversed."²⁹⁰

This situation did not last long, however. What a difference twenty years could make! By the second decade of the 20^th Century, the very same small businessmen who, back in 1890, had righteously expected their Republican representatives in Congress to rein in the giant industrial combinations they believed were gobbling up the market were singing a somewhat different tune. Now, Kolko writes, "the average small businessman wished to mitigate the effects of competition by what were essentially price, market, or output agreements[...]. He was, for all practical purposes, through with laissez faire, its costs, risks, and possible gains."²⁹¹

In effect, then, Kolko's answer to the question, "Why did Republicans support legislation to regulate the big business interests they supposedly represented?" is twofold. First, at least some of those big businessmen could see ways in which vaguely worded laws might be used to their advantage. Second, small businessmen, believing their interests to be different from those of their larger competitors, supported the adoption of the Sherman Act. By the time they had changed their minds on this issue, Theodore Roosevelt was president and was happily engaged in doing the bidding of the newly united business community by plumping for modifications in the Sherman Act and creation of several new regulatory commissions and agencies to do the work previously entrusted to antitrust lawsuits.

The law should not be repealed, he declared in December, 1907, but "it should be so amended as to forbid only the kind of combination which does harm to the general public." Combinations were "reasonable or unreasonable," and the way to determine which should be allowed was to grant supervisory power to the federal government. Antitrust suits as a means of enforcing the law, Roosevelt declared, were "irksome" and prolonged affairs. Instead, the government should have the right to approve "reasonable agreements" between corporations, provided they were submitted for approval to an "appropriate" body. National incorporation of combinations, with heavy emphasis of the regular publication of key data and publicity, would allow the government to regulate the corporate structure to protect both shareholders and the public. Barring this, federal licensing for the same ends might be tried. And only the national government was capable of effective regulation of this magnitude. Regulation, not repression, was the theme. On the other hand, if there was any public figure of the day toward whom Roosevelt felt the greatest possible exasperation, that figure was "the unscrupulous businessman who did not recognize that moderate regulation could save him from a more drastic fate at the hands of the masses."²⁹²

Before Roosevelt could become president, however, his fellow Republican, William Mc Kinley, would have to serve four and a half years in the White House. And before that could happen, there would be another Democratic interlude, in which Grover Cleveland would devote himself for four more years to the task "of undoing the ill effects of the Billion Dollar Congress." Cleveland did manage to reduce the Republican tariffs, but not before they had played a part in plunging the nation into "the depression of 1893 to 1897, which sunk the Democrats."²⁹³