Gabriel Kolko's "The Triumph of Conservatism: A Reinterpretation of American History 1900–1916"

Reading Gabriel Kolko’s classic The Triumph of Conservatism: A Reinterpretation of American History 1900–1916 (1963). A far more profound book than the vast majority of scholarship on the Progressive Era.

Except in the beginning he does the typical historian thing of arguing that the triumph of conservatism “was the result not of any impersonal, mechanistic necessity but of the conscious needs and decisions of specific men and institutions.” I.e., things could have turned out differently. But the mere fact that developments were the product of men and institutions doesn’t mean there were no impersonal pressures that strongly constrained what would happen.

Anyway, “progressivism was initially a movement for the political rationalization of business and industrial concerns, a movement that operated on the assumption that the general welfare of the community could be best served by satisfying the concrete needs of business. But the regulation itself was invariably controlled by leaders of the regulated industry, and directed toward ends they deemed acceptable or desirable.” Business control over politics (and not political regulation of the economy) is “the significant phenomenon of the Progressive Era”—and, he might have said, of every other era since before the Civil War.

So big business desired federal regulation, in large part to reduce destructive competition between firms. “Ironically, 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.” Business by its own voluntary measures, such as mergers, hadn’t succeeded in rationalizing the economy. Its leaders realized that only the national government could accomplish that purpose.

Another reason for federal regulation was that, in its conservatism, it could be a “bulwark against state regulations that were either haphazard or, what is more important, far more responsible to more radical, genuinely progressive local communities. National progressivism, then, becomes the defense of business against the democratic ferment that was nascent in the states.” An ironic and original thesis, in light of the conventional wisdom that federal legislation usually has a more progressive thrust than state legislation.

Despite the merger movement between 1897 and 1901, “the first decades of the century were years of intense and growing competition.” Giant corporations often didn’t even do very well, making mediocre profits. A financial journal observed in 1900 that “the most serious problem that confronts trust combinations today is competition from independent sources… In iron and steel, in paper and in constructive processes of large magnitude the sources of production are being multiplied, with a resultant decrease in profits…” Kolko proceeds to show in a series of “case studies” (of particular industries) that competition in the early years of the new century was growing: in iron and steel, oil, automobiles, agricultural machinery, copper, meatpaking, and the telephone industry. (Also paper, textiles, glass, chemicals, insurance, etc.) The public outcry over “monopolies” wasn’t wholly without cause, but it was essentially confused.

Kolko’s discussion of meat inspection is revealing. Decades after the publication of his book, we’re still taught that Upton Sinclair’s The Jungle almost singlehandedly led to a great victory over the evil Beef Trust, when the Meat Inspection Act of 1906 was passed. It was the epitome of the Progressive struggle against big business, and a remarkable populist triumph. The reality is that the major meatpackers were the most ardent supporters of regulation, and had been agitating for better regulation for at least twenty years. “The most important catalyst in creating a demand for reform or innovation of meat inspection laws was the European export market [i.e., the business of exporting meat products to Europe] and not, as has usually been supposed, the moralistic urgings of reformers.” Throughout the 1880s the major European countries banned American meat because of diseases, and the cost to the large American packers was enormous. Finally Congress passed a major meat inspection law in 1891, which opened up the European market. But then European packers who didn’t appreciate the competition pressured their governments to impose new medical standards to keep excluding some of the meat. Another law in 1895 provided for even greater enforcement. But the government system still failed to reach smaller packers, and the big ones resented this competitive disadvantage. They wanted to deepen and extend regulation. So, in a sense, The Jungle only helped their cause. The American Meat Packers’ Association supported the bill that was eventually passed, in fact lobbied successfully to get one of the only provisions they didn’t like taken out of the original version, that the packers themselves would have to pay for the costs of inspection. Nor did the bill say anything about working conditions, which is what Sinclair had been most concerned with. So in every respect it represented a triumph for the meatpackers. (Actually, the American Meat Packers’ Association continued in later years to agitate for more regulation, but it was unsuccessful.)

It was similar with the Pure Food and Drug Act, passed the same year. Major food interests had lobbied for regulation “in order to set their own houses in order and protect themselves from more unscrupulous associates,” and they supported the bill.

As for Theodore Roosevelt, despite the myths, he wasn’t much of a reformer. He was far more conservative than even his cousin Franklin Roosevelt. Didn’t care much about the pure food and drug question, cared about regulating meatpacking largely because business supported it, cared less for the conservation of nature than for preserving it for utilitarian economic ends (at least according to Kolko), and, despite his rhetoric, didn’t even care deeply about the antitrust issue (except with regard to Standard Oil). “The antitrust activity of Roosevelt’s administration was purely minimal, and substantially less, in terms of the number of cases initiated, than under Taft or Warren G. Harding.” In addition, he had contempt for muckrakers, and was instinctively well-disposed toward nearly the whole of the business community. Kolko also gives convincing evidence that he was more anti-labor than such business groups as the National Civic Federation and the ‘House of Morgan.’

Meanwhile, during Taft’s presidency business continued to press for greater federal regulation of prices (to eliminate destructive price wars) and other matters, a stronger Interstate Commerce Commission, major banking reform, etc. The trade association movement heated up in order to facilitate price, market, and output agreements between businesses in competitive industries (agreements that were of questionable legality because of the Sherman Act, which most of the business community therefore wanted amended or repealed). Within a couple of decades the U.S. economy—like other Western economies—was riddled by many hundreds of trade associations.*

In short, what was desired was ever greater fusion of business with government, in the formally fascist fashion that was already becoming the norm across the Western world (and would eventuate in Fascism and Nazism, and more generally in numerous varieties of state capitalism).

The banking reform movement that culminated in passage of the Federal Reserve Act was, of course, organized by bankers and served their interests. As Kolko says, it “was initiated and sustained by big bankers seeking to offset, through political means, the diffusion and decentralization within banking”—the competition of innumerable state banks and smaller banks around the country, and the relative decline of New York as the center of finance. There was also growing financial instability, which culminated in the panic of 1907. The Federal Reserve System was the solution. “The trend in the national banking system until 1913 was toward a reduction in the bankers’ balances and individual deposits in New York, and in favor of the relatively more rapid growth in the Midwest and West… The Federal Reserve System, for the most part, stabilized the financial power of New York within the economy, reversing the longer term trend toward decentralization by the utilization of political means of control over the central money market.” Thus, another quintessentially “Progressive” achievement was quite conservative in its aims and consequences.

So were the Clayton Antitrust Act and the Federal Trade Commission Act, both passed in 1914. “Big business as a whole was very pleased, to put it mildly, with the new state of affairs. The provisions of the new laws attacking unfair competitors and price discrimination meant that the government would now make it possible for many trade associations to stabilize, for the first time, prices within their industries, and to make effective oligopoly a new phase of the economy. In part the new mood of confidence was a result of the President’s repeated assurances that he favored a conservative approach to business…and a realization that a Federal Trade Commission was to serve as a stabilizing factor in the economy and a protector against public attacks. The unions were no better off, despite Gompers’ effusive support of the Clayton Act, and the last stone in the foundation of a comprehensive political capitalism involving the banks, railroads, and industry had been laid.”

All the public outcry against corporations and monopolies had eventuated in laws that in their essentials were exactly what big business desired. As usual, the rich were able to channel popular unrest to their own ends, while yet declaring that the public’s aims had been realized. “In its larger outlines it was [politically oriented big businessmen] who gave progressivism its essential character. By the end of 1914 they had triumphed, and to the extent that the new laws were vague and subject to administrative definitions by boards and commissions, they were to totally dominate the extensive reign of political capitalism that had been created in the United States by 1915.”

A useful statement in the concluding chapter: “National progressivism was able to short-circuit state progressivism, to hold nascent radicalism in check by feeding the illusions of its leaders—leaders who could not tell the difference between federal regulation of business and federal regulation for business.”

Another useful statement:

Historians have continually tried to explain the seemingly sudden collapse of progressivism after the First World War, and have offered reasons that varied from moral exhaustion to the repression of nonconformity. On the whole, all explanations suffer because they really fail to examine progressivism beyond the favorable conventional interpretation. Progressive goals, on the concrete, legislative level, were articulated by various business interests. These goals were, for the most part, achieved, and no one formulated others that big business was also interested in attaining. Yet a synthesis of business and politics on the federal level was created during the war, in various administrative and emergency agencies, that continued throughout following decade. Indeed, the war period represents the triumph of business in the most emphatic manner possible. With the exception of a brief interlude in the history of the Federal Trade Commission, big business gained total support from the various regulatory agencies and the Executive. It was during the war that effective, working oligopoly and price and market agreements became operational in the dominant sectors of the American economy. The rapid diffusion of power in the economy and relatively easy entry virtually ceased. Despite the cessation of important new legislative enactments, the unity of business and the federal government continued throughout the 1920's and thereafter, using the foundations laid in the Progressive Era to stabilize and consolidate conditions within various industries. And, on the same progressive foundations and exploiting the experience with the war agencies, Herbert Hoover and Franklin Roosevelt later formulated programs for saving American capitalism. The principle of utilizing the federal government to stabilize the economy, established in the context of modem industrialism during the Progressive Era, became the basis of political capitalism in its many later ramifications.

In this sense progressivism did not die in the 1920’s, but became a part of the basic fabric of American society…

I like Thorstein Veblen’s remark that the U.S. Congress is little more than a “Soviet of Business Men’s Delegates.” Exactly!

* We see, once again, that, contrary to panegyrics penned by the public relations industry, what business really wants isn’t a “free” market but a controlled market. That can be thought of as one of the central points of Kolko’s book. The hatred of the market is so extreme that some businessmen, for instance Andrew Carnegie and Elbert H. Gary (head of U.S. Steel), have actually advocated government price-fixing!