N.B. This is a piece I wrote in the early 1990s. I had forgotten completely about it until I came across it by accident today (Wednesday, August 22). It was my first attempt at a dissertation proposal, and I wrote it for one of my favorite graduate school professors, Dr. Russell Hanson. He probably doesn’t remember me, but I remember him as one of the best minds and kindest professors I ever encountered. Even when I (openly libertarian, Roman Catholic, and anti-Clinton) stuck out like a very sore and blistered thumb in graduate school, he always took my ideas, my research, and my writing seriously.
He’s exactly the type of person every graduate school should be blessed to know. And to his immense credit, I have absolutely no idea what his own views on politics or religion were or are. He was, simply put, a brilliant man who could observe with an astounding objectivity. If by chance you read this, Dr. Hanson, thank you.
This is a little bit of American political history that is largely forgotten. It helps, I hope, explain how the northern Democrats of the post-Civil War era forsook their classical liberalism and adopted progressivism.
If I wrote this today, I’d not be quite as enthusiastic about some their ideas, but I think the paper stands, for the most part.
In 1896 William Jennings Bryan and his western band of pseudo-populists took control of the Democratic party. The shift in ideology was far from subtle. The Democratic party transformed from being a party supporting laissez faire and individualism into one supporting regulated capitalism and special group interests. The Clevelandites—a coalition of Mugwumps, Independents, civil service reformers, German-Americans, and Liberal Republicans—found themselves politically homeless. To rectify the situation, they called upon their wealthy constituents and created the National Democratic party which lasted from 1896 to 1900. It represented the ideologically orthodox remnant of the philosophy of economic laissez-faire and minimalist government that had helped guide America from its inception through the Gilded Age.
Contrary to popular belief, these late nineteenth century classical liberals were not merely reactionaries or mouthpieces for business. They represented a legitimate alternative to the business-dominated society of the Gilded Age and a voice for good and honest government. They feared the centralization of government power in the hands of any individual, pressure group, or corporation. All private interactions and struggles, they believed, should occur in the unguided and non-coercive forum of the free market and unregulated society. They also took great pride in their heritage. They and their ancestors had been leaders fighting nineteenth century America’s illiberalities: the national bank, slavery, the political and economic subordination of women, and the mistreatment of Native Americans. During the nineteenth century they played the role of the watchman, making suggestions on how to better society.
They revered, studied, and often regurgitated the ideas of Algernon Sidney, John Locke, the French philosophes, Adam Smith, Edmund Burke, Thomas Jefferson, Richard Cobden, John Bright, Jean Baptiste Say, Frederick Bastiat, Lord Acton, William Gladstone, and Herbert Spencer. The classical liberal social critics of the time included Edward Atkinson, David B. Wells, Samuel Clemens, E. L. Godkin, and William Graham Sumner. They advocated their ideas through influential journals such as the Nation, the North American Review, and Popular Science, and through a network of political/philosophical clubs and professional organizations such as the American Free Trade League, the Massachusetts Reform Club, the Cobden Club, the Taxpayers Union, the Society for Political Education, and the Political Economy Club.
After a century of contested power, classical liberal ideals began to lose influence as the Gilded Age closed. Structural changes—economic and demographic—and the subsequent shifts in ideology helped to undermine the arguments. Between the Civil War and 1900 most facets of life in United States altered profoundly. Heavy industrialization occurred between 1878 and 1893. By 1893, America led the world in steel production, steam and electric energy usage, and railroad transportation. America’s economy, even with its downturns, expanded at an astounding rate. The agricultural sector also increased. Farms multiplied–600,000 more in the 1860s, 1.3 million more in the 1870s, 550,000 in the 1880s, and 600,000 in the 1890s. Between 1878 and 1893, the economy as a whole grew three to four percent a year.
The depression from 1893-1897, partially a result of the Sherman Silver Purchase Act of 1890 and partially a result of new international markets, proved the severest in the nation’s history to that point. It convinced many Americans that the doctrines of classical liberalism no longer served as a viable social philosophy. Academics trained in German graduate schools—the Reform Darwinists and Social Gospelers—stood ready to propose their new ideas for statist intervention. Within a few years of the depression, America officially entered the beginning of its “progressive” phase of rule by experts, regulation of businesses, and the constitutional taxation of incomes.
Walter Nugent labels the demographic and economic shifts in the Gilded Age and Progressive Era, “The Great Conjuncture.” In these historical periods, both the manufacturing and farming economic sectors grew, as did rural and urban population. As the population center of the United States moved steadily westward in the Gilded Age, the American West came into full constitutional equality in the 1890s, shifting the political power base of the nation away from the Northeast.
As the power of business and urban centers grew and the political base of the country moved steadily the West, an abstract distrust of Wall Street arose. Many Americans did not understand the economy, the monetary system, or the mechanics of banking generally. Ignorance led to reaction. In an age when Americans respected those who “produced” tangibles, 1890s westerners turned a wary and questioning eye to Wall Street. A farmer produced something, western thought ran, but a banker produced nothing—at least nothing touchable. Bankers on Wall Street, maintained popular thought, existed only as parasites manipulating and benefiting from what others produced. Many Americans considered the classical liberals slavish of Wall Street and Great Britain.
In this setting political entrepreneur William Jennings Bryan, the boy orator from the Platte of Nebraska, seized the opportunity to speak at the 1896 Democratic National convention. An expanding America, he cried in his populist and nationalist rhetoric, necessitated an inflationary currency—free silver—as a money for the people, and a money safe from the greed of Wall Street. Two-thirds of the convention supported him—a virtual unknown—as their presidential nominee.
The remaining one-third—all Cleveland Democrats—bolted the new Democratic party and formed a third party in Indianapolis on September 2. The new party acquired many names: the Honest Money Democracy, the Sound Money Democracy, the National Democracy, and, in the popular press, the Gold Democrats. Their enemies called them Yellow Bellies, money changers, Hannarchists (after Mark Hanna, head of the Republican campaign), the McKinley Aid Society.
The bolters had several motives for their new party. First, they hoped to throw the election to McKinley in states which might otherwise go to Bryan; they even received financial aid from the Republican National Committee. Second, if they accomplished the first goal to an ample degree they would destroy the influence of Bryan and the populists and retake control of the regular Democratic party. “Our Democracy was not breathed first across the plains of Nebraska” [home of Bryan], one National Democrat noted. “It speaks tonight from the tomb at Monticello, and the grave at the Hermitage.” The National Democrats believed they represented the true Democratic party. Third, they hoped to educate the electorate on the virtues of their liberalism. Fourth, they wanted to get at least one congressman elected to the House; they needed a voice in Washington. Lastly, they hoped to pressure McKinley into backing away from international bimetallism and adopting the gold standard as an absolute.
The National Democrats chose Senator John Palmer of Illinois, a former union general, as their presidential candidate, and Simon Buckner of Kentucky, a former confederate general, as their vice presidential candidate. The two had fought each other in the bloody Battle of Chickamauga. Congressman William D. Bynum of Indiana ran the party organization. In addition to the money the National Democrats received from Hanna, several Wall Street banks and corporations donated generous financial assistance. The National Democrats launched a nation-wide campaign, distributing literature and lecturing from coast to coast. Their audiences usually regarded them as traitors and showered the candidates with rotten eggs and vegetables, bricks, and cigar butts. Palmer and Buckner, regarded as two of the best orators of their day, would simply smile until the crowd’s anger subsided. The candidates would then orate to the best of their abilities. They concentrated their efforts in the states which traditionally supported classical liberal ideals and politics—the Old Northwestern states, Iowa, and Kentucky.
The National Democrats campaigned on a platform advocating strict adherence to classical liberalism. In an opening statement at the Indianapolis convention, they stated: “The Democratic party, during its whole history, has been pledged to promote the liberty of the individual, the security of private rights and property and the supremacy of the law.” Many of the more intellectually oriented classical liberals extended these beliefs to non-Caucasians. In 1900, E. L. Godkin, editor of the Nation and an adamant National Democrat, chastised the Republicans: “The great party which boasted that it had secured for the negro [sic] the rights of humanity and of citizenship, now listens in silence to the proclamation of white supremacy and makes no protest against the nullification of the Fifteenth Amendment. . . . We hear no more of natural rights, but of inferior races.”
The desire for free trade and the maintenance of a rigid gold standard remained the foremost passions of the classical liberals throughout the Gilded Age. When the Republican party gained a firm control of the federal government during the Civil War, it had passed several statist acts. Most heinous to the classical liberals, the Republicans passed the Morrill Tariff Act in 1862, implementing very high tariffs which stood in place until the Taft Administration. The classical liberals spent much of their time fighting a losing battle against protection. Grover Cleveland even devoted the entirety of his 1887 State of the Union address to it. Much to the expectation and frustration of the classical liberals, an alliance of Republicans, labor, and big business successfully blocked their free trade efforts.
The classical liberals, harkening back to Adam Smith’s famous attack on mercantilism, opposed the tariff for several reasons. First, they contended, protection distorted the natural functions of the market, which took American society away from its “proper” direction. It protected, centralized, and bureaucratized big business, which improperly and immorally entrenched businesses’ profit making capability. Once implemented, tariffs turned into a never-ending protection racket for corporations, inevitably leading to plutocracy. The state also gained in this “unholy alliance” by the increased revenues to feed itself.
Second, the classical liberals argued that tariffs served as the source for the monopolies which developed in the late nineteenth-century. The President of the American Sugar Refinery Company confirmed their argument when he stated, “The mother of all trusts is the customs tariff bill.” Reflecting that language, T. W. McCritcheon of Minnesota, stated in a speech on the tariff: “We believe that the Republicans stand as the mother of trusts and monopolies; that the Republican party is the foster parent of paternalism, that it is the embodiment of extravagance and of political power for private advantage. The solution to lessening the effective power of trusts, therefore, was not increased regulation or more stringent anti-trust legislation but the abolition of the tariff.
Third, tariffs financially harmed and politically disillusioned both the average consumer and the poor. By protecting one group in society over another, it prompted the non-protected groups to demand special interests. Intervention would never cease until the multitude of groups forming the nation tore the nation apart demanding special favors. William Graham Sumner wrote pointedly, “In the history of the United States the conflict between democracy and plutocracy began when the protective system was adopted, and the protective system has been the origin of all the ramifications of the special abuses of legislation which have come in since. . .” This destroyed the Constitution’s goal of “equality under the law.” Once the government helped a group, Sumner argued, instead of treating all individuals equally, it ceased to exist as a legitimate governor.
Lastly, free trade served as the ideal foreign policy. While benefiting the American supplier, free trade spread “civilization” to all parts of the world. As an added advantage, it reduced the chances of war between nations since those countries trading depended upon one another for economic survival
The gold standard served as an issue of equal importance for the classical liberal Democrats, especially toward the end of the century. The classical liberals considered the gold standard, like free trade, both an economic and a moral issue. They viewed the western demand for the free coinage of silver and inflationary money as a threat to the nation’s integrity. The National Democrats blamed—not without justification—the intermittent recessions and depressions of the Gilded Age on the agitation for silver subsidies and cheapened money. The silverites had gained subsidization in 1878 and 1890, and Grover Cleveland spent much of his second term political strength on repealing those laws. Even after the passage of the Gold Standard Act in the summer of 1900 (in effect lasting until 1933), the Democratic party fought over a gold and silver plank in their 1900 and 1904 platforms, again dividing the party.
To the classical liberals, a challenge to gold equaled a challenge to society—as ordained by God—itself. The National Democrats branded the Bryanites “anarchists” and “socialists.” The silverites ideology went beyond the acceptable. “The platform has been announced and there was nothing more to be done—no respectable man could afford to remain, wrote Charles S. Hamlin, Cleveland’s Assistant Secretary of Treasury, at the Chicago convention. One Clevelandite, making reference to a murderer at the time of the French Revolution, even screamed “Marat” at Bryan. Another called the silverites “Jacobeans.” The National Democrats called the silver argument “heresy.” “[I]f the time comes when [the Bryanites] repent, and God forgives them for their transgression,” Palmer shouted at the 1896 convention, the “transgressors” could return to the true Democracy. They did not intend this as merely rhetoric. The Bryanites call for inflation shocked the sensibilities of the third party. Not only would inflation be destabilizing, it would also be dishonest. In Aristotelian logic, “a is a,” and a gold dollar was a gold dollar. Finally, private business and the supply of gold would best determine the needed volume of money in the economy, the National Democrats argued.
The National Democrats failed to elect any candidate for a national office in 1896, but created a permanent office in Indianapolis with Bynum as the head. They wanted to maintain the semblance and machinery of a national party—ready to take over the main Democratic party when necessary—and to continue to educate the public on classical liberalism. Economist Edward Atkinson believed it would develop into a centrist party, balancing the power between the business-dominated Republicans and the populist-dominated Democrats.
Two events killed the prospects of a permanent party. First, the economy recovered after in 1897, and the Republicans passed a Gold Standard bill in 1900. Second, and more important in the short run, McKinley took the United States to war against Spain in 1898. Political debate shifted from domestic to international affairs. The National Democrats abandoned their party to fight what they considered an even greater evil and threat to the ideals of the Republic than Bryan—imperialism. Bynum wrote to a supporter: “From all the information I am able to gather, I am fully convinced that it is useless to attempt to longer maintain our organization. The radical change in conditions and the prospects of new issues [imperialism] have imbued the majority of our adherents with the belief that new alignments are likely soon to be made. . . .” The member attendance list of the Anti-Imperialist League reads similar to the National Democrat supporter list.
Imperialism would lead to heavy taxation and a huge military machine dominated by large corporations, they argued. It would also lead to nationalism, E. L. Godkin lamented: “Nationalism in the sense of national greed has supplanted Liberalism. . . . By making aggrandizement of a particular nation a higher end than the welfare of mankind, it has sophisticated the moral sense of Christendom.” In equal dismay William Graham Sumner wrote his famous essay, “The Conquest of the United States by Spain,” in which he argued that militarism would destroy the values of America and its “art and industry.”
Several factors completed the demise of the classical liberals. Important for the background of the political alliances were the shifts in economics and demographics changing power from East to West and rural to urban. Neither the new business nor the laboring classes appreciated the dogmatic and anti-patronage standards of the classical liberals. The issues of the tariff split the Democrats from business and labor while their advocacy of the gold standard alienated their western and rural constituents. Lastly, the issue of imperialism turned many classical liberals to fight what they perceived as a grave threat to the American Republic. Simultaneously, the most ardent defenders of classical liberalism, having fought for their political philosophy since the Civil War, died between 1890 and 1910. A newer, more progressive generation took their place. Godkin, presumably understanding that his generation had passed, wrote in 1900, a year before his death: “Only a remnant, old men for the most part, still uphold the Liberal doctrine, and when they are gone, it will have no champions.”
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