Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890-1913 by James Livingston
PART I
The Decline of CompetitiveEntrepreneurial Capitalism, 188g-1gos
From 1868 until 18g8 there were these constant frights and uncertain-
ties, which gave gamblers a great chance if they could guess right, and
which kept decent men in doubt and often in agony. They could not do
business in a proper way, and I look back on all those years with horror.
-Henry Lee Higginson, 1915
CHAPTER l
The Great Stalemate: The Sources and
Character of Late-Nineteenth-Century Crisis
The late nineteenth century has typically been defined as a golden
age for American business, particularly "big business." Matthew
Josephson's rendering of the Robber Barons has, of course, been
disputed if not wholly discredited; but most historians have assumed,
as Josephson did, that the "people" inevitably and invariably lost
their battles against "big businessmen." This assumption has tended
to obscure the fact that most capitalists of the late nineteenth century
did not see their eventual triumph as inevitable. Until the last few
years of the century, indeed, they felt almost powerless to create a
future in which their services and function would be recognized as
legitimate. From their standpoint in the late 18oos, "ruinous compe-
tition," overproduction, and price deflation had created a secular
trend toward a stationary state, in which profit incentives and their
civilizing corollaries would disappear. The social, political, and cul-
tural trends of the time were no less frightening because they
seemed to sanction the power and ideals of the 'jackleg" farmers
and organized workers who defined capitalists as alien growths on
the body politic.
If we take them at their word, in short, capitalists of the late
nineteenth century could neither claim a reasonable share of nation-
al income nor shape public discourse in accordance with the require-
ments of large-scale business enterprise. The obvious question is,
should we take them at their word? Can the order of ideas and the
order of events in the late nineteenth century be reconciled? Or
must we dismiss the complaints and fears of capitalists as symptoms
of paranoia--or worse? The argument of Part I is that their com-
plaints and fears were a reasonably accurate appraisal of their
situation.
The evidence available then and now suggests, for example, that a