History of American Business: A Baruch College Blog

Blog Post #4

Prompt: What was a historical figure, event, or detail that particularly stuck out to you or interested you? How did the author use this figure, event, or detail to support his/her overall argument or interpretation?

Source: Judith Stein, Pivotal Decades, Chapter 11 “Age of Inequality,” Sections “Right Turn” and “What Reagan Wrought: Consumption, High Dollar, and Trade Deficits.” 

Preface: Having covered FDR and the New Deal in my previous post, I will now cover what I see as being in many ways the undoing of the New Deal by Ronald Reagan. Reason I have this view is due to the evident manipulation of currency and consumer spending, as well as the governmental spending and the subsequent debt that ensued, which Stein describes through the first sections of the chapter. I will focus especially on Ronald Reagan in this blog post as I am learning about his administration’s economic policies and practices in depth for the first time, previously having very limited knowledge on the time period. I find the comparison between FDR and Reagan to be especially interesting due to only a few decades separating the two, yet their policies were polar opposites. 

Answer: Beginning the chapter, Stein summarizes the following about Ronald Reagan and his approach to the economy, “A new recipe for economic growth prescribed freeing capital from taxes and unions and liberating markets from government rules.” (Stein, p.262) This is a polar opposite approach to both the FDR agenda and the previous presidential administration of the Democrat Jimmy Carter. For many, the Reagan years are characterized by strong sentiments of conservatism, yet not protectionism. Going over the general characteristics of the Reagan terms, Stein also adds the following, “Reagan reduced taxes on capital, dismantled business regulations, privileged the fight against inflation, tolerated high unemployment, fought unions, promoted an expensive dollar, and championed free trade.” (Stein, p.262) Again, a clear opposite approach to that of the New Deal. To start off, the core purpose of the New Deal was to eliminate unemployment and to promote unions, the government essentially established unions with programs such as the National Recovery Act, and the Tennessee Valley Authority Act. The New Deal also promoted an expensive dollar, but only after inflation proved to be an issue as government spending coupled with the removal of the gold standard devalued the fiat currency. 

Continuing on with the theme of dismantling New Deal ideals, Reagan also held as a core principle that the government has become too large, being in turn burdened unnecessarily, thinking that “The nation’s ills were rooted in a bloated federal government that overtaxed and overregulated and generated inflation by spending too much and printing too much money, which discouraged work, risk- taking, saving, and investment.” (Stein, p.263) Staying true to the modern interpretation of American Republican ideals, Reagan was not for a massive government that was involved in all facets of the economy. Understandably so, if the government imposes itself and its authority and begins to regulate sectors and industries, it also assumes responsibility for the shortcomings of their decisions. One thing to note is that this is also the opposite thinking to Roosevelt, who pushed for widespread taxation which in turn would pay for an individual’s savings and retirement. Here, however, we see a rejection of taxation on the grounds that it hinders saving and investment, simply a different economic philosophy. The return to a more hands-off way of governance was rationalized as “U.S. society was too complex to be managed and markets were so rational that they anticipated and thus annulled government interventions.” (Stein, p.264) This is a fairly logical stance, as free market capitalism prides itself on its ability to adapt to any sort of intervention. What does indeed confuse me, is that although this was the mentality of the Republicans at the time, they nonetheless tried to manage the market not directly, but through influencing taxation and the citizens themselves, which influenced the markets in turn. Backwards in a way. What this then resulted in was the strengthening of the dollar and the eventual outsourcing of manufacturing as the companies did not want to pay wages in the highly prized dollar which gained value in part due to renewed foreign investments. 

Unions were dealt a massive blow, definitely undoing the great push towards workers rights which was seen during the New Deal. In 1981, over “…thirteen thousand members of the Professional Air Traffic Controllers Organization (PATCO) walked off their jobs. Reagan then fired them, and they were replaced by managers and air controllers from the military.” (Stein, p.267) This may seem as a no-nonsense answer to a complex issue, which it was, airports and in turn the nation could not function without such a large portion of airport staff having walked out. The greater effect of Reagan stepping in and firing all those employees, is that “Political morality had changed, and private sector unionization plummeted from 20 percent in 1980 to 12.1 percent in 1990. No longer were consensual agreements between workers and employers necessary.” (Stein, p.267) This was a huge blow for workers rights, a consequence that is unfathomable to have occurred during Roosevelt’s terms. The political morality that Stein describes, is an interesting choice of diction, as in just a few decades the advancements towards workers rights have seemingly been set back with one simple act. Corporations and large institutions who were in the essential public sector, could simply hire replacement workers, regardless of previously made non-contractual union agreements. 

Having covered the economic policies, what were the outcomes? Well, Stein presents the following data, that “Every form of saving—personal, business, and public— fell during the 1980s. Investment did not rise. During the 1970s investment was 18.6 percent of GDP; in the 1980s it was 17.4 percent.” (Stein, p.268) Investment is crucial, it signifies the public’s trust in the economic future of the nation, for it to be so low after the relatively turbulent 1970s shows that a rebound was not widely believed to be coming in the future decade. What is more striking however, is that savings in general fell throughout the 1980s. This can be attributed to consumerism, as well as the ever changing taxation policies of the Reagan terms. Generally speaking, it is worrying for the savings of the population to fall, during Roosevelt’s terms we saw the opposite, a rise in savings as well as overall national economic investment. Another outcome of Reagan’s economic policies was the previously mentioned “high” dollar, whose “…overall value rose 63 percent from 1980 to March 1985—the equivalent of taxing U.S. exports by 63 percent and providing U.S. imports with an equivalent subsidy.” (Stein, p.269) Both of these analogies offered by Stein show that the expensive dollar was not capitalized on as much as it should have been by the government. A very strong currency allows a nation to be comfortable with its relationship between imports and exports, yet the opposite was seen, “Non- oil imports rose from 5.9 percent of GDP in 1979 to 7.5 percent in 1986. On the other hand, exports fell from 9 percent of GDP in 1979 to 7.2 percent in 1986.” (Stein, p.269) The strong dollar also planted the seeds of outsourcing, as the strong value of each dollar having to be paid to workers was also a great value of each dollar that could be saved if the production of a company or industry were to be moved abroad. To go back to the New Deal, Roosevelt in a way had the opposite problem, that after taking the dollar off the gold standard he had to build up its value simultaneously with a seemingly infinite barrage of government spending. 

Overall, Stein brings up many specific statistics to demonstrate her argument in this chapter, that the economic policies during Reagan’s two terms were experimental with massive future implications, similar to those of Roosevelt. I think Stein’s interpretation of this short period of American economic history is quite accurate, especially her numerous comparisons to the post Great Depression and WWII America. My key takeaway is that it is fair to say that Reagan’s economic policies were polar opposite to Roosevelts. Furthermore, I believe that it is Reagan’s two terms which drove the Republican-Democrat divide on the matter of economic policies further than ever before, to this day even.

Blog Post #3

Prompt: How does this reading add to your knowledge of the subject, or challenge or contradict what you previously thought about this aspect of American or global history?

Source: Eric Rauchway, The Great Depression and the New Deal: A Very Short Introduction, Chapter 4, “Reflation and Relief.” 

Preface: Going into this text and keeping the blog post in mind, I wanted to focus on the question of the gold standard and to be critical of it. The question of the gold standard is especially relevant to us all today as we see our federal government in the last few years print more dollars than there have ever been before, devaluing them, no matter what the economists say. Having said that, I will only focus on the question of the gold standard and how Franklin Delano Roosevelt rationalized getting rid of it in 1933. 

Answer: Eric Rauchways chapter “Reflation and Relief,” offered a lot of information on the New Deal, as well as the matter of artificially inflating the currency, which I was especially interested in. The chapter title itself is indicative of the unusual economic approaches taken by Franklin Delano Roosevelt and his New Deal program, to inflate a currency on purpose seems bizarre at a first glance. There is also the second keyword of the title, that of relief. Undoubtedly, Americans saw a great deal of relief during FDRs years in office, all 12 of them, as Roosevelt was elected to a record 4 terms in office, a feat never to be repeated again as afterwards Congress imposed term limits. Although effective, the New Deal was experimental in nature, “The Roosevelt agenda grew by experiment: the parts that worked, stuck, no matter their origin.” (Rauchway, p.1) For the agenda of one of the largest and most powerful nations in the world to be “experimental,” is worrisome, yet such a simple approach was successful and showed itself bets through economic growth; “From the time of their initial implementation in 1933 to the mobilization for war production in 1940, with the sole exception of the recession of 1937–38, the American economy grew at averaged rates of around 8 to 10 percent a year.” (Rauchway, p.1) For the economy of any nation to grow at such rates for multiple years is massive, however much of this growth was brought about by governmental spending and currency manipulation, as well as an unprecedented agreement between the president and the Congress on economic issues. 

Rauchway highlights such a compliance by stating the following about Roosevelt’s control over the banks, 

“Congress would quickly comply, often adding to the bill measures that went further even than Roosevelt originally anticipated—in this case, not only did Congress amend the Trading with the Enemy Act to include peacetime emergencies, it added banking law that drew on preceding state action and on measures legislators had contemplated during the Hoover administration.” (Rauchway, p.2) 

Here, I am more focused on the principle rather than the matter itself. In retrospect, it seems quite worrisome to me that Congress would comply so swiftly, seemingly without any resistance given the way Rauchway puts it. For the president to have the ability to control banks and their operational procedures, to me, is an overstepping of his powers. It is also indicative of the immense power and support that Roosevelt had within the government. Despite being elected four times, it would seem as if the only times of weakness for Roosevelt were leading up to the elections, as the government managed to pass a variety of massive and divisive legislation under him. Legislation of the Social Security Act, the National Industrial Recovery Act, and the Work Progress Administration were all funded by a seemingly infinite supply of federal government dollars. A seemingly infinite supply that was in part achieved by the temporary ending of the gold standard. 

Roosevelt focused on the banks in order to lift the nation out of a depression right away, “Two days after taking office, he declared the nation’s banks must stop transactions in gold, thus shutting them down, and he asked Congress to ratify his action.” (Rauchway, p.1) Continuing with my theme of Roosevelt exhibiting too much power, such an action outside of a state of emergency is unfathomable. Not only is it a case of overstepping of executive power, it may also be viewed as unconstitutional, as you have a federal government directly controlling the actions of the most crucial industry of the nation. Roosevelt also foresaw the effects of uncontrolled and unprecedented spending that his administration and legislation demanded, “The president worried that the government would one day find itself forced to pay out too large a sum for failed banks…” (Rauchway, p.3) I immediately thought of the Global Financial Crisis of 2008, where we all saw the federal government take on the debts of massive banks and financial conglomerates in order to keep the entire economy from collapsing. Such a scenario is bound to repeat itself, as there are banking institutions in this nation that are “too big to fail,” meaning they can do as they please given that their failure would have major implications for the overall wellbeing of the society. Why is this relevant? Well the New Deal, as I see it, is the beginning of this very paternal government from an economic point of view, where the federal government took on more financial responsibility and burdens than it really needed to, resulting in a state that is economically dependent on the wellbeing of individual companies and banks, as they have become too massive and important to go under. 

Taking America off the gold standard in 1933 with Executive Order 6102, Roosevelt in a swift action turned the currency from being backed by gold to being a fiat currency, meaning that it was backed by the common belief in its value, ironically declaring “This currency is not fiat currency…” (Rauchway, p.3) This issue is especially relevant to today, where the dollar is a fiat currency, hence an infinite amount of it can be printed as it is not tied to any sort of tangible object. Rauchway explains the reasoning behind the standard, “Under the gold standard, countries, in theory, agreed to keep their currencies convertible to gold by maintaining only so much money in circulation as their gold reserves warranted.” (Rauchway, p.3) Roosevelt had to get rid of the standard, as it would have been impossible to finance even a fraction of the New Deal otherwise, for better or worse, the governmental spending and in turn debt skyrocketed during Roosevelt’s terms. What I see as a further abuse of executive power can also be seen with the following, 

“The 1933 Emergency Banking Act only temporarily cut the dollar’s tether to gold. But in April, Roosevelt issued an executive order preventing Americans from holding gold, except in small amounts, and required them to turn their gold in to Federal Reserve Banks in return for other currency.” (Rauchway, p.4)

It is quite bizarre to read that an American government was able to do something so controlling and seemingly anti-American, as it goes against the foundational principles of self enterprise and liberty that this nation holds so dear. To make things worse, this limiting of purchase and sale of gold also went on to become a kind of price manipulation, as “Congress allowed the president to fix the price of the dollar in gold. The dollar price of gold rose from its previous rate of $20.67 per ounce to $30 per ounce.” (Rauchway, p.4) This is the exact beginning of America becoming the unofficial home to the world’s gold reserves, as foreign nations, especially the war torn Europeans began to buy gold with dollars and hence helping the American economy on two fronts. However, the shady manipulation of legislature and prices to the detriment of the American citizen should not be forgotten easily, as was beyond un-American in nature. 

Given my pessimistic and critical analysis of Roosevelt’s economic practices relating to the gold standard during the New Deal, a question is then raised, why was the president able to go through with all this legislation? For Rauchway, the answer is simple, “The New Deal Congresses reacted to the widespread belief that the bankers and brokers had caused the crash by giving Roosevelt and his appointees extraordinary discretion to manipulate money and banking…” (Rauchway, p.4) This rationale makes sense to me, however, I see it as a simple changing of hands from the private financial institutions to the federal government, in accordance to who would do as they pleased with the financial sector and in turn the overall economy. From a rational perspective this does make sense, allowing a government to run the economy with a much more hands-on approach than ever before is in theory a great thing, yet as history shows, the worst decisions for humanity and nation are always made by the government. America went through depressions before 1929, and came out stronger than before without the need for the government to do everything in its power to save the economy, including taking on so much debt that the idea of national debt itself has become meaningless for Americans. Overall, I am not pleased or ecstatic about Roosevelt’s handling of the New Deal and the consequences of 1929, Rauchways reading offered me a fair and balanced summary of this period from which I drew my interpretations and thoughts. Perhaps my lack of agreement stems from a seemingly repeating set of events at the moment which can also be likened to being the effects of a depression, that I see the devaluation of the dollar and long for a gold standard which in turn would bring about some sort of security in both the finances and the future of all Americans. 

Wealth and Power in the Early Republic by Mandell discusses the tumultuous timeline of America’s socioeconomic and political development. The timeline begins from 1783, America’s Independence from Great Britain, discussing essentially from scratch, with blueprints from Great Britain, Jubilee, and Agrarian laws, the prospect and direction the country is to take. Philosophical arguments among intellectuals are rampant, disseminated through pamphlets and newspapers, on America’s future regarding property, education, wealth, government, and thus reins of power.

Mandell expounds on the building axioms of America beginning with aristocracy and nobility inheritance. To curtail the hoarding and perpetual control of wealth and power through noble bloodlines, a “natural aristocracy” is proposed to distribute wealth and power to individuals with talent rather than inheritance. This postulate, at the time America was scraping together the frameworks of civilization, was much too idealistic. Though the wealth and power did go to individuals with talent and higher education: merchants, lawyers, and financial speculators, the same outcome was fated as that of the old world. A concentration of wealth and power to a select few, perpetuated by legal cunnings, however, did not at all result in the acquiescence of the people. It provoked wide criticisms and debates, though seldom amounting to anything, became the slow and arduous process of building a democratic republic.

In conclusion, the nascent nation of the New World, America, lacked a conducive dilution necessary for hasty development. Resources, population, institutions, and settlements were few, and so, it was noticeable to its citizens from even a cursory survey of the undertakings of the elite class. Communities were still small and intertwined, making the affluent elite stand out and be on grounds for much scrutiny, speculation, and thus censure. Diffusion of information needed spread only so far, and the elites would use rudimentary forms of propaganda and barriers of entry to remain in a position of power. Compared to today, where it is much too sophisticated and established for proper scrutiny, has set a course for the tremendous growth we see in contemporary America. Of course, the difference in scale is tremendous and so are the repercussions. This lack of hastiness allowed somewhat for an ideal environment for the deliberations regarding the building and forming of a nation.

 

White explores the multi-faceted ways in which railroads in 19th century North America had an impact on expansion, society, economics and politics. Railroads were able to effectively integrate the western part of the continent by creating meaningful networks of transportation capable of mass transit and resettlement of these areas. Being able to interconnect a continent in such a way was a never seen before major advancement for the time and served as economic stimulus in the post-civil war period. White acknowledges the importance and success of the railroads, but he critiques its flaws and inefficiencies. 

What is particularly interesting is his critique of the collusion between these railroad companies and the government as well as the financiers who were at the very top of these hierarchies and who through mechanisms of greed, corruption and technicalities made money off these companies and eventually led them to fail. 

The collusion and interdependence between the railroads and the government is undeniable. The government incentivized the building of railroads through subsidies and the allocation of land to these companies. The collusion between big business and government created a culture in which interdependent influence peddling began to arise as a phenomenon in North American society, particularly in America. What is now called lobbying and an unfortunate fundamental part of American politics has significant roots from the railroads and business culture from the time, according to White. “Having helped both to corrupt and to transform the political system by creating the modern corporate lobby” (xxiv). 

What is also interesting is his scrutiny of the mismanagement at the very highest levels of the corporations. As with the influence peddling spoken of in the previous paragraph, a culture of accumulating wealth through corruption and speculation and even manipulation of markets began to form during this time. White says, “they employed rational managers” but that “financiers made money through subsidies, the sale of securities, insider companies…land speculation…” (xxviii). Wealth created through these means, according to him, began to have a significant presence during this time. Conducting business by not actually creating a good or providing a service is very much present in contemporary society, especially in the west, so it is interesting to read about his take on it. 

In essence, what is of particular interest to me in White’s readings are his descriptions of the beginnings of an American culture in which big business and government collude in what most believe to be unethical practices, especially lobbying, but that is to this day part of orthodoxy in American business and government. Furthermore, what is also present in contemporary America is the widespread wealth accumulation through means of market manipulation, speculation and other various technical methods. The massive amount of wealth that can be gained from not actually creating a product or offering a service is interesting, to say the least, when considering traditional economics and the way in which wealth is most often created. White’s readings are an interesting examination into its historical roots. 

In White’s reading, the author emphasizes the question, why were many railroads built at a time where there was no demand for them or little to no need for them? At a time where the nation was just starting to function without the control of Europe and the constitution was just starting to take action, innovators like Rockefeller and Carnegie took over railroads and steel. Since the Louisiana purchase, Americans have been trying to expand west. Before railroads, Americans’ form of transportation was by walking or by horse which took days and even weeks to cross. With the arrival of railroads the author describes it as the “Epitome of Modernity”, which defined the age even if it had some failures. White explains that although Railroads with Mexico and Canada became a source of national pride and national discontent which was important since they formed an international network that lined three countries it also received criticism since they were very expensive and the demand for it was not strong yet. Since railroads were originally a public/Private enterprise and then became a private corporation, Financing meant that they had to reach the government with heavy loans. This led to the government to attack while also protecting their workers in the name of the public good. Railroad also failed in the political system and image. Politicians used railroads in order to gain popularity in campaigns without realizing how expensive and counterproductive it can be. Many started to notice that railroads became corrupt and this influence was the start of the modern corporate lobby. Railroads also had social failures such as the production of an abundance of crops, cattle and natural resources beyond what the market can absorb. Production yielded great environmental and social harm and the nation was not prepared to handle it. White stated reasons as to why railroads were too ahead of their time but he also understood the great influence it will have on the United States and on the world.

Entrepreneur and Wage Earner

This chapter looked at two facets of the American economy in the 1860s. One part was manufacturing, and the other was labor.

In the 1860s, the country was changing with the building of railroads, telegraphs, and ocean-going steamships. It opened the way to manufacturing and mass production. In the 1860s, there were four major economic components: mining, agriculture, construction, and manufacturing. Mining was the most stable of the four components. Although mining was more reliable than manufacturing, manufacturing was dominated by the wealthy elite, leaving little room for the struggling entrepreneur.

“Furthermore, the entrepreneur’s market of the sixties was seldom local, but regional or national. They have even given adequate demand for his wares. The entrepreneur could not reach potential customers. He needed the intervention of transportation companies and jobbers who bought and moved wholesale lots of goods”. The up-and-coming entrepreneur did not stand a chance against the new manufacturing elite, their capital. “Their customer base was the established “old elite”  businessmen. They primarily engaged in commerce, shipping, finance, and real estate.”

This passage indicates that the rich are only getting richer. Most manufacturers were from old money—this old money financed many of the factories and manufacturing in cities like Chicago and Cleveland. The new elite wanted to be called capitalists, and they had labor disputes with whom they considered labor conflicts.

Wage Earner

The 1860s was a difficult time for labor relations and manufacturing. New York Times felt the need to investigate and survey why trade unions and strikes grew. So these labor conflicts were severe to the wage earners. This was the case of the big fish eating the smaller ones. The more prominent manufacturers took over the smaller companies. The relationship between business and labor was so low that it compared itself to slavery. “The only difference is that there is agriculture  in the field, landed proprietors were the masters and negroes were the slaves; while in the North manufacturers in the field, manufacturing capitalist threatens to become the masters and the white laborers who are to be the slaves.”

The 1860s was a time of flux. The country was changing from an agricultural economy to manufacturing. The gap was slowly closing. It was estimated that 3.7 Americans were agricultural wage earners located chiefly in the South. Industrial manual workers numbered just over 3.5 million employees.

Slavery was known as the free labor system, a polite way to say exploited.  This free labor system was no threat to paid labor in the North.   There was an idea that non-property owners were defined as waged slavery. This idea gained a symbol of widespread respect because it was believed that all wage earners should seek freedom. However, the manufacturers did not treat the workers with dignity, and low wage poor working conditions caused workers to strike.

Conclusion

The chapter entitled “Entrepreneur and Wage Earner ” describes America in 1860 by contrasting manufacturing development and the worker’s plight.  Manufacturing during this time was predominantly in Northern cities. Southern states remained agricultural-based. The South had the advantage of free labor. In the north, manufacturers treated their workers like slaves.  In conclusion, the wealthy received benefits that ordinary people could not get the tax breaks or funding to start companies.  These advantages were unfair and led to resentment by the commoner.

The introduction and expansion of the railroad was described as extremely rapid. This change not only occurred in America but Mexico and Canada as well. It was a massive modernization to connect America as travel which was conventional was extremely slow. The Author’s main arguments was that the development of the Railroad was extremely important to America but there was massive corruption and misuse of subsidies that ended with bankrupt corporations. While the railroad made travel faster there were massive financial errors that occurred which are not commonly brought to light. The reading added to my knowledge as the Railroads also came at the cost of the Indian people and gave rise to the modern corporate lobby which companies used to compete with one another. Who were the major players that benefited from the massive modernization effort and should more corporate laws be put in place to prevent abuses. Also were judges capable of being bribed and other officials for contracts. Does the free market economy suffer more from such interferences and restrictions and what determines the degree of free market economic freedom countries are willing to allow as there will always be those people who exploit it and use it for their own official gain. What interested me was how the use of the railroads sha[ped the war and how conflict seems to provide us with modern technology. With modern combat what are the conventional methods of Troop transport would it be mostly motorized vehicles and how are such large convoys fuel supported for large scale movement. Would they also make ford an easy target and how effective are railways today as they seem to be easily destroyed in conflict. It would appear that railways could also be used within your lines and heavily protected. I’m also interested in how railroads transport modern goods.

Reading: Richard White “Railroaded: Creative Destruction”

Arafat Khalil

The United States is one if the most technologically advanced nations in the world. To get to this point the United States had to go through several innovations throughout its history. One of the biggest innovations was the creation of the railroads. Railroads did many great things to help the United States grow. It made things such as trade and travel much easier, however the creation of the railroads also had its faults.

One negative that was caused by the creation of the railroads was the destruction it caused. Many natives were conquered and killed, while the Americans were expanding their territory. In the reading White says ” The railroads initial contribution to conquest and development was their transport of troops and their supplies. Native resistance to Mexican, Canadian and American state control persisted longest at from the railroads”(White 455). This quote shows that the railroads had a great impact in conquering native people and their land. Railroads allowed troops and supplies to be transported much quicker then before. Railroads also helped cause the decline of the Buffalo. Railroads made transporting animal hides to different regions much easier. This made hunting Buffalo even more popular. In the reading White says “The railroads proved instrumental in their demise by providing a means to get Buffalo hides to market in a region utterly lacking water transport. And, as a bonus, their own ex-workers and freighters provided Atleast part of the labor force necessary to hunt the animals” (White 463). This shows the impact the railroads had in the hunting of the Buffalo during this time.

The third negative that the creation of the railroads have caused is the rapid growth it caused around the world. Farmers and miners were producing a surplus of goods. Things such as silver had filled the market. This surplus made certain farms unnecessary. Buffalo were hunted and slaughtered at a rapid rate for their skin. Resources were being used up at a rapid rate.

The innovation of the railroads allowed society to grow at a rapid rate. Things such as trading and traveling became much easier, however railroads have also caused destruction. Railroads allowed transporting and trading animal hides to become much easier. This caused the hunting of wild Buffalo to increase and led to the decline of it’s population. Railroads also made it easier to attack and conquer native people. This form of capitalism was called creative destruction.

 

 

White in the reading describes the rapid settlement of the American midwest because of the railroad and its perception and impact. Moreover this rapid change in the Midwest reflects a growing idea of American exceptionalism that I have begun to notice in class. White starts off the chapter with a hypothetical “If a western Rip Van Winkle had fallen asleep in 1869 and awakened in 1896, he would not have recognized the lands that the railroads had touched. Bison had yielded to cattle; mountains had been blasted and bored.Great swaths of land that had once whispered grass now screamed corn and wheat.” (White 455) This hypothetical spin on the Rip Van Winkle story exemplifies just how rapid of a change occurred in a 30 year period and how people out the time would view it. 

 

Moreover from the accounts of Hesse-Wartegg who was a German traveler in America, we get a non-American view of the settlement of the west. “Built through a dry, treeless, unpeopled desert, the railroad now crosses an agricultural paradise. Civilization sweeps like a storm across the plains and smashes what will not bow down or give way before it.” Although this review may have been a bit biased as Hesse would be incentivized by the railroad to write good things about it, what Hesse chooses to praise about the railroad and its effects says alot about what the americans/railroads would have valued. Hesse describes the railroad’s effects as a storm of civilization that rips through everything without question. 

 

Both Wartegg account and Van Winkle use aggressive language that presents the railroad as a civilizing force that pushes through lands and peoples. Their accounts remind me of American Progress by John Gast  which is the quintessential representation of manifest destiny. Manifest destiny was enabled by the railroad and plays into the larger idea of American exceptionalism because it is rooted in ideas of divine right. The seeds of this have been planted since the first settlers and their city upon the hill and the ambitious egalitarian principles rooted in the constitution which strived to be better than England. Moreover the idea of conquering nature, grass to corn, buffalo to cattle, and the positive feedback by people of the time indicate the idea that Americans have the ability to change the world through their own ability, ie technology like railroads, selective breeding etc etc. 

In his excerpt “Introduction”, Richard Whites dives into the evolution of railroad corporations of the nineteenth century, their failures and successes, and how the people at the time held negative feelings towards these corporations. His belief is these transcontinental railroads of the 19^th century caused great political and social clashes that could have been avoided if it didn’t come into being at the time, but at the same time Richard White acknowledges how these transcontinental railroads shaped what it is today and it is the failures that led to today’s systems.

It’s these railroad connections that connected the East to the West, North to the South, creating plenty of business and investment opportunities for people to get rich, and the rich to get richer, but it came with more negatives than positive at the time according to White. The world at the time just wasn’t ready for such innovation and it also greatly harmed the environment. This is due to there being an excess of railroads, a lot that he saw as unnecessary, and were not efficiently built or controlled, this cost the corporations and the government more than they saw in profits. He saw it more of an “execution” fault, than a fault in the idea of a transcontinental railroad system itself.

White mention’s that Railroaded emphasizes finance capitalism and he states ­– “It was not “capital” that built the railroads but credit, and the capital was ultimately at risk in the railroads did not belong to the men who controlled them.” (pg. 5) At the same time he goes on to mention Thomas Scott, Henry Vallard and others who were entrepreneurs that helped the railroads to proceed by buying bonds. He then mentions that the market at the time was not set apart from particular state policies, institutions, or social and cultural practices.

Perhaps my favourite part of his introduction is “…although many readers will find such a claim astonishing. It is about the utter uprooting of older ways of life and older ways of communication and travel by a new technology in the hands of new men with a new form of corporate organization.” (pg. 5) He believed that the investments that fed these “new technologies” would have been better spent on other more “current” issues, and not let technological advancement try to get ahead of its time, but looking at it from a view of the world two centuries later from when they were built, those technological advancements were necessary and it is for them that we have this part of the world shaped and as connected as it is today.