employers pushed labor into retreat again. By the late 1920s union membership, which reached more than 17 percent of the labor force in 1924, was back below 11 percent—about what it is now.
High inequality didn’t mean that workers failed to share any of the fruits of progress. While inequality was great, it was more or less stable, so that the growth of the U.S. economy during the Long Gilded Age benefited all classes: Most Americans were much better off in the 1920s than they had been in the 1870s. That is, the decline in real earnings for many workers that has taken place in America since the 1970s had no counterpart during the Long Gilded Age. Urban workers, in particular, saw a vast improvement in the quality of life over the course of the Long Gilded Age, as diets and health improved, indoor plumbing and electricity became standard even in tenements, and the emergence of urban mass transit systems enlarged personal horizons.*
These improvements, however, shouldn’t lead us to gloss over the persistence of real deprivation. At the close of the twenties many American workers still lived in grinding poverty. For the unlucky—those who got thrown out of work, were injured on the job, or simply grew old without children to support them—there was great misery in the midst of opulence for the few. For before the 1930s there were no significant government income redistribution policies such as welfare or food stamps, nor were there any government provided social insurance programs such as Social Security or Medicare. Government at all levels was very small, and as a result taxes on all but the very richest were extremely low. For example, in the mid-1920s $10,000 bought as much as about $120,000 today, and people with incomes of $10,000 a year were in the top 1 percent of the income distribution—but they paid less than 1 percent of their income in income taxes, compared with around 20 percent for similarly situated people today. So it was a very good time to be rich. On the other hand, since income support programs currently account for most of the income of the poorest fifth of Americans, being poor in the 1920s was a far harsher experience than it is today.
This leads to an obvious question: Given the great wealth being generated during the Long Gilded Age, the great disparities in income, and a democratic system in which poorly paid workers vastly outnumbered the minimally taxed elite, what explains the absence of effective demands that the government do more to soak the rich and help the less well off?
It’s not that the concepts of progressive taxation and the welfare state had yet to be invented, or even implemented in other places. In Germany, Otto von Bismarck introduced old-age pensions, unemployment insurance, and even national health insurance in the 1880s. Bismarck acted out of political calculation, not compassion—he wanted to head off potential opposition to the Kaiser’s rule. But in so doing he showed that more compassionate government was, in fact, possible. Here in the United States the system of benefits introduced after the Civil War for veterans and their survivors was, in important ways, a forerunner to Social Security. The Populist platform of 1896 called for a progressive income tax and public works programs to provide jobs in times of depression—not qualitatively very different from what FDR would finally do almost forty years later.
Nor was America too poor a country to afford such programs. The United States in the 1920s was substantially richer than European countries, yet France, Germany, and the United Kingdom all had substantial programs of public aid several times as large as those in America.[2] In fact the United States in 1925 was about as rich as Britain would be in the early post–World War II years, the years in which Britain established a full-fledged welfare state, including national health care—a welfare state that was in some ways more extensive than the United States has now.
So why wasn’t there an effective demand to, as Huey Long would later put it, “soak the rich and help the little man”?
Republicans, who began as the party of free labor but by the 1870s had undeniably become the party of big business and the rich, won twelve of the sixteen presidential elections between the Civil War and the Great Depression. They controlled the Senate even more consistently, with Democrats holding a majority in only five of the era’s thirty-two Congresses. While the House of Representatives was somewhat more competitive, even there the Republican Party was usually in control.
Furthermore, party comparisons understate the conservative dominance of politics during this era, because one major wing of the Democratic Party—the so-called Bourbon Democrats, who included both reactionary Southerners and probusiness Northerners—was just as supportive of the interests of the wealthy and opposed to government help for the poor as the Republicans. The Bourbon Democrats did differ from the Republicans on some issues: They believed in free trade rather than high protective tariffs, and they decried corruption in politics. But it would be wrong to characterize the Bourbons as being in any meaningful sense to the left of the GOP. And on the rare occasions when a Democrat did take control of the White House, it was always a Bourbon: Grover Cleveland, the only Democrat to win the presidency between the Civil War and Woodrow Wilson’s victory in 1912,[3] was a Bourbon, and so were Democrats who got anywhere near the White House, like Samuel Tilden in 1876.
What accounts for this prolonged conservative dominance in a country in which demands to tax the rich and help the needy should, by the numbers, have had mass appeal? The explanation involves several factors that are all too familiar from today’s political scene, but were present in an exaggerated form.
First there was the effective disenfranchisement of many American workers. In 1910 almost 14 percent of adult males were nonnaturalized immigrants, unable to vote. Meanwhile Southern blacks were effectively disenfranchised by Jim Crow. Between the immigrants and the blacks, about a quarter of the population—and by and large, the poorest quarter—were simply denied any role in the political process. As we’ll see later in this book the problem of disenfranchisement has returned in contemporary America, thanks to large-scale illegal immigration and the continuing low voting participation of blacks—aided by systematic vote suppression that is more subtle than that of Jim Crow days, but nonetheless can be decisive in close elections.
Then there was the matter of campaign finance, whose force was most vividly illustrated in the 1896 election, arguably the only time between the Civil War and 1932 that a challenger to the country’s ruling economic elite had a serious chance of winning the White House. Fearful of what William Jennings Bryan might do, the wealthy didn’t crucify him on a cross of gold—they buried him under a mountain of the stuff. William McKinley’s 1896 campaign spent $3.35 million, almost twice as much as the Republicans had spent in 1892, and five times what Bryan had at his disposal. And bear in mind that in 1896 three million dollars was a lot of money: As a percentage of gross domestic product, it was the equivalent of more than $3 billion today, five times what the Bush campaign spent in 2004. The financial disparity between the parties in 1896 was exceptional, but the Republicans normally had a large financial advantage. The only times the Democrats were more or less financially competitive between the Civil War and Woodrow Wilson’s election in 1912 were in 1876, an election in which the Democrat Samuel Tilden actually won the popular vote (and essentially had the electoral vote stolen, in a deal in which Rutherford B. Hayes got the White House in return for his promise to withdraw federal troops from the South), and in Grover Cleveland’s two victories in 1884 and 1892. Not coincidentally Tilden and Cleveland were Bourbon Democrats. When the Democratic Party nominated someone who wasn’t a Bourbon, it was consistently outspent about three to one.[4] Finally there was pervasive election fraud.[5] Both parties did it, in a variety of ways. For much of the period secret ballots were rare: Most voters used ballots printed by the parties themselves, and these ballots were easily distinguishable by size and color. As a consequence, vote buying was feasible, easy—there was no problem verifying that the votes were actually cast as purchased—and widespread. In 1888 the
Your committee will certainly receive from Chairman Huston the assistance necessary to hold our floaters and doubtful voters…divide the floaters into blocks of five, and put a trusted man, with the necessary funds, in charge of those five, and make him responsible that none get away, and that all will vote our ticket.[6]
As the
