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Workers Vanguard No. 939

3 July 2009

The Grant Administration (1869-1877) and the Rise of U.S. Imperialism

Part Two

We print below, in slightly edited form, the conclusion of a presentation by Don Cane to a Spartacist League educational in the Bay Area on March 14. Part one of this talk, published in WV No. 938 (5 June), focused on the consolidation of an American capitalist-imperialist class during the administration of Ulysses S. Grant. What follows is a discussion of the rise of the American labor movement in the decades following the Civil War (1861-65).

An 1860 pamphlet promoting British investment in American railways made this observation: “The valley of the Mississippi and the basin of the St. Lawrence alone have been truly described as capable of furnishing breadstuffs, coal, iron, and other articles of prime necessity, equal to the consumption of the world.” In 1888 an American writer, William H. Harrison Jr., wrote a book called How to Get Rich in the South that reported that there was “no country that offers such tempting inducements to the capitalist for profitable investments” (quoted in C. Vann Woodward, Origins of the New South, 1877-1933 [1951]). Both Northern and British capital flowed into the former Confederate South in the period after the Civil War. This great influx of capital found its way not only into cotton production, but more importantly into mining and railroad construction. Of course, banking interests expanded in the South along with the flow of this capital.

It was the construction of a national railroad system that made possible the creation of a national market. The pre-Civil War Southern railroad system could have been described as branches without a trunk. The year 1880 witnessed the first major consolidation movement among Southern railroads, where once independent railroads coalesced into large systems. This consolidation was accomplished by Northern and British capitalist interests. By 1890 more than half the railroad mileage of the South was in the hands of a dozen large companies, mainly centered in New York City. In the process of this consolidation, Southern railroad gauges were adjusted to Northern standards—a difference of three inches involving 13,000 miles of railroad track and significant bottlenecks. The largest railroad company, the Louisville & Nashville, hired 8,000 men who in one day adjusted 2,000 miles of track and the wheels of 300 locomotives and 10,000 pieces of rolling stock to conform to Northern standards.

V.I. Lenin, in the preface to Imperialism, the Highest Stage of Capitalism (1916), observed: “Railways are a summation of the basic capitalist industries, coal, iron and steel; a summation and the most striking index of the development of world trade and bourgeois-democratic civilization.... The uneven distribution of the railways, their uneven development—sums up, as it were, modern monopolist capitalism on a world-wide scale.” Lenin noted that by 1890 the U.S. had surpassed all of Europe in total railroad mileage. Railroads spread beyond West Europe and North America in the years after 1860; by 1900, Asia, for example, had 34,700 miles of railroad, representing 7.1 percent of the world’s total in that year. Even more dramatic was the replacement of wood and sail by iron, steel and steam in ocean shipping. From the national market to the world market this resulted in a dramatic drop in freight rates.

The U.S. capitalist ruling class profited handsomely. But this accumulation of profit did not come without bloody resistance. During the 1900 Boxer Rebellion in China, one Boxer poster proclaimed, “The will of heaven is that the telegraph wires be first cut, then the railways torn up, and then shall the foreign devils be decapitated” (quoted in Diana Preston, The Boxer Rebellion [1999]). At home, within the U.S., the class struggle was unfolding. This was inevitable at a time when half of the country’s vast wealth was owned by 1 percent of the population—the ruling class that ruled with blatant corruption and violence.

Quoting Friedrich Engels, Lenin’s The State and Revolution (1917) established that “in a democratic republic, Engels continues, ‘wealth exercises its power indirectly, but all the more surely,’ first, by means of the ‘direct corruption of officials’ (America); secondly, by means of an ‘alliance of the government and the Stock Exchange’ (France and America).” Lenin added: “A democratic republic is the best possible political shell for capitalism, and, therefore, once capital has gained possession of this very best shell…it establishes its powers so securely, so firmly, that no change of persons, institutions or parties in the bourgeois-democratic republic can shake it.”

In the U.S. South after the Civil War, both the progressive Reconstruction governments and the reactionary post-Reconstruction “Redeemer” governments fit Lenin’s description. Both governments handed out millions of acres of public lands free or at nominal cost to railroad and mining interests. Officials of both governments could be bought.

These governments, however, represented the competing interests of different factions of exploiters. The Reconstruction governments were alliances of the Republican Party and the freedmen. But the Republican Party was moving quickly away from its historic roots, the alliance of Northern capitalists and small farmers that had dislodged the slave power from the federal authority through the Civil War. The Republican Party became the party of the big capitalists with a fig leaf of interest in the rights and advancement of black people. Under the Republican Party the rights of free blacks in the North were greatly expanded—the right to vote, access to public schools and the protection of the law. (In pre-Civil War days the movement of free blacks was restricted, and kidnapping and being sold into slavery was a constant threat.) It was under Republican Reconstruction governments that social advances were made in the South. Under these circumstances the Democratic Party recuperated by becoming a “big tent” encompassing all those disgruntled with the policies of the big capitalists and hostile to black rights.

The Compromise of 1877, which formally ended Reconstruction by pulling the last Union troops from the South in exchange for allowing Republican Rutherford B. Hayes to become president in the disputed election of 1876, ceded political control of the South to the Democratic Party (see “Defeat of Reconstruction and the Great Rail Strike of 1877: The Shaping of Racist American Capitalism,” WV No. 701, 20 November 1998). The Southern Democratic Party, under the banner of “rule of the taxpayer,” openly constituted themselves champions of the property owner against the propertyless and allegedly untaxed masses. They abolished large numbers of government offices, departments were cut to skeletal staffs, and some public services were simply dropped. One “Redeemer” governor considered public schools “a be paid for like any other luxury, by the people who wish their benefits.” Unlike the North, there was no tradition of public schools in the South; it was the Reconstruction governments that brought public schools to the South. The Northern capitalist understood the greater productivity of an educated workforce. The development of the South was to be hindered by high rates of illiteracy. Here are a few examples of how the South’s high illiteracy rate hindered development:

• Deposit banking developed slowly among a population that could not read or write checks;

• The normal business of lawyers and bankers requiring the use of documentation was hindered among the population that could not read or prepare these documents;

• Modern agriculture depended upon many things, including the learning of agricultural colleges; pamphlets and books were of no use among a population that could not read.

The Republican Reconstruction governments and the Democratic “Redeemer” governments were both bourgeois governments, but their particular policies had concrete implications for the historic development of this country and its various regions.

The Emergence of the Working Class

In “Socialist Agitation Among Farmers in America” (1902), German Social Democratic leader Karl Kautsky made this observation:

“Even when a permanent proletariat arose, in which born Americans began to take their places by the side of foreign immigrants and Negroes, the Anglo-Saxons still remained ‘practical politicians.’ They did, indeed, begin to understand that they must go into politics for themselves, but like true practical politicians, they demanded that it should be a shortsighted policy which should take heed only of the moment and regard it more practical to run after a bourgeois swindler who promises real successes for tomorrow, instead of standing by a party of their own class which is honest enough to confess that it has nothing but struggles and sacrifices in store for the next future, and which declares it to be foolish to expect to reap immediately after sowing.

“If at any time Anglo-American workingmen had come to the conclusion that they must keep clear of the old capitalist parties, then this ill-starred ‘practical’ sense would mislead them into founding a party on some single issue, which was supposed to cure at once all evils, free silver, single tax, or the like. But when this agitation did not bring any immediate success, then the masses soon tired of it, and the movement which had grown up over night collapsed quickly. Only the workingmen of German origin kept a Socialist movement alive among their countrymen. However, such a movement of immigrants could never hope to become a serious political factor. And as this emigration from Germany decreased considerably…and as the Germans in America soon became anglicized, this German Socialist propaganda not only made no progress, but actually fell off after a certain time.”

These “single issues” to “cure at once all evils” were Greenbackism, free silver, bimetalism and the single tax, all of which reflected the pressure of the farm on the worker. I am not an economist so I will give you what I understand to be the broad strokes of these single issues. It was a question of cheap money versus the gold standard. After the Civil War, the federal government was $1.5 billion in debt; this was mostly held in war bonds. These war bonds when due were payable in gold dollars. To conduct the Civil War the federal government for the first time began printing paper money. What Grant meant by “balancing the budget” was reducing the amount of paper money in circulation.

The U.S., however, was actually on two standards—gold and silver. The ruling class favored the European gold standard and felt the necessity to adopt this standard as the one-and-only. The American farmer had already been brought into the capitalist world market where prices were established. It was to the advantage of the farmer to pay his debts with cheap currency—paper and silver. While the European and U.S. ruling classes conducted their business on the gold standard, much of the colonial world was on a silver standard. This raised the costs of maintaining military forces abroad. At home and abroad the U.S. sought to eliminate the use of the silver standard.

At the same time, the American farmer and worker did have one common enemy, the railroads. The privately owned railroad was a powerful means of exploiting the farmer by the capitalist, using higher freight costs. The same railroad owners stood opposed to the railroad workers and the iron workers, the two most important branches of labor. But a labor-farmer alliance was not tenable given the campaign for the eight-hour day, which farmers necessarily opposed.

The Knights of Labor

In 1869, a secret labor organization called the “Noble and Holy Order of the Knights of Labor” was founded by a handful of garment cutters in Philadelphia. The founding leader of the Knights of Labor was Uriah Stephens, a former abolitionist and Lincoln supporter. Early in the Civil War Stephens was described as “one of the first and foremost to urge upon the Lincoln administration the securing of the right to the soil for the liberated freedman of the south” (quoted in Sidney H. Kessler, “The Organization of Negroes in the Knights of Labor,” The Journal of Negro History [July 1952]). He later left the Republican Party when it became clearly dominated by big capitalists.

The organization Stephens helped to found developed into the first real national trade union and a genuine product of the American workers, encompassing a broad swath of the American working class. The Knights of Labor stood on a modest program. In their own words, they meant “no antagonism to capital.” They sought to “create a healthy public opinion on the subject of labor” and aimed to achieve “a full just share of the values or capital it [labor] has created.” The bourgeois press hysterically denounced the Knights of Labor as a “dangerous underground political organization.” All trade unions were secret organizations by necessity. When the Knights of Labor ended their status as a secret trade union in 1881, their membership experienced steady growth. In 1885 the Knights of Labor won a strike against Jay Gould’s Southwest Railway conglomerate. After this victory the Knights of Labor membership mushroomed.

The motto of the Knights of Labor was “an injury to one is the concern of all.” This is the origin of the Industrial Workers of the World (IWW) slogan, “An injury to one is an injury to all.” The Knights of Labor drew into their ranks tens of thousands of workers who had never been organized before—men and women, black and white, foreign-born and native-born. The Knights of Labor was not organized on an industrial but on a geographical basis, in the form of assemblies. Each assembly was independently chartered and given a number. All assembly halls featured a reading room with a recommended list of readings. Organizers were appointed by the Grand Master Workman, Terence Powderly, who had superseded the founding leadership by the 1880s.

The Knights of Labor established roots in the South, recruiting blacks and whites alike, skilled labor and unskilled labor. Local assemblies were sometimes integrated and other times segregated, by no particular plan. Some assemblies in the South began as all-black and gradually recruited white members. The biggest demand of the black workers in the Knights of Labor was for black organizers. As one letter writer wrote, “Down in this country the wt. [white] people have set a decoy and fooled the colored people so much it is simply impossible for a wt. organizer to orgze them” (The Journal of Negro History [January 1968]). Nonetheless, Powderly appointed very few black organizers. In spite of this, blacks continued to join the Knights of Labor even after it entered a period of decline.

The Knights of Labor, like other labor organizations in the decades after the Civil War, practiced the reactionary exclusion of Chinese workers. In spite of this ban there were attempts to organize Chinese assemblies of the Knights of Labor in New York and Philadelphia. This pitted the General Executive Board, which refused to grant charters to these assemblies, against local organizers (among whom blacks were represented). Anti-Chinese bigotry was centered in California, where Chinese immigrants made up some 25 percent of the wage workers in the early 1870s. This reactionary ban was a litmus test of labor leadership. It was the IWW that later brought industrial unionism to the American working class, welcoming into its ranks all workers regardless of race.

Powderly, an Irish nationalist, was rumored to have considered petitioning the Pope for his blessing. This was his answer to the reign of terror that fell upon the labor movement after the Haymarket bombing in Chicago in 1886, when working-class leaders, mainly anarchists, were framed up and sentenced to die. Of course, such an effort to gain the blessing of the church aroused distrust among the Protestant members—many of the Knights of Labor leadership were Irish and the pressure of the Catholic church was felt. Powderly was an anti-communist who believed the anarchists were guilty in the Haymarket bombing. But given the enormous support for the Haymarket men among the Knights of Labor workers, it was impossible to openly denounce the anarchists. Powderly fought to keep politics out of the Knights of Labor. But this was difficult as all political currents within the workers movement found expression within the organization.

Henry George was the leader of the United Labor Party and author of a popular book titled Progress and Poverty (1879), a central tenet of which was the “single tax.” The single tax was a tax on land values, to replace all other taxes. As a candidate for New York City mayor in 1886, George outpolled Republican Teddy Roosevelt and likely the Democratic candidate as well. But by the tried-and-true American method of election fraud, he was denied his victory.

Henry George also joined the Knights of Labor. This was the beginning of an uneasy alliance between George and Powderly. Both leaders were anti-communists and believed that the Haymarket martyrs were guilty. But George favored clemency for the convicted Haymarket men, while Powderly opposed even this call. Haymarket martyr Albert Parsons was expelled from the Knights of Labor, and the Knights of Labor General Executive Board refused to endorse the first May Day general strike. This boycott was successful, except in Chicago where the Knights of Labor ranks joined the strike. The differences between George and Powderly were strictly within the bounds of capitalist politics—protectionism (Powderly) or free trade (George). The fortunes of the United Labor Party began to wane and George reversed himself, making a public statement asserting that the violence each Haymarket man had espoused made him guilty of conspiracy under Illinois law. He implied that even if none of them had thrown the bomb, their fates were the logical outcome of their dangerous ideals. In 1887, all United Labor Party members holding dual membership in the Socialist Labor Party (SLP) were expelled.

The SLP was the organization of the German socialists in the U.S. to whom both Kautsky and Engels had addressed their remarks. A section of the Socialist Labor Party was to go on to play an important role in the founding of both the American Socialist Party and the IWW later on. Throughout the period that we are discussing the SLP fought to carry out a revolutionary perspective. They stood out as a principled party among labor opportunists of all sorts.


By 1890 two organizations that stood outside the labor movement claimed over three million members: the National Farmers’ Alliance and Industrial Union, based in the South and West, and the Farmers’ Alliance, based in the North. In 1892 the two organizations held a joint convention, nominated a candidate for president, and adopted the name of “People’s Party,” from which they became known as Populists. They declared that “the newspapers are largely subsidized or muzzled; public opinion silenced; business prostrate; our homes covered with mortgages; and the land concentrating in the hands of capitalists.... The fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few.”

Having delivered this sweeping indictment, the Populists put forward their remedies: the free coinage of silver, a graduated income tax, postal savings banks and government ownership of railways and telegraphs. At the same time, they called for the popular election of Senators—who at that time were appointed by state legislatures—but not the president, who to this day is still elected by the Electoral College. They also condemned the use of federal troops in labor disputes. On this platform, the Populists polled over a million votes in the 1892 elections, captured 22 presidential electors and sent a powerful delegation to Congress.

In 1893 the American capitalist economy was shaken by a periodic crisis: banks and businesses went into bankruptcy; factory production came to a halt; the unemployed searched for work that did not exist; and the prices of farm products (including cotton) fell disastrously. These conditions sent Populism on the march, with the working class being pulled behind the petty bourgeoisie.

Shaken by economic fluctuations, workers and farmers protested the economic inequalities of the capitalist order, and they found common ground in this multi-class populist movement. They protested the domination and outright corruption of the big financial and industrial interests that controlled the economy and the party machines of both Republicans and Democrats. Looking back at an America that used to be, they protested the inevitable centralization of the economy and state power in the hands of the capitalists. They voiced a theme that we still hear today: share the wealth more fairly and improve the living standards of the masses. They sought to remove the government from the hands of the big capitalists and put it in the hands of the people. They sought to stop imperialist war and keep the nation at peace. What they won fell well short of these objectives. But they did eventually win some reforms: recall of elected officials, direct election of U.S. Senators, the graduated income tax, gains in social welfare, prison reform, child labor legislation and many of the public commissions that regulate capitalist business practices.

The support for the People’s Party crossed not only the class line but also the race line. The People’s Party was crushed by heavy repression that included the utilization of vicious anti-black racism. But what finally ended and destroyed the People’s Party as a national party was the co-optation of its forces into the Democratic Party. Democrat William Jennings Bryan voiced their sentiments in his “Cross of Gold” speech at the Democratic Convention in 1896, invoking the image of Christ on the cross: “You shall not press upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.” He declared that their cause “was as holy as the cause of liberty—the cause of humanity.” He exclaimed that the contest was between the idle holders of capital and the toiling millions. Then he named those for whom he claimed to speak: the wage-earner, the country lawyer, the small merchant, the farmer and the miner.

The Democratic Party’s appeal to labor voiced by Bryan in his “crown of thorns” speech was reinforced in its radical-sounding platform in 1896. “As labor creates the wealth of the country,” ran one plank, “we demand the passage of such laws as may be necessary to protect it in all its rights.” Referring to the 1894 Pullman strike, led by railway workers union leader Eugene Debs, the platform denounced “arbitrary interference by federal authorities in local affairs as a violation of the Constitution of the United States and a crime against free institutions.” A special objection was lodged against “government by injunction as a new and highly dangerous form of oppression by which federal judges, in contempt of the laws of states and rights of citizens, become at once legislators, judges, and executioners.” The remedy advanced was a federal law assuring trial by jury in all cases of contempt in labor disputes.

Early American Communist leader and founding Trotskyist James P. Cannon made the following observations regarding the founding of the American Socialist Party, a party that in part arose out of the People’s Party. In an article in International Socialist Review (Winter 1960), “American Radicalism: Yesterday, Today and Tomorrow,” Cannon wrote, “The distinctive factor which made possible the development of this new socialist movement at that time was the turn of a number of influential individuals and groups away from the policy of class collaboration in politics to the policy of independent socialist action.” Eugene Debs and others who promoted the formation of the Socialist Party in 1901 had supported Bryan and the Democratic Party in 1896. Cannon went on to explain:

“The composition of the party was also unfavorable in some respects.... The Populist movement in the South was deflected into a reactionary channel. But there was another part of this Populist movement which was drawn into the Socialist party. The Socialist party in many parts of the country consisted of a very large percentage of former Populists. The composition of its membership in the western part of the country was very heavily weighted on the side of the petty bourgeoisie in the cities and in the countryside. At one time the largest single state membership of the Socialist party, and, if I’m not mistaken, the largest socialist vote proportionally, was in the state of Oklahoma. In the other western agrarian states also the hard-pressed tenant and mortgaged farmers and desperate petty bourgeoisie streamed into the Socialist party from the Populist movement and swelled its ranks. So the class composition of the party was not as proletarian as an ideal Socialist movement should be.”

This unfavorable class composition of the Socialist Party, the weakness of the trade unions, the mistakes of the militant IWW and the treachery of labor reformism prepared the way for the decline of the American labor movement’s impulse to class struggle. What we see here are the historical roots of American labor and the black struggle. Much has, in fact, changed, but evidence of these roots can still be seen today.


Workers Vanguard No. 939

WV 939

3 July 2009


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The Grant Administration (1869-1877) and the Rise of U.S. Imperialism

Part Two