(The UNITED STATES to 1914 – continued)
Some people in the United States continued to blame the rich for their miseries, and commonly among people of modest means was the opinion that people who had gained great wealth had done so through greed. A leading target of these people was John D. Rockefeller. Now retired, Rockefeller had been a Sunday school teacher with ascetic tendencies, and he had risen in business by holding back from spending on himself and by being better organized and less wasteful than his competitors. But responding to the common view of Rockefeller, a "muckraking" journalist, Ida Tarbell, wrote a series of articles for McClure's magazine on Rockefeller that distorted his past.
But in the United States, optimism proved stronger than class consciousness, and Americans had good reason to be optimistic. The United States was a functioning democracy. It was stable and industrious, and real wages (wages according to what they can buy) were rising. Events would justify this optimism. Real wages would rise at an average rate across the century of 1.6 percent a year despite the Great Depression of the 1930s. In the first decade of the century, fresh beef was around 13 cents a pound, equivalent to about $30 a pound relative to 1990 dollars. Soap was 5 cents a bar, equal to $11.50 in 1990 dollars. A refrigerator early in the century cost $3,000 in 1990 dollars.
In the 1904 presidential elections, Roosevelt was returned to office, running on what he called "the Square Deal." Said Roosevelt: "I shall see to it that every man has a square deal, no less and no more." In his second term, the Pure Food and Drug Act and the Meat Inspection Act became laws, and with these laws the Food and Drug Administration (FDA) was created, whose task was to protect the American public by testing and approving drugs before they were allowed on the market. And in his second term, Roosevelt turned again to the issue of conservation. Lumber, oil and mining companies opposed his moves, and many western politicians feared that Roosevelt's conservationism would retard economic growth in their districts. But the Roosevelt administration went ahead and created more parks and made reserves of 17,000,000 acres of forest.
A necessary part of democracy was freedom of the press – which, of course, includes the publication and distribution of books. And in the latter half of the first decade, a socialist, Upton Sinclair, wrote a book called The Jungle in which he exposed conditions in the meat industry, specifically in the Chicago stockyards. The book became popular, and while it was Sinclair's intention to sell socialism to the American public, what resulted was not socialism but more reform – the passage of pure food laws. Americans were inclined toward solving one problem at a time rather than taking ideological leaps of faith.
In addition to reforms at the federal level, political reforms were taking shape in the states – reforms that followed the example of Wisconsin. Candidates for public office were to be chosen by primaries rather than by behind-the-scene power brokers. And states were beginning to establish referendums, and to establish a short ballot, limitations on contributions to political campaigns, and to establish the direct election of senators rather than senators being chosen by state legislatures.
Adding to what might be called progress was the continuing proliferation of the "horseless carriage." In the summer of 1903, an automobile had been driven from San Francisco to New York City in sixty-three days. That year, another car, a Packard, did it in fifty-three days, and that year auto sales soared, with Oldsmobile selling around 4,000 cars. In 1904, numerous people took cross-country driving vacations. The American Automobile Association organized a tour from New York to the Exposition in St. Louis, and fifty-nine autos made the trip.
The internal combustion engine made flying possible, the Wright brothers in 1905 having flown 24.3 miles in thirty-eight minutes. Then, in 1906, a benevolent aspect of the automobile became more apparent. That year the San Francisco earthquake became a turning point in the acceptance of engine powered vehicles. During that emergency, horses were dropping from heat exhaustion while supplies from motor trucks kept hauling needed supplies. The San Francisco Chronicle claimed the automobile had proved indispensable in saving parts of the city from fire.
Economic growth and making money had been big on the minds of people wanting to make money investing or gambling on the rise of stocks and other financial properties. People were buying stocks intending to sell at a higher price later. Banks were playing with the money of their the depositors' money. Enthusiasm raised the prices of stock certificates, until the boom was accompanied by another bust that started in 1906. In 1906, real estate values in New York City soared, but also that year there was President Roosevelt's anti-trust lawsuit against Standard Oil's monopoly, and 1906 was the year of the San Francisco earthquake and great fire, which is said to have exposed a problem with regional internal capital flows. On March 12, the Dow Jones Industrial Average stood at 86.53, down from a high of over 100 in late 1905. On March 14 the market was down to 76.23. More people were selling stocks to take their profits and for some to cut their losses, with some wondering when the lowered prices would be right to start buying again. By October 21 the market was down to 60.81. In November it would be down to 53.00. A lot of people had lost a lot of money.
The economy was in recession, and a banking crisis developed. Banks had made too many bad loans and were not getting enough cash back. Banks had been involved in market speculations as underwriters and as investors. This included the trust banks – administrators of trust funds (money invested on behalf of estates, wills, and such). Many of them had made loans to market speculators. New York's third-largest trust, Knickerbocker Trust Company, collapsed. There were numerous runs on banks and trust companies and across the country many state and local banks and businesses entered bankruptcy.
To rescue the banking system, the financier J P. Morgan supplied troubled banks with some of his own money, and he convinced others with a huge supply of money to do the same, among them John D Rockefeller. Morgan announced that "if people will keep their money in the banks, everything will be all right." A business merger was needed. Morgan controlled US Steel and needed by buy stock from Moore and Schley. Morgan needed immunity from anti-trust implications, and after some hesitation President Roosevelt provided it. When the Stock Exchange opened the market soared. The crisis was over. Confidence was restored. The market would begin a climb back. It would be back in the 80s when Roosevelt left office on March 4, 2009.
The panic is said to have transformed the way in which Americans viewed the banking system. In 1908, Congress passed the Aldrich-Vreeland Act which created the National Monetary Commission to study banking laws for the purpose establishing more order concerning currency and banking.
Copyright © 2009-2014 by Frank E. Smitha. All rights reserved.