The United States in the 1870s and 1880s

In 1872, Yellowstone National Park was founded in the territories of Wyoming, Idaho and Montana. The year 1872 also witnessed the arrest of the leader of the Mormons, Brigham Young, for bigamy. He had 25 wives. It had been 26 years since the Mormons had moved to Utah. Congress had outlawed polygamy in 1862, and federal law was being applied throughout the West.

In 1874, barbed war had been invented, and it was being strung to fence out herds from lands that had been settled. The free range of the prairie was becoming private pasture for herdsmen. Cowboys were becoming settled ranchers. Fence-cutting wars had begun between cattlemen and sheepmen, between ranchers and cattle thieves, between Indians and cowboys, with farmers against them all. Cowboys were beginning to feel fenced in.

The booming economy busted temporarily, one of a series of booms and busts through the nineteenth century. In August 1873, farmers were plagued by drought and grasshoppers. Some farmers were in debt to banks and were forced to sell their land. In September a great brokerage firm, Jay Cooke and Company, failed, and panic followed, taking the nation into a depression -- caused also, it is said, by over-production and over-speculation.

It was the second four-years of Grant's do-nothing presidency, and Congress did little to help recovery, but in five years the depression worked itself out. Meanwhile, manufacturing had been changing, using steam power instead of water power alongside rivers, and located in cities such as Fall River, Bridgeport, Paterson, Scranton, Troy, Schenectady, Youngstown and Akron. Oil had been discovered in Pennsylvania in 1859 and it was now being used on a small scale as a lubricant and, on a larger scale as a cure-all, to be applied on one's skin or taken internally, and it was being refined, producing kerosene for illumination, replacing whale oil and candles.

The light bulb had been invented (in 1875) and patented by Henry Woodward of Toronto and Matthew Evans, and their patent was picked up by Thomas Edison who had the financial backing to advance electric lighting. A park was lighted in Cleveland, and in 1881 in New York City, a street called Broadway was illuminated by electricity.

In the 1880s the American frontier disappeared, with people moving into Montana, the Dakotas and with people crossing the plains no longer afraid of Indians. Within reach of most U.S. farmers was a small town connected to a railroad, where the farmer could haul his crop for shipment and make purchases at a general store, and get his hair cut at a barber shop. The town might have two or three Protestant churches, and also a hotel, and if the temperance movement had not reach the town, the hotel might have a bar. And if the town was of fair size and with families of German immigrants, there might be an amateur string orchestra or brass band.

Hay and feed for horses remained a big part of the economy, and there was blacksmithing, saddle-making, harness-making and the construction of horse-drawn wagons, carriages, buggies and sleighs. The manufacture of ready-made clothing was booming, as was the lumber business. There were breweries in St. Louis and Milwaukee, and a watch industry in Elgin, Illinois. New York was the most populous city in the U.S., and Chicago second. In Chicago, farm machinery and railroad equipment was being manufactured. The U.S. began producing steel ships with which to strengthen its navy, and in Chicago and Pittsburgh, steel production was booming -- with perhaps 200 deaths a year in a single steel plant. In the 1880s, those working in cities rose from 40 to 45 percent of the nation's workforce. And the South in the 1880s was abandoning its dependence on cotton and beginning to diversify, including the growing of fruits and vegetables. The South was developing its timber industry, and coal and iron deposits in the southern Appalachians gave rise to steel production in Birmingham Alabama.

Rapidly developing industries in Britain were in need of more raw materials from abroad, and the U.S. citizens were selling raw materials to Britain, Germany and to other European countries. And it was selling foodstuffs for the fast growing populations of Europe and the United States. The U.S. was selling meat and spring and winter wheat from the West, and the demand for these in Europe, it is said, had hastened the westward expansion. The U.S. was exporting minerals, chemicals and cotton and benefiting from an export surplus, with which to pay for machinery for its expanding industries.

Britain was the world's leading imperial power and leading the world in finance, and its investors had been sending more of their money to the United States than to its colonies. Before the Civil War, the British had been handling much of the banking business for the U.S., but control had not followed financial power and the U.S. had hardly been oppressed by Britain's investments. In the United States, private corporate finance had arisen independent of British finance. Americans were saving more and also investing abroad, sending their capital to places such as Canada, Mexico, Japan and Europe.

Investing in stocks and bonds was growing in the United States. Much of the railway expansion had been built on government money, but forty or fifty percent of it was paid for by the railroads, who had raised much of it selling company shares -- the railroads becoming the first of the large shareholding corporations. And other corporations joined the railroads in selling shares. In 1880, Wall Street was still a village in lower Manhattan where major investors knew each other personally, and there were only a few more than one hundred companies listed on the stock exchange. By the end of the 1880s there would be seven million companies listed. And stock exchanges were in Chicago, Philadelphia, Boston and San Francisco.

Through gentlemen's agreements, rival producers had been cooperating to keep their prices up -- agreements that did not often work well. Then, around 1880, companies had begun consolidating into trusts. A trust was two or more companies affiliated by sending their stocks to board of trustees for the purpose of amassing capital and for coordination in acquiring supplies and setting the prices at which they sold things.

The best known trust was the Standard Oil Trust organized by John D. Rockefeller. Rockefeller monopolized the oil fields from which lubricants, kerosene and other products were made. He had control over railroads for shipping his oil, and he owned the oil refineries.

Another great man of industry by 1880 was Andrew Carnegie, who had acquired a monopoly over the steel industry, including the raw materials that went into the making of steel and the rail lines needed to transport his materials.

These were times of free-wheeling capitalism, an adherence to social Darwinism and the idea that governments best not meddle. The influential Yale sociologist and former Calvinist preacher, William Graham Sumner, spoke up for liberty, inequality and survival of the fittest, and he spoke against "survival of the unfittest." The leading banker of this period, J.P. Morgan, was more interested in how the economy was working and less in social theory, and he believed that the economy needed regulation. Morgan was distressed by chaos in the economy, and, with the government unwilling to regulate the economy, it was Morgan who used his financial power to consolidate industries into trusts -- Morgan believing he was doing so not for his own profit but for the sake of the economy.

The size and power of the trusts frightened people with small businesses, and some academics saw the development of trusts and bigness as undemocratic and as lacking the transparency that was in the public interest. The common citizen and small business person disliked the trusts and feared their power, and, in the 1880s, states began outlawing the trusts, but in the federated United States of America a corporation chartered in one state had the right to do business in another state. At the federal level, however, in 1890, came the Sherman Antitrust Act, based on the power of Congress to regulate interstate commerce. Trusts were outlawed on the ground that they interfered with interstate commerce or foreign trade. This move by Congress was frustrated, however, by the Supreme Court, and "trustbusting" had to wait for the 20th century and Theodore Roosevelt.

Politics and the Economy in the 1870s and 1880s