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(The robber baron Henry Villard referred to in this book review
purchased the Nation Magazine in 1881. After he died in 1900, his
son Oliver Garrison Villard took it over.)
http://www.slate.com/id/2296082/
The Transcontinental Travesty
What Gilded Age railroad-building frenzy reveals about American greed.
By Donald Worster
Updated Monday, June 6, 2011, at 6:56 AM ET
The corporate raider Gordon Gekko, in the 1987 film Wall Street,
distilled the essential philosophy of the Reagan era, when we were
supposed to get back to basic principles: "Greed, for lack of a
better word, is good. Greed is right. Greed works." Although
almost every ethical philosopher or religious leader of the past
came out against greed as an emotion that distorts judgment and
corrupts society, the Gekko-Reagan creed has usually been an easy
sell in America. Running against that tradition, Richard White, in
his new book "Railroaded: The Transcontinentals and the Making of
Modern America", doggedly persists in challenging the notion of
greed as either rational or virtuous. He has a big job on his
hands. No matter how many dot-com crashes or overleveraged credit
debacles we go through, the core faith in greed as the engine of
American greatness seems all but unshakable.
One legendary moment of greatness was the completion of the first
transcontinental. There is a legend- making photo taken at
Promontory Summit, Utah, May 1869, when the Union Pacific and
Central Pacific joined tracks and reunited a war-divided people.
After that came the Northern Pacific, the Great Northern, the
Atlantic, Topeka, and Santa Fe, and other lines that brought a
transportation revolution to the West. White debunks the legend,
arguing that the achievement was shoddy and chaotic and benefited
the nation very little. The money that built those lines did not
come from the railroad men themselves— Leland Stanford, Collis
Huntington, Henry Villard, James J. Hill, and Thomas Scott.
Instead, they persuaded Congress to lay out enormous subsidies.
The Union Pacific alone raked in $43 million in interest subsidies
on federal loans, and railroads east and west of the Mississippi
River received more than 131 million acres in free land. White
explains that largesse as a result of political corruption. But
then why did so many investors, including shrewd Germans and
Brits, throw money into these enterprises as well? Not until the
20th century would there be enough white settlement and shipping
traffic in the West to justify such investments. No rational need
existed for decades, yet a railroad- building frenzy went on and
on. The builders made a lot of money for themselves, but why did
so many people give them so much capital?
Other government subsidies came in the form of stifling, with
armed force, any resistance from Indians or any move on the part
of immigrant laborers to try to make the railroads serve their
needs. White describes in brilliant detail the infamous Pullman
strike of 1893, when the government blatantly took the side of the
corporations. "By and large, the western railroads remained what
they had been before the strike—bloated, ill managed, heavily
indebted, and corrupt. … Many were now wards of the federal
courts, and all of them depended on the might of the federal
government to control their own workers."
The dean of business historians Alfred Chandler Jr., in The
Visible Hand (1977), described the 19th-century railroad
corporation as the harbinger of order, rationality, and efficient
organization. White scoffs at such an image. These corporations
were made up of "divided, quarrelsome, petulant, arrogant, and
often astonishingly inept men." And instead of the conventional
leftist picture of a ruthless, soulless, but all-powerful business
that crushed its opponents, the infamous Octopus of novelist Frank
Norris, he finds "a group of fat men in an Octopus suit." They
were morally challenged men, dripping with hypocrisy,
mean-spirited, and grasping.
But White, who is a master of invective, describes them also as
stupid and incompetent. Their only claim to genius was their
ability "to find occasions for profit in their own ineptitude."
Leland Stanford, for example, was well-known to his companions as
dim-witted, careless, selfish, lazy, and yet filled with "immense
self-regard." That tone of criticism appears all through the era.
The Massachusetts railroad executive Charles Francis Adams,
dismissed his fellow businessmen as creatures of "low instincts, …
essentially unattractive and uninteresting." This is essentially
White's view also, and he finds their success more than
reprehensible; that such reptilian types ever gained so much power
and wealth is bewildering. That their descendants still command so
much authority is beyond understanding.
Richard White is a Thorstein Veblen for our times. Veblen
(1857-1929) was an academic economist too radical for his own day.
He and White share contempt for the business community; it was
Veblen who invented such phrases as "conspicuous consumption" and
"businesslike mismanagement." There are differences: White is a
more engaging writer than Veblen, less given to windy
circumlocutions, and he grounds his charges in deep and thorough
research. Dripping with venom, this book is nonetheless a model of
the historian's use of primary sources, narrative skill, and
insightful reinterpretation of the Gilded Age. It is easily the
best business history I have read, and it carries a weight of
argument and evidence that cannot be denied. Another difference
is that Veblen was dismissed by Stanford University for his
"immorality" and unpopular views, while White is one of that
university's most honored professors.
Unlike Veblen, White strongly identifies with the Indians who were
dispossessed in part by the railroads and with the railroad
workers who did the dirty and dangerous jobs for low pay and
little freedom. White is emphatically on the side of those he
calls the "anti-monopolists," contesting corporate authority,
though he admits that most of them were racists who blamed immigrant
Chinese workers for their precarious economic situation as much or
more than they blamed the bosses. A society based on class and
ethnic equality is closer to White's ideal than to Veblen's, who
in turning away from the underdogs of society threw in with the
technocrats, trained in rational analysis and management of modern
technology and enterprise. In his book The Engineers and the Price
System (1921), Veblen called for a "soviet of technicians" to run
the railroads and factories of industrial America. That's not
White's solution, but then what is his alternative to a society
run by capitalists? What other choices did Americans have in the
past or now? Whom should they trust?
The story of the transcontinentals, White writes, "is more than
just a phase, the unruly youth of corporate capitalism." It
represents the beginning of "a deeper mystery of modernity: how so
many powerful and influential people are so ignorant and do so
many things so badly and how the world still goes on." Why do t he
"unfit" seem always to triumph? I don't find his answer very clear
or satisfactory. Leland Stanford and his fellow railroad men did
not make A merica; it was America that made them, and it was
foreign as much as domestic investors who gave them money. Voters
and investors, workers and capitalists, all wanted to see the West
"civilized" as quickly as possible. They dreamed of human empire
over nature, and in that dreaming they didn't bother about
balancing costs and benefits. The conquest was worth whatever it
cost, in lost economic opportunity, in injustice, and in
environmental destruction.
Call it greed if you like, but often it was not personal greed so
much as it was desire to see whatever was wild and nonhuman
brought under control. After the railroads came massive water-
engineering projects (White does not discuss the role of the
railroads in promoting that boondoggle that went on through the
New Deal). Those likewise dramatically altered the ecology of the
West, and they made no more economic sense than the railroads did.
The water projects were easily sold to a public that wanted to see
the world under "civilized" control. Until we confront more
directly that rage for domination, we will never understand how
men like the robber barons ever got into power. Or why they have
left so many descendants today.
White ends his book with this judgment: "The issue is not whether
railroads should have been built. The issue is whether they should
have been built when and where they were built. And to these
questions the answer seems no." But would a delay of a few decades
have really mattered? Would it have brought a different group of
people into power?
Could the goal of civilizing the West have been more humane,
environmentally restrained, or economically sensible? Perhaps.
This book convinces me that the railroads helped create both "dumb
growth and environmental catastrophe." A greater capacity for
delay and restraint might have moderated both outcomes. But still
we are left with the conundrum of modernity: Who is both smart and
decent enough to be in charge of the enormous powers we have
unleashed on the earth? I don't have much confidence in
businessmen, but neither do I have confidence in engineers,
workers, or college professors. Least of all do I have confidence
in the state when it begins to subsidize and promote whatever
entrepreneurs want to do.
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