Documents: Gilded Age

For many years in the nation’s early history, few, if any, Asians immigrated to the United States. However, beginning in the 1840s, natural disasters, economic hardship, and political unrest in China, together with developments in the western United States, namely the California Gold Rush, caused a large number of Chinese males to immigrate to the United States. By 1850, there were over 20,000 Chinese in the U. S., most living in California. Construction of the Transcontinental Railroad in the late 1850s and early 1860s brought more Chinese who were used as cheap labor. By 1870, there were a little over 63,000 Chinese in the U. S., and by 1880, a little over 105,000. Over 90 percent were on the West Coast. By the early 1870s, the Chinese made up a large number of the individuals laboring in farming, fishing, factories, and businesses such as laundries. As the U. S. economy faltered after the Civil War, the national economic depression of the 1870s, along with other factors, led to growing resentment against the Chinese on the West Coast. Some California citizens began to resent the Chinese laborers whom, they felt, were “culturally and racially inferior” and, in addition, a threat to wage levels and working conditions. Some anti-Chinese critics began speaking of what they called “the yellow peril” because they were “taking jobs from American citizens.” Anti-Chinese feeling in California was strong. In 1858, the California Legislature passed a law making it illegal for any person “of the Chinese or Mongolian races” to enter California. This law was later struck down by the California Supreme Court. As time passed, violence aimed at the Chinese broke out in several California cities. In 1878, the U. S. Congress passed a law excluding Chinese from entering the United States, but President Rutherford B. Hayes vetoed it. In 1879, California adopted a new state constitution which, among other provisions, authorized the state government to determine what persons could live in the state and banned corporations and state or local governments from hiring Chinese. Senator John F. Miller, a Republican serving his first term in the U. S. Senate introduced what eventually became the Chinese Exclusion Act of 1882. It quickly passed the Senate and then the House of Representatives and was signed into law by President Chester Alan Arthur. It provided an absolute 10-year moratorium on Chinese labor immigration and required the few non-laborers seeking entry to obtain certification from the Chinese government that they were qualified to immigrate. It also placed new requirements on those Chinese who were already in the U. S. by providing that if they left the U. S., they had to obtain certifications to re-enter. Finally, the law specifically denied state and federal courts the power to grant citizenship to Chinese resident aliens. When the law expired in 1892, Congress extended it for 10 more years in the form of the Geary Act. That extension was made permanent in 1902 with the additional restriction that each Chinese resident had to register and obtain a certificate of residence without which he or she could be deported. The law, of course, had long-term consequences for U. S. relations with China. In 1905, the Chinese government, in an unsuccessful effort to persuade the U. S. to alter its anti-Chinese immigration policy, placed a boycott on American goods. The Chinese Exclusion Act marked the end of free immigration in American history. It was the first major legislation restricting immigration. Never before had the U. S. restricted immigration by a specific ethnic group. It remained law until 1943 when Congress repealed it after the U. S. and China became allies in the World War II fight with Japan.
In the United States, “the spoils system” is a term used to describe the practice of awarding individuals with government positions based on their political loyalties rather than on their merit or ability. This system developed early in the political history of the U. S. under its new U. S. Constitution with the rise of two competing political groups: the Federalists and the Democratic-Republicans. While it was a practice followed to some extent at the national government level by all of the nation’s early Presidents, many historians associate the term most directly with the administration of President Andrew Jackson. In fact, the origin of the term itself is frequently attributed to New York Senator William Marcy who, referencing the victory by Andrew Jackson and his fellow Democrats in 1828, said “to the victor goes the spoils.” Jackson and his successors seem to have utilized “the spoils system” so much more than before, that by the late 1860s there was some talk about reforming the system. In 1871, Congress authorized the President to set regulations for admission to public service and to appoint members of a Civil Service Commission to oversee the process. However, the commission was rendered useless in 1875 when Congress failed to appropriate funds for its operation. After the assassination in 1881 of President James Garfield by a disappointed office-seeker, the movement for reform of “the spoils system” gained momentum. In the early part of 1882, Senator George Hunt Pendleton of Ohio drafted a bill to reform the government’s hiring system, which became known as the Pendleton Act. This act provides for the selection of federal government employees through performance on competitive exams. It also makes it illegal to fire or demote those covered by the law for political reasons and forbids requiring these employees to perform political services or to make political contributions. The Pendleton Act transformed the public service. Before the act, new officials inundated government offices after every election, bringing chaos and inexperience to federal service. With the new system, the government was better able to rely on the experience and skills of its workers and to ensure adequate preparation for their jobs.
After the Civil War, railroads were privately owned and completely unregulated by the government. They had become increasingly important in the American economy. In areas of the country where only they operated they held a monopoly. They set prices and controlled the market. They discriminated by providing rebates or refunds to large shippers or buyers. These practices were especially harmful to farmers who lacked volume needed to receive more favorable rates. The U. S. Congress passed the Interstate Commerce Act in 1887 under the authority given it in Article I, Section 8 of the Constitution “to regulate commerce with foreign nations and among the states.” The Act created the Interstate Commerce Commission, the first of many regulatory agencies of the national government. Railroads thus became the first industry to be regulated by the U. S. government. The Interstate Commerce Act changed the laissez faire or hands-off philosophy which had previously dominated the American economy by establishing the government’s clear power to regulate private companies engaged in interstate commerce. The Act banned secret rebates and required that railroad rates be openly published. It required railroad rates to be “reasonable and just.” It prohibited special rates or rebates for individual shippers, preferential rates for certain localities, shippers, or products, and unfairly charging more for a short haul than a long haul.

The law was largely ineffective until later legislation provided the means for its enforcement, but the ICC did become the model for other government regulatory agencies.

In the decades following the Civil War, the American economy came to be characterized by the growth of large corporations and monopolistic business practices. The Sherman Anti-Trust Act passed by Congress in 1890, using the power given it in Article I, Section 8 of the Constitution “to regulate commerce with foreign nations and among the states,” was Congress’ first attempt to limit monopolies. It was named for Senator John Sherman of Ohio who was Chairman of the Senate Finance Committee and a former Secretary of the Treasury under President Rutherford B. Hayes. The law gave Congress the power to investigate and dissolve contracts or business combinations (mergers) that restrained interstate or foreign trade or commerce. Specifically, the law authorized the U. S. government to act against any “combination in the form of trusts or otherwise, or conspiracy, in restraint of trade.” For about the first ten years of the law’s existence, more actions were brought against labor unions for restraining trade than against large corporations which wasn’t the original intent of the law. Only rarely was the law employed against monopolies and then without success. Part of the reason was that the law did not carefully define key terms such as “combination,” “conspiracy,” “monopoly,” or “trust.” Also working against the law were narrow judicial interpretations as to what constituted trade or commerce among the states. For example, in 1895 the U. S. Supreme Court in U. S. v E. C. Knight struck a blow against the law. In that case, the American Sugar Refining Company had purchased four independent operations, thus giving it control of 98% of the nation’s sugar production. The Supreme Court ruled that acquiring refineries and businesses that manufactured sugar within a state had no direct relation to interstate commerce and thus was not a violation of the Sherman Anti-Trust Act.

The first major example of the law being used successfully to break up a trust occurred in 1904 during Theodore Roosevelt’s presidency when the law was used to break up the Northern Securities Corporation: a railroad trust formed in 1901 by E. H. Harriman, James P. Hill, J. P. Morgan, and John D. Rockefeller which controlled all the principal railroad lines from Chicago to the Pacific Northwest. The law was also later used in 1911 during the presidency of William Howard Taft against the Standard Oil trust and the American Tobacco Company.

The People’s Party (popularly known as the Populist Party) had its origins in the 1870s and 1880s among farmers in the South, Midwest, and West who were experiencing difficult times. One of the farmers’ problem s was the high rates which railroads charged to transport the farmers’ products. Another was the high tariff in place at the time on certain imports to the United States which meant that these farmers had to pay large amounts of money for imported goods which they required while the items that they produced were undervalued. Banks and other loan institutions were also foreclosing on farmers who were struggling to meet their financial obligations. In general, the farmers felt that neither of the country’s two major political parties were concerned with the farmers’ interests or those of “the common man.”

The founding convention of the Populist party occurred in Omaha, Nebraska, in July,1892. At this convention, the Populists adopted what came to be called the Omaha Platform.” The Preamble to this platform was written by Ignatius Donnelly, a Minnesota lawyer, farmer, and politician. In its Omaha Platform the Populists adopted a number of ideas which many Americans at the time considered radical: (1) a graduated income tax; (2) a secret ballot; (3) the direct, popular election of U. S. Senators; (4) an eight-hour work day; (5) government ownership of the railroads, telegraph, and telephone: (6) free, unlimited coinage of gold and silver; (7) limiting state and national revenue to necessary expenses of government, to keep as much money as possible in the people’s hands; and (8) government reclamation of land held by railroads and other corporations in excess of their actual needs and land held by aliens. Some of their proposals later became law in the Progressive and New Deal eras of American history.

Article I, Section 8 of the U. S. Constitution gives Congress the power “to coin money and regulate the value thereof.” In 1791, Secretary of the Treasury Alexander Hamilton proposed bimetallism or in other words, that the nation’s new currency would be equal to a given amount of gold or a larger amount of silver. During Abraham Lincoln’s presidency, the Congress passed the Legal Tender Act which authorized the issuance of paper money called greenbacks to finance the Civil War. Greenbacks were unable to be converted into gold or silver. That ended longstanding U. S. policy of using only gold or silver in transactions. In 1873 however, the nation went exclusively on the gold standard by ending silver coinage and bimetallism. This limited the money supply but eased trade with other nations. For the next twenty years, the nation became divided over the nation’s monetary standard. Many people once more had come to believe that bimetallism, making gold and silver legal tender, was necessary. Most Republicans wanted every dollar printed to be backed only by gold known as the gold standard. Many Democrats argued that silver, which was more plentiful, should also be used to back every dollar which would make it easier for Midwestern farmers to pay their debts.

William Jennings Bryan was a Democrat and a former two-term member of the U. S House of Representatives from Nebraska. He was an advocate for bimetallism or abandoning the gold standard and allowing the nation’s currency to be backed by silver as well. Bryan spoke on this topic in 1896 at the Democratic Party’s national convention in what came to be called his Cross of Gold speech. In a speech filled with religious imagery and righteous indignation, Bryan thundered, “having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”

At the start of the 1896 Democratic National Convention, Bryan was a “dark horse” candidate with little support for the party’s presidential nomination. This Cross of Gold speech is largely credited with winning him the party’s nomination. He lost the election to Republican William McKinley, and in 1900, the U. S. formally adopted the gold standard. Bryan later also lost races for the presidency in 1900 and 1908.