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Ideas about industrial capitalism
The formation of corporations, trusts, and holding companies became a major focus of debate in
the late nineteenth and early twentieth century America. Because of the disadvantages and
problems resulting ftom industrial expansion, ideologies justifying such economic activity arose.
Farmers and workers:
Criticized the new business philosophy as an attack on America’s traditional society. The new
economy was eroding their opportunities and stifling their mobility.
Middle-class critics:
Noted the corruption in the new industrial enterprises and in politics at all levels. Many
businessmen even charged that corporations were not sufficiently modernized and that their
methods were inefficient and wasteful.
Big business: Attempted to convince the public that the new corporate economy was
compatible with individualism and equal opportunity.
Social Darwinism:
 The application to society of Charles Darwin's laws of evolution and natural selection.
 Social Darwinism was popularized by several prominent intellectuals of the late nineteenth
century.
 According to this theory, if only the fittest organisms survive in the process of natural
evolution, in society individuals survive in the marketplace.
 Those who attain riches are thus rewarded for their hard work, while those who fail are
impoverished by their own shortcomings.
 Over time, society benefits from the triumph of the strong and the talented.
 Social Darwinists believed that economic life was controlled by the natural law of
competition.
 Social Darwinism coincided with the ideas of Adam Smith, particularly in the area of the law
of supply and demand
 Although businessmen celebrated the virtues of competition and the free market, as
embodied in Social Darwinism, they actively sought to eliminate competition and control the
free market.
 This ideology had a major impact on American society. John D. Rockefeller and Andrew
Carnegie used it to rationalize their activities, legitimize their success, and confirm their
virtues.
William Graham Sumner:
 Prominent American intellectual who promoted social Darwinism through lectures, articles,
and a book entitled Folkways (1906).
 He asserted that individuals should have the freedom to struggle to compete and to pursue
their self-interests.
 The struggle for survival should not be hampered by laws or by governmental intervention.
Gospel of wealth:
 A philosophy of business men, usually associated with Andrew Carnegie's book, The Gospel
of Wealth (1901), which states that wealthy individuals have not only power but also
responsibilities; it is their duty to use their wealth to advance social programs. The idea of
private wealth as a trust fund for the good of the community encouraged many wealthy
industrialists to devote some of their riches to philanthropic enterprises.
Popular literature: Widely read authors included
 Russell H. Conwell, a Baptist minister, fostered the notion of private wealth as something
available to all in his "Acres of Diamonds" lectures. In stories about people who found
opportunities for wealth in their own backyards, Conwell proclaimed that every industrious
individual has the chance to get rich.
 Horatio Alger, a former minister, wrote over 100 popular novels (e.g., Sink or Swim, Andy
Grant's Pluck) that proclaimed a similar message: Through work, perseverance, and luck,
anyone can become rich.
Critics of social Darwinism:
 Not everyone accepted the theory.
 Lester Frank Ward argued that human intelligence, not the laws of natural selection, governs
civilization. Modern society should use government to intervene in the economy and adjust it
to serve human welfare.
 Henry George, in his best-seller Progress and Poverty (1879), attempted to explain why
poverty existed in spite of modern progress.
o He pointed to the ability of a few monopolists to gain wealth as a result of rising
land values. The value of the land increased because of the growth of society
around the land. Such an increase in the value of the land resulting from increased
demand was rightfully the property of the community.
o He thus proposed a single tax, replacing all other taxes, which would return this
"unearned increment" to the people.
o Such a tax would distribute wealth more equally, eliminate poverty, and destroy
monopolies.
o Single-tax societies developed in many cities as a result of the popularity of his
ideas.
 Edward Bellamy, in his popular utopian novel, Looking Backward (1888), described a new
society where want and vice were unknown and happiness prevailed.
o Cooperation had replaced competition, and class divisions had disappeared.
o A single trust controlled by the government conducted all business and equally
distributed the resulting economic abundance. Bellamy called his concept
"nationalism," which was his brand of socialism.
o This novel provided the impetus for the creation of over 160 Nationalist Clubs,
which promoted Bellamy's ideas.