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2 June, 2011  ▪  Dmytro Hubenko

The Price of Progress

The US was only able to remove the influence of oligarchs by expanding the governments powers and supporting the middle class during the Great Depression

In his America’s 60 Families, a 1937 expose on super-rich, Ferdinand Lundberg wrote that "The United States is owned and dominated today by a hierarchy of its sixty richest families, buttressed by no more than ninety families of lesser wealth... These families are the living center of the modern industrial oligarchy which dominates the United States, functioning discreetly under a de jure democratic form of government behind which a de facto government, absolutist and plutocratic in its lineaments, has gradually taken form since the Civil War.” This was as if he was describing the current situation in Ukraine.

The United States developed rapidly over the late19th and the early 20th centuries, gradually moving to world leadership, at the same time with a corrupt political system. Back in the 1930s, when Mr. Lundberg was working on his book, the era of plutocracy was running out in America. The New Deal of the legendary President Roosevelt significantly restricted the influence of big business on government. However, the American middle class began a progressive movement to struggle for honest government even earlier at the end of the 19th century.

Uprising against the political machine

Progressive reforms in the United States were supported by teachers, doctors, lawyers, priests, farmers, and small and medium entrepreneurs, all socially proactive categories who demanded that the government be removed of corruption.They struggled to revive traditional principles of American life which had been taken over by the omnipotent trusts and begun to threaten the interests of the middle classes. Progressive-oriented people also promoted reforms, especially the implementation of new scientific methods in education, medicine, theology and many other sectors. Yet, we are most interested in their political and economic demands.  

The Progressive Movement viewed the political machines running the entire country as their key enemy. They were most powerful in large cities, including New York, Philadelphia, Chicago,  Boston and so on. These machines had a strict hierarchy with a boss on top who controlled local business leaders, elected officials and non-elected officials. They provided high voter turnouts in support of their bosses political force. In turn, the winning party awarded the supporters with positions, public contracts and other privileges. This scheme was a  vicious circle.

The most well-known political machine was Tammany Hall, a New York-based organisation of the Democratic Party which controlled nominations and patronage in Manhattan from 1854 through to 1934. Among other steps, Tammany Hall assisted immigrants who were disciplined voters to rise up the ladder in America’s politics. Political machines needed only slightly more votes than their competitors to win seats for their bosses, and it was mainly Irish immigrants who benefitted from this. Later immigrants, including Ukrainians, could barely expect any beneficial cooperation with these machines.  

First, reform-oriented votersdemandedthatcorruptpoliticiansbefired. They were supported by muckraking journalists who revealed examples of political corruption in their investigations. Very soon, however, it became clear that replacing certain individuals was insufficient  because only by changing the entire system could these bosses be over-ruled. Oregon was the pilot project of these reformers. In 1902, local voters were allowed to pass laws and amendments to the state constitution through referendums, followed in 1908 by the right to recall elected officials. Oregon pioneered direct election of Senators, which was preceded by election by legislators, and primaries, elections within a party that allowed party members to decide their candidate for the presidency.  

These innovations quickly flooded the country resulting in Amendment  XVII to the constitution which established in 1913 the direct election of US Senators after a popular vote in 1913 and Amendment XIX in 1920 prohibiting any US citizen be denied the right to vote based on sex. Yet, not all the reforms were successful. In 1920, Amendment XVIII prohibited the production, sale and transportation of liquor in America. Many advocates of reform supported this initiative as they believed bars and saloons to be one component of the political machine. The National Prohibition Act, known informally as the Volstead Act, proved ineffective as liquor was either produced illegally or smuggled into the US;Amendment XVIII was abolished in 1930.

Progressing to a new strategy

The American middle class that emerged in the late 19th century treated with equal suspicion the big business elites and radical worker and farmer movements. Therefore, supporters of reform demanded that the government should implement market regulations to guarantee free competition and a free business environment. In 1887, the US Congress adopted legislation to regulate railway transportation, followed in 1890 by the Antitrust Act, although both were rarely  enforced for a long period of time. Real progressive economic reforms began with Woodrow Wilson, a Democrat President who with Amendment XVI passed a moderate income tax and created the Federal Reserve System.

However, intheearly1920sthe potential of theProgressive Movement eroded, even though the United States was still deep in appalling social inequalities. The country had no social security system, a system which had already been put in place in many European countries. The Republican administration opposed initiatives to raise taxes to support social programmes, sticking to a policy of non-interference in the economy. The Great Depression of 1929-1933 changed everything. Unemployment soared from 4% to 25%, while industrial output fell by one third and prices plummeted by 20%. Despite an excess of food supplies, people would occasionally starve to death. The country needed to be rescued from the crisis and Mr. Roosevelt instituted the New Deal soon after he was elected President in 1933.   

President Roosevelt submitted nearly 70 draft bills to Congress to save the banking system and rehabilitate the main sector of the economy, all of which were immediately adopted. The number of banks was reduced by 4,000; many unemployed received jobs at publically-funded projects; and the social security system was introduced. The President openly experimented in seeking to find a cure for the country’s economic ailments. Even though, some of his initiatives did not succeed, the New Deal reforms proved that governments could find solutions to crisis situations. The Federal Government turned into an arbitrage in future conflicts between various social classes and groups.

By the end of the1930s, American big business had lost its omnipotence. It faced competition from  a powerful workers’ movement, farmers and consumers who were now protected by numerous public institutions. Many experts doubt that Mr. Roosevelt’s achievements were completely  behind  a revival of the American economy in the years up to World ar II. At the same time, it was his New Deal that laid the basis in the 1950s for a sustained economic boom in the US that improved living standards both for the middle class, and the poorest groups in society. Last but not least, Mr. Roosevelt inspired Lyndon Johnson to implement social reforms in the 1960s aimed at building a Great Society where there would be no poor people.  


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