I was recently lucky enough to stumble across a PDF copy of Carroll Quigley’sTragedy and Hope. While browsing through I came across an interesting statement:
Page 77-78
When the business interests, led by William C. Whitney, pushed through the first installment of civil service reform in 1883, they expected that they would be able to control both political parties equally. Indeed, some of them intended to contribute to both and to allow an alternation of the two parties in public office in order to conceal their own influence, inhibit any exhibition of independence by politicians, and allow the electorate to believe that they were exercising their own free choice. Such an alternation of the parties on the Federal scene occurred in the period 1880-1896, with business influence (or at least Morgan’s influence) as great in Democratic as in Republican administrations. But in 1896 came a shocking experience. The business interests discovered that they could control the Republican Party to a large degree but could not be nearly so confident of controlling the Democratic Party. The reason for this difference lay in the existence of the Solid South as a Democratic section with almost no Republican voters. This section sent delegates to the Republican National Convention as did the rest of the country, but, since these delegates did not represent voters, they came to represent those who were prepared to pay their expenses to the Republican National Convention. this way these delegates came to represent the business interests of the North, whose money they accepted. Mark Hanna has told us in detail how he spent much of the winter of 1895-1896 in Georgia buying over two hundred delegates for McKinley to the Republican National Convention of 1896. As a result of this system, about a quarter of the votes in a Republican Convention were “controlled” votes from the Solid South, not representing the electorate . After the split in the Republican Party in 1912, this portion of the delegates was reduced to about 17 percent.
A similar claim was made by Edward Bernays in his book Propaganda:
Page 60-61
But it is well known that many of these leaders are themselves led, sometimes by persons whose names are known to few. Many a congressman, in framing his platform, follows the suggestions of a district boss whom few persons outside the political machine have ever heard of. Eloquent divines may have great influence in their communities, but often take their doctrine from a higher ecclesiastical authority. The president of chambers of commerce mold the thought of local business men concerning public issues, but the opinions which they promulgate are usually derived from some national authority. A presidential candidate may be “drafted” in response to “overwhelming popular demand,” but it is well known that his name may be decided upon by half a dozen men sitting around a table in a hotel room.
In some instances the power of invisible wire-pullers is flagrant. The power of the invisible cabinet which deliberated at the poker table in a certain little green house in Washington has become a national legend. There was a period in which the major policies of the national government were decided by a single man, Mark Hanna. A Simmons may, for a few years, succeed in marshaling millions of men on a platform of intolerance and violence.
Have U.S. elections improved? From the looks of things, the answer is “No.”
No book details the historical relationship between big business and the Federal government better than this one. Though confined merely to the so-called Progressive Era in American history (1901-1914), Kolko manages to overturn all the misconceptions about the formation of government regulation in America. Instead of accepting the standard view that federal regulation of business was inspired by the Progressive intellectuals and activist political leaders eager to put a check on the rising power of big business, Kolko shows that it was really inspired by the drive of businessman to limit competition and bring “stability” into the market. The result is what Kolko calls, appropriately enough, “political capitalism.” Some earlier reviews have attempted to draw an ideological lesson from this book. This is a mistake. If there is a lesson to be drawn from Kolko’s work, it is the failure of all ideologies (whether from the right, left, or center) to adequately explain the rise of political capitalism in America. Both the right and the left share the common assumption that government regulation hurts big business. Kolko proves that this isn’t the case, that Big Business is in favor of regulation and the throttling of competition. Kolko’s book is a must read for anyone who wants to understand what capitalism and politics is really all about.
What’s quite fascinating is in The triumph of conservatism Mr. Kolko identifies John D. Rockefeller as being directly responsible for the creation of US incorporation law :
Page 63
The Sherman Act was not, with rare exceptions, enforced throughout the 1890’s. By the end of the century the issue could no longer be ignored, if only because it was becoming politically inexpedient to continue to do so in the face of mounting concern over the growth of big business. In June, 1898, Congress created the U.S. Industrial Commission to study the entire economic structure and to take testimony from those interested in the problem. Composed of House and Senate members, but primarily of the representatives of a variety of economic organizations, the commission functioned for three years, and its nineteen volumes of testimony and reports are a goldmine of information on every aspect of the American economy at the beginning of the century.
The Industrial Commission accepted the necessity and inevitability of industrial combinations, urging that “Their power for evil should be destroyed and their means for good preserved.” More significantly, the commission’s hearings provided a forum for key businessmen on the question of federal regulation. Of some type in some specific area, and no interest was as strong in this demand as Standard Oil. John D. Rockefeller, John D. Archibold, and H. H. Rogers of Standard called for a national incorporation law and the federal regulation of accounts and financial publicity. Inconsistent state regulation, the Standard spokesmen claimed, was vexatious. There should be, Rockefeller suggested, “First. Federal legislation under which corporations may be created and regulated, if that be possible. Second. In lieu thereof, State legislation as nearly uniform as possible encouraging combinations of persons and capital for the purpose of carrying on industries, but permitting State supervision. . . .” They were joined by Elbert H. Gary, of Morgan’s Federal Steel, who called for full publicity of financial data, and by John W. Gates and Max Pam of American Steel and Wire, who wanted strict federal incorporation laws and a national manufacturing commission to supervise incorporation, and by James B. Dill, the promotion lawyer, who also favored federal incorporation. There was of course, significant opposition to federal incorporation from John R. Dos Passos, the promoter, and Francis Lynde Stetson, but it is clear that important, if not dominant, big business sentiment was very much in favor of federal regulation.
This brings about a paradox in the right and the left. Glenn Beck is often critical of liberals for criticizing corporations, yet it was federal interference on behalf of big business which created our modern day incorporation laws to shield against liability. On the left there is a demand to regulate industry without acknowledging the dangerous fact big business is the main driver behind regulation. In most cases big business actually writes the laws to regulate themselves.
I was recently lucky enough to stumble across a PDF copy of Carroll Quigley’s Tragedy and Hope. While browsing through I came across an interesting statement:
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