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Chapter 5 Corporate Crashes Proponents of business are fond of calling government ineffective. But in many ways the business corporation has proven far less effective than government. The corporate economy that took shape in the United States in the late nineteenth and early twentieth centuries sometimes failed the most basic test of a good society. During the Great Depression of the 1930s and in some earlier financial crises as well, corporate America failed to supply industrious citizens with the work they needed to live a decent life. The corporate economy was central to mid-twentieth-century American prosperity, yet it was also central to the 1930s economic collapse. In the final analysis it was government, not the corporate economy, that took the decisive steps to lift ordinary citizens out of the Depression and into the postwar American Dream. The corporate economy came into being during the Second Industrial Revolution—the seventy-five years of heavy industry between the Civil War and World War II—a period in which there was little that was dreamlike in the lives of many corporate employees. As the railroads and then other capital-intensive industries such as steel and automobiles took shape, they created immense wealth but also huge disparities of income. Gaps between rich and poor were no new thing in history, but in America the poor were supposed to be able to become rich. As long as America had been a land of farmers with new land for settlement reaching almost infinitely west, there had seemed to be equal opportunity for all, or at least for free white males. In the new era of heavy industry, however, most of those who labored in a factory or on a railroad seemed likely to remain there. There could be no factory owners without factory workers. The old Jeffersonian dream of free men living independently on their own land 35 was replaced by the mundane reality of wage earners dependent on corporations for their livelihoods. By substituting dependency on employers for the independent life of the yeoman farmer, Americans won the material benefits of industrialism. Working people’s incomes rose overall. But the corporate economy was subject to dramatic downturns, with the greatest hardships falling on workers. Workers faced international competition. Corporations did not. The industrialized North, led by a corporate lawyer named Abraham Lincoln, had won the Civil War and raised protective tariffs. Having protected industrial corporations against competition from abroad, Congress ensured them a supply of cheap labor by keeping the door open to immigrants—just the reverse of today’s policy of free trade in goods, as information technology allows corporations to exploit cheap labor overseas, without bringing the workers to America. But in the nineteenth century, corporations were best served by an influx of cheap labor, a fact that resulted in an unrestrictive immigration policy. Workers’ mobility was more geographic than economic. Some moved into skilled trades or at least made it possible for their sons to do so. But many others moved desperately from city to city in search of jobs and livable wages. For example, 36 percent of the men who lived in Boston at the start of the 1880s were not there at the end of that decade.1 These men had evidently moved on, hoping for better prospects in another city. Women were not included in many of the official records, but it is a reasonable inference that their mobility bore some connection to men’s. Still more remarkably, in that same decade of the 1880s, twelve times more men moved into Boston than the city gained in male population .2 That statistic can only mean that men were rotating in and out of Boston at a remarkably high turnover. As new men arrived, others were leaving. Of course some men left Boston not for another city but for a cemetery. Still, it is clear that a sizable percentage of the men who came to Boston in the 1880s quickly moved on to another town. They seem not to have found sustenance in the home of the bean and the cod. The demographics of other cities have not been studied so closely, but there is reason to think that Bostonians’ extraordinary mobility was representative of other urban populations in nineteenth-century America.3 To some degree, probably a large one, that high mobility was driven by Americans’ unsuccessful search for economic opportunity. Many moved C o r p o r a t e F a i l u...

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