Introduction
Privateersmen to Robber Barons

excerpted from the book

Wealth and Democracy

a political history of the American rich

by Kevin Phillips

Broadway Books, 2002, paper

Introduction
pxi
The early nineteenth century ... in the frontier settlement decades humming with bargain-priced government land sales-"doing a land office business" became a common phrase in the 1830s-empowered millions of new small landowners. New World openness in acreage or jobs became a beacon, drawing millions of emigrants from European embarkation ports. Stephen Girard and John Jacob Astor, America's richest men, were two immigrants who had built fortunes with the help of Jeffersonian politics. Wealth in their hands symbolized opportunity.

The other great example came in the quarter century after World War II when the middle class pushed its share of national wealth and income to record levels. The skepticism of the rich imprinted by the Great Depression guided politics and public policy through the 1960s.

These were the two eras in which wealth and opportunity clearly nurtured democracy. Yes, the top 1 percent of Americans had a very large slice, but it was smaller than the share commanded by the aristocracy of Europe.

The last two decades of the twentieth century, by contrast, echoed the zeniths of corruption and excess-the Gilded Age and the 1920s-when the rich in the United States slipped their usual political constraints, and this trend continued into the new century. By the 1990s data showed the United States replacing Europe at the pinnacle of Western privilege and inequality. This, of course, is part of what made the United States the prime target of terrorism in much the same way as the Europe of czars, kings, and grand dukes was during the period of 1880 to 1920. Finance itself had been a target before-in 1886, an anarchist flung acid and fired shots at the stockbrokers of the Paris Bourse, and in September 1920, terrorists set off dynamite on Wall Street in front of the offices of J. P. Morgan. Thirty-four people were killed and more than two hundred injured.

Given these extraordinary wealth-related circumstances, provocations, and stakes, a political history of the American rich must inquire far beyond the predictable concentration of assets, inequality, and conspicuous consumption. It must also pursue troubling and crippling side effects: high levels of political corruption, the arrogance of global economic power, the twisting of the U.S. tax code, and the voter belief in the captivity of government to private interests.

The inroads on American democracy in the 1980s and 1990s have many philosophical as well as political patrons: think tanks, university chairs, and publications joined in praise of economic elites, corporate predators, Darwinian competition, the claims of political moneygiving to be free speech, uninhibited markets, global policing on behalf of investment, and "free" enterprise (however reliant on friendly government). Allied pundits and promoters, in turn, have repeatedly undercut popular programs ranging from Social Security to business regulation. Unelected judges, central bankers, trade regulators, and global economic organizations have been encouraged in taking over powers earlier enjoyed by elected national leaders and legislatures. Critics counter with charges of a growing "democratic deficit."

These trends are closely related to-indeed, many of their conservative protagonists are funded by-America's deepening wealth and income concentrations. Between 1979 and 1989 the portion of the nation's wealth held by the top 1 percent nearly doubled from 22 percent to 39 percent. By the mid-nineties, some economists estimated that the top 1 percent had captured 70 percent of all earnings growth since the mid-seventies.

pxiv
Early in his pursuit of the 2000 Democratic nomination, former senator Bradley made the point that

"When politics becomes hostage to money, as it did in the late nineteenth century, and as it increasingly is today, people suffer. Neither economic opportunity nor economic security is given the place it deserves in our national ambitions. There is still a very tangible relationship between the level of opportunity and security available to every American family and the extent to which we can keep our democracy secure and separate from the force of money."

pxv
... by 2000 the United States could be said to have a plutocracy, when back in 1990 the resemblance to the previous plutocracy of the Gilded Age had not yet fully matured. Compared with 1990, America's top millennial fortunes were three or four times bigger, reflecting the high-powered convergence of innovation, speculation, and mania in finance and technology. Moreover, the essence of plutocracy, fulfilled by 2000, has been the determination and ability of wealth to reach beyond its own realm of money and control politics and government as well. In America, explains political scientist Samuel Huntington, "money becomes evil not when it is used to buy goods but when it is used to buy power . . . economic inequalities become evil when they are translated into political inequalities." Political inequalities, in turn, lead to more dangerous economic inequalities.

The morphing of politics into a marketplace with barely hidden price tags reached critical mass in the 1990s. Escalating monied control of politics provoked a stream of new studies and volumes about the "Buying of the Presidency" and the "Buying of Congress." Elizabeth Drew, a serious author, employed a suitably stark title: The Corruption of American Politics. Pundits labeled pre-2000 presidential fundraising as a "wealth primary" that distilled the new electoral essence: big contributor sponsorship. Others derided the contest itself as our "national auction." Senator McCain dismissed the U.S. system of campaign finance as "an elaborate influence-peddling scheme in which both parties conspire to stay in office by selling the country to the highest bidder."

With Americans of the early twenty-first century confronting plutocracy's second U.S. emergence, it is only moderately comforting to know that the first emergence was eventually curbed a century ago by a pair of progressive presidents and the Sixteenth and Seventeenth Amendments to the U.S. Constitution, which authorized an income tax and required popular election of U.S. senators. The victories under Theodore Roosevelt and Woodrow Wilson, however, came after four decades. The measure of the Gilded Age, beginning in the 1870s, was that by the 1890s the goliaths of U.S. business, railroading, and finance had gained de facto control over many state legislatures, the federal judiciary, and the U.S. Senate. Looking back from the 1930s, historian Arthur Schlesinger Sr. observed how "America, in an ironical perversion of Lincoln's words at Gettysburg, had become a government of the corporations, by the corporations and for the corporations."

Schlesinger's analysis has a contemporary ring. While this book confines itself to a brief opening portrait of the George W. Bush administration, reformers like public television's Bill Movers were proclaiming Gilded Age deja vu within two months of the Bush inaugural. "Big money and big business, corporations and commerce," Moyers commented, "are again the undisputed overlords of politics and government. The White House, the Congress and, increasingly, the judiciary, reflect their interests. We appear to have a government run by remote control from the U.S. Chamber of Commerce, the National Association of Manufacturers and the American Petroleum Institute. To hell with everyone else."

pxvii
The Republican Party has its own recurring role in partial democratic erosion. Republicanism began its presidential cycles circa 1860, 1896, and 1968 with centrist economics, some concern for labor, and skepticism of capital-first under Lincoln, then under McKinley and Theodore Roosevelt, and later under Richard Nixon and Gerald Ford. Once these crisis-era beginnings gave way to more normal times, the Republican compass has swung toward Wall Street, private profit, market utopianism, and the demanding politics of money. Interest-group insistence and ideology took over. The third and current GOP shift of attention from Middle America to Upper America is no coincidence.

The new U.S. war against terrorism adds a further possibility: that a U.S. government concerned with protecting wealth may do so at the expense of democratic procedures and may try to blame terrorism rather than flawed policy for hard times. There is also the possibility that the "financialization" processes of the 1980s and 1990s-securitizing so many income and debt streams, becoming electronically dependent, exalting the stock market as the center of commerce-have made possible a new manner of economic terrorism and warfare prior great powers never faced.

p3
John Jay, first chief justice of the United States, 1787

The people who own the country ought to govern it.

p3
National platform of the Populist Party, 1892

Corruption dominates the ballot-box, the Legislatures, the Congress and touches even the ermine of the bench. The fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few, unprecedented in the history of mankind; and the possessors of these, in turn, despise the Republic and endanger liberty.

p3
... Alexis de Tocqueville, in 1837, hedged his praise for democracy in America with concern that the new industrial elite, "one of the harshest that ever existed," would bring about the "permanent inequality of conditions and aristocracy."

p4
By 2000 ... the United States was not only the world's wealthiest nation and leading economic power, but also the Western industrial nation with the greatest percentage of the world's rich and the greatest gap between rich and poor.

p6
The radical architects of the new state constitution [in Pennsylvania in 1720] in took indirect aim at these disparities by expanding the franchise, limiting the terms of state legislators, and opening sessions to the public. They even specified that final passage of bills should be delayed until their contents could be published in the state's newspapers and debated by the general public. But in the Declaration of Rights attached to the Constitution, they were more direct, declaring that government existed for the "Common Benefit, Protection and Security of the People, Nation or Community, and not for the particular Emolument or advantage of any Single man, family or Set of Men, who are only part of that community." This was bold talk for the eighteenth century, and many delegates had supported an even stronger Sixteenth Article, narrowly rejected, which stated that "an Enormous Proportion of Property vested in a few Individuals is dangerous to the Rights, and Destructive of the Common Happiness of Mankind; and therefore, every free State hath a right by its Laws to discourage the Possession of Such Property."

p9
... all but six of the major waves of inflation that have swept the United States have come in [war's] wake ...

p11
Half of the southern wealth was in slaves, some 600,000 valued at perhaps $120 million by the 1780s.

p35
Each of the six major U.S. inflation waves came out of a war. While the phenomenon seems unavoidable, the economic burdens and benefits have rarely divided evenly, and the divergences-who pays, who profits-have determined the wartime wealth effect, one of the most powerful that politics and government can influence.

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