The years following the Civil War saw an explosion of American industrial power. A national market system, already in embryo before the war, was born with the completion of the first transcontinental railroad in 1869. Railroads stimulated other industries, notably steel, coal, and lumber, which in turn relied on the railroads to transport their products. Successive administrations, usually controlled by the business oriented Republican party, continued to promote economic growth through railroad subsidies: they granted more than one hundred million acres of public land-an area equal to the German Empire-to corporations such as the Union Pacific Railroad.

As before, technology promoted economic growth and development. The telephone, the refrigerated boxcar, the Westinghouse air brake, and new techniques of steel-making made their impact within a generation. By the end of the nineteenth century, the United States had become the world's leading industrial nation. By 1910, it produced more iron and steel than Britain, France, and Germany combined. Whereas in l880, the United States accounted for less than 15 percent of the world's manufacturing, by 1913, that figure had more than doubled. Ironically, much of the capital needed to generate industrial success had come from Europe. By 1914, nearly $12 billion had been invested in the United States by British, French, and German capitalists. Like many former colonies in the twentieth century, the United States relied on foreign capital for its development. But its overall economic strength was sufficient to avoid the dependency and underdevelopment that more recent emerging nations have so frequently experienced.

Production figures could not be denied, and they led many Americans to proclaim the "Gospel of Wealth." It was, declared Henry Ward Beecher, formerly a radical abolitionist, the duty of everyone to get rich: poverty was evidence of sin. In America, at least, there was no excuse for failure, unburdened as it was by the archaic class systems of Europe and elsewhere. "I defy any man," said industrialist Andrew Carnegie in 1887, "to show that there is pauperism in the United States."

Yet even as Carnegie spoke, the evidence was mounting that the wealth generated by the American economy was increasingly maldistributed. Preindustrial America had prided itself on its lack of European-style slums. But by the 1850s, and even more so by the l890s, a gap had opened between the poor and the working class on one hand and the middle class and the rich on the other. Around Carnegie's Homestead plant near Pittsburgh lay thousands of workers' shacks. Employees worked every day of the year except Christmas and the Fourth of July, often for twelve hours a day. In crowded Manhattan, the first (and sometimes the last) stopping point for millions of European immigrants, many lived in the infamous "dumbbell" tenements: five- or six-story buildings with four families and two toilets on each floor. Yet in every large city these slums existed within walking distance of the mansions of the well-to-do. Some maintained the contrast was a disgrace to the economic system that produced it; others held that it was a natural result of competition and the "survival of the fittest." Social Darwinism and the Gospel of Wealth provided both comfort and justification for those who enjoyed the fruits of industrialism in America.

By the turn of the century, critics of American industrialism were increasingly outspoken. In Europe, critics of capitalism formed a powerful Socialist movement that aimed at the redistribution of wealth and the ultimate replacement of capitalism by public ownership and collectivism. America, too, had its Socialists, but the movement never attained the significance that it did in Europe and elsewhere.

Explanations for this form of American "exceptionalism" generally fall into three categories. First, historians often point to the long tradition of social mobility in America that had its roots in the seventeenth century. Immigrants, whether English Protestants in 1700 or Italian Catholics in 1900, expected to improve their status by coming to America. If they did not, certainly their children would. And there was always just enough evidence, from Benjamin Franklin through Abraham Lincoln to Andrew Carnegie, to justify this faith. The fact that the rags-to-riches ideal celebrated in the novels of Horatio Alger was statistically out of reach for most Americans made little impact.

Second, the wide variety of ethnic and cultural differences in America tended to soften or undermine what radicals called "class consciousness." In the early nineteenth century, divisions existed between Protestants and Catholics. Later, friction developed between "old" immigrants (Irish, German) and "new" immigrants (Slavs, Jews, Italians), between Christians and non-Christians, and, most devastating of all, between whites and blacks. Thus, while the more homogeneous working classes of Europe were drawn together by the inequities of modern industrialization, producing class-oriented political parties and a Socialist labor movement, these developments were largely absent in the United States. Third, the remarkable growth of the American economy, at least through the 1920s, tended to undermine critics of the system. Growth meant progress for the vast majority of American families and blurred the sharp edge of social conflict.

However, the seamy side of industrialism in America did not go unnoticed, unchallenged, or unabated. Between 1880 and World War 1, two political movements emerged that, though hardly Socialist, were nonetheless critical of the trends toward economic inequality and the concentration of power. The first, known as populism, was centered in the farming areas of the South and Midwest. The second, progressivism, had its greatest appeal to middle-class Americans in most regions, particularly in the cities. Of the two, the Populists were the more radical, at least in their rhetoric. They systematically denounced banks, industrialists, monopolies (especially railroads), the existing money system, and both major political parties, which they saw as controlled by the corporate interests of the East. But populism, after reaching a high point in the mid-1890s, had little appeal in the growing industrial areas, even among the workers at whom much of its rhetoric was aimed.

The Progressives, who claimed presidents Theodore Roosevelt and Woodrow Wilson among their number, had more success, especially after 1900. Unlike the Populists, few Progressives questioned the overall structure of the economy or looked backward to America's allegedly more innocent agrarian past. Rather, they sought to remedy the ills of industrialization through reforms, such as wages-and-hours legislation, better sanitation standards, and antitrust laws. Thus they called for greater governmental intervention in the economy. Theodore Roosevelt's presidency (1901-1909) saw the creation of a Food and Drug Commission and the passage of a Meat Inspection Act. Woodrow Wilson's first term (1913-1917) saw the enactment of an income tax amendment to the Constitution, the creation of both the Federal Reserve System of national banking and a Federal Trade Commission, and the regulation of hours for railroad workers. Progressives were sometimes attacked as "Socialists" and "radicals" by defenders of traditional laissez-faire economics, but nothing could have been further from the minds of men like Roosevelt and Wilson.

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