Empires Apart

by Brian Landers

  Morison’s description of post-civil war society as feudal is accurate, but in a sense American society had always been feudal. The original southern colonies had been feudal estates and the plantation owners and New England merchants who instigated the American Revolution exercised quasi-feudal powers in their communities. The essence of Hamilton’s view of democracy was government by an elite on behalf of the people. What was new in the period after the civil war was that the oligarchs made little pretence to be governing on behalf of the people; indeed they made great pretence of not governing at all. For perhaps the first time in history the most powerful men in society remained outside the formal structures of government. Their objectives were entirely mercenary, and in the new doctrines of laissez-faire capitalism they found an ideology sanctifying their creed of greed: the wealth of nations derived from their efforts, and the role of government was to do nothing more than to ensure that they were not interfered with. The institutions of democracy were not torn down by the new feudal lords but simply bypassed.

  The contrast with Russia was stark. There too nascent capitalists were at work but in a far less attractive environment. How do you bribe a tsar who has everything? The relative performance of the railways showed the inherent differences between autocracy and American democracy. For the tsars railways were a strategic not merely economic imperative. The Trans-Siberian railway was the world’s longest, built not just to facilitate the exploitation of Siberia’s mineral riches but to tie the empire together and allow rapid movement of troops to the eastern provinces. Great efforts were put into developing extensions into China and Manchuria, but within the Russian heartland railway connections were minimal. In America railways criss-crossed the nation in a tangled web that would have horrified a rational planner, but at least they existed. Despite the magnificent achievement of the Trans-Siberian, Russia remained in the era of the horse and cart when America was moving from steam trains to the automobile.

  Although most of Russian industry was less developed than its American counterparts this did not imply that Russian civilisation was somehow more backward. The United States was beginning to excel in what might be called practical learning, but in the more intellectual pursuits like literature and science it often lagged behind – despite being free of the heavy hand of autocracy. In Russia the Academy of Sciences, brainchild of Peter the Great, was founded in 1725, and had an enormous impact on scientific development. By contrast the US Congress did not set up the National Academy of Science until 1863. Some tsarist scientists became world famous. Ivan Pavlov’s animal experiments gave English the word ‘pavlovian’ and Pavlov himself a Nobel prize, Nikolai Lobachevski was the first person to develop non-Euclidean geometry, Dmitri Mendelev created the periodic table of chemical elements and the Baltic German Friedrich Struve founded the Pulkovo observatory outside St Petersburg. Russian women were among the first in the world to receive doctorates in scientific disciplines ranging from pure mathematics to zoology. The mathematician Sophie Kowalevski was the first woman in Europe to become a full professor, although she had to go to Sweden to do so.

  Tsarism was both a spur to scientific advance, by actively sponsoring research, and a hindrance when scientists reached the ‘wrong’ conclusions. The works of physiologist Ivan Sechenov were suppressed for their supposed atheism – a problem still encountered by scientists of evolution in America today. Many Russian scientists became political dissidents, for example the biologist and leading anarchist Prince Peter Kropotkin. Police broke up the last lecture given by the great chemist Dmitri Mendelev because they thought he might use it to incite a student uprising. In America too science and politics were never completely segregated; Benjamin Franklin achieved fame in both fields.

  The difference between science in the two nations is less in what was achieved than in what is now remembered. Although in the eighteenth and much of the nineteenth centuries both Russian and American scientists were outside the mainstream of scientific development, at that time centred on western Europe, American history has since been incorporated into ‘western’ experience. Thus Benjamin Franklin is widely remembered as one of the most important figures in the history of science, while his contemporary Prince Mikhail Lomonosov who played an almost identical role, and even did research in many of the same subjects, for example electricity, is now largely forgotten.

  Whatever the intellectual attainments of Russian scientists, the practical application of science was far more limited in Russia than in America. The world’s first oilwell was drilled by Russian engineers near Baku in the late 1840s, a decade before America’s first oilwell in Pennsylvania in 1849, but it was in America that oil corporations quickly achieved preeminence. Economic and industrial development across the Atlantic was on an altogether grander scale. One consequence of this was that the political power of the robber barons who controlled that development was far more pervasive. In Russia a powerful group of oligarchs emerged but they never exercised the influence over government of their American counterparts, and the industrial sector itself formed a much smaller part of the overall economy. Nevertheless, by the end of the nineteenth century the manufacturing and mining industries in Russia were becoming far more important than they had been.

  After the Crimean War it was obvious to everyone that if Russia was to fulfil its imperial pretensions it needed to industrialise, but industrialisation brought its own problems. First it needed investment, and to a large degree that meant foreign investment. One of the most critical events in the collapse of the tsarist autocracy occurred not on the battlefield or on the barricades of the revolution but in the corridors of power, where diplomats and bankers collide and collude. In 1888 Russia was in desperate need of foreign investment to kick-start its industrialisation, and it turned for help to what was by then the dominant continental power: Germany. For reasons that are still argued over, the German chancellor Bismarck refused all requests for credit, forcing the Russian regime to turn elsewhere, in particular to France. Thus was born the Franco-Russian alliance that pulled the Romanov regime to its destruction on the rocks of the First World War.

  As with early American industrialisation foreign entrepreneurs played a key role in kick-starting industrial growth. The modern city of Donetsk, with a population of 1.2 million and one of the largest cities in Ukraine, was founded in 1870 and originally named Yuzovka after a Welsh industrialist, John Hughes, whose factory dominated the local economy. (Donetsk may lack the historical interest of Yuzovka, but it has to be better than the name the city bore from 1924 to 1961 – Stalino.) A crucial difference between American industry and Russian was that in Russia foreign entrepreneurs and companies remained key players long after they had been displaced in America. There were a number of reasons for this, but none had much to do with the supposed virtues of America’s ‘free’ markets.

  Some of the reasons were industry-specific. For example, Whitney’s cotton gin, which had revolutionised the American cotton industry, worked with short staple cotton; when the American Civil War devastated world cotton markets Russia turned to the new provinces of central Asia as a source of raw cotton, but this meant spinning long staple cotton, which was not only labour intensive but relatively highly skilled and for large scale production required machinery Russia could not produce. Britain dominated the global cotton industry by the end of the eighteenth century and produced most of the world’s textile machinery. In 1842 a British ban on machinery exports was lifted and machinery was soon exported to both America and Russia. By copying British technology and then imposing high tariffs on machinery imports, American manufacturers were able to see off British competition. Russia, on the other hand, lacked the ability to create its own machinery, and as late as 1910 nearly 90 per cent of all cotton spinning machinery in Russia was British. Cotton weaving and dyeing also required technologically advanced machinery, and when Britain did not provide it other western nations did. Giant German- and Swiss-owned textile mills imported machinery from their homelands
. Not only was machinery imported; even as late as the First World War nearly all Russian-owned textile mills had British technical managers and engineers.

  However, the principal reason that so much of Russian industry before the revolution was dominated by foreigners was not specific to the cotton industry but was a consequence of history: unlike America, Russia had never been part of the British empire. In colonial America the local oligarchs, protected from global competition by British trade barriers, built up substantial capital assets. This accumulated wealth was able to fund the development of an industrial economy that was not only far more dynamic than Russia’s but balanced local with foreign ownership. In the Russian empire, on the other hand, wealth was sucked into the imperial treasury and most of it spent by the tsar. Therefore for budding entrepreneurs the only source of capital for industrial investment was what remained in the tsar’s vaults or what could be borrowed from foreign banks. Not surprisingly foreign banks, at least initially, were more inclined to lend to people they knew, their own nationals wanting to invest in Russia, rather than to the new class of Russian oligarchs. Furthermore, to buy foreign machinery required gold or foreign exchange. America’s first industrialists had ready access to the foreign exchange receipts from southern cotton and tobacco exports (which permeated north to merchants, manufacturers and – not to be forgotten – slave traders). Russia’s agricultural exports were too small to serve the same purpose.

  Both America and Russia were heavily dependent for their economic development on foreign investment, almost all of it from western Europe; by 1914 they were by far the world’s largest net debtors. Right up to the First World War the US was the world’s largest importer of capital. In 1914 its foreign debt was $7.1bn compared with the next largest debtor nation, Russia, with $3.8bn. The crucial difference between the two countries was that the US was also a significant lender; by 1914 it had overseas investment of $3.5bn (although dwarfed by Britain with $18bn, France with $9bn and Germany with $7.3bn). In terms of net borrowing Russia and America were in virtually the same position, but the US was an integral part of the global economy: in 1897 US foreign investment had amounted to $700m; by 1914 this had almost quintupled.

  The reliance of the US on foreign investment caused considerable anguish to the native oligarchs. The January 1884 issue of the New York Bankers Magazine commented, ‘It will be a happy day for us when not a single good American security is owned abroad and when the United States shall cease to be an exploiting ground for European bankers and money lenders.’ It went on to describe the interest and dividends earned by European bankers as ‘tribute paid to foreigners’ and as such totally ‘odious’.

  Russian entrepreneurs were also well aware of their disadvantageous position. As Professor Alfred Rieber has written, many were convinced that ‘reliance on foreign skills and capital could turn Russia into a dependency of the west without a single shot being fired’. But there was little they could do about it as long as the tsar, increasingly dominated by his reactionary wife and her spiritual advisor Rasputin, remained committed to a vision of divinely ordained autocracy, which made him nearly as unsympathetic to the arguments of the new capitalist class as he was to those of the socialists and anarchists.

  In contrast, across the Atlantic the US economy was entering a period of rapid ‘consolidation’. The mechanism for this consolidation was the ‘trust’, which could bring together all the firms in a particular industry – not just in the new sectors like oil, steel and railways but in older ones such as sugar and tobacco. These trusts were enormous, dominating their domestic market and in some cases controlling production worldwide. No trust was bigger than Standard Oil, owned by John D. Rockefeller, whose personal wealth was equal to nearly 2.5 per cent of the whole US economy (the equivalent of around $250bn today, more than twice as much as Bill Gates). Standard Oil was formed in 1867 but it took a lawyer, Samuel Dodd, to come up with the idea of a trust, and on 2 January 1882 the Standard Oil Trust was formed. A board of trustees was set up and all the Standard properties were placed in its hands. The nine trustees elected the directors and officers of all the component companies, allowing Standard Oil to effectively function as a monopoly. Later Standard Oil pioneered the holding company, which had the same effect.

  Public disquiet about trusts increased, and politicians like Theodore Roosevelt, secure in his inherited wealth, recognised not only a political bandwagon they could climb on but, in many cases, a genuine affront to their concept of democracy. If men like Rockefeller and Carnegie represented the new dawn of big business and corporate empire, Theodore Roosevelt represented an altogether older vision of economic and political life. He was born into a wealthy New York family with powerful southern connections on his mother’s side. He personified the way America’s imperial aspirations had moved on from the Wild West to encompass the whole world, but at the same time he retained the rugged frontier values that had prompted his cowboy heroes to stand up to the cattle barons and outlaws of yesteryear. After the death on the same day of his mother and his first wife Roosevelt bought a ranch in the Bad Lands of Dakota, determined to play cowboys for real. He was appointed deputy sheriff and claimed to have hunted down a gang of desperados, but he soon discovered that the frontier at the end of the nineteenth century was neither as exciting nor as profitable as he had hoped and his gaze turned elsewhere – to glory in warfare overseas and politics at home.

  Few American presidents have been able personally to shape their country’s history in the way that tsars defined the history of Russia but two or three have come near. Andrew Jackson was one, and two others fired the popular imaginations of their day: Abraham Lincoln, who took his nation into war with itself, and Theodore Roosevelt, who became a symbol of America’s imperial wars overseas. Lincoln is probably the only American president between George Washington and modern times that most people can name. Abraham Lincoln’s cause, freedom and civil rights for all, has become part of how Americans see themselves today, and that is why he is remembered – despite the fact that Lincoln was actually committed to maintaining slavery in the south and eventually freed the slaves only in the extraordinary conditions of the civil war. Roosevelt’s cause, empire and military glory, is no longer a core part of America’s self image and Theodore Roosevelt has become an embarrassing footnote to American history – despite the fact that he won the Nobel peace prize for resolving war between Russia and Japan.

  Theodore Roosevelt was from the same brave, impetuous and demagogic mould as Winston Churchill. Just as Churchill flung himself into Britain’s imperial war against the Boers, Roosevelt threw himself into battle in the Spanish American War, leading what became one of the most famous episodes in American military history – the charge up San Juan Hill in Cuba. Like Churchill, Roosevelt was given political command of the navy despite having no naval experience, although Roosevelt achieved greater success in the Philippines than Churchill achieved in the Dardanelles. Both leaders spent much of their spare time writing: Churchill penned his famous history of the Second World War, Roosevelt his less famous naval history of the 1812 War. The parallels continued in the political world. Churchill was shunned by many in his party (indeed both men changed parties) and was a political maverick who only achieved power owing to the exigencies of war; Roosevelt only became President McKinley’s vice-presidential running mate after the incumbent died, and then became president following McKinley’s assassination.

  Roosevelt’s career was dominated by the twin themes of empire and soul. Although most famous internationally for his pursuit of America’s manifest destiny, he first achieved political notice at home through his attacks on corporate America and the scandalous behaviour of the robber baron Jay Gould. He launched a series of initiatives against the trusts, and in doing so he deflected much of the popular anger that arose from glaring inequalities of wealth and power. The contrast with Russia was marked. Roosevelt’s Russian counterpart, Tsar Nicholas II, also had to grapple with the issues of empire and
soul, but not only were there no mechanisms available to him to capture the spirit of dissent, as Roosevelt had done in America, but fundamentally there was no desire to do so. Nicholas, as the supreme autocrat, simply did not believe that his role was to ‘represent’ the concerns of the people in the way Roosevelt would have understood the term. The tsar was not the voice of the people but its emblem. He represented Russia as parents might represent children, not as elected officials represent their constituents.

  Roosevelt, on the other hand, fulfilled another role for his nation’s children. On a hunting trip in Mississippi aides presented him with a captured bear cub to shoot, but Roosevelt considered this unsporting. His act of mercy was caricatured in the Washington Post and a New York shopkeeper put the cartoon in his window alongside a toy bear made by his wife: the teddy bear was born. (Teddy Roosevelt’s generosity to the toy industry was not matched by generosity to the original cub: when the president declined to kill it another member of the party did so.)

  New Model Empires

  The two most important developments in American history between the civil war and the First World War were the globalisation of American imperial ambitions manifested in the Spanish-American War and the birth and rapid growth of the corporation: the commercial structure that would come to dominate the economy of the world.