Kashia Arnold

H 573

9/22/11

Précis

Thomas Kessner. Capital City: New York City and the Men Behind America’s Rise to Economic

Dominance, 1860-1900. New York: Simon & Schuster, 2003.

Thomas Kessner's Capital City asserts that between 1860 and 1900, New York City’s rise as the driving force behind the United States economy was formed and shaped by an elite group of American entrepreneurs. This white and wealthy cluster included Jay Gould, Andrew Carnegie, John D. Rockefeller, Moses Taylor, A.T. Stewart, Cornelius Vanderbilt, John Jacob Astor, and John Pierpont Morgan, among others. Their efforts transformed small-scale businesses into large-scale corporate trusts that fundamentally changed American capitalism into corporate capitalism. This new capitalist economy no longer relied on competition between individual producers due to its advancement into a sophisticated marketplace that cultivated corporate competition. In turn, the corporate marketplace featured bureaucratic corporations competing under the leadership of their tycoons, thus enabling the United States economy to expand rapidly on a national and international level. New York City was key to this economic metamorphosis. The city emerged during this era as the center at which the bulk of United States trade and financial resources converged thereby advancing Gotham’s corporate elites and the economic rise of a nation.

Kessner has organized Capital City into thematic time periods to demonstrate how New York City and its moguls built the economic engine that drove the modern U.S. economy. Chapter one introduces New York City’s pivotal development during the Age of Jackson that followed the War of 1812. Despite U.S. post-war tensions with Great Britain, New York provided a successful arena for international trade relations that the City’s reliable transatlantic shuttle services strengthened and expanded. Even in its early years, New York provided an effective marketplace for the trade and transportation of goods. Immigrants lacking in pedigree flocked to this region from all over the world hoping to join a prosperous merchant class that had built its trading success on risk and a sense of having nothing to lose.

Kessner observes that by the time of the Civil War immigrants such as John Jacob Astor, Moses Taylor, and A.T. Stewart had constructed and diversified the trading houses, merchandising organizations, and, most importantly, the financial banking institutions that would transform New York City’s urban landscape. Because European investment had dried up during this period, the Civil War marked a dramatic shift for the American economy that placed New York at the hub of the nation’s monetary and banking demands. The war also ushered in effective modes of production and technology that large-scale firms most successfully advanced. As a result, the nation’s cities rather than its farms became the engines of economic expansion, and the U.S. developed its own industries that reduced its reliance on imports. New York was implicitly linked to this economic change.

In chapter two, Kessner further examines the postwar economic gains, identifying financing and New York City’s banking resources as the main reasons for both economic growth in the postwar U.S. and the City’s urban transformation. New York’s infrastructure and financial institutions were masterfully chiseled into professional commercial sectors during this period, increasing and broadening the sweep of the city’s entrepreneurial resources. New York financed massive sums for railroads, real estate, and shipyards. This metropolitan advancement fostered Andrew Haswell Green’s urban vision that was responsible for New York’s long-term development.

Chapter three examines the social contradictions that erupted during the postwar period that profoundly affected New York’s urban transformation. The city’s corrupt municipal politics and powerful political machines sullied New York’s image. Critics even predicted that “the rottenness of New York would destroy itself” (p. 127), but Kessner contends that despite New York’s flaws, the City had a remarkable capacity for attracting capital and producing profits. The war had opened up new opportunities to New York’s modernist “heroes,” particularly in the financing of railroads. This corporate-scale undertaking forged a unique relationship between private corporations and the U.S. government. Furthermore, the ability to finance the railroads tightened New York’s fiscal ties to London and Paris, and endeared the nation to stockholding possibilities in New York’s new financial world. However, railroad tycoon Jay Gould’s ill-conceived gold “corner” scheme tainted the national and global view of New York’s financial picture.

Chapter four demonstrates New York’s tumultuous economic situation in light of the failed gold scheme. By the 1870s the notorious Boss Tweed and Tammany hall had met their demise and New York experienced a period of uncertainty in its political direction. Regions all over the country counted on New York to foster the trade and financial markets necessary for the local economies of Chicago, California, Cleveland, and even the South to function. Despite this pressure, the City and its financial elites did not always know how to proceed and suffered from being in direct competition with one another. The popularity of Social Darwinism provided the moral justification and explanation as to why New York could not guarantee success for all.

Kessner further contends in chapter five that just as New York City’s stamp on the marketplace shaped corporate capitalism, the social backlash against New York’s perceived control also determined how corporate capitalism was systemically inflicted. The coterie of entrepreneurial elites could not prevent themselves from reacting to the social and political dynamics that challenged their power. New York’s churches, newspapers, intellectuals, and labor movements pushed against a system that rewarded few and punished many. The labor movement proved the most important check on the City’s corporate culture, as workers organized and protested against a system rife with inequalities. The number of state regulations increased in order to stabilize laissez-faire practices gone haywire. Additionally, widespread fears over corporate monopolies drove a wedge between workers and company owners.

Yet in chapter six Kessner recounts that J.P. Morgan, the ultimate mogul’s mogul, insisted that his motives and actions – and those of his colleagues – did not manipulate the American economy or provoke social unrest. Morgan argued that natural processes and not meddlesome influences had evolved the American economy into a realm that depended on corporate monopolies for transportation, employment, and financial stability. Indeed, Kessner notes that during the gold crisis that followed the 1893 depression, Morgan’s talents as a financier enabled him to work with the U.S. government to protect the nation’s gold reserves from sinking below a point of no return. One of the rare few who benefited from this crisis, Morgan left his mark on the U.S. economy. His “morganization” efforts successfully streamlined the rail industries’ excesses by 25 percent. Morgan’s endeavor to control the economic chaos of the 1890s was mirrored by the populist campaign that threatened to dismantle monopolistic interests and even Wall Street. Fearful Populists rejected the new economy, but by the late 1890s New York had crystallized into the center of world capitalism, a process that powerful men had forcefully steered for some time.

Ultimately, corporate capitalism dominated the American economy following the Civil War despite opposition to it. Kessner contends that the combination of individuals’ market strategies and their unintended consequences molded the American economy––not an invisible hand. Furthermore, he notes, New York accomplished more than any other U.S. city in terms of power and financial influence. Thanks to Wall Street and an assembly of influential individuals, the American economy recovered from the 1893 depression as the leading economic influence over the land. New York did not falter as other cities did when the economy no longer matched their design. Instead, the City and its financial giants adapted to guide and preserve the nation’s role within the system of world capitalism. The effects of these efforts have prevailed into the twenty-first century.