Macune’s Monopoly: Economic Law and the Legacy of Populism

Macune’s Monopoly: EconomicLaw and the Legacy of Populism

Sidney A. Rothstein, University of Pennsylvania

This article argues that the Populist legacy is embodied by the constrained conception of democracy underlying theAmerican state, which restricts popular sovereignty from the economic sphere. Charles Macune led the Farmers’Alliance according to a robust conception of democracy that insisted on subordinating economic law to popularsovereignty. Macune’s distinct economic thought marked a departure from previous antimonopoly movements,but his reliance on an inductive, empirical, institutionalist economic methodology was shared by the foundersof the American Economic Association. Populism did not fail because it relied on outdated economic theory; itwas defeated because it represented a coherent and credible threat to the established order. A successful campaignestablished the hegemony of the deductive method, which posited that manmade laws must serve the natural, uni-versally valid laws of economics and that popular sovereignty must therefore be restrained from the economic realm.Without the means to conceive an alternative relationship between the state and economy, the path of twentieth-century American political development has been limited to those possibilities available under a constrained con-ception of democracy. This article articulates Macune’s political strategy and highlights its underlying principlesin order to present a more robust conception of democracy and illustrate the mechanisms by which it was defeated.

Charles Macune’s leadership of the Farmers’ Alliancewas brilliant, beguiling, and short. In the spring of1886, he joined a farmers’ organization in MilamCounty, Texas; less than one year later, he waselected president of the National Farmers’ Alliance.Over the next three years, he built the NationalFarmers’ Alliance into an organization of more than1.2 million members, with hundreds of suballiancesin nearly thirty states; founded, edited, and distribu-ted a national newspaper with more than 100,000weekly subscribers; organized and led a powerful leg-islative committee that lobbied Congress on behalf offarmers; and designed and executed local commodityexchanges, insurance programs, cooperative stores,and subtreasuries. Macune set the agenda of theFarmers’ Alliance until 1889, when he was forcedout due to fundamental disagreements with otherleaders about strategy. No longer a formal leader,Macune’s influence waned and he spent the majorityof his remaining forty years as a small-town minister.Despite Macune’s role in leading a massive popularuprising, his distinctive economic thought remainsunacknowledged, in large part because its underlyingprinciples were roundly defeated.

By 1892, the National Farmers’ Alliance allied withothers in the producing class, including the Knightsof Labor and the American Railway Union, to lendsupport to the formation of the People’s Party, anational political coalition dedicated to the interestsof labor.1 But the party lost the 1896 election in devas-tating defeat, their poor showing at the polls the resultof a widespread, well-organized, and well-fundedbacklash.2 Social scientists, however, had forecastPopulism’s failure even before the election. FrankMcVey, in a dissertation written under the guidanceof Yale economist Arthur T. Hadley, argued thatbecause Populism was not based on reasoned judg-ment, but simply emotions of discontent, it was guar-anteed to fail:

It is not likely that it will make any greatheadway, because of its lack of fundamentalprinciples. The entire movement is the resultof discontent. Party organization of lastingqualities must be based upon more than dis-content. We may therefore regard the exist-ence of this party as a transient one.3

McVey wrote his dissertation in the spring of 1895,basing his forecast on economic analyses of the Popu-list agenda, rather than the People’s Party’s electoral

I am grateful to Begum Adalet, Osman Balkan, DavidBateman, Kali Borkoski, Warren Breckman, Guzman Castro,Jeffrey Green, Devin Judge-Lord, James Meador, Charles Postel,and Rogers Smith, as well as two anonymous reviewers and theeditors of Studies, for insightful comments and illuminating discus-sions on this paper. All remaining errors are my own.

1. Aziz Rana, The Two Faces of American Freedom (Cambridge,MA: Harvard University Press, 2010), 176–77.

2. Ibid., 211.3. Frank McVey, “The Populist Movement,” Economic Studies 1,

no. 3 (1896): 206.

Studies in American Political Development, 28 (April 2014), 80–106. ISSN 0898-588X/14doi:10.1017/S0898588X13000163 # Cambridge University Press 2014

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defeat.4 Contemporary scholars continue to pursuethe second part of McVey’s diagnosis, engaging econ-omic analysis to evaluate Populist claims,5 but the accu-racy of his forecast that Populism would fail has beenwidely questioned.

Many scholars, as well as Populist leaders, haveviewed Progressive Era reforms as proof that Populistagitation succeeded. This view understands Populismas a social movement with a set of concrete politicaldemands and implies that those demands outlivedelectoral defeat. In 1898, the Populist leader, TomWatson, declared that Populism was far from dead,insisting that “the Principles of Populism . . . nevercommanded more respect, never met with theapproval of a larger proportion of you fellow citizensthan they do to-day.”6 Macune himself reflected onthe movement in 1920, arguing that the Farmers’ Alli-ance was ultimately successful, which “obviated thenecessity of its existence, as did its success as anational organization in the field of economics, itspurpose having been adopted by the politicalparties embraced in their platforms.”7 Indeed,writing half a century later, Richard Hofstadteracknowledged the “failure of the revolt,” but nonethe-less pointed to legislation that originated with Popu-lism: “railroad regulation, the income tax, anexpanded currency and credit structure, direct elec-tion of Senators, the initiative and referendum,postal savings banks, even the highly controversialsubtreasury plan.”8 After reviewing this list, Hofstad-ter concluded that, “It is precisely the enactment ofso much of this program within a twenty-year periodthat gives us some cause to feel that third-partyaction was reasonably successful after all . . . and inthe not too long run saw most of its programsbecome law.”9 Similarly, John Hicks acknowledgesthat, “It would be idle to indulge in a post hoc argu-ment in an attempt to prove that all these develop-ments were due to Populism,” but he does not denythat, “the intensive study of agricultural problemsthat led ultimately to these measures did begin with

the efforts of sound economists to answer the argu-ments of the Populists.”10 While the organizationmay not have outlived the 1896 electoral defeat,Hicks and others suggest that many of the Populists’demands were nonetheless enacted because theywere taken up by the reformers of the ProgressiveEra in order to lay the groundwork for the twentieth-century American state.

Social scientists have taken up the hypothesizedlink between Populist demands and Progressivereforms and have tested it using modern empiricalmethods. Elizabeth Sanders employs roll-call analysisto show how Populism shaped key reforms, such asrailroad regulation, national education, and theFederal Reserve System.11 Monica Prasad argues thatPopulists’ demands long outlasted 1896, for theyplayed a key role in pushing the United Statestoward “agrarian statism,” a state form that seeks toprotect purchasing power through a flexible monet-ary policy.12 Prasad argues that agrarian statismexplains how the United States has arrived at thecurrent economic crisis, thus strengthening theclaim that the legacy of Populism endures in essentialfeatures of the American state.13

Some evidence, however, suggests that the connec-tion between Populist demands and the twentieth-century state is tenuous at best, casting doubt on thehypothesis that the Populists did in fact succeed.Even taking into account Sanders’s qualificationthat Progressive reforms reflect a response to Populistsrather than an enactment of their designs,14 andother scholars’ indications that Populism’s effectshave been oblique rather than direct,15 it remainsunclear what causal role Populists actually played indirecting American political development. Integrat-ing roll-call analysis with the logic of electoral compe-tition, Scott James finds that legislation shaping themodern state reflects legislators’ explicit rejection ofPopulist demands.16 Other scholars lend credence toJames’s argument, pointing out that even if legislationbore a rough resemblance to Populist demands, manypolicies significantly departed from their proposals.While Sanders includes the Federal Reserve System

4. Eric A. Moyen, Frank L. McVey and the University of Kentucky: AProgressive President and the Modernization of a Southern University (Lex-ington: The University Press of Kentucky, 2011), 15.

5. See, for instance, Allan G. Bogue, Money at Interest: Farm Mort-gage on the Middle Border (Ithaca, NY: Cornell University Press, 1955);Anne Mayhew, “A Reappraisal of the Causes of Farm Protest in theUnited States, 1870–1900,” The Journal of Economic History 32, no. 2(June 1, 1972): 464–75; Douglass C. North, Growth and Welfare in theAmerican Past: A New Economic History (Englewood Cliffs, NJ: Pre-ntice Hall, 1966).

6. Thomas Edward Watson, The Life and Speeches of Thos.E. Watson (Thos. E. Watson, 1908), 175, quoted in C. Vann Wood-ward, Tom Watson: Agrarian Rebel (New York: The MacMillanCompany, 1938), 333.

7. Macune, Farmers Alliance (Austin: Unpublished, Center forAmerican History, University of Texas at Austin, 1920), 59.

8. Richard Hofstadter, The Age of Reform (New York: Vintage,1955), 108.

9. Ibid.

10. John D. Hicks, Populist Revolt: A History of the Farmers’ Allianceand the People’s Party (Minneapolis: University of Minnesota Press,1931), 416.

11. Elizabeth Sanders, Roots of Reform: Farmers, Workers, and theAmerican State, 1877–1917 (Chicago: University of Chicago Press,1999).

12. Monica Prasad, The Land of Too Much: American Abundanceand the Paradox of Poverty (Cambridge, MA: Harvard UniversityPress, 2012), 87–88.

13. Ibid., 254.14. Sanders, Roots of Reform, 1.15. Stephen Skowronek, Building a New American State: The

Expansion of National Administrative Capacities, 1877–1920 (Cam-bridge, UK: Cambridge University Press, 1982), 253–54.

16. Scott C. James, Presidents, Parties, and the State: A Party SystemPerspective on Democratic Regulatory Choice, 1884–1936 (Cambridge,UK: Cambridge University Press, 2006), 34.

MACUNE’S MONOPOLY 81

as one policy that Populist demands helped shape,Lawrence Goodwyn suggests that the system that wasset up not only differed from the Populists’ plan, butthat it hurt farmers rather than helping them,17 andboth Charles Postel and James Livingston show howthe Federal Reserve System contradicts key tenets ofPopulist thought by removing the money questionfrom democratic politics.18 By focusing on the distancebetween Populist demands and Progressive Erareforms, these studies strengthen McVey’s propositionthat Populism would fail, but they reject his view thatPopulism lacked “fundamental principles.” Instead,they focus precisely on Populists’ unique understand-ing of modern politics. Seen from the angle of its prin-ciples, the legacy of Populism assumes a different form.

Writing in the 1950s, Hofstadter identified Popu-lists’ fundamental principles as sowing the seeds forMcCarthyism. This line of analysis has been pursuedby a handful of others who see the Populists as precur-sors to modern American fascism and anti-Semitism,19

given their expressions of paranoia and intolerance.20

Norman Pollack refuted this understanding of Popu-list thought, presenting a different view of Populists’fundamental principles that insisted that rather thanbeing “regressive,” Populist thought was soundly “pro-gressive” and democratic.21 Other scholars supportPollack’s account, similarly showing Populists’ commit-ment to democratic ideals, and while these accountsaccept McVey’s forecast that Populism would fail,they further contradict his assertion that Populistslacked “fundamental principles.” In their view, Popu-lism represents a coherent, measured, and yet unrea-lized, alternative to the emerging capitalist order.

Yet many of the scholars who emphasize its demo-cratic underpinnings present Populist thought as anoutdated holdover from a previous era, motivatedby nostalgia for a world eclipsed by the rise of a neweconomic order. Bruce Palmer and Robert McMatharticulate aspects of the Populists’ theories of coop-erative democracy, but insist that these theoriesfailed because Populism did not adequately respondto the political and organizational challenges theyfaced.22 In large part, what makes Populist thought

compelling for modern thinkers is precisely that itdid not survive into the twentieth century, and there-fore, rather than representing an enduring impact,it remains an enduring possibility.23 ApproachingPopulism from a different angle than those con-cerned with institutional legacies, these studiesdefine the Populists not by what they protested, butwhat they actually believed.24 Articulating Populistthought in the language of possibility, these accountspresent a detailed counterfactual, suggesting that itwas precisely the rejection of the Populist alternativethat shaped American political development in thetwentieth century. But because they often presentPopulist thought as out of sync with modern reali-ties,25 these accounts suggest that the movement wasresponsible for its own undoing, rather than focusingon the determined opposition seeking its defeat.

Building on these studies that challenge McVey’s dis-missal of Populist thought, I show that the Populistalternative rested on fundamental principles farexceeding the concrete political demands of itsleaders. Reaching beyond the details of their politicalstrategies, I argue that Populism must be recognizedfor its coherent and distinctive articulation of a robustconception of democracy, which depended on a par-ticular conception of economic laws. After distinguish-ing Populist antimonopolism from the Jacksonianantimonopoly tradition, I present the underlying prin-ciples of Macune’s economic thought. Most importantwas his insistence that democracy requires extendingpopular sovereignty to the economic sphere. InMacune’s view, economic processes should be subjectto democratic control, through federal institutionsdirected by popularly elected legislatures and throughcoordinated national cooperatives of local organiz-ations. I argue that this understanding reflected a fun-damental challenge to the reigning economicorthodoxy of the day, which insisted that economicdecisions be directed by experts rather than thepeople. This challenge was also taken up by earlymembers of the American Economic Associationthrough the language of an inductive economicmethod that treated economic law as contingent onsocial conditions rather than universally valid. But pre-cisely because Macune’s economic thought rep-resented a coherent and credible threat to theestablished order, orthodox economists launched a suc-cessful campaign against the inductive method,roundly defeating it before the twentieth century.While many Progressive Era reforms bear a superficial

17. Lawrence Goodwyn, Democratic Promise: The Populist Move-ment in America (New York: Oxford University Press, 1976), 519.

18. James Livingston, Origins of the Federal Reserve System: Money,Class, and Corporate Capitalism, 1890–1913 (Ithaca, NY: Cornell Uni-versity Press, 1989), 26; Charles Postel, The Populist Vision (New York:Oxford University Press, 2007), 280.

19. Victor C. Ferkiss, “Populist Influences on AmericanFascism,” The Western Political Quarterly 10, no. 2 (June 1, 1957):350–73; Oscar Handlin, “American Views of the Jew at theOpening of the Twentieth Century,” Publications of the AmericanJewish Historical Society (1951).

20. Hofstadter, The Age of Reform, 5.21. Norman Pollack, The Populist Response to Industrial America:

Midwestern Populist Thought (Cambridge, MA: Harvard UniversityPress, 1962), 12.

22. Bruce Palmer, “Man Over Money”: The Southern Populist Cri-tique of American Capitalism (Chapel Hill: University of North

Carolina Press, 1980), xviii, 221; Robert C. McMath, Populist Van-guard: A History of the Southern Farmers’ Alliance (Chapel Hill: Univer-sity of North Carolina Press, 1975), 157.

23. Goodwyn, Democratic Promise, xxiii; Postel, The PopulistVision, 22; Rana, The Two Faces of American Freedom, 177.

24. Postel, The Populist Vision, 5.25. For a compelling refutation of this view, see Postel, The

Populist Vision.

SIDNEY A. ROTHSTEIN82

resemblance to Macune’s demands, they contradict hisunderlying principles of robust democracy. Instead ofsubmitting the economic sphere to popular sovereignty,these reforms were largely executed by experts in quietconsultation with policy leaders. The legacyof Populismdoes not survive as merely a possibility, nor was it rea-lized in Progressive reforms; instead, the legacy of Popu-lism is reflected in the constrained democracy of theAmerican state, which restricts popular sovereigntyfrom the economic sphere.

VARIETIES OF ANTIMONOPOLISMDistinguishing Populist antimonopolism from the var-ieties that preceded it is the first step to recognizinghow Macune’s agenda presented a distinct and coher-ent alternative to the emerging economic order.Antimonopolism has long been a popular cause inAmerican politics, and the Populists are sometimesunderstood as a continuation of Jacksonian antimo-nopolism of the early nineteenth century. Reactingagainst years of economic distress, Jacksonian antimo-nopolists demanded that government remove itselffrom commerce in order to allow the free play ofnatural economic laws to direct the economy. Scho-lars who equate Populist antimonopolism with itsJacksonian predecessor argue that Populism failedbecause its principles remained stuck in the econ-omic understandings of the early nineteenthcentury and it was therefore unable to accommodatesignificant developments, such as economies of scaledue to technological advances. However, as the nextsection will show, this equation overlooks the distinc-tive strategies that made Populism a real alternativeto the emerging economic order and a real threatto those in power.

As the United States industrialized during the firsthalf of the nineteenth century, labor expressedmany of the same complaints that the Populistswould later raise. The boom that followed the Warof 1812 turned into a bust in 1819, and fuelled econ-omic instability that lasted through the 1830s.26 Inresponse to the bust, the newly formed Bank of theUnited States (BUS) rapidly abandoned its expan-sionary monetary policy, furthering the economicchaos, which included the reduction of New Yorkcotton prices by more than half by 1823.27 But inthe 1830s, prices began to rise again, which deliveredsubstantial profits to speculators, and harmedworkers, whose wages did not track increases in thecost of living.28 The evident wealth of speculators,

and the increased importance of credit in day-to-daybusiness due to the rise of commerce, directedpopular indignation toward banks, but in particulartoward the BUS, whose handling of the crises wasless than helpful.29 Martin van Buren had added tothe mess by introducing “safety fund banks,” underwhich “banking became to an unprecedentedextent a tightly controlled legal monopoly. The legis-lature decided who could operate a bank, where itwould be located, and how it would be operated.”30

Far from laissez-faire, government was deeplyinvolved in the economy in the early nineteenthcentury, and as their interventions only seemed tomake matters worse, the banks became the cleartarget of the people’s discontent.

The Working Men’s Parties formed in the mid-1830spartly in response to the dire economic situationfacing workers, but also in part because of the trans-formation of American politics that accompanied theintroduction of the party system.31 With the expansionof suffrage, parties began to appeal to voters on issuesthat the voters themselves articulated, rather thansimply promulgating the views of cliques of elites.Andrew Jackson was particularly effective in this newenvironment, for he was able to both stimulate andreflect popular sentiments against the elite, and hewas able to yoke his electoral goals to his concernsthat the BUS challenged his authority.32 Jackson’s strat-egy was guided by his engagement with the popularresurgence of Jeffersonian equal rights.

Against the inequalities of the emerging commer-cial order, New York radicals, such as Thomas Skid-more, had called upon the Jeffersonian doctrine ofequal rights to ground their demands for justice. Skid-more inspired multitudes with his 1829 manifesto,“The Rights of Man to Property!” in which heargued that natural law guaranteed to “every humanbeing AN EQUAL AMOUNT OF PROPERTY ONARRIVING AT THE AGE OF MATURITY, and pre-vious thereto, EQUAL FOOD, CLOTHING, ANDINSTRUCTION AT THE PUBLIC EXPENSE.”33 By

26. Ronald P. Formisano, For the People: American Populist Move-ments from the Revolution to the 1850s (Chapel Hill: University ofNorth Carolina Press, 2008), 70.

27. Charles Sellers, The Market Revolution: Jacksonian America,1815–1846 (New York: Oxford University Press, 1994), 136.

28. Richard Hofstadter, “William Leggett, Spokesman of Jack-sonian Democracy,” Political Science Quarterly 58, no. 4 (1943): 585;Lester Harvey Rifkin, “William Leggett: Journalist-Philosopher of

Agrarian Democracy in New York,” New York History 32, no. 1 (1951):45; Sean Wilentz, Chants Democratic: New York City and the Rise of theAmerican Working Class, 1788–1850 (New York: Oxford UniversityPress, 1984), 232.

29. Formisano, For the People, 72; Hofstadter, “William Leggett,Spokesman of Jacksonian Democracy,” 586.

30. Lee Benson, The Concept of Jacksonian Democracy: New York Asa Test Case (Princeton, NJ: Princeton University Press, 1961), 92.

31. Wilentz, Chants Democratic, 220; Michael Wallace, “Chan-ging Concepts of Party in the United States: New York, 1815–1828,” The American Historical Review 74, no. 2 (December 1,1968): 453–91; Richard Hofstadter, The Idea of a Party System, theRise of Legitimate Opposition in the United States, 1780–1840 (Berkeley:University of California Press, 1969).

32. Daniel Walker Howe, What Hath God Wrought: The Transform-ation of America, 1815–1848 (New York: Oxford University Press,2009), 376.

33. Thomas E. Skidmore, The Rights of Man to Property!: Being aProposition to Make It Equal Among the Adults of the Present Generation,


invoking natural law, Skidmore situated his thought asa continuation of the Founders’, and his calls forequality provided energy for the budding resistanceto growing disparities in wealth and power, whichwere manifest most obviously in the rise ofmonopoly.34

The Working Men’s Parties sought to achieve Skid-more’s vision of equality, and, consequently, theyfocused on attacking monopoly power. They definedmonopoly as

all exclusive privileges, or powers, or facilities, forthe accumulation of wealth, or the exclusive useand enjoyment of the bounties of Providencesecured to individuals or combinations of menby legislative enactments, the free and uninter-rupted enjoyments of which are denied by lawsto other members of the same community.35

The target of the Working Men’s Parties’ antimono-polism was legislative privilege, because they believedthat monopoly was political, arising from corruptionrather than purely economic activity, such as the effi-ciencies afforded by economies of scale. In hisaccount of the movement, Walter Hugins confirmsthat, “these definitions reveal no conception of econ-omic monopoly.”36 While the Working Men’s Partiesfolded in 1831, their formulations of monopolywere carried on by other popular movements, andby Jackson himself.37

The Equal Rights Party, better known as the Loco-focos, grew out of the Working Men’s Parties, andwhile the two are significantly distinct,38 the Locofo-cos carried on the resistance to monopoly power,which they also saw as arising from legislative privilegerather than purely economic activity.39 Organizingthemselves as a political party in 1835, the Locofocoswere less concerned about the rise of commerce thanthey were about securing access to its riches.40 When

Jackson vetoed the charter of the Second Bank of theUnited States in 1832, his veto message reflected theLocofocos’ rhetoric: “Jackson blasted the bank as anengine of the ‘rich and powerful, [who] too oftenbend the acts of government to their selfish pur-poses.”’41 Underlying this rhetoric, and indeed theveto itself, as well as the Locofocos’ later legislative vic-tories, was the economic thought of William Leggett.

Leggett was never officially a member of the Loco-focos, but he was often taken to be their spokesman,and he nonetheless played an important leadershiprole in the movement.42 After his death in 1839, aLocofoco historian stated that, “there never lived aman with more of the true heroic in him, or moretruly the hero of the rights of humanity, thanWilliam Leggett,” and he was described as a“martyr,” who had died because “the demon spiritof monopoly had condemned him.”43 As editor ofthe Post, and later the Plaindealer, Leggett articulatedthe antimonopoly views guiding the Locofocos,and thereby set the agenda for a broad swath of Jack-sonian antimonopolist thought.

According to Leggett, all the current economic dis-ruptions, whether high prices or low prices, could belaid at the feet of monopoly banking. Reacting to the1837 bust, which raised prices considerably, Leggettobserved that, “The fields, in many places, lie untilled. . . Hence we see flour at fifteen dollars a barrel, andhay at forty dollars a tone.”44 People were hungry, yetthe fields were being traded instead of tilled, becausespeculators were crafting deals that disrupted thenatural functioning of the economy. While ordinarypeople struggled under the weight of high prices,“the speculator flaunts by in his carriage,” continuingto profit from the vast inequality.45 Leggett saw thecause of this inequality, as well as the cause of allother economic disruptions, to be rooted in onesingle source: “the pernicious bank system of our countryis the cause!”46 Similar to the Working Men’s Partiesthat preceded him, Leggett believed that legislationhad given exclusive privileges to banks, thereby dis-abling natural economic laws from regulating theirbehavior and enabling speculation and other disrup-tions that harmed ordinary Americans. This unjustlegislation had broad effects, which were observableeverywhere: “Each fragment of our shattered com-merce bears, stamped in characters which he who

and to Provide for Its Equal Transmission to Every Individual of Each Suc-ceeding Generation on Arriving at the Age of Maturity (Printed for theauthor by A. Ming, 1829); quoted in Sellers, The Market Revolution,287.

34. Joseph Dorfman, The Economic Mind in American Civiliza-tion, 1606–1865, vol. 2 (New York: Viking Press, 1946), 641–45;Wilentz, Chants Democratic, 189.

35. Working Man’s Advocate, January 3, 1835; quoted in WalterHugins, Jacksonian Democracy and the Working Class (Stanford, CA:Stanford University Press, 1967), 149.

36. Ibid.37. Formisano, For the People, 86; John Gerring, “A Chapter in

the History of American Party Ideology: The Nineteenth-CenturyDemocratic Party (1828–1892),” Polity (1994): 729–68.

38. Wilentz, Chants Democratic, 235.39. Benson, The Concept of Jacksonian Democracy, 95; Carl Degler,

“Locofocos: Urban ‘Agrarians,’” Journal of Economic History 16(1956): 333; Sellers, The Market Revolution, 352; Wilentz, ChantsDemocratic, 235.

40. Edward Pessen, Most Uncommon Jacksonians, the RadicalLeaders of the Early Labor Movement (Albany, NY: State University ofNew York Press, 1967), 169–82; Wilentz, Chants Democratic, 235.

41. Quoted in Formisano, For the People, 143.42. Degler, “Locofocos: Urban ‘Agrarians,’” 324; Dorfman, The

Economic Mind in American Civilization, 1606–1865, vol. 2, 653.43. Fitzwilliam Byrdsall, The History of the Loco-Foco or Equal

Rights Party (1842), 99, 98.44. Plaindealer, December 19, 1837; in William Leggett, Demo-

cratick Editorials: Essays in Jacksonian Political Economy, ed. LawrenceH. White (Indianapolis, IN: Liberty Press, 1984), 100.

45. Ibid.46. Ibid., 97; emphasis in original.


runs may read, the forceful inscription – ‘THIS ISTHE FRUIT OF MONOPOLY LEGISLATION.’”47

All the problems arising in the 1830s, by Leggett’saccount, were not the result of economic formationsaccompanying the rise of commerce, but wereinstead the unnatural result of government interfer-ence. No matter how the economy had developed,government interference would always disruptnatural economic law, because manmade law wouldnever be more than an imperfect approximation.Thus, society must conform to economic law, andLeggett argued that natural law must be allowed toreplace manmade laws in the economy. No matterhow well intentioned, the imperfections inherent inmanmade economic law would only lead to furtherinjustice. The only logical solution was to allow thenatural laws of economics to run their course:

We should attempt to remedy the evil, not byerecting ineffectual dams and barriers againstthe desolating tide where it was hurryingalong in swollen and irresistible fury, inundat-ing the land with its waters of bitterness, butby tracing it to its source, and demolishingthe monstrous impediments placed there byignorance and fraud, to prevent its windingthrough its thousand natural channels, andforce the whole volume with destructive rapid-ity in one particular direction.48

In Leggett’s eyes, the only plausible solution to theeconomic disruptions caused by monopolies was toinstitute a strict policy of laissez-faire. Monopolieswould disappear, reasoned Leggett, only if the gov-ernment would remove itself from the economy.Rather than crafting a series of laws to limit thepower of combinations, government needed onlyone law to address the problem at its source: “Sucha law would confer no exclusive or special privileges. . . . leaving capital to flow in its natural channels,and enterprise to regulate its own pursuits.”49

Without government interference, the economywould deliver efficient and equitable outcomes,directed by the immutable laws of supply anddemand.50

Chief among the obstacles impeding the naturalflow of money was the government’s banking mon-opoly. Leggett’s solution: dissolve all governmentbanking and treasuries and allow entrepreneurs to

establish locally based lending institutions. In Leg-gett’s view, the “safe keeping of money . . . has, prop-erly, nothing to do with the exchanges of thiscountry,” and should therefore “be left to the lawsof trade.”51 Recognizing that the government wouldneed to maintain some currency of its own, Leggettargued that government currency should be kept insubtreasuries in various cities, but he stressed that itshould not be lent out. During the Bank Wars, thesesubtreasuries were built according to Leggett’s specifi-cations. Doubts remain concerning how closely theyfollowed the prohibition against lending,52 but thesuperficial resemblance between the Jacksonians’ sub-treasuries and the Populists’ has led some scholars toargue for a direct link between these two varieties ofantimonopolism.

According to some scholars, Jacksonian antimono-polism, especially as articulated by Leggett, survivedthe 1830s and came to be adopted by the Populistsin their fight against monopolies at the end of thecentury. Bruce Palmer, for instance, suggests thatLeggett influenced Populist antimonopolism:

Ironically, much of the Southern Populists’antimonopoly thought originated with Jackso-nian Democracy’s original urban left wing,the Locofocos. William Leggett’s emphasis onthe natural laws of supply and demand and ofcompetition came a long way, as did his attackon monopoly as special privilege and thecause of the extremes of wealth in society.53

While Palmer suggests that Populism failed because itwas unable to update its theoretical basis to one thatreflected contemporary reality, he does qualify thelink between Leggett and the Populists by notingthat Populism differed from Leggett’s thought inthat Populists did not support laissez-faire.54 Otherscholars are less judicious in suggesting a connectionbetween the two schools of thought. Hofstadter, forinstance, argues that, “In assuming a lush naturalorder whose workings were being deranged byhuman laws, Populist writers were again drawing onthe Jacksonian tradition.”55 While some accountsrefer only in passing to the Jacksonian influence onPopulist thought,56 others assign explanatory powerto the link in order to ground a broader historicalaccount of the Populist defeat.

Situating Populist thought in Jacksonian antimono-polism allows scholars to explain the Populist defeat

47. Plaindealer, May 13, 1837.48. Leggett, Democratick Editorials, 381.49. William Leggett, A Collection of the Political Writings of William

Leggett: Selected and Arranged with a Preface by Theodore Sedgwick, Jr, ed.Theodore Sedgwick (Taylor & Dodd, 1840), 247.

50. “The law of free competition is the only one which canproperly regulate either the size or the quality of bread, as it isthe only one which regulates the commodities of other branchesof traffick. It is the great natural law which makes the best possibleadjustment, in all articles of trade, of the supply to the demand, andof the price to the supply.” Plaindealer, December 24, 1836.

51. Leggett, Democratick Editorials, 121.52. Bray Hammond, Sovereignty and an Empty Purse: Banks and

Politics in the Civil War (Princeton, NJ: Princeton University Press,1970), 20.

53. Palmer, “Man Over Money,” 114.54. Ibid., xvii, 114–115.55. Hofstadter, The Age of Reform, 63–64.56. Gerald Berk, Alternative Tracks: The Constitution of American

Industrial Order, 1865–1917 (Baltimore, MD: The Johns HopkinsUniversity Press, 1997), 14.


as a result of their reliance on outdated economictheory. Jacksonians, such as Leggett, argued thatmonopolies were caused by legislative privilege, butcorporate law, technology, and the structure of theeconomy had changed by the late nineteenthcentury, all of which invalidated the Jacksonian analy-sis. Thomas Goebel, for instance, argues that Populisteconomic thought is best understood as a holdoverfrom the Jacksonian era, and he suggests that Popu-lists did not need, and did not have, a correcttheory of economics. In his view, all that Populistsneeded was a strong link to the historical memoryof protest: “The real strength of Populism did notderive from the way its language and argumentsoffered a challenge to the American political systembut, rather, from the manner in which it connectedto a long and rich tradition of oppositional politicsin American history.”57 According to Goebel, Popu-lism was able to mobilize millions because it revivedan older antimonopoly sentiment. Leaders likeMacune added little to existing arguments, servingmostly as mouthpieces and organizers for ideas thathad already proven successful. But while these anti-monopoly arguments were successful, Goebelargues that they misunderstood the current economicconditions:

Antimonopoly in the nineteenth and earlytwentieth centuries was based on a distinctmodel of political economy, on the firmbelief that the abuse and manipulation of pol-itical power led to economic monopolies.Modern economics with its insistence on theeconomies of scale and scope has renderedthis belief irrelevant.58

For Goebel, Populist economics relied on the mista-ken premise that monopoly was the result of politicalcorruption. Stuck in the mind-set of the early nine-teenth century, Populists were unable to updatetheir theories in order to address the realities ofmodern commerce and industrialization, whichwere built on the ability of technology to provideeconomies of scale and scope. With industrialization,monopolies existed because they were efficient, notbecause their owners solicited political favor. Populisteconomic theory, argues Goebel, was blind to the roleof technology in creating monopolies and was thusunable to correctly describe the economic conditionsof its time.

Jacksonian antimonopolism plays a similar role inScott James’s account of the development of theAmerican regulatory state. James shows how theDemocratic Party’s response to industrialization was

shaped in large part by their rejection of agrariandemands. Like Goebel, James presents Populistdemands as an extension of Jacksonian antimonopo-lism. In his view, the Populists’ demand for legislationto improve competition among the railroads pro-ceeded from the Jacksonian analysis that inequalitywas caused by legislative privilege: “To a majority ofagrarians, palpably little had changed since the Jack-sonian era. Favoritism and corruption were stillthought to explain the disadvantaged market positionof the farmer.”59 While James does include that Popu-lists differed from their predecessors by virtue ofdemanding government regulation, he still insistson describing them as “antistatist,” and writes thatthey “turned away from the various visions of nationaladministrative power.”60 In both Goebel’s and James’sviews, Populism was the extension of a preexistingprogram of political economy, so that the defeat ofPopulism in the 1890s did not represent the rejectionof an explicit alternative to the dominant order.Instead, Populism was defeated because its outdatedeconomic theory made it unable to recognize,let alone respond to, the actual economic conditionsof its time.

However, as the next section will show, Macune’seconomic theory marks a significant departure fromJacksonian antimonopolism. Many of his strategies,such as the subtreasury plan, were explicitly statist,and others were based on the recognition of econom-ies of scale, such as the Exchange. Drawing attentionto these distinctions underscores that, rather than anoutdated holdover from a previous era, Macune’seconomic thought was a perceptive and practicalresponse to the challenges confronting Americanfarmers in the late nineteenth century. This evidencedirectly challenges Goebel’s claim that Populism fellbecause its economic thought failed to account formodern developments, and it offers a productiveamendment to James’s. In rejecting Populist demands,the Democratic Party, and later the Progressives, builta set of constraints into American democracy thatlimited popular sovereignty from the economicsphere. Recognizing how Macune differed from Jackso-nian antimonopolism highlights the degree to which hisagenda marked a distinct and coherent alternative tothe emerging economic order, and highlights the exten-sive opposition that ultimately defeated it.

MACUNE’S ECONOMIC SCIENCE

Charles Macune was first and foremost a politicalactor, but his approach to economic knowledgebelied a distinctive understanding of the conflictbetween democracy and the emerging economicorder. In his view, economic law was not natural, or57. Thomas Goebel, “The Political Economy of American

Populism from Jackson to the New Deal,” Studies in American PoliticalDevelopment 11, no. 1 (1997): 112.

58. Goebel, “The Political Economy of American Populism,”148.

59. James, Presidents, Parties, and the State, 30.60. Ibid., 30–31.


in any way prior to popular sovereignty, so theeconomy should be subject to democratic controlalong with every other significant realm of publiclife in a democracy. Against the Jacksonians, whoargued that concentration of economic power inmonopolies was always harmful, Macune arguedthat monopolies were acceptable, and in some casesoptimal, as long as they were controlled by thepeople. Insisting that popular sovereignty rule theeconomic sphere, Macune denied that conflictsbetween democracy and the economic order werenecessary, because popular sovereignty always trumpsperceptions of economic necessity. These principlesaccount for the apparent contradiction of lobbyingCongress to criminalize monopoly while simul-taneously organizing the Farmers’ Alliance into amassive combination in order to control commodityprices. It also explains Macune’s singular focus onmonetary reform, and why his subtreasury solutiontook such a peculiar shape. Surely some of his pro-nouncements were pure rhetoric, and some of his sol-utions appear simply incorrect to modern eyes, butonly by examining what Macune said, wrote, anddid, can we grasp the alternative vision of democracythat was rejected with the defeat of Populism.

Macune’s economic thought grew directly out ofthe challenges that faced American farmers in thelate nineteenth century. The Texas Farmers’ Allianceelected Macune president during a meeting in Cle-burne, Texas, in 1886. The meeting attracted repre-sentatives from eighty-four Texas counties, making itthe largest meeting the Alliance had held, underscor-ing the rising desperation of Southern farmers.61

Farmers believed that economic conditions wererobbing them of just compensation for their labor:“The Texas Alliance did the arithmetic at its cele-brated Cleburne convention in August 1886. Euro-pean and New England spinning mills paid $80million a year on Texas cotton. Texas producers onlyreceived $64 million for their crop. The $16 milliondifference was the crux of their problems.”62 Whilethe Alliance had pursued a number of strategies toimprove the farmers’ position, all had failed and itwas time to try something new. The Cleburnemeeting concluded by issuing seventeen demands,and they elected Macune to lead the charge torealize them. Much of Macune’s agenda remaineddefined by the Cleburne demands and the diagnosisunderlying them, which identified the causes prevent-ing farmers from receiving full value for their labor.

Farmers believed that railroads were one of theprime causes for the discrepancy between the valueof the commodities they produced and the amount

of money they received for their labor. Chief amongtheir complaints was the perception that the railroadscharged farmers higher prices than other customers.In his first address to the National Alliance in 1887,Macune observed that, “A car-load of lumber fromGalveston to Waco will probably cost you about fortydollars freight; but if you load that very same flat carwith cotton and ship to Galveston, the freight willcost about one hundred and fifty dollars.”63 Macunebelieved that price discrimination was the productof market imperfections that prevented competitionfrom properly regulating prices.64 Railroads wereable to form monopolies, pooling freights in onearea in order to achieve economies of scale andthereby lower prices while continuing to chargehigher rates in other areas.65 Rural areas with less rail-road traffic, primarily where farmers lived, were stuckwith higher prices than those areas with heaviertraffic, such as towns and cities. In Macune’s view,monopolies were not the product of villains’schemes, but the product of an imperfectly regulatedmarket: “Discriminations are not caused by compe-tition, but are caused by its imperfect and obstructedcondition under the prevalent railway methods.”66 Ifthe market were structured properly, the laws of com-petition would prohibit monopolies’ pooling offreights, which would bar certain companies fromcharging higher rates to some customers thanothers, thereby forcing down the prices farmers hadto pay to ship.

On the basis of Macune’s analysis, the clear sol-ution to the problem of railroad price discriminationwas better legislation, which would enable moreperfect competition among railroad companies.Macune’s strategy followed the fourteenth Cleburnedemand, which called for

the passage of an interstate commerce law, thatshall secure the same rates of freight to allpersons for the same kind of commodities,according to distance of haul, without regardto amount of shipment. To prevent the grant-ing of rebates; to prevent pooling freights toshut off competition; and to secure to thepeople the benefit of railroad transportationat reasonable cost.67

Farmers had been agitating for an interstate com-merce law for years, and, in 1887, Congress finally

61. Nelson A. Dunning, The Farmers’ Alliance History and Agricul-tural Digest (Washington, DC: Alliance, 1891), 40.

62. Postel, The Populist Vision, 119; Cleburne Demands (Cleburne,TX, August 6, 1886), in Dunning, The Farmers’ Alliance History andAgricultural Digest, 43.

63. Charles Macune, “Message of the Acting President” (Waco,TX, January 18, 1887), in Dunning, The Farmers’ Alliance History andAgricultural Digest, 49–50.

64. But see James, Presidents, Parties, and the State, 57. Populistsmay have misrepresented railroads’ actual pricing practices. Recog-nizing inconsistencies or misrepresentations in Populist thoughtshould not, however, inhibit explicating what that thought was.

65. Goodwyn, Democratic Promise, 114–17.66. National Economist 2 (January 11, 1890): 267.67. Cleburne Demands, in Dunning, The Farmers’ Alliance History

and Agricultural Digest, 42–43.


passed the Interstate Commerce Act (ICA), bringinginto existence the Interstate Commerce Commission(ICC), which was charged with closely regulating rail-road business practices. Unsatisfied by the superficialvictory represented by the passage of the ICA,Macune pushed for more severe legislation. Hesuggested that monopolies, such as the railroads, beprohibited under criminal law: “the law should say itis a criminal offense, punishable by imprisonment,to form combinations to suppress competition.”68

The severity of Macune’s approach surely troubledhis contemporaries, and presented a real threat tothe railroad companies given that farmers hadplayed a role in passing the ICA, but it puzzledthem as well. While Macune called for the criminali-zation of monopolies, he was simultaneously leadingan energetic effort to build a massive combinationto suppress competition among farmers.

Macune insisted that until government passed legis-lation to properly regulate competition, farmers musthelp themselves. One solution to closing the $16million gap between the value of what farmers pro-duced and the value they received was to form a com-bination. In his first address to the Texas Alliance in1887, Macune suggested that farmers “have an ade-quate and complete remedy in co-operation . . . ifthe farmers of the cotton belt were all to unite intoan organization, they could force the world to pay ajust and fair price for the labor expended in raisingthis staple.”69 Forming a combination of farmerswould address losses due to the railroads’ price dis-criminations, and it would also challenge the combi-nations of commodities buyers, who colluded inorder to drive down commodity prices. Texanfarmers were well aware of the buyers’ strategy:

often a country town contained six or eightstores and dealers, where two or three couldtransact all the business, without an increaseof force or investment, and that, could tradebe concentrated so as to employ a lessnumber of men and less capital, the savingthus made should accrue to the purchaser, inthe shape of lower prices on the commoditiespurchased.70

When Macune suggested that the most appropriatecounterstrategy would be forming a farmers’ combi-nation,71 he echoed the early Alliance practice of“bulking.” Prior to 1886, the Texas Alliance wouldorganize county business agents to enter contracts

with one merchant, with whom they would negotiatea rate for cotton higher than the local average, inexchange for selling them all the cotton of thatcounty.72 Farmers were able to receive adequatevalue for their labor until buyers caught on and reor-ganized. Bulking ultimately failed because “afterseveral lots had been bulked, and all buyers had com-bined against it, the sale was sometimes made at a loss,and the plan as a whole, after two years’ experience,was gradually abandoned.”73 Macune interpretedthe failure of bulking not as evidence that the ideaof a farmers’ combination was flawed, but only thatit needed to be done on a larger scale.

Until Macune’s election to the presidency of theNational Alliance in 1887, farmers had combinedonly at the county level, but once local bulking prac-tices collapsed, Macune led the effort to establish astatewide farmers’ combination. Macune continuedto emphasize the importance of achieving economiesof scale, as in his 1889 address to the Alliance conven-tion in St. Louis, where he explained how economiesof scale could benefit farmers, if only they wouldorganize: “organization could render farming profit-able by the introduction of better business methods,in which all would unite and cooperate for thepurpose of selling our products higher, and purchas-ing such commodities as we are compelled to buy,cheaper.”74

While some farmers surely critiqued monopoly onthe basis of the Jacksonian theory of corruption andlegislative privilege, Macune recognized that mon-opolies resulted from an evolution of business prac-tices. The problem was not that buyers andindustrialists and the railroad companies had beengranted exclusive charters; the problem was thatfarmers’ business strategies had not kept up withdevelopments in other sectors of the economy:“[F]arm reformers recognized the advantages ofsize and concentration. They, too, believed thatbigger was indeed better. To explain rural povertythey pointed to the farmers’ late entry into themodern business world of combination: hence thenecessity of the Farmers’ Alliance and similar organiz-ations.”75 While Macune did lobby Congress toamend particular laws in order to realize moreperfect competition, he also directed energy towardorganizing farmers’ combinations, so that theycould realize the economies of scale enjoyed byother sectors of the economy.

The Texas Exchange would be, according toMacune’s plan, “established for conducting the

68. National Economist 1 (March 30, 1889): 17.69. Charles Macune, “President’s Address to the National

Farmers’ Alliance” (Shreveport, LA, October 12, 1887), inDunning, The Farmers’ Alliance History and Agricultural Digest, 50.

70. Dunning, The Farmers’ Alliance History and Agricultural Digest,356.

71. Macune, “President’s Address to the National Farmers’ Alli-ance,” in Dunning, The Farmers’ Alliance History and AgriculturalDigest, 49.


73. Ibid.74. Charles Macune, “Address to the National Farmers’ Alli-

ance” (St. Louis, MO, December 3, 1889), in Dunning, TheFarmers’ Alliance History and Agricultural Digest, 110.

75. Postel, The Populist Vision, 16.


production and disposition of the cotton crop . . . .They [ farmers] could negotiate and consummatearrangements tending to an increased price; andshould all negotiations prove of non-effect, theycould adopt a graduated scale for the reduction ofthe cotton crop, which would be an injustice tonone.”76 By combining the cotton crop of an entirestate, Macune saw that farmers could interact directlywith wholesale buyers on the world market, therebycutting out the variety of middlemen, including rail-roads, who would otherwise inflate the $16 milliondifference between a farmer’s labor and his compen-sation: “In this way the Exchange sold cotton direct tothe mills or to Liverpool, and had it shipped from itshome depot on a through bill of lading, therebysaving all local freights and other expenses of hand-ling.”77 In 1892 testimony to Congress, Macunereflected on his experience with the Texas Exchange:“in the year 1888 I handled the crop for the Farmers’Alliance of Texas, and I visited the mills of Massachu-setts and I made my arrangement for shipping tothem direct, and I sold and shipped direct a greatdeal of cotton to them.”78 The official Alliancehistory reports that the Exchange was initially asuccess: “There can be no doubt that this effort . . . .raised the price of cotton to the farmers of thatState at least one-half of one cent per pound . . .This, on the crop of 1,300,00 bales of 500 poundseach, was a saving to the farmers of $3,252,000 thathad previously gone into the pocket of the specu-lator.”79 Macune’s combination was a small but suc-cessful step toward closing the $16 million gapidentified by the Cleburne demands. Success,however, proved short-lived.

In 1889, after less than two years, the Exchangefailed because farmers did not provide enough cashto cover its operating costs. Alliance members wereasked to pay dues of one dollar, but many farmerswere unable to come up with the cash.80 One majorobstacle was that many farmers were unable tochoose when they planted. Many rarely used cashbecause they had exchanged liens on their crops forcredit with local merchants, so that, at harvest, theyexchanged crops directly for supplies. Their cashflow was strictly dependent on the holder of thelien.81 Realizing that the Exchange rested on such a

precarious foundation, Macune attempted to set upan Alliance mortgage system so that farmers couldreceive cash advances on their crops.82 But this toofailed, and “when the Board of Directors met inMarch, they found that only about $17,000 of thecapital stock had been paid in,” far too little tocover operating costs, let alone the costs of the build-ing the Alliance had purchased for the Exchange.83

The Exchange “failed; not because the system wasfaulty, or the management bad, but because thepeople did not put in capital stock in proportion tothe credit they asked, and because many of themdid not pay their indebtedness.”84 While Macuneinterpreted the failure of the Exchange as asymptom of the failure of the monetary system toprovide sufficient capital for farmers’ needs, this wasnot the only possible interpretation: “The dearth ofcash among Texas farmers partly explains the failureto collect even these minimal assessments. Expla-nation, however, must also be sought within themix of opinions among Alliance members aboutthe Exchange.”85 Farmers did not participate in theExchange in part because they were uncomfortablewith what looked very much like a monopoly.Because Macune’s plans challenged widespread con-temporary conceptions of monopoly, farmers werenot the only observers confounded by the Alliance’sefforts at combination.

Macune’s contemporaries, farmers and congress-men alike, recognized the similarities between thecombinations that Macune targeted and the combi-nations that he organized. In The Populist Vision,Charles Postel reports a conversation between twoTexans in 1888:

Mary B. Lesesne of Llano County, Texas, anardent supporter of the Farmers’ Alliance,had a discussion with a prominent lawyerabout the organization’s business principles.The lawyer asked her, “What is the platformof the Farmers’ Alliances?” She responded,“They are opposed to monopolies.” To whichthe lawyer tellingly observed that the Alliances“are forming one of the grandest monopoliesthat the world ever saw.” Lesesne concededthe charge. “It may become a great monopoly,”she replied, “but we predict it will use its powerwisely.”86

Other contemporaries of Macune were less charitabletoward the Alliance’s business efforts. Postel describesthe Alliance receiving “stinging letters” directed

76. Macune, “President’s Address to the National Farmers’ Alli-ance,” in Dunning, The Farmers’ Alliance History and AgriculturalDigest, 72.


78. Charles W. Macune, Testimony before House Committeeon Agriculture, Fictitious Dealing in Agricultural Products, 52nd Con-gress (Washington, DC, 1892), 252.


80. Postel, The Populist Vision, 123.81. Ralph A. Smith, “‘Macuneism,’ or the Farmers of Texas in

Business,” The Journal of Southern History 13, no. 2 (May 1947): 231–32.


83. Ibid., 362.84. Ibid.85. Postel, The Populist Vision, 123–24.86. Southern Mercury, October 9, 1888, quoted in Postel, Populist

Vision, 118.


especially at its business activities.87 Debates preced-ing the 1890 passage of the Sherman Antitrust Actdemonstrate similar puzzlement over whether theAlliance was a monopoly. Senator Teller, a ColoradoDemocrat, objected to Sherman’s bill on thegrounds that it might interfere with the Alliance:“But there has been recently organized all over thiscountry what is called the Farmers’ Alliance . . . . Isit possible that we are putting it in the power ofsome men to coerce and force the farmers toabandon these organizations?”88 Other senatorsseemed unwilling or unable to even define what amonopoly might be. Senator Turpie, an IndianaDemocrat, insisted in a late March debate that, “Todescribe it [monopoly] is impossible.”89 Later thatday, Senator Blair, a Republican from New Hamp-shire, argued that, on the contrary, “Everybodyknows what a monopoly is, and nobody will objectto prohibiting a monopoly.”90 Macune’s seeminglycontradictory stance on the question of monopolyreflects his challenge to the deductive orthodoxy oflate nineteenth-century economics and emphasizesthe distinctiveness of his economic theory. BecauseMacune’s challenge to the established order extendedbeyond a concrete political program to include thevery method of understanding economic facts andlaws, his strategies appear contradictory unless hisown understanding is taken into account.

Macune did believe that, under the correct con-ditions, the laws of supply and demand would distri-bute value in a just way, and his efforts to lobbyCongress for more adequate regulation of compe-tition reflect that belief. Once the conditions necess-ary for competition were achieved, the laws of supplyand demand would function, and farmers wouldreceive adequate value for their labor. At the sametime, as long as the conditions necessary for compe-tition were absent, farmers had every right to ensurethat they received just compensation. The use of com-bination was only a temporary effort, designed toachieve the adequate purchasing power necessaryfor competition:

[T]he farmers’ and labor organizations aretemporary combinations for self-protectionand should not be regarded as permanentcombinations based upon, and calculated tocarry out, the principles of socialism. This iswhy the Alliance is not a monopoly. Still, itand like organizations must continue to existtill government shall so faithfully perform itsfunctions as to make their operations nolonger necessary or desirable.91

Macune believed that by securing greater value forfarmers’ labor, the Alliance combinations would buildthe conditions so that competition could replacetheir efforts, ensuring that farmers continued toreceive the value they earned. In this central respect,Macune’s leadership of the Farmers’ Alliance marks adeparture from Jacksonian antimonopolism. Not onlydid Macune appeal directly for federal interventionin the economy, but he also called for farmers toform their own combinations. Each of these tacticswas decisively rejected by Jacksonian antimonopolism,which relied on the belief that economic laws werenatural and must therefore guide government action,rather than vice versa.

Against the Jacksonians, Macune’s economicthought was thoroughly inductive and empirical, inthat he believed that economic laws were notnatural, but instead were descriptions of contingentsocial conditions. He expressed the significance ofthis contingency in his 1892 testimony to Congressconcerning commodities futures trading, where heinstructed the committee: “You will remember ourold political economists always gave us an importantmodification of supply and demand, the pricesbeing regulated by supply and demand, it always pre-supposes the ability to purchase is perfect or ample.Whenever it is not, it is a basic modification of thelaw.”92 The laws of supply and demand may accuratelydescribe phenomena in a given situation, but theirvalidity depends upon the conditions of that situ-ation. Macune was wise to emphasize this seeminglytechnical point to the committee, given that muchof Macune’s strategy depended on assuming a par-ticular methodology that was unambiguously foreignto the deductive orthodoxy of the time.

The congressmen to whom Macune addressed histestimony most likely followed the common views ofthe time and treated economic analysis as a deductiveexercise. On the deductive view, often described byMacune’s contemporaries as the “English method,”economic laws are seen as natural, rational, universal,and therefore normative and predictive, regardless ofcontext. Deductive economics reasons from laws tofacts, thereby viewing economic laws prior to any con-ceptions of democracy. Gresham’s law, for instance,which posits that a high value currency will alwaysdrive a low value currency out of an economy, was apopular belief among deductive economists and wasdeployed to support arguments for the gold standard.The law is deductive because it predicts certain econ-omic phenomena on the basis of assumptions unteth-ered to facts. Macune considered the deductiveapproach unfounded, and he critiqued Gresham’slaw in the Alliance’s newspaper, the NationalEconomist:87. Postel, Populist Vision, 121.

88. Congressional Record (CR), 51st Congress., 2nd Sess., 1889,2561. (Hereafter CR, 51–2.)

89. CR, 51–2, 2558.90. CR, 51–2, 2566.91. National Economist 1 (April 6, 1889): 34. 92. Macune, Fictitious Dealing, 256.


Nothing seems to demonstrate so completelythe unfitness of the English rules of financefor this country as a few years experience . . .Like all self-styled laws of similar characteradvanced by financiers of a certain class, theydo well to frighten the people, but neverprove sound when practically applied.93

While Macune appreciated the utility of deductiveeconomics, he denied its validity. His experiences ofthe farmers’ plight had made it clear to him thateconomic laws were no better than the facts onwhich they were based.

Macune’s economic thought is largely an extensionof Edward Kellogg’s, a nineteenth-century Americaneconomist whose Labor and Other Capital, was takenup by a variety of popular movements.94 Kelloggopens Labor with the fundamental principle of induc-tion: “We reason from known facts to the hiddenpower governing them.”95 In this view, supply anddemand may determine the price of a commodity,but the relationship of supply to demand is notnatural and unchanging, but is instead invalid onceremoved from the specific conditions in which it isobserved. One upshot of Macune’s debt to Kelloggwas the role of Kellogg’s labor theory of value inshaping Macune’s diagnoses of the nationaleconomy. Kellogg believed that in modern econom-ies, where the division of labor was well established,all economic actors were deeply interdependent,because each was forced to depend on others inorder to satisfy his wants and needs.96 But becauseall value originated in labor, and labor cannot easilybe traded, modern economies require the use ofmoney as a means of exchange.97 In Kellogg’s view,labor is natural because it is constituted simply byhuman activity, but money is artificial, because it iscreated by laws in order to represent labor, so thatthe value of labor can be exchanged.98 Whilemoney may seem to follow the dictates of naturallaw, such that, in some circumstances, a high valuecurrency will replace a low value currency, Kellogg’semphasis on the artificial, legal nature of moneyimplies that money’s ability to represent value isentirely contingent on manmade law.99 Thus, ifsome economic actors fail to receive currency that

adequately represents the value of their labor, thisis the product of imperfect manmade law.100

Macune’s interpretation of Kellogg is what led himto advocate monetary reform as a means of makingup the $16 million gap between the value offarmers’ labor and the value they received.

Viewing Macune in light of his debt to Kellogg, hisactivities against monopolies appear secondary to hisfight to reform the monetary system. This strategy wasbased on the fundamentally inductive view that mon-etary value does not accrue naturally, but is the resultof a contingent social process, shaped largely bymanmade laws and institutions. Business combi-nations may indeed have extracted value fromfarmers’ labor, but Macune did “not believe that thiswas the result of any rascality on the part of any oneman, but . . . the legitimate result of this system.”101

The flawed system at the root of farmers’ troubleswas the overly rigid monetary system, which, com-bined with farmers’ production cycles, created con-ditions easily manipulated at farmers’ expense:

In the last four months of the year, the agricul-tural products of the whole year have been har-vested, the yare placed on the market to buymoney. The amount of money necessary tosupply this demand is equal to many timesthe actual amount in circulation. Nevertheless,the class that controls the volume of the circu-lating medium desires to purchase these agri-cultural products for speculative purposes; sothey reduce the volume of money by hoarding,in the face of augmented demand, and therebyadvance the exchangeable value of the theninadequate volume of money, which is equival-ent to reducing the price of agriculturalproducts.102

While those relying on deductive, rationalist econ-omics would argue that government should notinterfere with the monetary system because the distri-bution of value is simply the effect of natural laws,which are always superior to manmade laws,

93. National Economist 2 (February 8, 1890): 328.94. Edward Kellogg, Labor and Other Capital: The Rights of Each

Secured and the Wrongs of Both Eradicated (New York: published by theauthor, 1849); Chester Destler, “The Influence of Edward Kelloggupon American Radicalism, 1865–96,” Journal of Political Economy40, no. 3 (June 1, 1932): 338–65; Dorfman, The Economic Mind inAmerican Civilization, 1606–1865, 678–81; Goodwyn, DemocraticPromise, 566–67.

95. Kellogg, Labor and Other Capital, xiii.96. Ibid., xxxvii.97. Ibid., xxix.98. Ibid., 42.99. Dorfman, The Economic Mind in American Civilization, 1606–

1865, vol. 2, 679–80.

100. “Unjust distribution originates in wrong legislation. Whenmonetary laws shall be made equitable, present labor will naturallyreceive a just proportion of present products, and capital will like-wise receive a just reward for its use.” Kellogg, Labor and OtherCapital, xxxi.

101. Macune, Fictitious Dealing in Agricultural Products, 252–53.102. Report of the Committee on the Monetary System (St. Louis, MO,

December 7, 1889), in Dunning, The Farmers’ Alliance History andAgricultural Digest, 126. The Committee’s report may appear contra-dictory to modern eyes, given that they seem to argue that currencyis both too rigid to account for farmers’ production cycles, yet flex-ible enough to allow manipulation by capitalists. Regardless of itsaccuracy, this was the justification given for the subtreasurysystem. But see, for instance, Richard Franklin Bensel, YankeeLeviathan: The Origins of Central State Authority in America, 1859–1877 (Cambridge, MA: Cambridge University Press, 1991);Hammond, Sovereignty and an Empty Purse; Irwin Unger, The Green-back Era: A Social and Political History of American Finance 1865–1879 (Princeton, NJ: Princeton University Press, 1964).


Macune’s methodology led him to a different con-clusion. Proceeding from Kellogg’s theory, Macuneargued that the monetary system was the product ofmanmade laws and institutions, so there wasnothing natural that should be left free from govern-ment interference. In a democracy, human lawsshould always be subject to popular sovereignty, andby denying the naturalness and universality of econ-omic laws, Macune was led to the conclusion thatpopular sovereignty must extend to the economy.103

The Alliance had been focused on monetary issuessince the 1886 Cleburne demands,104 but Macune’sproposal of the subtreasury system at the 1889National Alliance convention brought the issue tothe fore. Macune recognized that the Alliance’s pre-vious efforts—lobbying Congress, building theExchange, and so forth—had not yet closed thatgap between the value of farmers’ labor and thevalue they received for their commodities.105 Onthe last day of the convention, Macune formed theAlliance’s top leaders into the Committee on theMonetary System and issued a report that set outthe Alliance’s new goal:106

The most desirable and necessary reform isone that will adjust the financial system of thegeneral government so that its provisionscannot be utilized by a class, which therebybecomes privileged and is in consequence con-trary to the genius of our government, andwhich is to-day the principal cause of thedepressed condition of agriculture.107

The report represented a shift in Alliance tactics fromalleviating the symptoms of the farmers’ condition toattacking its cause directly. The subtreasury system wasdesigned to accomplish three goals: “first, theincrease of the volume of money; second, a flexiblevolume of money, and third, the issue of moneydirect to the people, without the intervention ofbanks.“108 In order to achieve these goals, the Alli-ance demanded that the federal government

establish in every country in each of the Statesthat offers for sale during the one year$500,000 worth of farm products—includingwheat, corn, oats, barley, rye, rice, tobacco,cotton, wool, and sugar, all together,—a sub-treasury office, which shall have in connectionwith such warehouses or elevators as are

necessary for carefully storing and preservingagricultural products as are offered it forstorage.109

These subtreasuries, placed close enough to farmersso that they were easily accessible, would provide cur-rency in exchange for agricultural products, thusgiving farmers access to currency that would be flex-ible enough to account for their production cycles.After depositing their products at the subtreasury,the subtreasury officers would give farmers “a certifi-cate of deposit showing the amount and quality, andthat United States legal tender paper money equalto eighty per cent of the local current value of the pro-ducts deposited has been advanced on same, on inter-est at the rate of one per cent per annum.”110 Macunesurely realized that if his planned subtreasury systemhad existed a couple years earlier, then the TexasExchange would not have failed. But furthermore, ifit had existed a few years earlier, the Texas Exchangewould not have been necessary.

The subtreasury system marked a break with thecurrent monetary regime because it “brought thenation’s monetary system under democratic controland gave millions of citizens access to capital at lowinterest.”111 Macune’s reliance on inductive, empiri-cal economics led him to believe that the economywas no more natural than a system of manmade law,and therefore, in a democracy, popular sovereigntymust extend to the economy. In Macune’s view,there was no necessary conflict between democracyand the emergent capitalist order, but becauseMacune’s methodology was not widely held, theplan directly challenged popular views that govern-ment should not intervene in the monetary system,nor any other economic matter.112

Macune’s contemporaries argued that popularsovereignty had no place in the economy, and thatthe subtreasury plan was unconstitutional, represent-ing an overreach of governmental power. Criticsargued that the government simply “does not andcan not embrace lending the people’s money to anyclass of the people themselves.”113 These critics sawa crucial difference between tax-funded public

103. Rana, The Two Faces of American Freedom, 207.104. Goodwyn, Democratic Promise, 80.105. Charles Macune, “Address to the National Farmers’ Alli-

ance” (St. Louis, MO, December 3, 1889), in National Economist 2(December 14, 1889); 197; see also John D. Hicks, “The Sub-Treasury: A Forgotten Plan for the Relief of Agriculture,” The Mis-sissippi Valley Historical Review 15, no. 3 (1928): 361–62.

106. Ibid., 356.107. Report of the Committee on the Monetary System, in Dunning,

The Farmers’ Alliance History and Agricultural Digest, 125.108. National Economist 3 (May 24, 1890): 146.

109. Report of the Committee on the Monetary System, in Dunning,The Farmers’ Alliance History and Agricultural Digest, 127.

110. Ibid., 128.111. Goodwyn, Democratic Promise, 568.112. Substantial evidence suggests that the American state has

always been thoroughly and broadly active. This, however, seems notto have dampened, but on the contrary, may have inspired, publicarguments for laissez-faire. See Brian Balogh, A Government Out ofSight: The Mystery of National Authority in Nineteenth-Century America(Cambridge, MA: Cambridge University Press, 2009); Bensel,Yankee Leviathan, esp. chap. 4; Daniel Carpenter, The Forging ofBureaucratic Autonomy: Reputations, Networks, and Policy Innovationin Executive Agencies, 1862–1928. (Princeton, NJ: Princeton Univer-sity Press, 2001); and, particularly regarding financial policy, seeUnger, The Greenback Era.

113. New York Times, March 10, 1890. Cited in National Economist3 ( March 22, 1890): 1–2. See also Hicks, “The Sub-Treasury,” 366.


projects and the type of fiscal scheme represented bythe subtreasury system.

In Macune’s eyes, the subtreasury system should beseen as an extension of the government’s power tocoin money, which is included in the CommerceClause,114 and he offered a telling counterexampleto refute the charge that the subtreasury system rep-resented unprecedented government interventionin the economy: “If it is wrong for the Governmentto give even temporary relief to the farmer, by whatprocess of reasoning is it made right to anticipatemillions of interest whenever Wall street is beingsqueezed?”115 Macune insisted that no difference dis-tinguished the government’s support of bankers fromhis proposal that it support farmers. If the govern-ment is truly democratic, he argued, then it shouldserve the interests of the people, which extend toeconomic issues. The current system, by not respond-ing to the people’s will, appeared to be less a democ-racy than a monarchy: “Our monarch is a false, unjust,and statutory power given to money, which calls for aconflict on our part to emancipate productive laborfrom the power of money to oppress.”116 Buildingon an analogy to the Revolutionary War, Macunecalled for this monarch to be overthrown, and forreinstating the power of the people.

Opponents of the subtreasury system recognizedthe power that the government had given financialinterests, but in their view, this was not troubling.They argued that democracy would necessarily clashwith the economic order, and that the laws of econ-omics must always take precedence over manmadelaw, in large part because the people are not intelli-gent enough to make decisions about economics:“The principles of public finance require knowledgederived from much study and observation in orderto be understood, and the creation and direction ofa financial policy demand the highest kind ofexpert ability if it is to result in anything but disas-ter.”117 But even worse, the farmers were particularlythe type of people who needed to be kept from craft-ing economic policy:

There is probably no class of men of fair intelli-gence who are less capable of dealing with thiscomplex subject than those who spend theirdays remote from the centers of population inwhich the mechanism of traffic and exchangeis developed and managed. They can bring itonly ignorance and incapacity, however confi-dently they may think otherwise.118

These critics, engaging the deductive orthodoxy ofMacune’s time, argued that economic laws arenatural, and therefore inherently superior tomanmade law, such that manmade law can at bestonly approximate the perfection of natural law.Relying on this methodology, they sought to removedemocracy from economic decisions, insisting thateconomic institutions must be designed and operatedby experts. Experts’ authority was justified, in thisview, because their knowledge of the universalnatural laws governing economic interactions wouldallow them to minimize the damage of manmadelaw. Democracy would always conflict with the econ-omic order because the people would always want tocontrol the economy, but would never understandhow it functioned. Macune was an exact represen-tation of the fears of the deductive orthodoxy,because he not only organized resistance to the distri-bution of resources, but also proposed that economiclaw was fundamentally contingent on manmade laws.Such an assertion threatened experts’ beliefs andtheir authority, because Macune’s inductive econ-omic theory validated commonsense observations ofeconomic phenomena, thereby denying any episte-mic privilege that experts might claim. Without ascientific defense for separating economics from poli-tics, there was no reason for the economy to be pro-tected from popular sovereignty.

Despite its promise to improve farmers’ lives, theplan for the subtreasury system collapsed withMacune’s departure from the Alliance in 1892.Macune’s relationships with other Alliance leaders,especially Leonidas Polk, had deteriorated, as Polkand others positioned the Alliance to enter electoralpolitics.119 Eventually, Macune was accused of con-spiring to undo Polk’s efforts to form the People’sParty, and he was forced out.120 A version of the sub-treasury system was eventually established in the Pro-gressive Era, but it was done so in service of aconstrained conception of democracy. Other Populistleaders, such as Leonidas Polk, Thomas Nugent, andMarion Todd, continued to struggle for the rights offarmers and producers, but none articulatedMacune’s conception of robust democracy with suchdetail, and none mobilized such organizationalresources to realize that vision. Lawrence Goodwyndescribes Macune as “the boldest single theorist ofthe agrarian revolt. He was also, in economic terms,one of the most creative public men of Gilded AgeAmerica.”121

Macune’s tenure as president of the Farmers’ Alli-ance was short, but in the span of three years, hewas able to lead the Alliance to take decisive stepstoward alleviating farmers’ hardships. His efforts to

114. National Alliance 3 (May 24, 1890): 147.115. National Economist 3 (March 22, 1890): 2.116. Report of the Committee on the Monetary System, in Dunning,

The Farmers’ Alliance History and Agricultural Digest, 130.117. “An Abortive Moment,” New York Times, December 10,

1890, cited in Hicks, “The Sub-Treasury,” 366.118. “An Abortive Moment,” cited in Hicks, “The Sub-

Treasury,” 366.

119. McMath, Populist Vanguard, 110–13.120. Hicks, “The Sub-Treasury,” 372; McMath, Populist Van-

guard, 113.121. Goodwyn, Democratic Promise, 564.


lobby Congress for antimonopoly legislation, buildfarmers combinations, and establish the subtreasurysystem all responded to the initial demands fromthe 1886 Cleburne meeting. What made Macune’seconomic science so distinctive was his articulationof the link between state and economy, which rep-resented a direct challenge to the economic theoryof his day and our own, as well as a decisive breakwith the economic theory that preceded him. Manyof Macune’s proposed reforms were achieved in theperiod following his leadership of the Farmers’ Alli-ance. However, his distinct vision of a democracywhere popular sovereignty extends to the economywas lost, in large part due to the defeat of an econ-omic method that treated economic law as inductive,contingent on social conditions.

ECONOMICS IN AMERICAMacune’s economic thought was a distinctive, but notunique, articulation of political protest against Amer-ica’s emerging economic order. The demands he pro-posed on behalf of the Farmers’ Alliance contrastedsharply with those of the Jacksonians, but they wereechoed to a large extent by the economists whofounded the American Economic Association(AEA) in 1885. Distinguishing Macune from the Jack-sonians makes clearer how his economic thoughtrelied on contextualizing economic law, and it high-lights the degree to which the early AEA sharedMacune’s basic assumptions about economics. Fur-thermore, emphasizing the role of contingency andinduction in Macune and the AEA shows how thatmethodology offered a more expansive conceptionof democracy by subordinating economic laws topopular sovereignty. Until its decisive defeat at theclose of the nineteenth century, an alternative econ-omics founded on induction, empiricism, and institu-tionalism was a valid discipline; the struggle fordemocracy unconstrained by economic order was aconceivable and realistic political project.

The differences between Macune’s economicthought and Jacksonian antimonopolism extendfrom conflicting first principles to opposing viewson national economic policy, and can be observeddirectly in their competing plans for a substreasurysystem. Macune and Leggett both advocated alocally based system of subtreasuries, but Macune’splan was based on the government providing creditto farmers, while Leggett’s was designed to prohibitthe government from lending. The Jacksonian sub-treasury plan was introduced in order to allow thenatural laws of economics to drive economic develop-ment, while the Populist subtreasury plan was intro-duced to alter the manmade law on which thosecontingent economic laws relied. The differencesbetween the two plans illustrate the deep distinctionsbetween the two approaches.

Jacksonians, such as Leggett, believed in universalnatural economic laws, so state involvement toremove monopoly power would only be temporary.122

But because Macune denied the independence ofnatural economic laws, he insisted that the statemust be recognized, and managed, as a constant pres-ence in the economy. For Macune, it was Populist agi-tation that should be temporary, pursued only untilthe government would step in and fulfill its role, “toprotect the weak, sustain the right, and prevent thewrong.”123 According to Macune’s methodology, theeconomic order is always constituted by economiclaws that depend directly on manmade laws, so ademocratic government must ensure that those lawsare the true expression of the people’s will. WhileLeggett argued that democracy could be reconciledwith the economic order only through laissez-faire,Macune insisted that democracy could be reconciledwith the emerging capitalist order only through theextension of popular sovereignty to the economy.

Macune’s reliance on empirical, inductive, institu-tionalist economics allowed him to formulate an econ-omic theory that acknowledged modern conditions,the most notable of which were the economies ofscale afforded by developments in technology. ForMacune, monopolies were clearly the result of techno-logical development, especially the steam engine:“The direct source from which these giant modernenemies to society have sprung are the vast stridesmade in invention, the application of steam to indus-trial pursuits.”124 In his eyes, monopolies were“enemies to society” in large part because they hadbeen poorly regulated and allowed to turn againstsociety’s interests, but the reason for their existencewas not corrupt legislation, but technology. Unlike theJacksonians, whose method engaged observation andhistorical investigation only to test timeless naturallaws, Macune’s inductive economics drew all its con-clusions from observation and analysis of those con-ditions that constituted economic history. TheNational Economist concluded a series of articles on pol-itical economy by noting that, “This series of articles onpolitical economy would lose a large part of the powerfor good if lessons for the present were not drawn fromexperiences of the past.”125 By orienting economicanalysis to history, Macune’s method identified theeconomic changes to which Populist organizingneeded to respond. Had his analysis ignored history,Macune recognized that it would be wrong and wouldfail to provide a useful guide for strategy.126 But thestrength of Macune’s strategy was also its undoing.

122. Sidney Fine, Laissez Faire and the General-Welfare State, aStudy of Conflict in American Thought, 1865–1901 (Ann Arbor: Uni-versity of Michigan Press, 1956), 14.

123. National Economist 1 (March 30, 1889): 18.124. National Economist 1 (April 20, 1889): 67.125. National Economist 1 (April 6, 1889): 42.126. National Economist 1 (April 20, 1889): 66.


Through most of the nineteenth century, Ameri-cans learned economics in the tradition of the“English School,” which was based in a rationalist,deductive, naturalist methodology and proposedlaissez-faire as the system most likely to enable theunchanging natural laws of economics to properlyfunction. E. L. Godkin had a great appreciation forthe English School, and because he edited TheNation until 1881, and was then editor of the Postuntil 1899, he ensured that these ideas had nationalcirculation, and that they circulated among theright people.127 He wrote for a group of upper-classmen who believed in liberal economics and conserva-tive politics, comprised of gentlemen as well as socialscientists and experts.128 Godkin had, in the words ofWilliam James, “towering influence in all thoughtconcerning public affairs.”129 He used this influenceto shore up the position that, because history waspushed forward by natural laws, expressed in econ-omics, but also more broadly in evolution, the stateshould be directed only by individuals who under-stand those laws.

The foundation of Godkin’s thought was his unwa-vering belief in the independent natural authority ofeconomic law.130 In his eyes, economics was an exten-sion of nature, rather than politics, so economicanalysis must proceed just as natural science, by dedu-cing conclusions from a priori assumptions. Theassumption that man is rational and self-interestedplayed the role of gravity in Godkin’s economics:

No real progress would ever have been made inastronomy or mechanics without the assump-tion that if a body were set in motion in avacuum that is the way in which it wouldmove. It is no less true that political economy,no matter how defined, cannot be taughtwithout assuming the existence of an Econ-omic Man who desires above all things, andwithout reference to ethical considerations, toget as much of the world’s goods as he canwith the least possible expenditure of effortor energy on his own part.131

Just as science proceeds by abstracting from reality todeduce general laws from assumptions, so shouldeconomics, in Godkin’s view, proceed by abstractingfrom the messy reality of everyday interactions inorder to deduce general laws. Because these laws con-stitute the essential assumptions of his method, theyare prima facie valid in every instance, and therefore,Godkin insisted, they also hold predictive power. With

reference to Gresham’s law, for instance, Godkinwrites:

‘Gresham’s Law’ is simply a deduction fromobservation of the working of the EconomicMan’s mind when brought into contact withtwo kinds of currency of unequal value, andthrough our knowledge of the EconomicMan we can predict its operation with almostas much certainty as the operation of a law ofchemistry or physics.132

While Godkin does refer to “observation” in deducingGresham’s law, this is not the same type of observationused by Macune and other inductive, empirical, institu-tionalist economists. Induction directs the formulationof contingent laws based on observation of actualphenomena, but when Godkin refers to observation,he is referring to a procedure in which the economistimagines how the hypothetical “Economic Man”would react if he were given a choice between two com-peting currencies.

Godkin’s naturalistic approach to economics ledhim to argue that economics must be kept freefrom the political realm. In his eyes, it was simply a“fact of nature” that the scientific search for naturaltruth was foreign to activities that defined politicallife.133 To illustrate the perils of combining politicsand science, Godkin invited his readers to “supposeour acceptance of the law of gravitation had beendelayed by the war of 1812, or our belief in theatomic theory shaken by the Alabama case.”134

Because politics works at cross-purposes to scientificanalysis, it would be disastrous to allow politics tointerfere with the economy. Thus, Godkin’s favoredpolicy, like Leggett and other the deductive econom-ists, was laissez-faire: “[A]ny attempt to provide by lawany other measure of a man’s deserts in the socialstate than the amount of his own labor, or the valueput on the product of his labor by his fellows in freeand open market, would in the long run be destruc-tive to civilization, or at least to our civilization.”135

While Godkin certainly echoes Leggett’s endorsementof laissez-faire, and the disaster that necessarily resultsfrom government interference in the economy, hisapproach to reconciling democracy with the economymarks a significant departure.

In Godkin’s eyes, democracy is a particularlydangerous form of government, because the peoplewill always try to control the economy, despite being

127. William M. Armstrong, E. L. Godkin: A Biography (Albany,NY: State University of New York Press, 1978), 9.

128. Skowronek, Building a New American State, 45.129. Quoted in Fine, Laissez Faire and the General-Welfare State, 5.130. Dorothy Ross, The Origins of American Social Science (Cam-

bridge, UK: Cambridge University Press, 1991), 80.131. E. L. Godkin, “The Economic Man,” The North American

Review 153, no. 419 (October 1, 1891): 494.

132. Ibid.133. Nancy Cohen, The Reconstruction of American Liberalism,

1865–1914 (Chapel Hill: The University of North Carolina Press,2002), 57.

134. E. L. Godkin, “The Difficulties of Economic Discussion,”The Nation, July 22, 1889, 66, cited in Cohen, The Reconstruction ofAmerican Liberalism, 1865–1914, 53.

135. E. L. Godkin, “The Future of Capital,” Nation, June 22,1871, 381, emphasis in original. Cited in Cohen, The Reconstructionof American Liberalism, 1865–1914, 56.


unable to understand it. Economic truths may appearclear to the experts, but the people exhibit a remark-able tendency to ignore those truths,136 and becausethe people are unable to adequately perceive econ-omic truth, they are unfit to make economicdecisions. Democracy, however, invests the peoplewith decision-making power through voting. Godkininvoked an analogy for his nineteenth-centuryreaders in order to illustrate the absurdity of thevalue placed on voting:

We laugh at the poor African who consults hiswooden fetish before he takes any step in thebusiness of his wretched and darkened life;but when a Caucasian demagogue tries toshow us that the springs of justice and truthare to be found in a comparison of ten thou-sand bits of paper with nine thousand similarbits, we listen with gravity, and are half inclinedto believe that there is something in it.137

Instead of allowing the people to determine their fatethrough voting, argued Godkin, government shouldbe directed by experts, those who understand thescientific laws underlying reality. He took somesolace in observing that Americans were increasinglyreceptive and respectful of “scientific men.”138

Calling for a reorientation of authority from poli-ticians and the people to experts, Godkin and hisgroup came to be called the Mugwumps, from theAlgonquin word for “Chief.”139

Many of those in Godkin’s Mugwump sphere fol-lowed his invocation of deductive, rationalist, natura-listic economics, and some were eventually involvedin designing and implementing essential ProgressiveEra reforms. Godkin’s approach to economicsreflected a broader view of the relation betweennature, society, and progress, which energized politi-cal debates and set the terms for academic disputes.As history pushed America forward at the end ofthe nineteenth century, many wondered whetherand how America’s essential character would survivesuch great transformations. Evolution providedsocial scientists the most developed theory forasking how essential group traits change over time,but interpretations were sharply divided.

On the one hand were the followers of WilliamGraham Sumner, who argued that societies devel-oped as natural organisms, “determined by a naturalprocess of selection linked to the market, and imper-vious to the intervention of reason, politics, and mor-ality.”140 This theoretical standpoint led Sumner to

argue that America’s essential character would notbe diluted, as long as these natural processes of selec-tion were left unhampered. Chief among these pro-cesses was the market, and Sumner was a leadingadvocate of laissez-faire. On the other hand, FrancisAmasa Walker and a handful of others argued thatwhat Sumner took for natural processes were notindependent of, but instead directly contingent on,broader social conditions. Walker demonstrated con-vincingly that the creation of economic valuedepended less on the laws of supply and demandthan it did on the productivity of labor.141 While a see-mingly technical point, Walker argued that thisdemonstrated that the state could not treat economiclaws as independent of society, especially its laws andinstitutions. Ensuring prosperity, in Walker’s view,would require the state to guarantee labor pro-ductivity, and doing so might require actions that con-tradict the laws of supply and demand. Walker wassuggesting, in other words, that the natural processesof selection were functional only when placed withinbroader social context. Walker’s challenge toSumner’s universalistic, naturalistic methodology ledto his dismissal from Yale, and it foreshadowed theconflict that would erupt between the two approachesbefore the end of the century.

Through the 1870s and 1880s, the deductive econ-omists142 consolidated their power in academia, andthey played a major role in establishing Americansocial science by forming associations, securing pro-fessorships, and publishing in academic andpopular presses.143 In the 1870s, they advocatedlaissez-faire economics through their participationin the American Social Science Association144 andin the newly formed Political Economy Club.145 Bythe mid-1870s, the deductive economists had success-fully established a stronghold in academia, fromwhich they could study contemporary conditionsand offer expert advice. Relying on academic creden-tials to justify their activities as experts, the deductiveeconomists introduced a new role for American socialscientists as policy advisors and unelected de facto

136. E. L. Godkin, Problems of Modern Democracy: Political andEconomic Essays (New York: Scribner, 1903), 87.

137. E. L. Godkin, Reflections and Comments, 1865–1895(New York: C. Scribner’s Sons, 1895), 234.

138. Godkin, Problems of Modern Democracy, 94–95.139. Armstrong, E. L. Godkin, 160; Ross, The Origins of American

Social Science, 61.140. Ross, The Origins of American Social Science, 219.

141. Cohen, The Reconstruction of American Liberalism, 1865–1914, 154.

142. Because my focus is the group of individuals who advo-cated and articulated the doctrines of deductive economics, theterm “Mugwump,” due to its diverse application, proves unhelpfulhere. Although Cohen’s term, “liberal reformer,” picks out a neatergroup, “deductive economists” cuts no corners, but I must acknowl-edge considerable overlap with Cohen’s “liberal reformers,” as wellas Ross’s “Mugwumps,” and Skowronek’s “political mugwumps” and“economic mugwumps.” See Cohen, The Reconstruction of AmericanLiberalism, 1865–1914, 11–16; Ross, The Origins of American SocialScience, 61–71; Skowronek, Building a New American State, 133–34.

143. Fine, Laissez Faire and the General-Welfare State, 49.144. Cohen, The Reconstruction of American Liberalism, 1865–

1914, 12; Mary O. Furner, Advocacy and Objectivity: A Crisis in the Pro-fessionalization of American Social Science, 1865–1905 (Lexington:University Press of Kentucky, 1975), 40.

145. Furner, Advocacy and Objectivity, 60.


political leaders. Wielding significant power over poli-tics without necessarily being subject to the whims ofelectoral politics, journalists had previously enjoyedsimilar influence, Godkin foremost among them.

Young, ambitious, and dedicated to social issues,Henry Carter Adams had intended to be a journalist,and looked to Godkin as his role model. But whenAdams had a chance to meet with Godkin duringan 1876 trip to Cambridge, Godkin encouraged himto study social science instead.146 Adams followedGodkin’s advice, accepted his help, and enrolled atJohns Hopkins University, where he eventuallyreceived the first doctoral degree in social science.Hopkins was based on the German model of graduateeducation, and, midway through his program, Adamsleft Hopkins to continue his studies in Germany.

In the nineteenth century a significant number ofAmerican economists received their training inGermany, and having studied economics under pro-fessors identified with the Historical School, theybrought the Historical School’s methodology backto the United States. Henry Adams, Richard Ely,Edmund James, and Edwin Seligman, amongothers, all studied in Germany, and were impressednot just by the ideas they learned, but also by the aca-demic institutions built by their professors, especiallythe Verein fur Sozialpolitik. The Verein had beenfounded in 1872 to bring together German intellec-tuals to address the pressing problems of the day,and its members became well known for their rolein the Methodenstreit, a long-running protest againstthe Austrian school of economics. On the basis oftheir own inductive, empirical, historicist approach,members of the Historical School vigorously objectedto the Austrians’ deductive, axiomatic approach,insisting that economic facts cannot be separatedfrom national context, particularly because of econ-omics’ relationship to a nation’s history and culture,as well as its specific issues of policy and distri-bution.147 The opposition to universal economiclaws put the Historical School in direct oppositionto laissez-faire, which was purported to apply to alleconomies, regardless of national distinction.Adams and the other American economists returnedto the United States thoroughly convinced of induc-tive, historicist, empirical, institutional economicsand ready to challenge the orthodoxy, ascendant inits commitment to deduction, rationalism, natural-ism, and universalism.

In 1885, Adams, Ely, and other American econom-ists who had studied in Germany founded the Amer-ican Economic Association (AEA) in order to, in Ely’swords, “accomplish in America what the Verein fur

Socialpolitik has done in Germany.”148 The AEA’soriginal statement of principles began by declaring,“laissez faire is unsafe in politics and unsound inmorals; and it suggests an inadequate explanationof the relations between the state and the citizens.”149

The journal Science, sensing a controversy, invited thefounding members of the AEA to state their prin-ciples in a series of articles in 1886. What followedwas a heated exchange between the “new school,”that challenged the orthodoxy on first principles byinsisting that economic science must be inductive,empirical, institutional, and the “old school,” thatinvoked the principles of deduction to argue that thescientific validity of economics depended on recogniz-ing economic laws as natural and universally valid.150

Adams penned one of the opening salvos in an issueof Science from early July 1886. According to the view ofthe new school, economic analysis must take intoaccount not only “the economic nature of man,” butalso “the material surroundings of men,” as well as“the legal structure of society.”151 Rejecting theabstracted assumptions of the orthodox approach,Adams insisted that economic life does not occur ina vacuum, but is embedded in society, and unlesssocial factors are taken into account, economic analysiswill fail to describe reality. Economic science, forAdams, was a discipline whose responsibility includednot just accurate observation and portrayal of econ-omic reality, but its findings must be useful for govern-ment officials and policymakers. In order to be useful,economic analysis would need to take social contextinto account.

The old school did not take these challenges lyingdown. Arthur T. Hadley responded to Adams’s piecein the next issue of Science, where he diagnosedAdams’s problem: “The error lies in confoundingthe material to which a science is applied, with thematerial out of which it is built; or—to put the samething in another form—in identifying the materialof a science with the materials of an art.”152 Hadleydistinguished between science and art in order torestrict the scope of economic analysis. In his view,


147. Erik Grimmer-Solem, The Rise of Historical Economics andSocial Reform in Germany 1864–1894 (New York: Oxford UniversityPress, 2003), 247.

148. Private correspondence between Ely and Seligman, notedby Joseph Dorfman, “The Seligman Correspondence,” PoliticalScience Quarterly 56 (1941): 281, quoted in Daniel T. Rodgers, Atlan-tic Crossings: Social Politics in a Progressive Age (Cambridge, MA:Belknap Press of Harvard University Press, 1998), 102.

149. Richard T. Ely, “Report of the Organization of the Amer-ican Economic Association,” Publications of the American EconomicAssociation 1 (1886): 7.

150. For the view that the opposition to laissez-faire was a per-sonal crusade of Ely’s, unshared by other members of the AEA, andthat Ely inflated the popularity of that doctrine, see Thomas L.Haskell, The Emergence of Professional Social Science: The AmericanSocial Science Association and the Nineteenth-Century Crisis of Authority(Urbana: University of Illinois Press, 1997), 178–89.

151. Henry C. Adams, “Economics and Jurisprudence,” Science8 (1886): 15.

152. Arthur T. Hadley, “Economic Law and Methods,” Science 8(1886): 46.


the context in which man is situated, whethermaterial or legal, was irrelevant to economic analy-sis.153 Instead, those material or legal conditions areprecisely what should be the subject of economic pol-icymaking. Economic science should provide theinformation necessary to make decisions regardingpublic administration, but, argued Hadley, to basethat economic science on previous decisions ofpublic administration would be illogical. The lawson which economics relies are always valid, indepen-dent of particularities of context.

Adams did not let the point go, and he replied toHadley in the following issue, where he insisted thatcontext must be relevant to economic science andthat Hadley’s conception of context was overlynarrow. “Lego-historical facts,” he wrote, “are materialout of which to construct an economic science.”154

Against the orthodox view that economic scienceshould be deductively sound, logically derived fromfirst principles, Adams insisted that it must be “analyti-cal and constructive,” because economic life is alwaysembedded in, and therefore secondary to, thesocial.155 Hadley seemed to understand socialcontext as being completely constituted by a legal fra-mework, thereby denying Adams’s position that socialreality is constructed out of a multitude of inter-actions, some voluntary and others not. Adamsmocked Hadley’s understanding by comparing himto an astronomer, and his method to the “astronomi-cal method of investigation,” whereby one constructsa system of thought to build a straight line and thenmeasures how crooked it is in reality.156 Accordingto the AEA, economists relying on the deductiveapproach mistakenly focused on measuring imagin-ary theories, thereby overlooking the actual facts con-stituting economic reality.

The AEA attacked the orthodoxy on two levels.Their method caused economists to overlook thepressing facts of economic reality, and because theyoverlooked the facts, their theories were thereforeinvalid. Against this view, the AEA insisted on aninductive, empirical, institutionalist method, whichrequired that the scientific validity of economic lawsrest on social facts, such as material and legal con-ditions. According to the AEA’s view, a world of differ-ence existed between economics and astronomy, themost important being that humans create economicfacts but do not create astronomical ones. Inductionprovided a framework for economists to observehow economic facts are causally reducible to a collec-tion of social facts. For the AEA, economic laws wereproduced through inference based on observation.Social facts, such as laws, history, and material

surroundings, constituted the content of relevantobservations. Members of the AEA may have beenprimed for such an approach by their German pro-fessors, but they found that induction most accuratelycaptured their intuitions about contemporary Ameri-can life. Laissez-faire was destroying the social fabric.Induction, empiricism, and institutionalism providedthe AEA with the framework to observe and interpretthat doctrine’s effects, and to craft potential solutions.

Elements of the debate were surely scholastic, butthe implications for the discipline of economics wereprofound because the split between inductive anddeductive foundations led to opposing views on press-ing social issues, not the least of which was mon-opoly.157 According to the new school, the oldschool’s disregard for facts had led them to arguethat monopolies could not, and should not, be regu-lated because only by allowing the laws of supply anddemand to function would the most efficient andjust outcome be achieved. The new school distin-guished themselves by centering their analysis on thematerial and legal circumstances that made mon-opolies possible, and it was on these grounds thatthey argued for government regulation, in a mannerthat echoed Macune’s approach.

Indeed, Macune’s methodology may have beenshaped by the AEA’s agitation, for he was certainlyaware of their activities. After laying out Macune’s pos-ition on regulating railroad monopolies through com-petition, an 1890 issue of the National Economistdistinguished Macune’s theory from two popularalternatives. Briefly mentioning Hadley’s theory ofmonopoly, James Hudson wrote that, “The other isan ingenious theory of the classification of differentclasses of business, made by Prof. H.C. Adams, andsupported by Prof. E. J. James.”158 Hudson was refer-ring to the theory of “natural monopoly,” whichAdams had introduced and James had madepopular. The theory of natural monopoly proposeda solution to the monopoly problem orthogonal toMacune’s in that Adams argued for direct statecontrol of these businesses, while Macune stressedthe importance of reconfiguring the underlyingeconomic structure. Both, however, relied on thesame inductive, empirical, institutional methodology,in that both saw monopolies proceeding from econ-omies of scale, rather than political corruption orprivilege.

Adams defined natural monopolies as businessesfor which expansion would always lead to increasedreturns. In a sense, if a business saw economies ofscale, it was a natural monopoly. Adams identifiedcommunication (telegraph and post), transportation(roads and railways), and utilities (gas) as the mostcommon natural monopolies. But, he noted, “There

153. Fine, Laissez Faire and the General-Welfare State, 73.154. Henry C. Adams, “Another View of Economic Laws and

Methods,” Science 8 (1886): 104.155. Ibid.156. Ibid., 104–5.

157. Ross, The Origins of American Social Science, 113.158. National Economist 3 (April 26, 1890): 90.


are many other lines of business which conform to theprinciple of increasing returns, and for that reasoncome under the rule of centralized control. Suchbusinesses are by nature monopolies.”159 Theupshot of Adams’s theory of natural monopoly wasthat such businesses should be publicly owned andrun by the state because they were naturally predis-posed to centralization.

Natural monopolies, however, were not natural inthe a priori sense intended by the orthodox econom-ists. Rather, in Adams’s view, a monopoly was naturalto the extent that its position was entailed by a webof myriad social conditions, whereby no single causecould be isolated to account for the business’s increas-ing returns. Because of its degree of embeddedness,the only way to control the behavior of a natural mon-opoly without a far-reaching reconfiguration of thesocial fabric was to turn its ownership and manage-ment over to the state. “We certainly deceive our-selves,” wrote Adams, “in believing that competitioncan secure for the public fair treatment in suchcases [of natural monopoly], or that laws compellingcompetition can ever be enforced.”160 For Adams, theproblem was twofold. First, competition betweennatural monopolies did not entail adjustments toprice according to supply and demand, but causedreal destruction to the firms’ productive capacities.Because natural monopolies were founded in econ-omies of scale, reducing output due to competitivepressure led to significant losses, which were sufferednot by the firms, but by the public.161 Governmentwould ideally be able to craft economic regulationsto avoid this pitfall and still achieve an efficientoutcome, but Adams questioned this as well,because the regulations would need to be so farreaching, which led to the second problem with reg-ulating natural monopolies.

Even if the orthodox economists recognized theexistence of natural monopolies and their potentialdangers, they argued that government regulationwould likely do more harm than good because itwould interfere with the natural laws of economics.162

In their view, government intervention would onlyfurther the opportunities for corruption, bothmoral,163 and through mismanagement.164

Placed in charge of complex organizations, govern-ment officials would fail to understand the naturallaws of economics, and would operate businesses in

a manner harmful to the public, in part because poli-ticians are subject to political, rather than economic,incentives: if industries are placed under state control,“we should run the risk of having facilities grantedand capital invested, not because business neededthem, but because they were demanded by doubtfulstates or influential members of Congress.”165 InHadley’s eyes, the attempts at regulating the railroadsthat had been pursued following the demands offarmers, the so-called Granger laws, were deeplyflawed and ineffective because “a more powerfulforce than the authority of the courts was workingagainst the Granger system of regulation. The lawsof trade could not be violated with impunity.”166

The farmers’ efforts, no matter whether justified bythe Supreme Court, could not bend railroad practicesto their will, because the natural laws of economicswould necessarily prevail. While Hadley’s critique ofthe Granger laws proceeded from a judgment of inef-ficiency, Godkin’s was more direct, describing them as“robbery,” and, when referring to the law, putting“justice” in quotation marks.167

For Adams, however, the law of the land was noteconomic necessity, but the public good, and hebelieved that state regulation could and shouldserve the public. In his eyes, his opponents’ mistakewas to take the effects of noninterference as justifica-tion for barring state control of private enterprise. Butnoninterference was itself the problem, arguedAdams: “The policy of restricting public powerswithin the narrowest possible limit tends to weakengovernment and render it inefficient; this leads to cor-ruption on the part of public officials, which in itsturn, invites to yet greater corruption in private prac-tices.”168 Against his laissez-faire-inclined opponents,Adams argued that the choice of noninterferencewould be more prone to corruption and inefficiencybecause of the stakes involved. A well-designed CivilService could enact harmonizing regulations,169 suchthat the competition between natural monopolies,which was widely recognized to be harmful, wouldbe prevented. According to Adams, an economistwho takes up the argument for laissez-faire based ona fear of corruption and inefficiency “commits agrave error of mistaking a result for a cause.”170

Adams’s solution to natural monopoly represents anattempt to reconcile the orthodox economists’concern for economic necessity with a democratic

159. Henry C. Adams, “Relation of the State to IndustrialAction,” Publications of the American Economic Association 1, no. 6(January 1887): 528.

160. Ibid.161. Ibid., 513–14.162. Arthur T. Hadley, “Private Monopolies and Public Rights,”

The Quarterly Journal of Economics 1, no. 1 (October 1, 1886): 40–41,37.

163. E. L. Godkin, “Political Economy in Germany,” Nation,November 7, 1872, 294.

164. Hadley, “Private Monopolies and Public Rights.”

165. Arthur T. Hadley, Railroad Transportation: Its History and ItsLaws (New York: G.P. Putnam’s Sons, 1885), 256.

166. Ibid., 135.167. Godkin’s response to Edward F. Adams, “The Wisconsin

Method of Railroad Reform: Correspondence,” Nation, August 20,1874, 122, quoted in Cohen, The Reconstruction of American Liberal-ism, 1865–1914, 130.

168. Adams, “Relation of the State to Industrial Action,” 529.169. Joseph Dorfman, Economic Mind in American Civilization:

1865–1918, vol. 3 (New York: The Viking Press, 1949), 169.170. Adams, “Relation of the State to Industrial Action,” 529.


concern for an economic structure that serves thepublic good. Accordingly, Adams lent support to theGranger laws: “Certain businesses are regarded as ofa quasi-public character, and on that ground areadjudged to be under the control of the law . . . thedecisions in the so-called Granger cases establishedfor law, and in public opinion, the right of the statesto control railroad property.”171 Demonstrating thatsupport for the Granger laws could be formulatedon scientific grounds, Adams directly challenged theposition of the orthodox economists.

The AEA upstarts thus presented a threefold chal-lenge to the old school economists who advocateddeduction and laissez-faire. They disputed the firstprinciples that undergirded the deductive method-ology, they questioned the conclusions of the oldschool regarding laissez-faire, and, by presenting anargument against laissez-faire in the language ofscience, the AEA threatened to validate thedemands of farmers and labor for an increased roleof the state in the economy.172 Sharing Macune’sview that in a democracy popular sovereignty mustextend to the economic sphere, the AEA proposedan expansive conception of democracy that chal-lenged the existing economic distribution. The oldschool had relied on their authority as experts torepel demands for more equitable distribution ofresources by claiming that such demands wereungrounded in science.173 Godkin, for instance,wrote “[W]e trust they [the public] will ask them-selves, not how many votes the new movement prob-ably numbers, but whether it has a solid reason forexistence; whether the arguments of its supportersare true, or mere hollow imitations of reasoning.”174

While the deductive economists had once com-manded exclusive control over expert authority, thecredentialed economists of the AEA presented thepossibility that experts would lend their authority tovalidating the Populists’ and labor parties’demands.175 In order to prevent widespread accep-tance of increased economic intervention, the oldschool economists were presented with two strategies:either they could undercut the credentials of the AEAupstarts, or they could invalidate the AEA’s inductivemethod on scientific grounds. They did both.

DEFEATING CONTINGENCYMugwump leaders like Godkin led a charge againstmembers of the AEA that resulted in many losingtheir academic positions, and those who remainedin the academy were forced to strategically adapttheir views. This development of the economics pro-fession left an enduring legacy because it was aca-demic credentials that enabled economists to leadthe Progressive reforms central to early twentieth-century American state building. Those economistswho retained their credentials, such as Adams,directed Progressive reforms along the lines dictatedby a deductive, rationalist, naturalistic method, thusstructuring reforms that reflected a conception ofdemocracy constrained by economic laws. Seenfrom this angle, the Progressive Era represents notonly a marked shift in American economics, butsuggests that the defeat of Populism can be under-stood as the stabilization of a constrained conceptionof American democracy, where popular sovereigntycannot extend to the economic sphere.

Because Americans had been observing the revolu-tions unfolding in Europe over the course of the nine-teenth century, when the Haymarket Affair occurredin May 1886, public fears of revolution ran high. Itwas the perfect opening for the AEA’s opponents toattack. Unfortunately for Ely, his book on the labormovement was published directly following Haymar-ket, even though he had written it beforehand.176 Pre-sented the opportunity to connect Ely’s economictheory with the public’s fears about revolution,Godkin and his associates began a campaign to haveEly fired from his professorship at Johns Hopkins.177

While he was able to keep his position, Ely’s influencesteadily waned, and his career was repeatedly threa-tened over the following years. He gave up his pos-ition as secretary of the AEA in 1892, and, followingthe 1894 Pullman Strike, found himself on trial atthe University of Wisconsin for his views.178 Adams,too, came under serious pressure. Following aspeech at Cornell in March 1886, where he endorsedthe labor movement, he lost his position there, andwhen he went to assume the professorship he hadarranged at the University of Michigan, the universitypresident pushed him to publicly renounce hisviews.179 Other AEA members were also pressured,including Edward Bemis, who was forced out of the

171. Adams, “Economics and Jurisprudence,” 18.172. Fine, Laissez Faire and the General-Welfare State, 302; Ross,

The Origins of American Social Science, 99.173. Cohen, The Reconstruction of American Liberalism, 1865–

1914, 16.174. E. L. Godkin, “The Granger Collapse,” Nation, January 27,

1876, 58,cited in Cohen, The Reconstruction of American Liberalism,1865–1914, 132.

175. Cohen, The Reconstruction of American Liberalism, 1865–1914, 174; Leon Fink, Progressive Intellectuals and the Dilemmas ofDemocratic Commitment (Cambridge, MA: Harvard University Press,1997), 58–59.


177. Ibid., 169; Ross, The Origins of American Social Science, 116–18.178. Fink, Progressive Intellectuals and the Dilemmas of Democratic

Commitment, 63; Furner, Advocacy and Objectivity, 152; Ross, TheOrigins of American Social Science, 116–23.

179. Cohen, The Reconstruction of American Liberalism, 1865–1914, 171–72; Fink, Progressive Intellectuals and the Dilemmas of Demo-cratic Commitment, 62; Furner, Advocacy and Objectivity, 128; Rodgers,Atlantic Crossings, 104–5.


University of Chicago,180 and Edmund James, who wasforced out of the Wharton School.181

In addition to attacking the careers of the AEAeconomists, the opponents of the AEA also attackedthe scientific validity of the AEA approach. Godkin,for instance, charged that the AEA was engagedonly in political, rather than scientific, debate.Deeply committed to the deductive program of apriori natural laws, Godkin saw no scientific value inthe AEA’s program: “There is hardly a trace ofscience in their [AEA members’] talk any morethan in that of city missionaries. What they areasking us to do is simply to try a hazardous exper-iment in popular government.”182 The members ofthe AEA responded in kind, shaping their work tomeet the standards of the profession, as articulatedby the old school.

Richard Ely and John Bates Clark both changedtheir views considerably in order to tailor theirresearch away from threatening the old school’sdeductive, rationalist, naturalistic, and laissez-faireprinciples,183 but Adams’s shift was the most illustra-tive.184 In 1897, he published The Science of PublicFinance, which one can read as his attempt to reestab-lish scientific credibility in a profession overtly hostileto induction, empiricism, historicism, and institution-alism. While some passages echo his earlier commit-ments,185 his articulation of the “science of publicfinance” is explicitly deductive and naturalistic:

The service rendered by an adequate workinghypothesis in the development of any scienceis familiar to all students, and the reason nowurged for considering the theory of publicexpenditures in advance of the formal studyof the statistics of expenditures is found inthe fact that the former is essential for the suc-cessful prosecution of the latter.186

By emphasizing the importance of groundingresearch in previously formulated hypotheses,Adams echoes Godkin’s articulation of the deductivemethod. The inductive, empirical method employshypotheses as well, but according to that method,hypotheses must proceed from observation, andthey are always subject to invalidation by conflictingobservations. This is why Adams’s former professorsof the German Historicist School had insisted that

economists must first gather statistics before theywere able to formulate any theories about theeconomy.187 Adams stated his goal in the presentvolume as the exact opposite. He wrote that, whilethe necessary statistics do not yet exist, his goal isto formulate a theory in order to guide futureinvestigations:

[T]he author ventures to express a hope thata consistent theory of public expenditureshaving been set forth as a general theory ofsocial evolution, it will prove to be of sufficientinterest to claim the attention of many stu-dents, and that at their hands it will beexpanded and modified so as to become even-tually an established generalization in thescience of which it is a part.188

Despite Adams’s attempts to qualify his explicit rejec-tion of induction,189 his seeming reversal did not gounnoticed.

Edwin Seligman, one of the cofounders of the AEA,reviewed Adams’s The Science of Public Finance in Politi-cal Science Quarterly, and his comments reveal the dis-tance Adams had travelled from his previousposition. Seligman suggested that Adams’s privilegingof theory may be valuable in its own right, but “wemiss not only historical examples, but also anydetailed statement of actual fiscal methods inAmerica and any comparison with the institutions ofother countries.”190 Praising Adams where he doespresent historical examples,191 Seligman also slylynotes the change in Adams’s methodology: “In thisdetail Professor Adams has forgotten the general doc-trine which he elsewhere so eloquently inculcates.”192

And while Adams had earlier identified himself as asocialist,193 Seligman notes that his position now“lies midway between the two extremes of laissez faireand socialism.”194 The shift in Adams’s thoughtfrom challenge to capitulation illustrates the generaltrend among other AEA economists, as he began totreat economics as a technical field removed from pol-itical struggle, rather than viewing economics as afield on which to fight those struggles.195 And whilethe AEA had “quietly abandoned its statement ofprinciples,” including its opposition to laissez-faire,as early as 1888, the organization grew steadily less

180. Fink, Progressive Intellectuals and the Dilemmas of DemocraticCommitment, 65; Furner, Advocacy and Objectivity, chap. 8.

181. Rodgers, Atlantic Crossings, 105.182. Godkin, “The Economic Man,” 502.183. Furner, Advocacy and Objectivity, 161, 184–92; Ross, The

Origins of American Social Science, 118.184. Cohen, The Reconstruction of American Liberalism, 1865–

1914, 182–83; Furner, Advocacy and Objectivity, 138, 127.185. Henry C. Adams, The Science of Finance: An Investigation of

Public Expenditures and Public Revenues (New York: Henry Holt andCompany, 1905), 13–14.

186. Ibid., 35.

187. Grimmer-Solem, The Rise of Historical Economics and SocialReform in Germany 1864–1894, 106.

188. Adams, The Science of Finance, 35.189. Ibid.190. Edwin R. A. Seligman, “Adams’s Science of Finance,” Pol-

itical Science Quarterly 14, no. 1 (March 1, 1899): 133.191. Ibid., 137.192. Ibid., 135.193. Cohen, The Reconstruction of American Liberalism, 1865–

1914, 158.194. Seligman, “Adams’s Science of Finance,” 134.195. Shelton Stromquist, Reinventing “The People”: The Progressive

Movement, the Class Problem, and the Origins of Modern Liberalism(Urbana: University of Illinois Press, 2006), 23.


politically charged, and moved further from itsfounding methodology, as the nineteenth centurydrew to a close.196

By 1898, American economics had been trans-formed so significantly that Arthur Hadley waselected president of the AEA. While the AEA hadabandoned its principled opposition to laissez-faireand its scientific commitment to an alternative meth-odology, Hadley and others had changed their viewsas well. Emerging from the disputes between theinductive and deductive economists was a new syn-thesis, which accepted the role of the state in theeconomy, but still clung to the deductive, universalis-tic method.197 Adams’s The Science of Public Financeillustrates the methodological background of the syn-thesis,198 but Hadley’s 1898 presidential address setthe tone for how economists would employ this syn-thesis through their political involvement in thecoming years of the Progressive Era.199

In his address, Hadley argued that economists couldand should play a key role in navigating the necessaryconflict between democracy and the economic system.Echoing Godkin’s admonitions against popular govern-ment, Hadley perceived a necessary conflict betweendemocracy and economics: “Under the current systemof political ethics there is in fact a direct antagonismbetween the theory of economics and the practicalworking of representative government.”200 Theproblem, in his eyes, was that representatives actedonly in terms of the interests of their constituents, andnot for the nation as a whole. The solution was for econ-omists to take a more central role in directing govern-ment policy. While his advice was offered in relation toimperial projects, there is reason to believe that it alsoapplied to the domestic situation.201

I believe that their [economists] largest oppor-tunity in the immediate future lies not in the-ories but in practice, not with students butwith statesmen; not in the education of individ-ual citizens, however widespread and salutary,but in the leadership of an organized bodypolitic.202

Accordingly, Hadley directed economists away frominteracting with, and educating, the people, andinstead suggested that they focus on commissions,advisory boards, and other such positions fromwhich they would have direct access to the executiveand other key decision makers. Hadley’s advocacyfor economists to involve themselves in politicsmarked an “amazing reversal” from his position inthe 1880s, but he had not rejected the necessity ofallowing natural economic laws to function free ofdemocratic intervention.203

While continuing to advocate the necessary role ofthe state, the new synthetic view of the AEA explicitlyrejected the view that popular sovereignty shouldextend to the economy. Despite having earlier formu-lated a methodology that mirrored Populist economicthought, the early members of the AEA became activereformers during the Progressive Era under themantle of the deductive, rationalist, naturalisticapproach that undergirded the new synthesis.204 Tothe extent that Progressive reforms reflected Populistdemands, the purge of inductive, empirical, insti-tutional economics ensured that none of thosereforms embodied the key elements of Populistthought.

From 1887 through the Progressive Era, academiceconomists played a key role in shaping railroad regu-lations. Economists recognized that railroads posedbroad questions for social science regarding therelation of state to economy, and the issue was widelytaken up in the academy.205 Hadley, for instance, hadpublished an influential book on the topic in 1885,206

and Adams’s 1887 “Relation of the State to IndustrialAction”207 had also pushed the discussion forward.Hadley and Adams had both been involved in thepassage of the 1887 Interstate Commerce Act (ICA),which had brought the ICC into existence, but theyhad, at the time, disagreed over the proper methodof regulation, with Adams’s invocation of inductionand empiricism undergirding his defense of an unequi-vocally strong role for the state. The ICC, however,remained ineffective until Progressive Era reformsupdated its administrative and enforcement capabili-ties,208 and while Hadley and Adams were againinvolved in this effort, their engagement was nowdefined by Hadley’s program.209

196. Furner, Advocacy and Objectivity, 265; Rodgers, AtlanticCrossings, 106.

197. Cohen, The Reconstruction of American Liberalism, 1865–1914, 176, 183. Due to space constraints, I do not addresswhether the other synthesis of the era, marginalism, embodies asimilar capitulation to the deductive program, but one couldreasonably be led to that conclusion. See Dorfman, EconomicMind in American Civilization: 1865–1918, vol. 3, 165–66, 191–92,200–205; Furner, Advocacy and Objectivity, 184–92; Ross, TheOrigins of American Social Science, 118–22.


199. Skowronek, Building a New American State, 161.200. Arthur T. Hadley, “Relation between Economics and Poli-

tics,” Yale Law Journal 8, no. 4 (January 1898): 203–4.201. Dorfman, The Economic Mind in American Civilization,

1606–1865, vol. 2, 263–64; Rana, The Two Faces of American Freedom.202. Hadley, “Relation between Economics and Politics,” 206.

203. Furner, Advocacy and Objectivity, 273.204. Rodgers, Atlantic Crossings, 109.205. Skowronek, Building a New American State, 135–36.206. Hadley, Railroad Transportation: Its History and Its Laws.207. Adams, “Relation of the State to Industrial Action.”208. Berk, Alternative Tracks, 153; Sanders, Roots of Reform, 195–

97; Skowronek, Building a New American State, 160. For Adams’slasting influence on public economics, despite frustration withthe ICC, see Dorfman, The Economic Mind in American Civilization,1606–1865, vol. 2, 171–74.

209. For Hadley’s influence, see Martin Sklar, The CorporateReconstruction of American Capitalism, 1890–1916: The Market, the


The resurgence of economists’ attention to govern-ment action in the economy coincided with the birthof the Progressive Era, and their views were taken upby reformers aiming to apply scientific solutions topolitical conflicts. At the turn of the century, no con-flict had more influence over the shape of the Amer-ican state than the regulation of railroads. Thestruggles over railroad regulation “became a publicconflict over the institutional norms by whichtwentieth-century Americans would define thenature of democratic citizenship, market landscape,state structure, and the relationship between publicand private.”210 These widespread impacts dependedon the minutiae of regulation, one of which was theICC’s efforts to mediate the disagreements betweenshippers, who argued that the railroads’ rates weretoo high, and railroads, who argued that they wouldbe bankrupted if rates were reduced. At issue wasthe larger question of governmental authority, and,especially, what role the state should play in the emer-ging capitalist order.211 Despite Hadley and Adams’searlier disagreement over the role of the state in theeconomy, once Adams abandoned his views aboutmethod, his analysis of the railroad problem comple-mented Hadley’s.

Adams had written extensively on railroad ratessince 1887, but at the turn of the century, heoffered a new analysis. The ICC had regulated rail-road rates based on the overall financial structure ofeach railroad company, evaluating its debt structureand securities holdings in order to determine whata “reasonable” rate would be. In 1901, however,Adams told the Commission that, “he no longertrusted the long-standing practice of evaluatingreasonable rates according to whether they providedsufficient revenue to pay interest on bonds.”212

Debt, argued Adams, does not properly signify thevalue of property. Instead, the ICC should set ratesbased on assessments of the actual physical value ofrailroad property. Conveniently for the ICC,Adams’s position corresponded with the SupremeCourt’s ruling in Smyth v. Ames (1898), and, in 1911,the ICC successfully formed a commission underthe Mann-Elkins Act to perform a physical valuationof the railroads.213 Adams provided the justificationfor the commission in a series of works after 1901,and the commission itself was led by Hadley.214

The involvement of the AEA in the Mann-Elkins Actdemonstrates the degree to which their inductive,

empirical economic method was rejected. In 1886,Adams’s challenge to the deductive orthodoxy hadtaken the form of proposing a solution to the railroadquestion fundamentally at odds with Hadley’s. But, in1911, Adams was not only working with Hadley, buthad fully abandoned the inductive, empiricalprogram.215 The Hadley-led commission gave the ICCthe resources and justification for setting rates on abasis they described as factual, rather than political,social, or legal. By nominally rooting their approachin science instead of politics, the commission hopedto avoid the intractable disputes that had previously pre-vented effective regulation, but their new method wasfar from perfect:

The promise of a factual solution to an inescap-ably political problem (namely, the trade-offbetween current consumption and futureinvestment) resulted in circular logic. Any waycommission and carriers looked at it, thevalue of railroad property depended uponnet earnings and net earnings, in turn,depended upon rates.216

The problem facing the ICC was that their new regu-latory scheme required disaggregating a collection ofeconomic facts that were contingent on one another.Most striking about the failure of the ICC’s newscheme is that it would have avoided this particularproblem had it been structured according to induc-tive, empirical, institutional economics. The majorflaw of the regulatory framework was that it took theconcept of economic value as a natural fact ratherthan an observation embedded in social and politicalcontext.217 Because the Mann-Elkins Act considerablyincreased the ICC’s regulatory ability and had far-reaching consequences, this distinction, based onAdams’s economic reasoning, combined with theCourt’s decision in Smyth v. Ames, was not lost on con-temporaries. Legal scholar Gerard Henderson, forinstance, complained that, contrary to the ICC’sfocus on apparent facts of value, actual railroadrates “depend on compromise and practical adjust-ment rather than deductive logic. The whole doctrineof Smyth v. Ames rests upon a gigantic illusion.”218

But illusion or not, the hegemony of deductive,rationalist, naturalistic economics had a lasting influ-ence on the ICC, and by extension, the path of thetwentieth-century American political development.

The passage of Mann-Elkins revived the ICC fromdecades of ineffectiveness by introducing a new

Law, and Politics (Cambridge, MA: Cambridge University Press,1988), 57–58.

210. Berk, Alternative Tracks, 179.211. Ibid., 13; Sklar, The Corporate Reconstruction of American

Capitalism, 1890–1916, 33–34; Skowronek, Building a New AmericanState, 135–36.

212. Berk, Alternative Tracks, 157.213. Ibid., 165; Skowronek, Building a New American State, 268.214. Skowronek, Building a New American State, 268.

215. Berk, Alternative Tracks, 157.216. Ibid., 176.217. This abstracted use of statistics can be contrasted to the

German Historical School’s use of statistics, which insisted oncontext and contingency. See Grimmer-Solem, The Rise of HistoricalEconomics and Social Reform in Germany 1864–1894, 155.

218. Gerard Henderson, “Railway Valuation and the Courts,”Harvard Law Review 33, no. 8 (June 1920): 1031–32, quoted inBerk, Alternative Tracks, 177.


framework for regulation and, with it, a new role forthe American state. By significantly altering acceptedregulatory practices, the act was “a landmark of Pro-gressive Era legislation.”219 The ICC had originallybeen designed to enact meaningful state regulationof railroad business activities, but it was only withthe changes brought by Mann-Elkins that such regu-lation was possible.220 The framework evolved overthe next decade, so that “the Interstate CommerceCommission (ICC) emerged in the 1920s as thesignal triumph of the Progressive reconstitution,”and it set the standard for the Progressive Era’sother reform efforts.221 That standard mandated a“pattern of regulation by agencies that were indepen-dent from politics and staffed by experts, [andthereby] it established the American mode of regu-lation.”222 As the ICC provided an effective modelfor other agencies, the diffusion of its frameworkheld broader significance, as “it became a symbol ofa new democracy and a new political economy.”223

According to this new model, the relationship ofstate to economy had to be adjudicated by the strictlimitations of deductive, universalistic economics.The state may play a role in the economy, but onlyso long as democracy is not allowed to interferewith economic laws, for under this new system, itwas broadly recognized that, “the laws of trade werestronger than the laws of men.”224

Some have recognized alternative streams ofthought embedded in the Progressive Era, emphasiz-ing for instance the more experimentalist approachof Louis Brandeis and the Federal Trade Commission(FTC).225 Certainly the Progressive Era was notentirely overrun by deductive, universalistic econ-omics and a constrained conception of democracy,but it must be acknowledged that the exceptionproves the rule. Brandeis may have offered anapproach to economics that was not strictly deductive,and the FTC may have pursued a novel regulatorystrategy.226 Despite the potential that each of thesealternatives may have held for a conception of democ-racy that extended popular sovereignty to economics,they represent only a marginal aspect of Progressivereform, for the underlying consensus ran deep:

the Progressive Era was characterized by apaucity of alternatives to the status quo, avacuum that permitted political capitalism todirect the growth of industrialism in America,

to shape its politics, to determine the groundrules for American civilization in the twentiethcentury, and to set the stage for what was tofollow.227

Progressive reforms largely followed the model of theICC, which relied on expert commissions, staffed byeconomists trained in deductive, universalistic econ-omics who directed government to meet the require-ments of economic law. Even recognizing thatProgressives represented a diverse range of thoughtfrom left to right,228 it must be emphasized thatbeliefs about the universal validity of natural lawsundergirded the dominant viewpoints. HerbertCroly, for instance, a major leader of Progressivethought,229 rejected strict laissez-faire, but he didemphasize that popular sovereignty needed to bendto natural economic law, which “stirred anxietieseven in his own mind about the role that wouldremain for democratic citizens.”230 Decades earlier,there had been a handful of alternative approachesfor leading American democracy into the future,but the Progressive Era marked the decisive rejectionof a more robust conception of democracy: “thisreduced vision of democracy, its sphere narrowed byadministration and its authority limited to a kind ofveto power, extended the deferential role mugwumpsand Whigs had assigned to the people.”231 Accordingto Progressive reformers, the same processes ofnatural selection applied in the Progressive Era asthe Gilded Age, and the imperative for governmentaction to follow their direction had not diminished.As such, the foundation of the twentieth-centuryAmerican state was built on a conception of democ-racy in which popular sovereignty must be limitedby natural and universal economic laws.

Progressive Era reforms may bear a superficialresemblance to the Populists’ demands, but theymark a direct rejection of the Populist vision of expan-sive democracy. While some of the economists whowere involved with the reforms of the ProgressiveEra had previously defended the inductive, empirical,institutionalist methodology that grounded the strat-egy of Populist leaders like Macune, by the turn ofthe century this methodology had been thoroughlyrejected. Some of the former inductive economists,such as Adams, abandoned their views, while thosewho did not, such as Bemis, were removed from theprofession. Indeed, given that railroad regulation

219. Sanders, Roots of Reform, 208.220. Berk, Alternative Tracks, 167.221. Skowronek, Building a New American State, 249.222. Prasad, The Land of Too Much, 188.223. Skowronek, Building a New American State, 249.224. Berk, Alternative Tracks, 180.225. Gerald Berk, Louis D. Brandeis and the Making of Regulated

Competition, 1900–1932 (Cambridge, UK: Cambridge UniversityPress, 2012).

226. Ibid., 52.

227. Gabriel Kolko, The Triumph of Conservatism: ARe-Interpretation of American History, 1900–1916 (New York: FreePress, 1977), 305.

228. Stromquist, Reinventing “The People.”229. Rogers M. Smith, Civic Ideals: Conflicting Visions of Citizen-

ship in U.S. History (New Haven, CT: Yale University Press, 1999),414.

230. Ibid.231. Dorothy Ross, The Origins of American Social Science (Cam-

bridge, UK: Cambridge University Press, 1991), 278.


provided the model for Progressive reform, it is likelythat, “if the coming of managerial capitalism placedunassailable constraints upon twentieth-century statestructure and democratic politics, one is sure to findthem in this industry.”232 One such constraint wasthe commitment to deductive, rationalist, naturalisticeconomics. By discrediting inductive methodology,orthodox economists limited Progressive Erareforms from realizing a greater role for popularsovereignty in the economy. Instead, while acceptingthe increased role of the state, the economists whoshaped those reforms were careful to ensure thatthe underlying natural laws of the economic orderremained undisturbed by the popular will.233

Despite having achieved many of the piecemealreforms he proposed, Macune’s overarching visionof democracy unconstrained by economic lawsremained unfulfilled.

Treating the Populist legacy as based in the endur-ing institutions of the Progressive Era overlooks theextent to which Macune’s expansive vision of democ-racy was defeated as soundly as the People’s Party. Thestate responded to Populist demands, but did so fromwithin a deductive, rationalist, naturalistic framework,thereby necessarily constraining democracy to thedemands of the economic order. The FederalReserve, for instance, could be seen as the extensionof Macune’s demands for a distributed system of sub-treasuries, but while Macune’s subtreasury planrevolved around an extension of popular sovereignty,Progressive Era reforms entailed a “peculiar sort ofdemocracy.”234 Livingston notes how the FederalReserve actually restricted the role of popular sover-eignty regarding economic issues, such as thecontrol of the money supply: “Not until the FederalReserve System was in place were such issues finallyremoved from congressional jurisdiction and hencefrom normal political discourse.”235 While deductiveeconomists, such as Hadley, came to recognize thenecessity of regulating the economy, they did sofrom the perspective of “intervention,” whichimplicitly treated economic laws as natural, universal,independent, and superior to manmade law. Follow-ing the advice and specifications of experts, policywas crafted to follow economics, rather than the willof the people because, in the economists’ view, thepeople were uneducated and unappreciative of thecomplexities of economic law, unable to choosethe correct economic policy. This limited conceptionof democracy, where popular sovereignty is con-strained by economic laws, defined the twentieth-century growth of the American state, and continues

to define the political economic crises of thetwenty-first.236

CONCLUSION

Macune’s vision of an alternative to the emergingcapitalism of the Gilded Age challenged the domi-nant order of his time, and it continues to representa possibility in American political development,given that his underlying principles remain unrea-lized. Yet without uncovering its foundations, welose sight of what made Macune’s vision distinctive,and our perception of its failure remains clouded ingeneralities about the rise of industrial capitalism.Indeed, it was inductive, empirical economics thatenabled Macune to propose such a comprehensivestrategy for the Farmers’ Alliance, and it was preciselyhis invocation of this school of thought that sealed theabsolute defeat of Populist politics, following the 1896election. Because inductive economics was sothoroughly invalidated by the deductive orthodoxy’sresponse to the early AEA, the foundations of Populistthought did not survive into the twentieth century. Asa result, Progressive reforms, even those resemblingPopulist demands, fail to reflect the essential prin-ciples of Populism, which called for extendingpopular sovereignty to the economy. Instead, the Pro-gressive Era solidified the hegemony of deductivemethodology through the construction of durableinstitutions that limited democratic control in thename of natural economic law. While the Populistsdemanded a larger role for the popular will in theeconomy, the Progressive Era delivered state actionin the form of administrative intervention, takingfor granted the distinction at the heart of the deduc-tive method between the laws of man and the laws ofeconomics.

The loss of an alternative economics as a validmethod of analysis constrained the path of twentieth-century American political development to those pos-sibilities conceivable under the deductive method.While the range of possible economic policiesremains broad, each presupposes a necessary antagon-ism between democracy and economic necessity, andrequires the laws of man to serve the laws of econ-omics. These constraints are most visible during thecentury’s repeated economic crises. Searching for sol-utions to the Great Depression, for instance, policy-makers, naturally enough, could not rely oninvalidated economic reasoning. Their options werethus constrained by economics’ disciplinary history,which, in this case, led to a policy pattern mirroringProgressive reforms whereby the laws of man can regu-late the economy only so far as allowed by the natural232. Berk, Alternative Tracks, 4.

233. Stromquist, Reinventing “The People,” 23.234. James Livingston, Origins of the Federal Reserve System: Money,

Class, and Corporate Capitalism, 1890–1913 (Ithaca, NY: Cornell Uni-versity Press, 1989), 206.

235. Ibid., 26.236. Prasad, The Land of Too Much, 191, 194–95; Skowronek,

Building a New American State, 14.


laws of economics.237 The absence of inductive econ-omics entailed the absence of a range of possible pol-icies, for an entire set of potential solutions was leftinconceivable, as they would have transgressed thecore assumptions of the dominant methodology.Thus, while articulating the foundations of Macune’seconomic thought may present a substantiated coun-terfactual regarding an alternative to the ascendanteconomic order, much more significant is that doingso brings into view the constraints that the legacy ofPopulist defeat has placed on American politicaldevelopment.

These constraints are all too evident in the era of“too big to fail,” where it is widely accepted thatexperts’ pronouncements of economic necessitytrump popular demands. Since the financial crisisof 2008, popular protests against concentrated

wealth and power have refocused the public’s atten-tion on the gap between democratic governanceand economic administration, and the legacy ofPopulism has been brought back into discussionwith the rise of Occupy Wall Street. That Occupy’sdemands were rejected as unrealistic demonstratesthe value in reinvestigating the legacy of Populism’sdefeat, which emphasizes that the currently hegemo-nic methodologies were not always so, and thattheir dominance resulted from a highly contingent,and deeply political, series of conflicts. But if the cur-rently dominant methods of analysis and investigationare contingent, and we are free to pursue alternativemethods, what type of social science is to be done inthe era of “too big to fail”? Macune’s approach rep-resents one possibility, but he by no means holdsexclusive privilege to the potential alternatives.

237. Mark Blyth, Great Transformations: Economic Ideas and Insti-tutional Change in the Twentieth Century (Cambridge, UK: CambridgeUniversity Press, 2002), 49–51, 90–95.


Documents

Macune’s Monopoly: Economic Law and the Legacy of Populism