24 ChaPter^1
new rounds of speculation, mergers, oligopolies, and business failures [again,
think of the banking meltdown of the past few years].Wealth and Power, Private and Public
A wealthy family in the Northeast held a treasure hunt at their estate, where
they buried diamonds in the lawn and provided their guests with small gold-
en shovels to dig for them. As extreme as this may sound, it was hardly a rare
and gaudy display of riches. With the triumph of industry and Capitalism after
the Civil War, Americans, especially those with great wealth, lived differently.
Some showed off their money ostentatiously. This emergence of “conspicuous
consumption” would expand as wealth was created and in a couple genera-
tions would simply replace the ideas of thrift and savings that the Puritans had
brought with them centuries earlier.
As we have seen, Capitalism created huge amounts of wealth. The Net
National Product [the total output of products minus the replacement of
worn-out factories, machines, and other capital goods] was $6.2 billion in
1870 and almost five times more, $30.1 billion, in 1900. In that same period,
American production grew to be more than one-third more than Germany’s,
twice as much as Britain’s, and over twice that of France; per capita income
also rose significantly, by 110 percent. This growth cut across virtually all eco-
nomic activities. Capital and capital markets—stock exchanges, bond sales, an
increase in banks, the growth of insurance companies—all created huge levels
of wealth, while land and property—factories being built, new buildings,
transportation systems, land improvements— grew due to such investments
and helped expand the market for manufactured goods, first nationally and
then globally.
This growth took place in many specific economic areas as well. Banking
grew tremendously. In 1815, there were 206 chartered banks in the U.S., but
by 1860, there were well over 1500, a 700+ percent increase. By 1900, there
were over 13,000 such financial institutions, and by 1920, over 31,000, with
over $53 billion in assets. Banks [along with insurance companies] expanded
markets by providing capital to build factories and improve transportation;
helped mechanize farm equipment by funding the creation of tools such as
steel plows, threshers, and twine knitters; and, in general, revolutionized indus-
try by making money available for investment. Where humans and animals