Introduction by Patrick Newman

Murray Rothbard was a scholar of enormous erudition with many diverse research interests. He wrote about economic theory, economic history, history of economic thought, pure history, philosophy, political science, and popular culture. Indeed, David Gordon writes, “A person examining the books and articles of Murray Rothbard without prior acquaintance with their author could not help wondering whether five or six prolific scholars shared the name ‘Murray Rothbard’.”1 Among all of these disciplines, one area of research to which Rothbard devoted a significant portion of his academic career and utilized many of the above fields was late 19th and early 20th century United States history, particularly the period that is known as the Progressive Era (approximately from the late 1890s to the early 1920s).

The Progressive Era was one of the most, if not the most, significant periods in U.S. history. The country was transformed from a relatively laissez-faire economy with a minimal government into a heavily regulated economy governed by an interventionist state. Correspondingly, the ideology of public intellectuals, business, the citizenry, and political parties drastically changed and became more interventionist. For most historians, this was the period when the country was growing up, when it realized that minimal government was not suited for a modern industrial economy, because it produced numerous social ills such as frequent business cycles, unemployment, monopolies, crippling deflation, poor quality products, and enormous economic inequality. For Rothbard, on the other hand, it was the turning point, the time when America abandoned its laissez-faire strengths for the welfare-warfare state, and thereby plunged headfirst into all of its destructive consequences in the 20th century.

It is well known that Rothbard was deeply interested in the Progressive Era and throughout his life wrote numerous papers on it. Less well known, if it is known at all, is that Rothbard had also partially written a full blown book on the period, starting with the railroad interventions of the 1860s to the National Civic Federation of the early 1900s. The book was written while Rothbard was heavily involved with the Cato Institute during the 1970s. While Rothbard never formally completed the book, he informally finished it by writing the remaining chapters as various essays which were published in the 1980s and 1990s. Justin Raimondo, Rothbard’s only biographer, commented on the project in 2000:

Rothbard’s writings on the Progressive Era, which have never been put together in a single volume, are a rich vein of analysis that contemporary scholars, libertarian or whatever, would do well to mine. In a fascinating narrative that unfolds like the plot of a novel, Rothbard documents his thesis with the fascinating stories of the men, and especially the women, who led the Progressive movement: ministers, social workers, intellectuals, and other professional do-gooders, whose zeal to remake America in the image of an (often secularized) God was rooted in the theological vision in which humanity would be the agency that would establish the Kingdom of God on earth.2

It is the task of this volume, at long last, to combine the unfinished book and other essays and publish the complete Rothbardian history of the Progressive Era.

In 1962, at the age of 36, the young Murray Rothbard had already produced multiple classics in the Austrian and libertarian tradition. Some of these were of smaller scope in the form of a paper or monograph. Others were much larger and more ambitious, such as his comprehensive treatise on economics. The first two volumes were published in 1962 under the title Man, Economy, and State, the last volume on government intervention deemed too controversial, Power and Market, in 1970. Another was America’s Great Depression, which came out a year later, an economic history that gave the authoritative Austrian interpretation of the United States’ Roaring Twenties and Great Depression. In addition to both of these, he also wrote his dissertation, The Panic of 1819, under Joseph Dorfman, which he defended in 1956 and published in 1962.3 ,4 If he had ended his career then, Rothbard would have already cemented his status as one of the foremost scholars in Austrian economics and libertarianism.

However, Rothbard did not end his career, and he was still eager to write prodigiously, especially on completely different topics. In a letter to Kenneth S. Templeton, Jr., an associate of the Volker Fund which provided the research grant for Man, Economy, and State, he wrote:

I am also happy to have the opportunity to leave the realm of economic theory, for, with the books published and especially with Man, Economy, and State, I believe I have said whatever I have to say about economics, and am now eager to move on. I have a constitutional aversion to repeating myself and milking my previous stuff ad infinitum — which seems to be a way of life for so many scholars.5

For the remainder of the 1960s, Rothbard would focus his energies on a number of different fields, including history, political philosophy, and popular libertarianism. Like before, he would work on many projects of varying sizes at the same time. His next major work was a history of the United States. In late 1962, through the auspices of Templeton, he received a grant from the Lilly Endowment that would last until 1966 to write a one volume text on American history from a libertarian perspective. He was to work with Leonard Liggio, a young historian Rothbard’s junior who had developed a close connection with him in the 1950s.

Rothbard’s major projects frequently took on a life of their own. Man, Economy, and State was originally supposed to be a textbook translation of his mentor Ludwig von Mises’s Human Action; instead, after careful deliberation, Rothbard decided to transform it into a full blown treatise on economics.6 The last work of his life, An Austrian Perspective on the History of Economic Thought, was originally supposed to be a small volume that provided the anti-Heilbroner alternative to economic thought from Adam Smith onward. It too became a massive two-volume work (the planned third volume was unfortunately never written) that spanned from the ancient Greek philosophers to Karl Marx.7 And the current history project would not be published as a general overview of American history at all, but instead a five-volume work titled Conceived in Liberty which spanned from the founding of the American colonies to the United States Constitution.8 Commenting on the evolution of the project in an interview, which equally applies to his other work, Rothbard said “I don’t chart this stuff in advance. I don’t like to work that way. I go step by step and it keeps getting longer.”9

The major theme of Conceived in Liberty, which also applied to his other historical work, was the idea of Liberty versus Power. Throughout history, there has been an eternal battle between those who wield the coercive power of the State apparatus, and those who wish to resist it. Throughout most of human history, to quote the famous words of Thomas Hobbes, life was “nasty, brutish and short.” Tyrants of all stripes, emperors, kings, feudal barons, and warlords, subjugated the masses and ruled over them with an iron first. The dominant economic system of this ancien régime was mercantilism, where government subsidies and other forms of protectionism were granted to favored businesses and other special interests. Then suddenly, in Britain and the American colonies in the 17th and 18th centuries, this changed, and much different forms of government were created — ones that were more limited in scope and allowed for greater liberty. The American colonies in particular cast off the oppressive shackles of their royal governors, and then later the British government completely in the American Revolution, in favor of a far more limited government and laissez-faire economic system that the people directly controlled. The fight was not over however, as those fighting for liberty and limited government continually clashed with those wishing to expand the size of government in the 19th century.

How did this occur? How were the ideas of Liberty versus Power disseminated to the broad populace? Why, for so long, did the public stand the depredations of their rulers in the ancien régime? Why did they later revolt against this dispensation and fight for liberty? And fast forwarding to the Progressive Era, why did the pendulum shift back to statism and acceptance of increased state rule?

The answers to all of these questions involve the role of ideology and intellectuals filtering these messages down to the public. Throughout history, there have been two types of intellectuals. The first are the court intellectuals, originally the priests and the clergymen. Their job was to convince the public of the righteousness and legitimacy of the ruler through religious means (such as “The King is Divine”) and to truckle to his predations. In return for these necessary public relations, the court intellectuals were to receive their fair share of the pelf taken from the public. This relationship was the famous Alliance of Throne and Altar that existed throughout most of history in various forms. On the other hand, there are the radical and revolutionary intellectuals who were out to spread the message of liberty and fight against the coercive order. They were not in it for power or prestige but instead liberty and justice.

The principal transmission mechanism during the American Revolution was the natural rights theory of John Locke. While Locke’s work provided the ultimate theoretical edifice, it was very abstract, and the message was instead distributed to the public through the much more popular and easier readings of Cato’s Letters, written by John Trenchard and Thomas Gordon.10 Here were the works that instilled in the public a radical libertarian ideology that emanated in various ways in subsequent years. The importance of intellectuals in filtering ideas to the public, statist or libertarian, would be a major theme of Rothbard’s historical work.

Rothbard never did write a complete history of the United States, as originally intended, but he did subsequently concentrate on certain periods, particularly the late 19th and early 20th centuries, which included everything from the Progressive Era to World War I to the Great Depression.11 The Progressive Era was the main catalyst behind later events, for it provided the necessary framework that created the modern welfare-warfare state and increases in government power. In 1965, while heavily researching American history and writing Conceived in Liberty, in his seminal article “Left and Right: Prospects for Liberty” Rothbard had already laid out his general framework for understanding this transformation, using the historical work of Gabriel Kolko:

In The Triumph of Conservatism, Kolko traces the origins of political capitalism in the “reforms” of the Progressive Era. ... Despite the wave of mergers and trusts formed around the turn of the century, Kolko reveals, the forces of competition on the free market rapidly vitiated and dissolved these attempts at stabilizing and perpetuating the economic power of big business interests. It was precisely in reaction to their impending defeat at the hands of the competitive storms of the market that big business turned, increasingly after the 1900s, to the federal government for aid and protection. In short, the intervention by the federal government was designed, not to curb big business monopoly for the sake of the public weal, but to create monopolies that big business (as well as trade associations of smaller business) had not been able to establish amidst the competitive gales of the free market ...

Thus, Kolko shows that, beginning with Theodore Roosevelt’s New Nationalism and culminating in Wilson’s New Freedom, in industry after industry, for example, insurance, banking, meat, exports and business generally, regulations that present-day rightists think of as “socialistic” were not only uniformly hailed, but conceived and brought about by big businessmen. This was a conscious effort to fasten upon the economy a cement of subsidy, stabilization, and monopoly privilege.12

Here Rothbard explains the central idea that big business, far from being laissez-faire ideologues, was interested in developing government regulations to actively hamper their competitors and help it cartelize in order to restrict supply and raise prices. He would extend this theme in two later essays he wrote shortly thereafter on the Progressive Era, “War Collectivism in World War I” and “Herbert Hoover and the Myth of Laissez-Faire.”13

Kolko, along with the Chicago school economist George Stigler, espoused what later came to be labelled the “capture” theory of regulation. This theory states that regulation purportedly designed to curb business abuses is actually often “captured” by various businesses in order to enhance their own profits and weaken their competitors. In addition, in many cases the regulation is even promoted by the businesses themselves for this specific purpose. This is opposed to the “public interest” theory, which argues that regulation is designed for, and ultimately benefits, the general public, and the “bureaucratic” theory, which argues that regulations are enacted to empower various bureaucrats and government agencies. As will be seen below, Rothbard combined both the capture and bureaucratic theories in his historical narrative of the Progressive Era.14 His narrative was intimately linked with his general historical method, which sought to understand the various motivations of special interests who lobby for government legislation.

While Rothbard was Mises’s foremost student in wielding the praxeological method to deduce a body of abstract economic theorems, he was also his foremost student in applying them to history and utilizing his thymological method, best described in Theory and History.15 In contrast to praxeology, the science of human action, thymology is the science of understanding why humans act a certain way, or “psychologizing” their behavior (psychology understood in the common-sense definition). This historical method strives to answer the eternal question “Cui bono?” or, “Who Benefits?” from an action, particularly a change in government institutions. More specifically, the thymological method looks at both pecuniary and nonpecuniary (such as religious) motivations, and seeks to answer the question “Who thinks they stand to benefit?” The latter question emphasizes that not all results of a government intervention are intended, and that not all special interest groups who lobby for a regulation actually do benefit ex post. To answer the latter question, one needs to engage in a detailed historical understanding of the various actors involved and not just a statistical test, which is the usual approach of an economist.

Rothbard’s use of the thymological method in his historical analysis is also closely related to his consistent application of the sociological law called “The Iron Law of Oligarchy.” The law states that governments, politicians, and legislation are not controlled by democratic majorities or public opinion, but instead by a small entrenched group of individuals. This group contains a mix of big businesses, politicians, and bureaucrats who wield the state apparatus for their own benefit at the expense of the rest of society. Court intellectuals supply the necessary public relations in various ways, such as by arguing that the government is not controlled by a small elite or that certain government actions are necessary, in return for power and prestige. There is a close relationship between this law and the method in political science called “Power Elite analysis.” Governments are controlled by well-established financial and political elites who pull the levers “behind the scenes,” and government officials and bureaucrats often have many important links, including familial ties, with the business community that provide powerful motivations for explaining why they acted a certain way while in office. These approaches and Rothbard’s consistent application of them have often been criticized as crank “conspiracy theories,” but it is important to note that proper use of them is only an extension of Mises’s thymological method, which seeks to understand human action and explain its motivations. Government officials do not fall from the sky without any prior connections to the political and business world, and they are just as self-interested as those in the private sector. There is a strong similarity between what is called “Public Choice analysis” and the thymological approach, although the two are not completely identical. The thymological method places more emphasis on engaging in pure historical work in understanding the motivations of acting individuals, as well as the fact that individuals often act in a certain way and expect to benefit but do not actually do so. In addition, Rothbard’s particular application also places much more emphasis on the oligarchical and coercive aspects of State rule.16

As the late 1960s and early 1970s passed, Rothbard would not turn away from utilizing the thymological method in his scholarly work. On the contrary, he would continue to elaborate on the method in important popular articles, updating Conceived in Liberty for publication and publishing other historical papers, such as “The New Deal and the International Monetary System.”17 More importantly for our purposes here, Rothbard also began writing his book on the Progressive Era while affiliated with the Cato Institute.

With this work Rothbard planned to continue his project on American history, only now fast forwarding from the change in ideology and government from statism to liberty to the change from liberty to statism. He would chronicle how the battle of Liberty versus Power was lost around the turn of the 20th century. He was not only going to utilize the works of Kolko, but also the works of other notable revisionist historians who wrote on the period in recent years, such as James Weinstein, Paul Kleppner, Richard Jensen, and James Gilbert. Rothbard succinctly described his thesis in a book proposal:

The purpose of this projected book is to synthesize the remarkable quantity and quality of new and fresh work on the Progressive Era (roughly the late 1890s to the early 1920s) that has been done in the past twenty years. In particular, the object is to trace the causes, the nature, and the consequences of the dramatic shift of the U.S. polity from a relatively laissez-faire system to the outlines of the statist era that we are familiar with today.

The older paradigm of historians held the burst of statism in the Progressive Era to be the response of a coalition of workers, farmers, and altruistic intellectuals to the rising tide of big business monopoly, with the coalition bringing in big government to curb and check that monopoly.

Research in the past two decades has overthrown that paradigm in almost every detail.

The burst in statism would be explained by an alliance between big business, big unions, big government, and big intellectuals who were able to take control due to a seismic change in the political system following the election of 1896:

[T]he essence of Progressivism was that certain elements of big business, having sought monopoly through cartels and mergers on the free market without success, turned to government — federal, state, and local — to achieve that monopoly through government-sponsored and enforced cartelization ...

Allied to these big business elements in imposing Progressivism were what Gilbert calls “collectivist intellectuals,” whose goals no longer seem that altruistic. Rather, they seem like the first great wave of the “New Class” of modern intellectuals out for a share of power and for the fruits of similar governmental cartelization ...

In the last decade, the “new political history” stressing ethno-religious determinants of mass political attitudes, voting, and political parties ... has added another important dimension to this story ... Kleppner explains that the triumph of the Bryan forces in the Democratic Party in 1896 marked the end of the Democrats as a laissez-faire party, and the subsequent lack of real electoral choice left a power vacuum for Progressive technocrats, intellectuals, and businessmen to fill.18

The original outline of the book was “roughly as follows,” and appears to have been the following nine chapters:

Chapter 1: Introduction
Chapter 2: The Failure of Attempts at Monopoly
Chapter 3: Government as Cartelist
Chapter 4: Centralization of the Cities
Chapter 5: Science and Morality: the Intellectual as Corporatist
Chapter 6: The New American Empire
Chapter 7: World War I: the Culmination of the Corporatist System
Chapter 8: The 1920’s Corporatism After the War
Chapter 9: Epilogue: to the Present19

Chapter 2 would explain the ways in which business attempts at cartelization, mergers, or monopolies failed, whether it was railroads or major industrial firms such as U.S. Steel. Chapter 3 would document the resultant state and federal attempts at cartelization pushed by big businesses, such as the Interstate Commerce Commission (ICC), the Federal Trade Commission (FTC), meatpacking legislation, the Federal Reserve System (FRS), and the importance of the National Civic Federation in spurring the new interventions. Chapter 4 would describe local Progressive politics and the drive by reformers to weaken the ethnic immigrants and push for prohibition and public schools. Chapter 5 would explain the evolution of intellectuals into acting as apologists for the new big government, and Chapter 6 would be on the pre-World War I changes in American foreign policy, including interventions in Asia, South America, and the Spanish- American War. Chapter 7 would explain the Wilson administration’s push for intervening in the European war, the devolution of the Democratic Party away from its laissez-faire heritage, and how the war represented the culmination of the Progressive movement. Chapter 8 would document the Progressivism of Herbert Hoover and the 1920s monetary interventions of Benjamin Strong, and Chapter 9 would briefly extend the analysis up into the present.20

When writing the manuscript, Rothbard more or less followed this outline, with one major exception. Instead of postponing the transformation of the Democratic Party to the World War I Chapter 7 (in order to explain the Wilson administration’s drive toward war), Rothbard moved it up to right after the failure of the merger movement and monopolies (listed above as Chapter 2). Rothbard decided to move up explaining the Democratic and Republican parties during the third party system up until the election of 1896, when both parties became center-statist and there was no longer a clear laissez-faire party in American politics.

Rothbard appears to have worked on the manuscript from 1978 to 1981. Like many of his projects, the book took on a life of its own and grew much bigger than the original plan. By 1981, Rothbard wrote rough drafts of nine chapters, but he was only still on what was planned to be Chapter 3 of the original proposal! Chapter 2 on monopolies grew into three chapters, with two whole chapters devoted to the railroad question, which Rothbard initially planned to only visit “briefly.” Explaining the third party system and the election of 1896 took three entire chapters, and Rothbard devoted two entire chapters to the Progressive cartelization during the Roosevelt administration, and a stand-alone chapter on the National Civic Federation, and was still not done with what he wanted to write about in the original chapter 3.

By 1981, Rothbard was no longer working on the remaining chapters of the book. But by no means was Rothbard not finishing the book. Instead, he was writing the remaining chapters as papers that were published in the 1980s, early 1990s, or posthumously after his unexpected death in 1995. On the material planned to be in Chapter 4, such as the feminist movement and women’s suffrage, urban reform, prohibition, and other aspects of local Progressivism, Rothbard wrote “The Progressive Era and the Family” and “Origins of the Welfare State in America.” In addition to the above topics and on the material in Chapters 5 and 7 on intellectuals and World War I, Rothbard wrote “World War I as Fulfillment: Power and the Intellectuals.” On the progression of American foreign policy planned for Chapters 6, 7, and 9, Rothbard wrote “Wall Street, Banks, and American Foreign Policy.” Rothbard devoted the most space to the origins of the Federal Reserve (part of Chapter 3) and on 1920s monetary interventions (part of Chapter 8), such as the historical sections in The Mystery of Banking, “The Federal Reserve as a Cartelization Device, The Early Years: 1913–1930,” the historical sections in The Case Against the Fed, “The Gold Exchange Standard in the Interwar Years,” “The Origins of the Federal Reserve,” and “From Hoover to Roosevelt: The Federal Reserve and the Financial Elites.”21 He was selected to be a reviewer in 1985 for Robert Higgs’s Crisis and Leviathan: Critical Episodes in the Growth of American Government, in which he wrote an in-depth review that showed he was still deeply immersed and interested in the Progressive Era.22 Moreover, while teaching at Brooklyn Polytechnic, Rothbard taught a class in 1986 on the Progressive Era, in which he lectured on segments of the book manuscript as well as other Progressive Era essays he had written or was working on.23

It could be said that, in the last decade or so of Rothbard’s life, aside from working on his all-encompassing history of economic thought, Progressivism was the next most significant area of research on his mind. That Rothbard was interested in Progressivism right up until his untimely death in 1995 can be seen when reading The Case Against the Fed, the last book published in his lifetime, since Rothbard devoted a significant portion of it to providing a brief overview of Progressivism and the history of the Federal Reserve. No doubt, if Rothbard lived to write his third volume on the history of economic thought, which planned to cover topics ranging from the 1871 Marginal Revolution to the 1930s Keynesian Revolution and beyond, he would have written extensively about the Progressivist intellectuals.

Rothbard’s book manuscript and the essays contained in The Progressive Era, represent a lifetime of deep research in American history. Rothbard was deeply immersed in all areas of American history, especially the Progressive Era, and he was able to collate a massive amount of research and facts and synthesize them to create his own unique narrative of the era. The remainder of this introduction will provide a brief overview of the Rothbardian interpretation as well as a general summary of the chapters and essays contained therein.

Rothbard’s central thesis is that big businesses had previously tried to cartelize on the free market around the turn of the 20th century, but had failed to do so. Try as they might, the cartel agreements and mergers failed because of the internal pressure of collaborators cheating and the external pressure of new competitors entering the market to cut prices and break the cartels. Having failed in this endeavor, they turned to government regulations in order to help them cartelize by preventing various forms of price and product competition and preventing new smaller competitors from successfully entering markets by raising their costs. Big Business allied itself with Big Government, who wanted the regulations in order to increase its own power, and Big Unions, to help stifle the radical opposition of labor. However, this was a resurrection of the ancien régime in a different form, and it could not simply be imposed on the public who was all too familiar with this system and instilled with relatively laissez-faire principles. In order to sell it to the public they needed a new breed of collectivist intellectuals, many of whom were thoroughly convinced of the ways of Bismarckian socialism after receiving their Ph.D.s in Germany in the post-Civil War era. The Alliance of Throne and Altar was back with a vengeance, between the favored government interests and the intellectual apologists, only that this time the intellectuals were not convincing the public that the King’s mandate was the word of God and his depredations were divine, but that Big Government was needed in order to improve the public welfare and cure the social problems brought on by unfettered capitalism. In return, the intellectuals were to benefit by becoming professionalized and given lucrative jobs in planning and administering the whole apparatus. The Alliance saw itself as a middle of the road stabilizer between anarchic and outdated laissez-faire capitalism and confiscatory and extremist socialism.

This dramatic change at the beginning of the 20th century was not able to be instituted on the existing political system, but occurred after a seismic change in the orientation of the political parties. This resulted from the ethnoreligious political battles between the Democrats and the Republicans in the 1880s and 1890s which led to the climactic election of 1896.

During the third party system (1854–1896) of American politics, the great mass of the public was ideological and learned their respective economic positions from political activists who translated them into ethno-cultural and religious terms. On the one hand, there was the Republican Party, “The Party of Great Moral Ideas,” dominated by pietist “Yankee” natives. They were “postmillennial” in that they believed in order for Jesus to return to earth and usher in the end of history, they must first bring about a thousand year Kingdom of God. In order to do so, they not only needed to save themselves, but also save others, even if it required state force. Thus the pietists were hell-bent on stamping out all forms of sin, including instituting prohibition and weakening the “Roman Popery” of the Catholic schools, along with other measures such as immigration restriction and women’s suffrage (to boost the pietist vote). This paternalistic intervention on the local ethnoreligious level was translated to a paternalistic intervention on the larger economic realm, such as enacting various government subsidies, tariffs, or greenback inflation. On the other hand, there was the Democratic Party, “The Party of Personal Liberty,” dominated by liturgical natives and immigrants, such as Catholics and Lutherans. These religious denominations did not have the evangelical zeal to actively save others and stamp out sin, but only to follow the teachings and practices of their respective churches. As a result, they criticized all Republican local interventions as paternalistic drives to meddle and control their lives, correspondingly saw their economic policies as allied, and consequently favored a more laissez-faire agenda, including less government spending, low tariffs, and the gold standard. The laissez-faire Democrats were also called the Bourbon Democrats, who were generally centered in the Northeast and Midwest, and whose ancestors belonged to the laissez-faire wing of the Jacksonian Democrats. The battle of Liberty versus Power was being fought once again in American history.

The Democrats were slowly but surely winning, and in the late 1880s and early 1890s made a remarkable series of gains, shocking the Republican elite. In order to counter this trend, Republican elites strategically decided to downplay ethno-cultural issues and become more hard money in order to stop alienating liturgicals at the expense of aggravating pietists. This also fortuitously coincided with the Panic of 1893, a severe economic depression that (unjustly) hurt the incumbent Bourbon Democrats at the polls. To make matters worse, at the same time the Southern and Western Democratic pietist populists, who were becoming increasingly “Yankee” and activist, were able to wrest control of the Democratic Party machine while the Bourbon leaders were weakened due to the depression. William Jennings Bryan, not Grover Cleveland, was now the standard bearer for the new Democratic Party. Liturgicals went to the Republicans in droves while pietists flocked to the Democrats. With this remarkable turnaround, in the election of 1896 the moderate statist Republican presidential nominee William McKinley resoundingly defeated the pietist inflationist Democratic presidential nominee William Jennings Bryan and established Republican dominance for the next several decades. This ended the third party system of American electoral politics, when the parties were fiercely ideological and polarized, and brought about the fourth party system (1896–1932), when both parties became less ideologically defined and more center-statist, with increasing control granted to bureaucrats from the resultant de-democratization. The weakening of the Bourbon forces reduced the Democrats to minority status, and ended any laissez-faire majority party in America. This lacuna, and the increasing similarity and center statism between the two parties due to the recent metamorphosis, created the power vacuum that allowed for the new quadripartite alliance to take hold of America.

With this rejuvenation of the Alliance, embodied in the newly formed National Civic Federation, came a whole spate of “Progressive” measures, including increased railroad regulation, trustbusting, compulsory publicity laws, conservation laws, meatpacking legislation, the Pure Food and Drug Act, employers’ compensation laws, safety legislation, the minimum wage, the Federal Reserve System, and the Federal Trade Commission. The once staunchly pietist Progressive intellectuals arguing on behalf of the entire system slowly but surely became increasingly secularized and more committed to using state coercion to ostensibly improve public welfare than to create the Kingdom of God. Moreover, academia in general and its disciplines, such as economics, began to denigrate theory and embrace statistics and empirical analysis in an attempt to vainly ape the natural sciences. The need for greater data collection and inductive reasoning went hand-in-hand with greater government planning and interventionism.

The transformation of the American government and subsequent interventions were not isolated events unconnected to specific financial and political elites, but were deeply related to the growing clash between the two dominant power elites in the ruling oligarchy, the Morgan ambit, which included the financial groups surrounding J.P. Morgan & Company, and the Rockefeller ambit, which included the financial groups surrounding Standard Oil. In the latter part of the third party system, the Morgans were the dominant interest behind the Democratic Party, and the Rockefellers behind the Republican Party. While the last Cleveland administration (1893–1897) was Morgan dominated, the subsequent McKinley administrations (1897–1901) were Rockefeller dominated, with the Morgans as junior partners since they supported McKinley over Bryan. Matters quickly changed when McKinley was assassinated in 1901 and his vice president, the Morgan affiliated Theodore Roosevelt, took office, and the Morgans were to remain the dominant financial group for the next decade. Ultimately, the Roosevelt administrations (1901–1909) were dominated by the Morgan interests, who were largely able to shield their larger corporations from antitrust and divert Roosevelt’s “trustbusting” to non-Morgan companies, in particular Standard Oil in 1906. This led to a Rockefeller counterattack, mainly through the more Rockefeller-affiliated William Howard Taft, whose administration (1909–1913) launched antitrust suits against the Morgan-dominated companies U.S. Steel and International Harvester. Infuriated at Taft, the Morgans deliberately sabotaged his reelection by encouraging Roosevelt to come out of retirement and run on the Progressive Party ticket in 1912, which split the Republican vote and allowed the Democrat Woodrow Wilson, with Morgan and other financial affiliations, to squeak by and capture the presidency — the only Democrat to do so in the fourth party era.

The culmination, the apogee, or the “fulfillment” of not only the new warfare state but also Progressivism, was during World War I, when collectivist fever was at its height and there was an enormous desire among businesses, bureaucrats, and intellectuals to top-down cartelize and plan the economy, and to maintain it in some form after the war. In the 1920s, when the Morgans were still dominant, Progressivist activism, though reduced, continued, especially through the efforts of the Secretary of Commerce Herbert Hoover, and government intervention accelerated during his ill-fated term as president, and then especially during Franklin Roosevelt’s New Deal, with its fascist tendencies. The Morgans were to remain dominant throughout the 1920s until they were savagely removed from political power during the New Deal, which was supported by the Rockefellers and other anti-Morgan interests. With the end of World War II the modern American welfare-warfare empire had matured and grown into being, with its roots all from the Progressive Era.

The nine chapters of the original book draft and the six published essays describe this thesis, along with its many other facets, in much greater detail. The essays were chosen by the present editor because they were generally hard to find or had not been published previously in a collection of Rothbard’s essays.24

Chapters 1 and 2, “Railroads: The First Big Business and the Failure of the Cartels” and “Regulating the Railroads” document the history of the railroad industry from the Civil War onward. Much like the later mergers, the railroads, which were previously granted lavish subsidies, tried hard to cartelize on the free market but failed. Correspondingly, many of them turned to government to push for state enforced cartelization, which led to the Interstate Commerce Act in 1887. Armed with this new legislation, the railroads tried to cartelize but were not entirely successful, which resulted in future legislative attempts to control the railroad industry until the regulations and rival interests suffocated the railroads, leading to government ownership during World War I. Chapter 3 “Attempts at Monopoly in American Industry” documents repeated cases of various businesses’ failures to monopolize and consequently saw their market share slipping: Standard Oil, U.S. Steel, and International Harvester, among others. This would later instill the drive for government cartelization.

Chapters 4, 5, and 6, “The Third Party System: Pietists vs. Liturgicals,” “The Democratic Triumph of 1892,” and “1896: The Collapse of the Third Party System and of Laissez-Faire Politics” describe the ethno-cultural background behind the third party system, and the battles fought between the pietist Republicans and liturgical Democrats. This ultimately led to the election of 1896 where the Republicans were able to decisively defeat the Democrats, change the future of American politics, and allow for an unmitigated increase in government intervention in the new century with the Democrats permanently weakened.

Chapters 7, 8, and 9, “Theodore Roosevelt: The First Progressive, Part I,” “Theodore Roosevelt: The First Progressive, Part II,” and “The National Civic Federation: Big Business Organized for Progressivism” describe the beginnings of this new Progressive alliance and the repeated attempts at various forms of cartelization. The fascinating struggles between the power elites are documented, and Theodore Roosevelt is exposed as a Morgan affiliate whose actions opened the floodgates of Progressivism. The highly touted Progressive reforms are shown to be driven largely by businesses wishing to hamper their competitors and bureaucrats interested in enhancing their own power, and the National Civic Federation is seen as the major organ for the new Progressive partnership to work through.

The remaining chapters are previously published essays. Chapters 10 and 11, “The Progressive Era and the Family” and “Origins of the Welfare State in America” further describe and elaborate on the recent ethnoreligious history. Local Progressivism and various urban reforms are described, ranging from the fight over public schools to the welfare state, along with many urban reformers, economists, and other crusaders. Chapters 12 and 13, “War Collectivism in World War I” and “World War I as Fulfillment: Power and the Intellectuals” describe Progressivism during the war, when business collectivism was at its peak, along with various other Progressive reforms such as prohibition and women’s suffrage. The evolution of intellectuals and their turn towards increased interventionism and empiricism are also chronicled.25

Chapter 14, “The Federal Reserve as a Cartelization Device: The Early Years, 1913–1930” describes the origins of the Federal Reserve and its subsequent monetary policy during World War I and the 1920s. The Fed is seen to have originated from a coalition of various bankers, especially the Morgans, who wanted a central bank to help them expand credit and solidify the dominance of New York City finance. Later on, in the 1920s, the Fed played an increasingly international role in helping Great Britain return to the gold standard, largely through the efforts of the governor of the New York Fed Benjamin Strong and his connection with the governor of the Bank of England, Montagu Norman. Chapter 15, “Herbert Hoover and the Myth of Laissez-Faire” describes the 1920s Progressivism driven by Herbert Hoover and refutes the myth that Hoover was a noninterventionist and advocate of laissez-faire while president during the Great Depression.

The Progressive Era is one of Rothbard’s finest achievements as an academic, and should be read by anyone interested in the Progressive Era or American history in general. Rothbard’s analysis is essential for anyone who wishes to understand the evolution of the American state from relatively laissez-faire leanings in the 19th century to the modern welfare-warfare state of the 20th and 21st centuries.

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The nine chapters of the current volume were rough drafts and in many places lacked references. No doubt, judging from his later essays, if Rothbard finished the book, he would have gone back, revised it, and added a plethora of source material for the reader. As editor, I have, albeit imperfectly, done my best to edit the manuscript and track down and cite all of the material in the nine chapters. In addition, I have provided commentary and sources for the reader on various ideas that Rothbard mentioned and planned to later elaborate on but did not. These are either in [Editor’s remarks], my additions to existing footnotes, or [Editor’s footnote], my entirely new footnotes. 

I would like to thank the Ludwig von Mises Institute, and academic vice president Joseph Salerno in particular, for providing me with the opportunity to work on this book. Archivist Barbara Pickard was indispensable in tracking down the book manuscript. In addition, Joseph Salerno, Jonathan Newman, and Chris Calton were very helpful in proofreading various parts of the book. I would also like to thank editor Judy Thommesen for finalizing the book and correcting typographical mistakes. All errors are entirely my own.

Patrick Newman
Lakeland, Florida
April 2017

• 1David Gordon, The Essential Rothbard (Auburn, AL: Mises Institute, 2007), p. 7.
• 2Justin Raimondo, An Enemy of the State: The Life of Murray N. Rothbard (Amherst, NY: Prometheus Books, 2000), pp. 252–53.
• 3See Murray Rothbard, Man, Economy, and State: A Treatise on Economic Principles, 2 vols., (Princeton, NJ: D. Van Nostrand, 1962); The Panic of 1819: Reactions and Policies (New York: Columbia University Press, 1962); America’s Great Depression (Princeton, NJ: D. Van Nostrand, 1963); Power and Market: Government and the Economy (Menlo Park, CA: Institute for Humane Studies, 1970).
• 4Commenting on this period, Joseph Stromberg wrote that Rothbard was always busy working on multiple major projects. Joseph Stromberg, “Introduction,” in Murray Rothbard, Man, Economy, and State, with Power and Market, 1st ed., (Auburn, AL: Mises Institute, 2004), p. lxii. This would continue throughout his life.
• 5Rothbard to Templeton, November 19, 1962; quoted in Stromberg, “Introduction,” p. lxxxii. Indeed, one can detect a shift in research interests around this time by looking at his book reviews written for internal circulation at the Volker Fund, published in Murray Rothbard, Strictly Confidential: The Private Volker Fund Memos of Murray N. Rothbard, David Gordon, ed. (Auburn, AL: Mises Institute, 2010). The reviews on economic works included in the volume dated mostly from 1959–60, while his reviews on history and foreign policy were from 1961–62. The latter were on a wide range of topics, from the American Revolution to Jacksonian America up to World War II. They demonstrate that Rothbard was well versed in historical method as well as current works. See also Sheldon Richman, “Commentator on Our Times: A Quest for the Historical Rothbard,” in Man, Economy, & Liberty: Essays in Honor of Murray N. Rothbard, Walter Block and Llewellyn H. Rockwell, Jr., eds. (Auburn, AL: Mises Institute, 1988), pp. 361–69.
• 6Ludwig von Mises, Human Action: A Treatise on Economics (New Haven, CT: Yale University Press, 1949).
• 7Murray Rothbard, An Austrian Perspective on the History of Economic Thought, vol. 1: Economic Thought Before Adam Smith (Brookfield, VT: Edward Elgar, 1995); An Austrian Perspective on the History of Economic Thought, vol. 2: Classical Economics (Brookfield, VT: Edward Elgar, 1995).
• 8Murray Rothbard, Conceived in Liberty, vol. 1: A New Land, A New People: The American Colonies in the Seventeenth Century (New Rochelle, NY: Arlington House Publishers, 1975); Conceived in Liberty, vol. 2: “Salutary Neglect”: The American Colonies in the First Half of the Eighteenth Century (New Rochelle, NY: Arlington House Publishers, 1975); Conceived in Liberty, vol. 3: Advance to Revolution, 1760–1775 (New Rochelle, NY: Arlington House Publishers, 1976); Conceived in Liberty, vol. 4: The Revolutionary War, 1775–1784 (New Rochelle, NY: Arlington House Publishers, 1979). The first two volumes were written with the assistance of Leonard Liggio, and Rothbard was the primary author. The fifth volume on the American Constitution was never published, it was handwritten and then dictated into an audio recorder, which was lost.
       For more on the project, see Brian Doherty, Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement (New York: PublicAffairs, 2007), pp. 296, 339, 672; Leonard P. Liggio, “A Classical Liberal Life,” in I Chose Liberty: Autobiographies of Contemporary Libertarians, Walter Block, ed. (Auburn, AL: Mises Institute, 2010), pp. 187–88; Murray Rothbard, “A Conversation with Murray N. Rothbard,” in Austrian Economics Newsletter 11, no. 2 (Summer 1990): 3–4.
  
   
• 9Murray Rothbard, “A Conversation with Murray N. Rothbard,” p. 4.
• 10Murray Rothbard, Conceived in Liberty, 4 vols. (Auburn, AL: Mises Institute, 2011), pp. xv–xvi, 1114–1120. Much of this analysis was published earlier in Murray Rothbard, “Economic Determinism, Ideology, and the American Revolution,” in Libertarian Forum (November 1974): 4–7. For appreciative surveys of Rothbard’s approach, see Gordon, The Essential Rothbard, pp. 55–61; Gerard Casey, Murray Rothbard: Major Conservative and Libertarian Thinkers (New York: Continuum, 2010), pp. 103–06.
• 11The closest Rothbard came to writing a detailed overview of American history in its entirety was a review written for the Volker Fund on an American history book. Severely critical, he wrote a review well over 100 pages extensively on each era (from colonial times to post-World War II), and documented all of the historical episodes that the authors needed to revise their interpretations on or include in their work. Murray Rothbard, “Report on George B. DeHuszar and Thomas Hulbert Stevenson, A History of the American Republic, 2 vols.,” in Strictly Confidential, Gordon, ed., pp. 86–188.
• 12Murray Rothbard, “Left and Right: The Prospects for Liberty,” Left and Right 1, no. 1 (Spring 1965): 13–14.
• 13Murray Rothbard, “War Collectivism in World War I” and “Herbert Hoover and the Myth of Laissez-Faire,” in A New History of Leviathan, Ronald Radosh and Murray Rothbard, eds. (New York: E.P. Dutton, 1972), pp. 66–110, 111–45.
• 14See Gabriel Kolko, The Triumph of Conservatism (Glencoe, IL: The Free Press, 1963); Gabriel Kolko, Railroads and Regulation (Princeton, NJ: Princeton University Press, 1965); George Stigler, “The Theory of Economic Regulation,” Bell Journal of Economics and Management (Spring 1971). For a contextualization of Kolko’s works in comparison with other contemporary historians and economists, see Robert L. Bradley Jr., Capitalism at Work (Salem, MA: M&M Scrivener Press, 2009), pp. 142–81. For a discussion of Kolko’s works by various historians, including Kolko, see Otis L. Graham, Jr. ed., From Roosevelt to Roosevelt: American Politics and Diplomacy, 1901–1941 (New York, 1971), pp. 70–109. See also Thomas K. McCraw, “Regulation in America: A Review Article,” The Business History Review (Summer 1975): 159–83; Jack High, “Introduction: A Tale of Two Disciplines,” in Regulation: Economic Theory and History, Jack High, ed. (Ann Arbor: University of Michigan Press, 1991); Robert L. Bradley, Jr. and Roger Donway, “Reconsidering Gabriel Kolko: A Half-Century Perspective,” Independent Review (Spring 2013): 561–76; William D. Burt, “Gabriel Kolko’s Railroads and Regulation at Fifty,” Railroad History (Spring-Summer 2016): 23–45.
• 15Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution (New Haven, CT: Yale University Press, 1957).
• 16On Rothbard’s historical studies and their connection with Mises’s method, see the important work by Joseph T. Salerno, “Introduction,” in Murray Rothbard, A History of Money and Banking in the United States: The Colonial Era to World War II, Joseph Salerno ed. (Auburn, AL: Mises Institute, 2005), pp. 7–43.
• 17Murray Rothbard, “The New Deal and the International Monetary System,” in Watershed of Empire: Essays on New Deal Foreign Policy, Leonard Liggio and James Martin, eds. (Colorado Springs, CO: Ralph Myles, 1976), pp. 19–64. For examples of popular articles, see Murray Rothbard, “Only One Heartbeat Away,” Libertarian Forum (September 1974):  5–7; “The Conspiracy Theory of History Revisited,” Reason (April, 1974): 39–40. During the 1970s into the 1980s Rothbard also encouraged other scholars, including prominent Progressive Era historians, to contribute academic articles on the Progressive Era to either Libertarian Forum or Journal of Libertarian Studies, both of which Rothbard edited. See, among others, Arthur A. Ekirch, Jr., “The Reform Mentality, War, Peace, and the National State: From the Progressives to Vietnam,” The Journal of Libertarian Studies 3, no. 1 (Spring 1979): 55–72; Paul Kleppner, “Religion, Politics, and the American Polity: A Dynamic View of Relationships,” Journal of Libertarian Studies 6, no. 3 (Summer/Fall 1982): 349–52. During this time, in 1973 Rothbard also gave a lecture series on the Progressive Era at a Cornell University event sponsored by the Institute for Humane Studies. Forrest McDonald was the other speaker. Rothbard’s lectures were recorded and titled “20th Century American Economic History.” See also Liggio, “A Classical Liberal Life,” p. 193; Murray Rothbard, “Selected Bibliographical Essay,” (n.d.).
• 18Murray Rothbard, “Roots of the Modern State: The Progressive Era” (n.d.). Reprinted in Preface below, pp. 39–40.
• 19Murray Rothbard, “Roots of the American Corporate State: 1890’s–1920’s” (n.d.). 
• 20Rothbard presented brief summaries for each chapter except for Chapter 1, the Introduction. Rothbard apparently never wrote it since he most likely planned to write it after he finished the book.
• 21Murray Rothbard, The Mystery of Banking (New York: Richardson & Snyder, 1983); “The Federal Reserve as a Cartelization Device, The Early Years: 1913–1930,” in Money in Crisis: The Federal Reserve, the Economy, and Monetary Reform, Barry N. Siegel, ed. (San Francisco: Pacific Institute for Public Policy Research, 1984), pp. 89–136; “Wall Street, Banks, and American Foreign Policy,” World Market Perspective (August 1984); “The Progressive Era and the Family,” in The American Family and the State, Joseph R. Peden and Fred R. Glahe, eds. (San Francisco: Pacific Research Institute, 1986), pp. 109–34; “World War I as Fulfillment: Power and the Intellectuals,” Journal of Libertarian Studies 9, no. 1 (1989): 81–125; The Case Against the Fed (Auburn, AL: Mises Institute, 1994); “Origins of the Welfare State in America,” Journal of Libertarian Studies 12, no. 2 (1996): 193–232; “The Gold-Exchange Standard in the Interwar Years,” in Money and the Nation State: The Financial Revolution, Government and the World Monetary System, Kevin Dowd and Richard H. Timberlake, Jr., eds. (New Brunswick, NJ: Transaction Publishers, 1998), pp. 105–63; “The Origins of the Federal Reserve,” Quarterly Journal of Austrian Economics 2, no. 3 (Fall 1999): 3–51; “From Hoover to Roosevelt: The Federal Reserve and the Financial Elites,” in Salerno, ed., pp. 263–347.    
       In addition, Rothbard also wrote on Progressivism in his contributions to Congressmen Ron Paul and Lewis Lehrman’s Minority Report for the 1981–1982 Gold Commission. In the section completely written by Rothbard on the 19th century, he included his analysis of electoral politics leading up to the election of 1896, and in the section on the 20th century which he partially wrote (many of the initial paragraphs are extremely similar to what appeared in The Mystery of Banking), he wrote on his basic thesis of the Progressive Era and the origins of the Federal Reserve. See “A History of Money and Banking in the United States Before the 20th Century” and “Money and Banking in the United States in the 20th Century,” in The Case For Gold: A Minority Report of the U.S. Gold Commission, Rep. Ron Paul and Lewis Lehrman, eds. (Washington, D.C: Cato Institute, 1982), pp. 111–22.
• 22Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government (New York: Oxford University Press, 1987). Higgs notes with astonishment that the review ran 26 single spaced pages at probably over 12,000 words and contained a detailed list of bibliographic information he recommended Higgs to include. In addition, he apparently recalled most of the citation information off the top of his head as he did not have access to his library at the time. Robert Higgs, Murray N. Rothbard: In Memoriam, Llewellyn H. Rockwell, Jr., ed. (Auburn, AL: Mises Institute, 1995), pp. 56–60.
• 23The class lectures were recorded and titled “The American Economy and the End of Laissez-Faire: 1870 to World War II.”
• 24Many of Rothbard’s other works on the Progressive Era and beyond, particularly on the Federal Reserve from its origins to World War II, can be found in Rothbard, A History of Money and Banking. The essays contained therein should definitely be read in tandem with the current volume.
• 25A previously unpublished section of Chapter 13 is included as an appendix.