The sudden rise of these vast, and vastly wealthy, industrial empires and Wall Street banks produced a sea change in American politics. At the dawn of the Republic, the country had been overwhelmingly agrarian. But as industry developed, more and more people began migrating to the cities to seek jobs in the cash economy. The flood of immigrants from Europe tended to gravitate to the cities as well. At the end of the eighteenth century, New York had had a population about equal to present-day Altoona, Pennsylvania. A hundred years later, it was one of the great cities of the world.

Corporations also swelled in size and power. Before the Industrial Revolution there had been no large corporations at all. In the early days of the new economy, only the railroads had had work forces of more than a few hundred employees. As late as the end of the Civil War, there was not a single industrial corporation listed on the New York Stock Exchange. By 1900 there were dozens, many of them employing tens of thousands of people.

This growing army of industrial workers was at a great disadvantage relative to the managers of the corporation in deciding how to divide between labor and capital the wealth that was created by both of them together. The managers of a corporation spoke in one voice, but the workers spoke in their thousands. This made it easy for management to impose its own ideas as to wages, hours, and working conditions. When the workers tried to organize, in order to bargain more effectively, management, naturally, resisted furiously.

As early as 1677, 12 New York cartmen became the first strikers to be prosecuted in the colonies. But it was only after the Civil War era that the union movement really got under way. In 1886 the American Federation of Labor was formed, and an increasing number of strikes roiled the nation’s industry. Some of these strikes, such as the one at Andrew Carnegie’s Homestead Steel Works, are remembered for their violence even today.

But government at this time was firmly on the side of capital (the governor of Pennsylvania sent in about 8,000 state militia to protect replacement workers at the Homestead works, and broke the strike). Not until the 1930s would labor become a major force in the American economy.

Curiously, the American labor movement never adopted the socialism that European labor unions so wholeheartedly embraced. Even in the depths of the Great Depression, in 1932, the Socialist candidate for President, Norman Thomas, received only about 2 percent of the popular vote. This antipathy to socialism would prove to be a great advantage to the economic vitality of the United States in the late twentieth century.

In 1901 J. P. Morgan assembled the United States Steel Corporation out of Andrew Carnegie’s holdings and numerous other steel companies. The new corporation, capitalized at $1.4 billion (almost three times the federal government’s annual budget), controlled about