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In this excerpt taken from the chapter "Accumulating Capital", Harvard history professor Sven Beckert outlines the development of New York City as an economic and social powerhouse.
In the fall of 1857, August and Caroline Belmont sailed into New York harbor, his four-year assignment as United States ambassador to The Hague complete. As their boat passed the Narrows between Brooklyn and Staten Island, the steeples of Trinity Church appeared on the horizon, followed by the merchant houses of South Street and the banks just north of the Battery. On the calm waters before them, dozens of ships crisscrossed the port, ferry boats shuttling between lower Manhattan and Brooklyn, canal sloops loaded with wheat arriving from Albany via the Erie Canal, ocean-going clippers unloading barrels stamped "Liverpool," and coastal brigs lying low with their heavy load of cotton bales. As it unfolded before the Belmonts, New York radiated material bounty. Indeed, August himself had thrived in the city in the short twenty years after first setting foot on the North American continent as a representative of the banking house of Rothschild.' Now, he was one of the richest and most powerful Americans. Within days of the Belmonts' return to their mansion on Fifth Avenue and 18th Street, they had exhibited their exquisite art collection, "containing paintings of most of the first living masters," and given lavish dinners that featured the delicacies of a chef brought back with them from Europe. By giving back to this nascent world capital some Old World culture, the Belmonts were reasserting their prominent position.
By the year of the Belmonts' return, New York and the nation had risen on a great, fast-moving swell of economic growth. In the course of this boom, the city, the nation, and the relationship between the two had changed radically. During the short span of seven years before 1857, American coal production had more than doubled, railroad mileage nearly tripled, and pig-iron shipments expanded fully thirteen times. At the helm of this expanding economy was New York. Already the most important port in the Americas, New York in these years saw exports—especially of cotton, wheat, and corn—increase by 139 percent and imports—especially of textiles and iron goods—rise by 97 percent. By 1860, a full two-thirds of the United States' imports and one-third of its exports went via New York. Its chief rivals, Boston, Philadelphia, and Baltimore, could not compete: Together they traded in goods only one-quarter the value of those which passed through the port of New York. Trade, in turn, supported the city's burgeoning factories, and during the decade of the 1850s, capital invested in manufacturing grew by 6o percent, making it the New World's most important manufacturing location.
Such rapid expansion reshaped the very face of the city: Returning citizens marveled at the growing number of docks and wharves, thickening forests of masts and steam pipes in the harbor, and sprawling warehouses and dry goods stores. A short walk from these powerful testimonies to the city's enormous trade they found evidence of New York's industry: Northward along the East River they encountered large iron factories, among them the Morgan, Allaire, and Novelty Works. Strolling through the streets of lower Manhattan they ran into workshops small and large, which churned out shirts, shoes, newspapers, and hundreds of other goods. At the tip of Manhattan, around Wall Street, new Renaissance-inspired palazzi ennobled the city's banks, insurance companies, and expanding financial and commodities markets—the fount of capital for the trade and manufacturing of the city and the nation. By midcentury the Western world knew few cities like it; its wealth dwarfed that of all but London and Paris.
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| By midcentury the Western world knew few cities like it; its wealth dwarfed that of all but London and Paris. | |
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| —Sven Beckert |
New York outpaced its rivals through good fortune and determination. It was blessed by geography: A large, protected port that remained free of ice throughout most of the year, its closeness to the open sea, and a river that provided it with easy access to a vast hinterland gave it a privileged start. New York's merchants, capital rich and risk taking, used these endowments to good advantage by dredging shallow passages in the harbor, and by forging canals and railroads that enlarged the city's hinterland ever more. But more important in the story of New York's rise than geography or even infrastructure were the commercial enterprises that its merchants built. Here, where the Hudson meets the Atlantic, they fashioned trading houses that connected the British industrial economy to the cotton plantations in the American South. New Yorkers bought cotton in the South for transport to Liverpool, returning in their sailing vessels the bountiful goods of Britain's industry to equip and clothe western farmers, northern workers, and southern plantation owners. Once they drew this trade into their port, it was all but impossible for others to compete. Advantages in trade, in turn, could be translated into other enterprises. Drawing labor from the densely inhabited streets along the East River, manufacturers large and small produced ever more printing presses, carriages, books, and ready-made clothing, supplying not only New York's unrivaled urban market but also much of the rest of the nation. Along the fine boulevards of southern Manhattan just north of the Battery, bankers, insurance agents, and lawyers set up shop and lubricated the machinery of trade and production. Strategically placed at the center of a rapidly growing economy, New York's bankers, manufacturers, and merchants reaped proceeds from the cotton fields of Louisiana, the iron works of Pennsylvania, the sugar plantations of Cuba, and the railroads extended throughout the nation.
The merchants' activities, in turn, strengthened the city's position ever more, making it the center of the nation's trade, information, and transportation networks. Indeed, in contrast to all other urban areas in the United States, New York dominated not only its hinterland and the northeastern region but also the nation as a whole. Thanks to the merchants' resolve to take advantage of the privileged position of New York, the city sat like a spider in the web of the American economy, drawing resources into the metropolis, transforming them, and sending them to places near and far. Moreover, as a central outpost of the trading networks of the Atlantic world that stretched from the coasts of Europe and Western Africa to North and South America, the city connected the southern plantation economy to the factories of Great Britain. Few cities in the world owed as much to capitalists and capital than New York at midcentury, and in 1857, such capitalists as August Belmont were poised to reap the harvest of all their activity.
These capitalists stood out in dramatic relief against a city that was mostly artisanal and proletarian. In 1856, 9,000 individuals, about 1.4 percent of New York's inhabitants, or 5 percent of the city's economically active, owned assets exceeding $10,000 each—a sum that provided them well-furnished living quarters and the help of servants, and thus the essential attributes of respectability. Though small in number, these capitalists, together with their families, controlled a significant share of the city's and nation's resources. At midcentury, they owned roughly 71 percent of the city's real and personal wealth. This was a concentration of assets made all the more remarkable considering that 84 percent of the city's economically active citizens owned no personal or real wealth of consequence at all.
These propertied New Yorkers represented the largest and most diverse segment of the nation's economic elite, surpassing in wealth, power, and diversity of their business undertakings the merchants of both Boston and Philadelphia. While Boston and Philadelphia had their long-established merchant elites, and Pittsburgh would eventually have a well-defined group of industrialists, New York City had all this and more. Already at midcentury, its economic elite was extraordinarily diverse. Most strikingly, in a city built by merchants, a full 20 percent of substantial taxpayers had accumulated their capital in an entirely different kind of undertaking, manufacturing. The city on the Hudson, so it seemed, was a springboard for capital and entrepreneurial vision of every kind. Indeed, by the 1850s, New York enjoyed an influx not just of trade but also of the merchants themselves, drawn, like August Belmont, by its seemingly unlimited opportunities. New York was different. New York was the future.
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In introducing his new book The Monied Metropolis, Harvard history professor Sven Beckert sets forth the significance of the rise of the bourgeoisie and bourgeois society throughout the Western World in the nineteenth century.
"As a result of the unfolding of capitalist economics and the emancipation of society from the state, owners of capital decisively shaped economic change and the newly emerging societies. As the first elite not to derive its status from the accidents of birth and heritage, the rising bourgeoisie worked hard, lived in modest comfort, and celebrated individual accomplishment. Accumulating ever more capital and power, this new social class gained the upper hand over an older, feudal, social elite and eventually shaped the economy, ideology, and politics of all Western nations, " says Beckert in his book.
Characterizing New York City as the "gatekeeper of America's most important outpost in the Atlantic economy", Beckert focuses his study on the development of a social class identity among New York City's merchants, bankers and industrialists. He writes "their economic, social, and political power reverberated from California to South Carolina, from the factory to the farm, from City Hall to the White House".
As a Harvard-Newcomen Fellow in Business History at HBS, Beckert did much of the initial research and work for "The Monied Metropolis" in the Baker Library collections. Beckert is currently at work on a global history of cotton in the nineteenth century.
Beckert is the Dunwalke Associate Professor of History at Harvard University. His research interest focuses on nineteenth century American history with emphasis on social and economic history. At Harvard, Beckert teaches courses on nineteenth-century American capitalism, Guilded Age America, and labor history. He has written and lectured extensively and internationally on business, economics, and labor history.