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The Business of America

An Empire Of Wealth

June 2024
5min read

Looking At The Big Picture

I have now been writing about the American economy and American business in this column for 15 years and enjoying every column inch of the job. One might think it would be a rather narrow subject, or even dismal, to use Thomas Carlyle’s famous descriptive. In fact it is just the opposite, for economics, properly considered, goes to the heart of what it means to be human. If our species only occasionally deserves its formal Latin name, Homo sapiens , we are always—rich and poor, smart and dumb —members of the species Homo economicus . Getting and spending are as necessary to life as breathing and sleeping.

Thus, under the rubric of the history of the American economy, I have been able to write columns on such diverse subjects as Liederkranz cheese, Rodgers and Hammerstein, clipper ships, the Puritan settlement of New England, J. P. Morgan’s librarian, “I Love Lucy,” diet fads, major-league baseball, wampum-counterfeiting machines, wooden-navy boondoggles, and Jerome Kern’s book collection. But perhaps what is most remarkable about the American economy is the fact that 400 years ago it didn’t even exist. How, in a historical eye-blink, did a wilderness lightly populated with mostly hunter-gatherers turn into an engine of wealth such as the world has never seen? That is a subject far too vast to be tackled in a column, of course, but I have tried to cover it in a new book, just now out from HarperCollins. It’s called An Empire of Wealth: The Epic History of American Economic Power.

The “empire” in the title comes from the fact that while the United States is, by far, the most powerful country in the world, it has no empire and never has had. The United States, after all, has only 6 percent of the world’s land area and 6 percent of its people, almost all of whom speak English and regard themselves as American. However, we conquered the world economically and have about 30 percent of the global gross product. While it was the Roman legions who Romanized the Mediterranean basin 2,000 years ago by force of arms, it has been U.S. entrepreneurs who have Americanized the modern world, through such means as blue jeans, Hollywood movies, Coca-Cola, rock ’n’ roll, automobile assembly lines, and computer chatrooms.

To be sure, we began with enormous advantages, especially a vast, temperate, and largely well-watered land rich in natural resources. Still, Argentina has those advantages (and hasn’t fought a protracted war since 1870), yet it has struggled through most of the last century just to avoid utter economic disaster. Its gross domestic product is less than a third that of the United States per capita.

The reason for much of the difference between Argentina and the United States, I think, is the two very different European countries we are the children of. Spain’s government, which was nearly constantly at war with Muslims for more than 500 years, was very hierarchical. Power was concentrated at the top in the person of the king. He granted little, if any, self-government to the New World colonies. Spanish society, meanwhile, was rigid with largely uncrossable class lines.

On the other hand, in the early seven-teenth century Britain, protected from invasion by the English Channel, did not have a standing army. Further, it could afford the luxury of decentralized government. The running of local affairs had always been left largely in the hands of local people, with little interference from the king unless there was serious trouble. British society was also the most fluid in Western Europe. Marriage alliances between bourgeois and gentry families were far more common in Britain than in other countries. Thus talent could more easily rise to the top.

Britons became used to this state of affairs and deeply antagonistic to attempts to change it. The British who settled what would become the United States brought these ideas with them and applied them to the new situation in which they found themselves. That situation, to a remarkable extent, resembled Britain’s, only on a much grander scale. In addition, until the second half of the twentieth century, North America was largely immune from foreign attack. Thus the hand of government (and therefore the taxman) could lay very lightly indeed upon it. That is always a powerful plus for economic development.


Furthermore, while France and Spain tightly controlled emigration to their New World colonies to ensure both political and religious orthodoxy, Britain took a different approach entirely. In fact, the British state did not even found the various North American colonies. They were established by profit-seeking corporations such as the Virginia Company and proprietors such as Lord Baltimore and William Penn. There were often other motives besides profit, of course, but profit was always part of the picture. As William Penn himself explained, regarding his “holy experiment” in Pennsylvania, “Though I desire to extend Religious freedom, yet I want some recompense for my trouble.”

The British government, unlike those of France and Spain, had little at stake in its New World colonies in the early days. It was only too happy to export to the new colonies its troublemakers, both religious and criminal, as well as its unemployed. So instead of a population consisting largely of bureaucrats and establishmentarians, the British colonies consisted of many who marched to different drummers, pursuing their own ideas of happiness with little restraint on their doing so. That, too, was a powerful plus for economic development.

If this country is famous for its get-up-and-go, it is because its population is largely descended from those who got up and went, leaving all they had ever known to seek their fortunes or their God (or both) in North America. It is perhaps not a coincidence that the United States is at once both the most religious and the most secular nation on earth —devout and commercial.

However, the success of the American economy was not a slam dunk. Thank heavens, for that would make for very dull reading. The “epic” in the subtitle of my book reflects the fact that the history of the American economy has been a great adventure, one with disasters as well as triumphs. Its present success was no more foreordained than was Odysseus’s return to Ithaca from the Trojan War.

There were any number of times when the American economy could have gone off the tracks. Had that “bastard brat of a Scotch peddler,” as John Adams described Alexander Hamilton, not been able to rise to the top and serve as the country’s first Secretary of the Treasury, the new United States might have gotten off to a disastrous economic start. Had the Supreme Court in the case of Gibbons v. Ogden (1824) not aggressively asserted federal power in the regulation of interstate commerce, the country might not have become the world’s largest common market, with all the efficiencies of scale that became possible at the dawn of the Industrial Revolution. Had Congress in 1944 not passed the GI Bill, which it hoped would slow down the flow of returning soldiers into the civilian economy and stave off a renewed depression, we would not have so massively increased the country’s human capital just as the economy was moving from an industrial base to an information base.

Of course, we made plenty of big mistakes too. Thomas Jefferson’s hatred of banks, especially of large ones, would cast a pall over the American banking system that has still not been totally removed. The lack of a central bank after Andrew Jackson killed the Second Bank of the United States in 1836 caused the business cycle to have a much larger amplitude than in other countries, producing both euphoric booms and disastrous crashes, in 1837,1857,1873,1893,1907, and, of course, 1929. They in turn often foreshadowed deep and protracted depressions. (Jefferson’s contributions to the American economy were not wholly negative, however. It was he who devised the world’s first decimal currency system, an idea that has now spread to every other country on the globe. He even coined the word dime for the 10-cent piece.)

The greatest economic crisis in American history, of course, was the Great Depression of the 1930s. How bad was it? Consider this. On March 8,1933, the newly inaugurated President, Franklin Roosevelt, held his first news conference. One hundred and twenty-five reporters crowded into the Oval Office as Roosevelt read a statement detailing the emergency steps the administration had already taken and others it would propose to a special session of Congress the next day. The country’s banking system, the very beating heart of a modern economy, was completely closed down at that point. Many people thought revolution was in the offing. At the end of the President’s remarks, for what is surely the only time in history, the hard-boiled, cynical, professionally skeptical Washington press corps broke into applause. Even they were desperate for the new President to succeed.

The story of the American economy, the story I have tried to tell in An Empire of Wealth, is truly one of the great epics of the modern world, a story full of triumph and disaster, great daring and entrenched prejudice, giants and midgets, leaders and villains. But the story has only one real hero: the American people, who found a wilderness and turned it into a land of milk and honey beyond the wildest dreams of prophecy.

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