How America Became Rich
The story of American wealth is a tale of conquest.
Wealth plays a key role in shaping America’s identity. Symbols of wealth — skyscrapers and sports stadiums, resorts and amusement parks — blanket the landscape from Silicon Valley to Wall Street. The longstanding power of the American Dream depends on the country’s dominant position in the world economy. How did this come to be?
One answer is that the U.S. economy is the work of Providence, a manifestation of the nation’s special status in the eyes of God. This explanation rings hollow to me, since it’s safe to assume every country thinks so highly of itself, and because history tells a more complicated story. In telling this story, I will start with the geography of the United States. Embedded in the shape of America’s borders lies the historical footprint of conquest and empire.
The United States is home to stunning geographic diversity. Covering 3,000,000 square miles, it stretches from ocean to ocean, encompassing mountain ranges and deserts, rocky highlands and fertile grasslands. There are ample energy reserves and thousands of unique flora and fauna — all necessary ingredients for the flourishing of human life.
From the beginning of human history, American soil nourished settlement. Indigenous Americans made sophisticated use of local resources to survive and flourish. Corn and timber sustained Cherokee in the Piedmont and salmon and elk supported the Chinook of Cascadia, to mention two examples of many.
Here lies a point of entry into the role of conquest in the story of American wealth. When white settlers declared independence from England in 1776, they laid claim to an area roughly from the Atlantic to the Mississippi and the Great Lakes to Georgia. The Spanish claimed territory to the south and west (soon to be driven out), the French had Louisiana, and Native Americans remained settled throughout.
In time the indigenous population was devastated by war, ethnic cleansing, disease, land appropriation, and more. It’s hard to express the totality of this demographic transformation — one historian calls it the “American Holocaust.” Such was a consequence of the creation of a European state in the New World.
In the decades to follow, the country took its current shape. France, reeling from the Haitian Revolution and strapped for cash from the Napoleonic Wars, sold Louisiana to the United States in 1803, relinquishing the strategic port of New Orleans and control of the Mississippi River. Shipping along the Mississippi spurred economic integration and the formation of a cohesive national whole.
Soon after, American settlers conquered Florida and pushed westward. Whites in Texas claimed independence from Mexico, which considered Texas its northeastern edge. The United States annexed the newly declared Republic of Texas and successfully fought Mexico for its control in the Mexican-American War. The Treaty of Guadalupe Hidalgo in 1848 marked the formal cession of roughly half of Mexico to America, including present-day California, fulfilling the dream of a transcontinental state.
In time, Americans came to fill out the West. The mythical Frontier, a place of vast unexplored riches west of the Mississippi, consumed American popular culture, symbolizing the untapped wealth at the heart of the American Dream.
Before 1776, English settlements in the New World were economic vehicles for London. The main input were African slaves, who cultivated tobacco and sugar first, then cotton, for slaveowners to sell to merchants in Bristol and Liverpool.
In the South, life turned around slavery. Slave labor was enormously profitable for slaveowners, driving down overhead costs and enabling them to compete with Europe’s more mature industrial economies. An elite class of slaveholders had emerged by 1776, set apart from the poor whites and Black slaves that made up most of the population. Even today, the legacy of slavery in the South is unmistakable — in the wealth gap between whites and Blacks, the relative lack of megacities, and the lingering nostalgia for the Confederacy among many whites, to name a few examples of many.
Cotton plantations require a good deal of land, so merchants in pursuit of new riches spread out toward the Mississippi River. As slavery grew in scale, so too did cotton production. In search of new markets for its rising exports, the U.S. forced open trade with China and Japan in the 1850s, marking the beginning of a global orientation to U.S. economic policy.
In the North, the cheap labor of immigrants propelled nascent industries. Immigrants from Ireland, Germany and China worked long hours in shoddy factories to manufacture goods for domestic and international markets. An asymmetry therefore emerged between industrial life in the North and the cotton plantation of the South.
Southerners supported free trade for their export-driven economy. They harnessed the South’s natural resources (namely cotton), spacious countryside and, most importantly, the forced labor of enslaved Blacks, to carve out a niche in the global economy. In the North, however, tariffs were sought after, as a way of protecting small manufacturers from European competition. Because of financial interests, inspired by the powerful Abolitionist movement, and following the lead of Black slaves and freedmen, Northerners called for new U.S. territory to be free from slavery. Southerners, of course, demanded the opposite, setting the country on a collision course that culminated in the Civil War of 1861–65.
The Civil War devastated infrastructure and cost nearly a million lives but served to integrate the country politically and enable more coordinated policy. All the while, immigrants poured in from across the globe. As land and capital were aplenty, territorial expansion remained attractive to enterprising capitalists like Cornelius Vanderbilt, who amassed a massive fortune in the railroad industry. The integration of far-flung settlements required new technologies — steam engines, canals and railroads — setting the country on a natural course to industrial development.
In sum, slavery and conquest created the foundation upon which the U.S. economy grew. By 1900, America had surpassed England in total economic output, forming a key component of the world system. What it still lacked in comparison were colonies to absorb goods and provide raw materials for manufacturers — but soon, that too would change.
In1898, the United States intervened in the Cuban War of Independence from Spain on behalf of the former. Led by statesman like James Blaine, policymakers sought an expanded role in world affairs and reasoned that Cuba belonged in America’s sphere of influence. Spain, meanwhile, clung stubbornly to the island as a last vestige of its decaying empire. In ten short weeks the U.S. Navy easily defeated the Spanish and secured control of Cuba, a major victory for expansionists at home and for America’s colonial standing worldwide. By 1900, the U.S. controlled Hawaii, Puerto Rico, and the Philippines, and a new era of hemispheric supremacy dawned.
On the other side of the Atlantic in 1914, Europe’s fragile system of alliances unraveled and the continent plunged into war. European powers borrowed from the U.S. to fund their war efforts, triggering a push-pull relationship whereby the weakening of European states simultaneously bolstered the American economy.
The rise of fascism in Europe brought the Second World War in 1939. Again, American loans were essential to war efforts, providing cash for military operations and tying European powers to the dollar. Domestic manufacturing rebounded from the depression years, as wartime demand created jobs for the unemployed. Finally, spatial isolation — the vast buffer of the Atlantic Ocean — spared the United States from the devastation that befell Europe, enabling infrastructure to remain intact.
By 1945 England, France, Germany, and Japan, the great powers of the past century, were devastated by war and depression and retreated from the world stage, relinquishing their colonies and ushering in the current era of U.S. supremacy. America held preeminence not only economically — the U.S. already had the largest economy in the world by 1900 — but politically as well, as policymakers like George C. Marshall set out to remake the world order.
The Bretton Woods Conference of 1944, a meeting of 44 nations spearheaded by the U.S. State and Treasury Departments, enshrined the principles of economic security and American power upon which the postwar order would rest. Policymakers at Bretton Woods envisioned a “Grand Area” of American economic and military power, a worldwide periphery that would supply raw materials for manufacturers and steady markets for exports.
As it were, through the ebbs and flows of the past half-century — the Nixon Shock and oil crises of the 1970s, financialization in the 1980s, the War on Terror and Great Recession of the 2000s, and the rise of Trump and coronavirus pandemic in the 2010s — the United States remains the premiere economy in the world.
So, how does it all add up? What are the takeaways from the story of American wealth?
To recap, the forced removal of the indigenous population and conquest of neighboring states enabled the new Republic to claim a vast swath of land and resources upon which its economy could flourish. Slavery and cheap immigrant labor enormously helped the export-driven economy. Finally, empire-building and world war were the final stepping stones to global supremacy. Too often narratives of our wealth fail to account for a) the internationalism to the story and b) the violence with which it unfolded. The exercise of power is the inescapable foundation of wealth, one that should inform our politics at every turn.
