Sectional Parties, Divided Business

The National Association of Manufacturers (NAM) led the corporate attack on labor organization and government regulation in the early twentieth century. Yet NAM’s deep distrust of coordination, in fact, developed years into its organizational life: at its inception, NAM organizers sought mechanisms to coordinate economic and political business activity, and held policy positions that resembled those favored by contemporaneous European manufacturers. Thus, the organization’s dramatic shift in policy preferences almost a decade later was something of a sea change: suddenly NAM became committed to laissez-faire liberalism—the antithesis of coordination—and became best-known for its commitment to fighting organized labor. In this article, I explore this bizarre early trajectory in NAM’s policy positions, and reflect more broadly on a critical juncture that seemed to set American employers’ organizations down a path of laissez-fair liberalism. A paradox, I argue, is at the heart of the NAM mystery: the association was formed to overcome the limits of the American sectionally-based and locally-dominated two-party system; yet, its broader ambitions were defeated by the very political structural conditions it was created to overcome. First, two-party systems create representation gaps and interest groups often arise to speak for neglected constituencies. In the case of NAM, while the Republican Party was arguably a party of business, employers in the Democratic south were loathed to vote Republican; consequently, NAM was created at the behest of the McKinley campaign to support the party’s industrializing agenda and to mobilize potential voters beyond the party’s border. Yet second, expecting interest groups to fill needs left unmet by political parties is problematic, because interest organizations are deeply influenced by the characteristics of their nations’ states and party systems. In the case of NAM, sectionally-dominated party competition and limited national capacity constrained the realization of NAM’s policy agenda, and the organization failed to realize its ambition of becoming an intermediary between business and government in the transition to industrial capitalism. NAM’s dramatic policy reversal—in effect, the rise and fall of the cooperative instinct among nineteenth-century American employers—reflected these dual impacts of party system structures on business organization. The American sectionallybased two-party system created a representation gap: Although the Republican Party can credibly be called the party of business during this so-called “age of innocence,” not all employers’ interests were covered. Employers in sections of the country beyond the Republican territory (most notably in the industrializing regions of the south) had no comfortable partisan home. Southern manufacturers refused to join a party dominated by African-American leaders, yet these employers grew increasingly alienated from the Democratic economic positions of the day. Thus, even though these manufacturers’ interests were represented by the national Republicans, their electoral participation in party activities was constrained by sectional tensions as well as by the composition of local parties. Republican Party entrepreneurs (most notably Marcus Hanna) had an obvious interest in broadening the Republican constituency base, and experimented with various organizational forms to reach these Republicans in Democratic garb outside the Northeast/Midwest Republican stronghold. Party entrepreneurs were joined in this endeavor by corporate allies who felt great kinship with the GOP and