Reshaping the former Confederacy was only part of Republicans’ plan for a reconstructed nation. They remembered the era after Andrew Jackson’s destruction of the Second National Bank as one of economic chaos, when the United States had become vulnerable to international creditors and market fluctuations. Land speculation on the frontier had provoked extreme cycles of boom and bust. Failure to fund a transcontinental railroad had left different regions of the country disconnected. This, Republicans believed, had helped trigger the Civil War, and they were determined to set a new direction.

Even while the war raged, Congress made vigorous use of federal power, launching the transcontinental rail project and a new national banking system. Congress also raised the protective tariff on a range of manufactured goods, from textiles to steel, and on some agricultural products, like wool and sugar. At federal customhouses in each port, foreign manufacturers who brought merchandise into the United States had to pay import fees. These tariff revenues gave U.S. manufacturers, who did not pay the fees, a competitive advantage in America’s vast domestic market.

The economic depression that began in 1873 set limits on Republicans’ economic ambitions, just as it hindered their Reconstruction plans in the South. But their policies continued to shape the economy. Though some historians argue that the late nineteenth century was an era of laissez faire or unrestrained capitalism, in which government sat passively by, the industrial United States was actually the product of a massive public-private partnership in which government played critical roles.