How Mass Immigration Stopped American Socialism

Relatively open borders helped halt the early 20th century welfare state.


For centuries, Americans have worried that immigrants could overwhelm and negatively alter economic and political institutions in the United States. In 1783, at the end of the American War of Independence, even Thomas Jefferson had misgivings about too rapid an influx of immigrants, writing that they "will bring with them the principles of the governments they leave, imbibed in their early youth; or, if able to throw them off, it will be in exchange for an unbounded licentiousness, passing, as is usual, from one extreme to another. It would be a miracle were they to stop precisely at the point of temperate liberty." John Jay, the first chief justice of the U.S. Supreme Court and co-author of The Federalist Papers, thought that Catholicism was inimical to the principles of individual liberty and representative government, so he argued that the federal government should "erect a wall of brass around the country for the exclusion of Catholics." Prominent Federalist Party member Harrison Gray Otis said, "If some means are not adopted to prevent the indiscriminate admission of wild Irishmen and others to the right of suffrage, there will soon be an end to liberty and prosperity."

But the Founding Fathers were conflicted: Many supported an open immigration system because of their Enlightenment ideology. The newly independent United States had been recently settled by a diverse group of immigrants from Europe, as well as by African slaves. The political, legal, and economic institutions of the colonies were English, but only about 60 percent of the white population in 1790 was of English stock, while the rest were mostly Scots, Irish, Scots-Irish, German, and Welsh. Immigration had already made the United States the most ethnically, racially, and religiously diverse society in the Western world when the Constitution was written, and the founders expected it to continue.

Right-wing fears about assimilation persisted into the late 19th and early 20th centuries. But there were also left-wing fears that immigration was slowing down the transformation of the United States into a unionized welfare state ripe for an eventual transition to socialism. Karl Marx, Friedrich Engels, and their American followers warned that immigrant-induced diversity reduced worker solidarity and that this problem would continue so long as the United States had near-open borders. At the same time, many American Progressives and other immigration restrictionists embraced the ideology of eugenics and were thus worried that immigrants were bringing inferior genetic traits that would undermine American prosperity by lessening support for democratic institutions.

Today, support for immigration is associated with the political left. But back then, immigrants were a barrier to the demographic central plans of lefty reformers. Overall, the impact of immigration on American policy has done more to confirm the fears of Marx and Engels than of Jefferson and Jay. American government grew slower when the stock of immigrants was high, and union membership was lower when immigration was greater. It was only after Congress ended open immigration from Europe that the size and scope of American government expanded dramatically.

Unions Against Immigration

From 1820 to 1921, the average annual number of immigrants to the United States was equal to about 0.66 percent of the resident population. From 1922 to 1967, when immigration was most restricted in American history, the average inflow of immigrants was equal to 0.14 percent of the resident population per year—a 79 percent drop. Since 1968, when immigration law was liberalized, the average inflow of immigrants has been equal to about 0.3 percent of the resident population per year—more than double the flow of the restrictionist period but still less than half that of the open immigration period during the 19th and early 20th centuries.

Friedrich Engels wrote that immigrants in the United States "are divided into different nationalities and understand neither one another nor, for the most part, the language of the country." Furthermore, the American "bourgeoisie knows…how to play off one nationality against the other: Jews, Italians, Bohemians, etc., against Germans and Irish, and each one against the other." He argued that open immigration would delay the socialist revolution for a long time as the American bourgeoisie understood that "'there will be plenty more, and more than we want, of these damned Dutchmen, Irishmen, Italians, Jews and Hungarians'; and, to cap it all, John Chinaman stands in the background."

Indeed, American meatpackers and steelmakers in the late 19th and early 20th centuries intentionally hired workers from diverse national, ethnic, and racial backgrounds to inhibit their ability to form labor unions: More diverse backgrounds increased transaction costs among organizing workers. Meanwhile, union members in the United States generally opposed immigration and took nearly every opportunity to argue for closed borders.

Unlike union movements in other countries, unionization grew slowly in the United States in the late 19th and early 20th centuries and grew primarily among skilled occupations. Samuel Gompers was the founder and head of the anti-socialist American Federation of Labor (AFL), part of an anti-revolutionary reform movement derisively called "slowcialists" by its more radical opponents. He supported every major anti-immigrant law debated in Congress, from the Chinese Exclusion Act of 1882 to the National Origins Act of 1924. Gompers started by targeting Chinese and Japanese workers for exclusion but eventually expanded his efforts to include even white European immigrants like himself. (Gompers was from the United Kingdom.) And he was not an outlier. Terence Powderly, head of the Knights of Labor, endorsed a ban* on French Canadian labor migration in 1896. Not to be outdone by the competition, Gompers' AFL voted in 1897 to endorse a ban on illiterate immigrants by a 5–1 margin. The group even took its anti-immigrant argument to the International Socialist Congress in Amsterdam in 1904.

Gompers and the heads of the other anti-immigrant labor unions were correct to believe that immigrants made their unionization efforts more difficult. Ethnically homogenous immigrant groups who dominated the workforces of certain employers were able to organize, as in the case of the 100,000 Polish and Eastern European United Mine Workers (UMW) in Pennsylvania who joined the great anthracite coal strike of 1902. But that was the exception. Since 1900—the earliest date for which unionization and employment data are available—union membership as a percentage of those employed has been strongly negatively correlated with the stock of the foreign-born population. And the same surge of immigrant-induced diversity that reduced solidarity and stunted unionization among workers also stunted the formation of interest groups to lobby for laws that would lower the cost of unionization and expand the welfare state.

Socialism Rejected

A large percentage of socialist intellectuals and organizers in the United States in the late 19th and early 20th centuries were immigrants. For decades, a minority of immigrants in the United States were socialists, but a majority of the socialists in the United States were immigrants—a situation unique in the Western world. Germans who settled in Milwaukee, Finns and Scandinavians who settled in Michigan and Minnesota, Eastern European Jews in New York City, and other immigrant groups disproportionately contributed to the growth of socialist political outreach and thought in the United States. In 1916, for instance, 13 out of the 15 daily socialist newspapers in the United States were printed in a language other than English.

Although immigration increased the number of socialists in the United States, it also increased the perception that socialism was an alien and foreign ideology that was distinctly un-American.

Prior to America's entry into World War I, the Socialist Party secured its highest share of votes in states with low foreign-born populations, like Nevada, Oklahoma, Montana, and Arizona. This was because such places were geographically isolated from the power bases of the major American political parties and because they were relatively homogeneous. In the 1920 election, following World War I, the Socialist share of the vote fell everywhere except in the four states with large immigrant or German-American populations: Maryland, Massachusetts, New York, and Wisconsin. Immigrants supplied a great number of socialist organizers and intellectuals, but they supplied relatively few votes for the Socialist Party except in the election of 1920.

German immigrants deserve special attention. Marx and Engels were both German, and it was Germany where socialists had the greatest political influence during the 19th century. German immigrants to the United States, especially those from more industrialized regions, brought years or decades of experience with socialist politics and labor organization along with them. They founded the Socialist Labor Party in 1876, originally as the Workingmen's Party, a group that would remain overwhelmingly German. And German immigrants disproportionately voted Socialist in 1920 because of their opposition to American involvement in World War I, although they had been less likely to vote Socialist in 1912.

German immigrants were also active in labor organizing. They pushed their unions to support more extreme policies and made up a large percentage of their more radical members. And they founded numerous socialist German language newspapers to support their unions. German editors helped get many of those papers started, and many of them were exported to Germany when the government there banned the publication of socialist newspapers. Thus, Germans living in America became a major voice for socialism in Germany.

Immigration historian Marcus Lee Hanson wrote that "more immigrant Socialists were lost to the cause in the United States than were won from the ranks of the newcomers." If anything, his observation understates how ineffective the socialists were and their degree of attrition once on American soil. For instance, one list of 797 exiled socialists from Germany who arrived in the United States and were taken care of by the Socialist Labor Party records that only 191 of them joined the party—an attrition rate of 76 percent. And not only did many socialist immigrants abandon their ideologies when they arrived, but their mere presence is correlated with slowed growth in the size of the government in the United States.

The Story of Spending

Although it is difficult to measure historical economic institutions over time, there is suggestive evidence that they either improved or at least were not adversely impacted by immigration. For example, American counties with more immigrants during the late 19th and early 20th centuries have higher incomes and less poverty today, which indicates that they probably have better institutions today as well.

In the absence of long-term historical comprehensive measures of economic institutions, the size of the government is a decent substitute, since a smaller government is so highly correlated with overall economic freedom today. The simplest way to see whether immigration has affected the size of the government is to plot federal expenditures as a percentage of gross domestic product (GDP) against the stock of immigrants as a percentage of the population.

They are negatively correlated with a coefficient of 0.63 for the years 1850–2018. During the 45-year period 1922–1967 when immigration was most restricted, federal government expenditures grew from 4.5 percent of GDP to 18.3 percent—a 302.5 percent increase. And that understates growth in the size of the federal government during this period, as the United States was still demobilizing and deregulating its World War I wartime economy in 1922.

The two 45-year periods that bookend the restrictionist 1922–1967 period had substantially less growth in growth in government spending. From 1876 to 1921, federal expenditures as a percent of GDP rose from 3.2 percent to 6.9 percent of GDP—a 117.8 percent increase over the entire time. Again, the end date exaggerates growth in the size of the federal government, as in 1921 it had not completed demobilization after World War I. Using 1916—just prior to the United States entering World War I—as the end year shows a 54 percent decline in the relative size of government, from 3.2 percent of GDP in 1876 to 1.5 percent of GDP in 1916.

From 1968 to 2013, federal expenditures as a percent of GDP rose from 18.9 percent of GDP to 20.6 percent of GDP—an 8.7 percent increase. When the size of federal expenditures is measured on a real per-capita basis instead of spending as a percentage of GDP, the results are very similar.

More Diversity, Smaller State

There are several potential explanations for why immigrants did not grow government expenditures in the United States. The likeliest theory is that the high levels of American ethnic, racial, religious, and linguistic diversity caused by immigration hobbled the rise of an American labor movement and reduced overall voter demand for bigger government. This is the essence of the complaint voiced by Marx, who warned that immigrant-induced ethnic and racial differences reduced worker solidarity, slowing his efforts to stoke a revolution in the United States and elsewhere.

A relatively open immigration policy resulted in more immigrants who increased the fractionalization of the United States. As a result, unionization rates remained low, because collective action in heterogeneous communities is costlier than it is in homogeneous communities. Thus, unions, the main organized groups that lobby and vote for a larger and more interventionist welfare state, were smaller than they would have been in a less diverse America. Furthermore, voters were less supportive of redistribution, welfare, and government-supplied services when the consuming population was more heterogeneous. As a result, federal outlays, state expenditures, and local tax rates were negatively correlated with the size of the immigrant population.

All in all, immigration did more to slow the growth of government in the 19th and early 20th centuries and to frustrate the goals of left-wing reformers than it did to overturn the fundamental economic and political institutions of the American founding. With few exceptions, immigrants helped preserve, protect, defend, and expand American free markets.

This article is adapted from Wretched Refuse? The Political Economy of Immigration and Institutions by permission of Cambridge University Press.

*CORRECTION: The original version of this article included incorrect phrasing about the endorsement of a ban on French Canadian labor migration.