After the Civil War, it was common for American college students to study in Germany. During their time abroad, these students were indoctrinated in the ideas of Immanuel Kant, Georg Friedrich Hegel, and their disciples. When they returned to America, these young intellectuals began injecting these ideas into the American culture.
As one example, Richard Ely, studied in Germany under the Historical School economist Karl Knies and was a devoted Hegelian. He was a founding member of the American Economic Association, whose constitution stated: “We regard the state as an agency whose positive assistance is one of the indispensable conditions of human progress.”
Ely, like many intellectuals of the Progressive Era, did not explicitly advocate socialism. Instead, he called for “social democracy”—that is, a mixed economy—to combat such alleged evils as child labor. One of the most influential economists of his era, Ely wrote numerous textbooks that helped spread his ideas on compromise between individualism and collectivism.
Another American intellectual trained under the Historical School in Germany was the political scientist John W. Burgess. Burgess was a professor of constitutional law at what later became Columbia and founded the Political Science Quarterly, which has published continuously since 1886.
While Burgess embraced many of the ideas advocated by the Historical School, he was a critic of the income tax and direct democracy, correctly fearing that these were moving the nation away from individual liberty. However, reflecting his German schooling, Burgess held that
the state is the source of individual liberty. The revolutionists of the eighteenth century said that individual liberty was natural right; that it belonged to the individual as a human being, without regard to the state or society in which, or the government under which, he lived. But it is easy to see that this view is utterly impracticable and barren; for, if neither the state nor the society defines the sphere of individual autonomy and constructs its boundaries, then the individual himself will be left to these things, and that is anarchy pure and simple.
To Burgess, government must place controls on individual actions, lest anarchy reign. He failed to recognize that individual liberty is not derived from God or government, but from man’s metaphysical nature and the requirements of his life. If, as Burgess argued, the state is the source of liberty, then what the state gives the state can take away. If liberty is defined by the state, rather than a metaphysical necessity, then all bets are off.
These ideas were espoused and repeated in newspapers, books, and college classrooms. They dominated the culture. And in time, the state came to dominate the lives of individuals.