The Gilded Age

The Rise of Big Business

A Brassy, Flamboyant Age• The Gilded Age, the period

between the end of Radical Reconstruction (1877) and the beginning of the Progressive Era (1901), was a brassy, flamboyant age dominated by big business values, political corruption, and extremes of wealth and poverty.

• During the Gilded Age, the United States changed from a predominantly rural agrarian nation to an urban industrial one.

Major Developments

• Establishing the foundation for 20th century America, the period witnessed these major developments:• Industrialization• Urbanization• Immigration

The Age of Energy

• According to Howard Mumford Jones, the period was, an "Age of Energy.” Americans showed tremendous energy and persistence in their activities. 

New Types of Organization

• They were willing to experiment with new types of organization (the corporation, labor unions, and ethnic neighborhoods).

New Ideas• They were receptive to new ideas (Social

Darwinism, the Gospel of Wealth, and the Horatio Alger success formula ).

Originality

• They showed originality in confronting their problems (the Interstate Commerce Act and the Sherman Antitrust Act)

Took Problems into 20th Century• However, most problems

generated by the Age of Energy -- the unequal distribution of wealth, large-scale unemployment, urban crowding, the decline of farm income, and reckless exploitation of natural resources -- would carry over into the 20th century.

Breakup of Island Community

• By the turn of the century, most Americans experienced what Robert Wiebe in The Search for Order (1967) called the breakup of the "island community."

Distant Corporations

• The self-sufficient, isolated, rural communities, that once had satisfied people's needs, were replaced by distant corporations. These impersonal giants, located primarily in the Northeast, now manufactured the products, services, and ideas that once had been obtained locally. 

Controlled Nation’s Economy• Swallowing up independent

companies to form trusts, they controlled the nation's food supply, fashioned its clothing, household furnishings, and tools, dominated its methods of transportation, and published its books, magazines, and newspapers.

Life Profoundly Changed• Allan Nevins & Henry Steele Commanger

provide a vivid description of the impact of trusts on the "island community:"  

The life of the average man, especially if he was a city dweller, was profoundly changed by this development. . . . When he sat down to breakfast he ate bacon packed by the beef trusts, seasoned his eggs with salt made by the Michigan salt trust, sweetened his coffee with sugar refined by the American Sugar trust, lit his American Tobacco Company cigar with a Diamond Match Company match.

Standardization

• Then he rode to work on a bicycle built by the bicycle trust or on a trolley car operating under a monopolistic franchise and running on steel rails made by United States Steel. . .

Lack of Control• What the average man

noticed most was the effect of trusts on the business life of his community. Local industry dried up, factories went out of business or were absorbed, mortgages were placed with Eastern banks or insurance companies, and neighbors who worked not for themselves but for distant corporations were exposed to the vicissitudes of policy over which they had no control. 

From Agriculture to Industry

• During the Gilded Age, the United States experienced a rapid shift from an agricultural economy to an industrial one. 

The Way We Were in  The Gilded Age: 1877-1901

Who We Were How We Lived

1880 1890 1900 1880 1890 1900

Population (millions)

50.2 63.0  76.0Gallon of milk

$0.16 $0.17 $0.30

Pop. per sq. mile

16.9 21.2 25.6Loaf of bread

$0.02 $0.02 $0.03

Percent rural 71.8% 64.9% 60.4%New auto

N/A N/A $500

Percent urban 28.2% 35.1% 39.6%Gallon of gas

N/A N/A $0.05

Percent native born

94.4% 87.1% 84.4%New house

$4,500 $5,800 $4,000

Percent immigrant

5.6% 12.9% 15.6%Average income

$480 $660 $637

 

Rapid Industrialization

• An abundance of natural resources, developments in technology, new inventions, an adequate labor supply, a growing domestic market, and federal support for industrial projects contributed to this rapid industrialization. By 1890, the value of industrial goods and services, for the first time, exceeded that of agricultural products.

Captains of Industry

• Entrepreneurs with the talent, vision, and willingness to take risks were able to achieve unprecedented wealth and power. 

Standard Oil Trust

• In 1882, John D. Rockefeller formed the Standard Oil Trust and consequently dominated 95% of the production, refining, and marketing of oil in the United States.

Horizontal Consolidation

• The merger of competing companies in one area of business, like oil refining, was known as horizontal consolidation.

Raw material Independent Companies

Horizontal Consolidation

ManufacturingRefineries, 

pipelines, tankers Standard Oil Trust

Product Distribution

Fuel, kerosene,oil, tar

Independent Companies

Vertical Consolidation

• It was often accompanied by vertical consolidation of industries, in which a firm would strive to control all aspects of production from acquisition of raw materials to final delivery of finished products. 

VerticalConsoli-dation

Raw material

U.S. SteelManufacturing

Product Distribution

Giant Corporations

• By 1900, two-thirds of all manufactured goods were being produced by giant corporations. Swift and Armour dominated meat packing, the Duke family controlled tobacco, and Andrew Carnegie took over every aspect of steel production.

Swift armour

1889 Duke Tobacco Advertisement

Swift armour

U. S. Steel Corporation• When he retired in 1901,

he sold Carnegie Steel to financier J. P. Morgan for over $400 million dollars. Morgan subsequently reorganized the company into the United States Steel Corporation.

USS

Equal Protection of the Law• In 1886, the Supreme

Court set a precedent that has been interpreted to mean that corporations have the same rights as living persons under the Fourteenth Amendment to the Constitution.*

on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."

* Before oral argument took place in Santa Clara County v. Southern Pacific Railroad Company, Chief Justice Waite announced: "The court does not wish to hear argument

Corporate Personhood• From that point on, the 14th

Amendment, enacted to protect rights of freed slaves, was used routinely to grant corporations constitutional "personhood." Justices have since struck down hundreds of local, state and federal laws enacted to protect people from corporate harm based on this premise. Armed with these "rights," corporations increased control over resources, jobs, commerce, politicians, even judges

Citizens United• In Citizens United v.

Federal Election Commission (2010), the Supreme Court ruled that the government may not ban political spending by corporations in candidate elections.

Federal Regulation of Trusts

• The Sherman Antitrust Act  of 1890 outlawed all contracts, combinations, or conspiracies in restraint of trade, and all monopolies

Theodore Roosevelt: Trust Buster• President Theodore

Roosevelt was successful in cases against the Northern Securities Company, the meatpacker trust, the tobacco trust, and the Standard Oil Company. 

The Transcontinental Railroad

• The first transcontinental railroad was completed when the rails of the Union Pacific, reaching westward from Omaha, Nebraska, and those of the Central Pacific Railroad, reaching eastward from Sacramento, California were joined, completing the coast-to-coast connection. The telegraph signaled a waiting nation:  "DONE!"

Joining of the Central and Pacific Railroads, May 10, 1869, Promontory, Utah

How Railroads Changed America• Railroads changed American

life in many ways:• Travel took less time.• Mail arrived faster.• Railroads brought new jobs.• Local stores profited from train

traffic.• Sales were not limited to local

markets.• Unfamiliar items appeared locally.• Railroads moved settlers to new

locations.• Railroads tied the nation together.• Transportation charges decreased.

Problems of the Railroad Era

• Too many railroads were built.

• Over-expansion frequently ended in bankruptcies.

• Failures spread economic disaster to workers, businesses, and farmers.

• Railroads resorted to discriminatory practices

Discriminatory Practices

• Rebate: a partial kick back of a large company's shipping costs in exchange for all of its freight business.

• Long and Short Haul Abuses: a short journey where no competition existed cost more than a long one where two or more lines competed.

• Graft: officials bribed public officials by giving out free train passes.

Regulation of the Railroads

• The principle that states could regulate commerce entirely local in character was established by Munn v. Illinois. 

• The Interstate Commerce Act of 1887 applied to trains that crossed state lines. It  prohibited pooling, rebates, discrimination in rates and services, and required that all charges should be just and reasonable. It also provided for an Interstate Commerce Commission to supervise the administration of the act.

Bibliography• Adapted from SparkNotes: SAT U.S. History: Industrial Revolution

1889 Duke Tobacco Advertisement

armour

Swift

USS