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, largescale 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 Nations 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

Population
(millions)

50.2

63.0

76.0

Pop. per sq.

mile

16.9

21.2

25.6

1880

1890

1900

Gallon of
milk

$0.16

$0.17

$0.30

Loaf of
bread

$0.02

$0.02

$0.03

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 rural

Percent native
94.4% 87.1%
born

84.4%

New
house

Percent
immigrant

15.6%

Average
income

5.6%

12.9%

$4,500 $5,800
$480

$660

$4,000
$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
Manufacturing
Refineries,
pipelines, tankers

Product
Distribution
Fuel, kerosene,
oil, tar

Standard Oil
Trust

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.
Raw material
Vertical
Consolidation

Manufacturing
Product
Distribution

U.S. Steel

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

armo
ur

1889 Duke Tobacco Advertisement

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.*

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
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."

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 coastto-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

Swift

USS

armo

1889 Duke Tobacco Advertisement