US History 202-071 (Chapter 17)

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The Gilded Age : 

The Gilded Age An Introduction

America’s First Big Business : 

America’s First Big Business What is America’s first big business? Railroads Railroads helped create a national market. Transcontinental railroad linked the coasts. The vast scale of the railroads necessitated the need for a more complex bureaucracy. Railroads were the epitome of business management.

America’s First Big Business : 

America’s First Big Business Much land was given away to railroad companies by the government. Congress was bribed by railroad companies. Diminished land available to homesteaders and railroad companies made money by selling land to settlers.

America’s First Big Business : 

America’s First Big Business Intense competition between railroad companies caused rates to decline. Solution: pool Informal agreement in which businesses divide the market and charge equal prices. Big businesses received rebates. Small businesses and farmers upset.

America's First Big Business : 

America's First Big Business Jay Gould Didn’t care about railroads or their operation. Instead, he was interested in making money. Bribed New York Legislature to legalize schemes. Gould bought stocks in railroad companies and threatened to lower prices to undermine pool. Competitors bought out his shares. “The most hated man in America.”

America’s First Big Business : 

America’s First Big Business Railroad executives hoped to consolidate lines. Hoped mergers would lessen price wars. To construct and consolidate, companies needed capital from investment bankers. One prominent investment banker: J.P. Morgan.

The Steel Industry : 

The Steel Industry Railroads used to operate with iron rails. Henry Bessemer developed way to make cheaper steel. Carnegie opened a plant in Pittsburg. Began churning out steel. Steel was used to lay down railroad tracks, bridges, and later skyscrapers.

The Steel Industry : 

The Steel Industry Vertical Integration Bringing together a wide range of business activities under one organization. Controlled mining of ore, transport of ore, and production of steel. Carnegie always looked to cut costs.

The Steel Industry : 

The Steel Industry Pitted managers against one another and fired least productive ones. Workers endured long hours, low wages, and dangerous working conditions. Homestead steel plant strike blotted Carnegie’s reputation for posterity.

Oil Industry : 

Oil Industry What was oil used for? Refined into lubricating oil for machines and as kerosene for lamps. John D. Rockefeller was responsible for building the Standard Oil Company. Precursor of ExxonMobil

Oil Industry : 

Oil Industry Trust Individuals would buy stocks from other companies and give them to Standard Oil. Thus they achieved horizontal integration. Brought together of series of related business activities under the control of one organization. Controlled businesses without technically owning them.

Oil Industry : 

Oil Industry Government threatened to outlaw trusts. N. J. permitted companies to own stocks in other companies. Standard Oil became a holding company in N. J. A holding company owned other companies via controlling interests in stocks.

Oil Industry : 

Oil Industry Rockefeller controlled more than 90% of the oil business. Rockefeller had a near monopoly. He attempted to drive competitors out of business. (Punitive Rates) Ida Tarbell skewered him a series of articles in McClure’s Magazine.

Finance Capitalism : 

Finance Capitalism Finance Capitalism- investment sponsored by banks. Railroads needed funds for building & mergers. J.P. Morgan provided the needed capital. Morgan lent money and insisted on reorganization of railroads. Purpose: stable and high dividends.

Finance Capitalism : 

Finance Capitalism Morgan took on Carnegie. (Carnegie sold) Morgan bought out competitors. Led to the creation of United States Steel. Could not fully form a monopoly. Oligopoly (industry or market dominated by a few firms).

Inventors and Big Business : 

Inventors and Big Business Americans enthralled by inventors. Bell invented the telephone. Edison pioneered the use of electricity. Telephone & the electrical industries needed investment to grow. Investment bankers helped create AT&T and General Electric.

Who Benefits? : 

Who Benefits? Businessmen aimed to consolidate holdings for the benefit of all. Hundreds of millions vs. $500 a year. Laborers performed backbreaking work. During periods of economic contraction: cut back on production. Government not there to help.

How do you justify this? : 

How do you justify this? Social Darwinism: “survival of the fittest.” Don’t regulate competition. (Natural selection) Softened by Carnegie’s Gospel of Wealth. Wealthy could use money to help poor. Encouraged laissez-faire economics. Supreme Court believed this.

Politics and Culture : 

Politics and Culture Voter turnout in the Gilded Age was 77% The Spoils System Appointing government jobs to loyal party members. Parties provided sense of group identity. Politics was source of entertainment.

Gender, Race, & Politics : 

Gender, Race, & Politics Cult of domesticity Woman’s place was in the home. Separate sphere Women concerned with families, church, & school. Politics was too “dirty” for women. But did women stay out of politics?

Gender, Race, & Politics : 

Gender, Race, & Politics 14th Amendment angered women. National Woman Suffrage Association created by Stanton and Anthony in 1869. Sought amendment to secure suffrage. Women’s Christian Temperance Union formed in 1874.

Ida B. Wells : 

Ida B. Wells Southern Democrats feared that black voting would lead to miscegenation. Black political & economic power enhanced sexual power. Protected white womanhood. Wells saw economic dimension to lynching. She put her life in danger.

Presidential Politics in the Gilded Age : 

Presidential Politics in the Gilded Age Few believed the President should interfere in economy. Presidents confronted corruption & party strife. Politicians got rich from public office. Civil Service Reform was also an issue. Republican Party divided into factions: Stalwarts, Half-Breeds, and Mugwamps.

Presidential Politics in the Gilded Age : 

Presidential Politics in the Gilded Age Election of 1880: Garfield (R) v. Hancock (D) Garfield assassinated by Charles Guiteau. Arthur became President. (Stalwart) Arthur fought corruption. Pendleton Civil Service Act. Businessmen became contributors.

Presidential Politics in the Gilded Age : 

Presidential Politics in the Gilded Age Election of 1884: Blaine (R) v. Cleveland (D) Grover Cleveland won the tumultuous election. Protective Tariff produced surplus that hurt the economy and/or invited wasteful spending. Industrialists, producers of raw materials, and workers supported it. (Republicans) Southern and Midwestern farmers hated the tariff and wanted it reduced.

Presidential Politics in the Gilded Age : 

Presidential Politics in the Gilded Age Cleveland called for tariff reform. Harrison, who supported a high protective tariff, won the election 4 years later. Harrison backed McKinley Tariff which raised prices. “Billion Dollar” Congress. Cleveland returned to power in 1892 vowing to lower the tariff.

Role of Government in Business : 

Role of Government in Business Voters started to agree on need to regulate railroads. Midwestern farmers were angry about unfair shipping practices. The Grange started as grassroots organization. Elected Grangers to state office to standardize freight and passenger rates.

Role of Government in Business : 

Role of Government in Business Wabash v. Illinois (1886) halted the states attempts at regulating railroad rates. Congress established the Interstate Commerce Commission in 1887 This commission lacked real power. But it was still an important precedent.

Role of Government in Business : 

Role of Government in Business Sherman Antitrust Act (1890) Outlawed pools and trusts. However, it didn’t stop holding companies. Clause regarding “conspiracy against trade” used against unions. United States v. E.C. Knight Company undermined Sherman Antitrust Act.

Gold Standard v. Free Silver : 

Gold Standard v. Free Silver Gold Standard – all currency could be redeemed by gold. (Used to pay debts) Eastern creditors supported gold standard. (Didn’t want payment in devalued dollars) Poor western and southern farmers opposed gold standard.

Gold Standard v. Free Silver : 

Gold Standard v. Free Silver The population rose while money supply stayed the same. End result: less money in circulation hurt debtors. Farmers wanted to devalue the dollar with silver.

Gold Standard v. Free Silver : 

Gold Standard v. Free Silver Free Silver-mint coins at a rate of 16 ounces for every 1 ounce of gold. Western miners supported free silver. Bland-Allison Act (1878) Provided for purchase of silver to be coined into silver dollars. Sherman Silver Purchase Act (1890) Increased amount of silver purchased.

The Independent Action of Farmers : 

The Independent Action of Farmers Farmers’ Alliance Carried on the cause of farmers in 1880s and 1890s. Organized People’s Party. Positions: anti-monopoly, believed government should help farmers & workers, and wanted to increase popular control of government.

The Independent Action of Farmers : 

The Independent Action of Farmers Won elections in state legislatures. Won seats in the House of Representatives. A couple were appointed to the Senate. James Weaver was nominated by the People’s Party for President in 1892.

Cleveland and the Depression : 

Cleveland and the Depression Depression of 1893. Some believed silver had caused crisis. Cleveland called for repeal of Sherman Silver Purchase Act. Angered farmers greatly & divided party. This didn’t stop drainage of gold reserves.

Cleveland and the Depression : 

Cleveland and the Depression J.P. Morgan proposed to purchase gold from abroad in order to save the gold standard. Cleveland saved the gold standard. Didn’t alleviate the suffering of Americans. Cleveland didn’t believe he had to provide relief. Next chapter will deal with labor unrest.

Concluding Remarks : 

Concluding Remarks Business dominated the era. Symbolized by J.P. Morgan bailing the U.S. Government out of a jam. Era of greed, vulgarity, and corruption. Yet America leapt into industrial age. New strategies facilitated industrial maturity.

Concluding Remarks : 

Concluding Remarks Women were active politically. Reformers attempted to fight corruption. Issues such as the tariff, regulation of trusts, and currency reform restructured national politics. Civil Rights took a back seat.

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