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The Guilded Age Politics and Business
Transcript of The Guilded Age Politics and Business
- An era of forgettable presidents who didn't serve more than one term, rising politicians who ignored or avoided controversial issues and increasing corruption among business and political leaders. - The development of the national railroad had the greatest impact on American economic life in the 19th Century.
- With transportation of goods now nationwide, mass production, mass consumption and economic specialization was a possibility.
- The railroad helped the coal and steel industry grow.
- The creation of four time zones in 1883 was due to the railroad and became standard time for the nation.
- The railroads also helped create complex financial structures, stockholder corporations, businesses management and regulation of competition. - At the conclusion of the Civil War many industries began to expand.
- The iron industry began to transform into U.S. Steel.
- Inventions led to oil refining, electricity and the expansion of the rail system.
- The expansion of the rail lines created a consumer culture that helped businesses expand on a national scale.
- All this gave rise to business tycoons in an unrestricted capitalist environment. Eastern Trunk Lines - Prior to the Civil War the railroads were multiple local lines with varying gauges.
- A trunk line was a major route between large cities; smaller branch lines connected the trunk line with outlying towns.
- Cornelius Vanderbilt, who had made millions from a steamboat business merged local railroads into the New York Central Railroad (1867) which ran from NYC to Chicago. Soon many other trunk lines followed. Federal Land Grants - The federal government provided railroad companies with loans and land grants in order to encourage western settlement.
- The expectation was that the railroads would sell the land to new settlers to finance construction of their rail systems.
- In return federal land would increase in value and also aid in transporting troops and mail.
- Led to corruption, promoted poor construction of railroads.
- Railroads owned most of western land by the 1880s.
- Corruption lead to financial woes and railroad monopolies - Due to the Bessemer process (1850) iron could turned into high-quality steel.
- Andrew Carnegie began as a poor Scottish immigrant and became the superintendent of a Pennsylvania railroad.
- Later, Carnegie began a steel business and using a technique known as vertical integration, began to control the steel industry.
- Vertical integration is the control of every stage of the industrial process.
- By 1900, Carnegie Steel was at the top of the steel industry.
- In 1900 he sold his company to J. P. Morgan who created U.S. Steel. The sale was $400 million.
- Philanthropy... Andrew Carnegie and U.S. Steel John D. Rockefeller, Standard Oil and the Trust - Rockefeller owned an oil refinery by the age of 25.
- Through shrewd business practices Rockefeller was able to buy out rival oil companies and by 1881 he had created Standard Oil Trust.
- Standard Oil controlled 90% of the oil refinery business.
- The trust consisted of multiple companies on a board that Rockefeller oversaw.
- This was horizontal integration - the purchase and control of former competitors.
- Rockefeller could control supply and prices with no objection. The Antitrust Movement - In the 1880s trusts came under attack by middle class citizens.
- Ordinary citizens feared the unchecked power and resented the urban elites.
- Congress passes the Sherman Antitrust Act in 1890. This act outlawed pools and trusts, ruling that businesses could no longer enter into agreements to restrict competition.
- The act had no power due to its vague wording and was further weakened by the Supreme Court case United States v. E.C. Knight Co (1895). This ruled that the Sherman Antitrust Act could be applied only to commerce, not manufacture. Conservative Economic Theories - The concept of "laissez-faire" economics had taken hold as influenced by Adam Smith's "invisible hand".
- American industrialists appealed to this idea in order to justify their business dealings.
- Though monopolies crippled competition and companies took government subsidies they continued to utilize "laissez-faire" to ward off further regulation. Social Darwinism - Charles Darwin's theory of natural selection.
- Helped economic conservatives justify their actions.
- Herbert Spencer, an influential Social Darwinist, advocated that the concentration of wealth in the hands of the "fit" was good for the whole human race.
- Helping the weak would disrupt the evolutionary process. The Gospel of Wealth - Others stated that religion had to do with their social status. Rockefeller concluded that "God gave me my riches."
- Andrew Carnegie compose an essay in 1889 titled, "The Gospel of Wealth." In his essay Carnegie wrote that the rich and successful had an obligation to help the poor. Very few followed in Carnegie's example. Inventions - By 1900 cables linked all continents of the world in an electronic network.
- Telephone in 1876 by Alexander Graham Bell (American Telephone and Telegraph)
- Thomas Edison worked in his laboratory in Menlo Park, New Jersey. Creates motion picture camera, lightbulb, phonograph)
- His competitor was George Westinghouse who developed the air brake for railroads (1869) and a transformer for producing high-voltage alternating current (1885). Powered entire cities. Mass Marketing - As factories produced more goods there was a need for businesses to sell merchandise.
- R. H. Macy, Marshall Fields, Frank Woolworth's Five and Ten Cent Story sprang up.
- Sears and Roebuck had a mail order catalog. "Wish Book"
- Kellogg and Post become household names. Concentration of Wealth - By 1890 the richest 10% of the population controlled 9/10 of the nation's wealth.
- Horatio Alger was a popular author who wrote novels that portrayed a young man of modest means who becomes rich and successful through hard work, honesty and luck. Many people bought into this idea and his books sold millions of copies.
- Carnegie's story was a rarity in fact. Concentration of Wealth Continued - Thousands of white collar jobs opened up such as accountants, clerical workers and salespersons.
- Higher wages created an emerging middle class.
- By 1900 2/3 of Americans were wage workers.
- Many wage workers worked 10 hours work days and 6 day work weeks. Even these hours did not provide enough to keep a family stable.
- Women made up 5% of the work force in 1900 and began to fill more clerical roles. Organized Labor Movement - Management held power over organized workers, scabs...
- lockouts, black lists, yellow dog contracts, militia or private guards and court injunctions
- Unions viewed as anarchistic and un-American
- Federal and State government normally backed management. Labor Strikes - Great Railroad Strike (1877) - railroads cut wages and strikes spread across 11 states and shutdown 2/3 of the country's rails.
- President Rutherford B. Hayes called in federal troops to end the strike. Hundreds of people were killed.
- National Labor Union (1866)- organize both skilled and unskilled workers. Won 8 hour workdays.
- Knights of Labor (1869) - allowed blacks to join, wanted to abolish child labor, abolition of trusts and monopolies.
Haymarket Bombing (1886) - Knights of Labor strike in which 7 cops were killed by a bomb. Bad Press.
- American Federation of Labor (1886) - only skilled craft workers could join. Led by Samuel Gompers. Better working conditions. Homestead and Pullman Strikes - Henry Clay Frick cut wages by 20% and utilized force to beat the unions.
- George Pullman had a model company town in Chicago and after a cut in wages and firing worker's leaders.
- Eugene Debs advocated to not handle any trains with Pullman cars. Railroads began linking train cars to mail cars so the federal government sent the strike to the Supreme Court.
- In re Debs (1856) ruled that the obstruction of mail meant the strike had to stop.