• A society which promotes the self interest of the individual promotes the best interest of society.

• Do you agree or disagree with this statement?– Why or why not?

The Gilded Age

1870s – 1890s

The Gilded Age• Coined by Mark Twain and Charles Warner -

The Gilded Age: A Tale of Today (1873) (Satire of Greed and Corruption in America)

• Creation of Modern Industrial Economy– Canals, railways, coal, oil, banking, iron to steel

• “Science of production” (efficiency)– Division of labor– Unskilled laborers perform repetitive tasks

• Referred to an age of political corruption, financial speculation, and wide gaps in wealth

The Breakers, Summer Home of Cornelius Vanderbilt II

Political Machines

• Unofficial city organization designed to keep a particular party or group in power and usually headed by a single “boss.”

• Most famous was Boss Tweed in NYC, who controlled Tammany Hall

Politics of the Gilded Age• Spoils System– Politicians rewarded their supporters with jobs, lucrative

contracts, etc.• Political Machines• Boss System– Oversaw wards, or entire cities– Sometimes bosses were politicians– Boss Tweed in NYC Tammany Hall

• Political graft – Corruption that leads to someone gaining something of value

Tammany Hall (1914)

Who Created the First Modern Corporations?

• Railroads– Schedules– Integration– Large bureaucracies– Middle managers

Cornelius Vanderbilt (1794-1877)

• Ferries, then Railroads• Steel rather than iron• Offering superior

service at lower rates• Amassed fortune of

$100 million

Andrew Carnegie (1835-1919)• Born in Scotland• 1st job as bobbin boy at 14• Carnegie Steel Co.– Merged to become United

Steel– Controlled 25% of U.S.

steel production– Vertical integration– “Gospel of Wealth” (1889)

John D. Rockefeller (1839-1937)

• Standard Oil Co.• Controlled 90% of U.S. oil

refineries, forced small refineries out of business

• Horizontal Integration, then vertical

Terms to Know

• Cartels– Informal arrangements to decrease competition

• Trust– Board of trustees would run many companies in

the same industry (monopoly)

• Holding Company– A company that owns companies– Bought up stock in other companies

Defenses of the Gilded Age

• Social Darwinism– Triumph of individualism, competition

• Meritocracy– Great wealth open to all

• ‘Captains of Industry’ create wealth, jobs• Wealthy are social benefactors– Philanthropy, schools, libraries, hospitals, etc.

Condemnations of the Gilded Age

• Concentration of wealth unhealthy– By 1900, 1% controlled 88% of wealth

• Great wealth contributes to political corruption (anti-democratic)

• ‘Captains of Industry’ stifling competition– Monopolies and Trusts bad for economy

• Conditions for many harsh– Business cycles, low wages, child labor, urban crowding

and poor health

Robber Barons

“One of the American industrial or financial magnates of the latter 19th century who became wealthy by unethical means, such as questionable stock market operations or exploitation of labor or political connections.”

–American Heritage Dictionary

Standard Oil Octopus

How rich were these guys?$ Worth Then $ Adjusted for inflation

John Rockefeller (Standard Oil)

$1 Billion 1916 $336 Billion today

Andrew Carnegie (U.S. Steel)

$480 Million 1901 $309Billion

Cornelius Vanderbilt (Railroads)

1885 $185 Billion

Bill Gates $72 Billion ($136 peak)(72k mil)

Warren Buffet $58.5 Billion ($63.9 2008)

Sam Walton $64.5 Billion

Horatio Alger

• ‘Rags to riches’ stories

Problems during the Gilded Age?

• Unequal distribution of wealth• Poor working conditions– long hours, few safety precautions, child labor

• Few protections for consumers• Overcrowding, sickness, disease, unsanitary• Racism, discrimination (race, gender)• Inadequate (no) health care• Moral vices• Political corruption…

Response to the Gilded Age?

• The Progressive Movement

– Personal Responsibility v. Social Baseline

• If the “system” or those with the ability to do so are not going to look out for the best interest of the people, who will?