•Definition of Gilded AgeDefinition of Gilded Age

Essential QuestionEssential Question

Industrialization increased the standard

of living and the opportunities of most

Americans, but at what cost?

Industrialization increased the standard

of living and the opportunities of most

Americans, but at what cost?

Causes of Rapid IndustrializationCauses of Rapid Industrialization

1. Steam Revolution of the 1830s-1850s.

2. The Railroad fueled the growing US economy:

First big business in the US. A magnet for financial investment. The key to opening the West. Aided the development of other

industries.

1. Steam Revolution of the 1830s-1850s.

2. The Railroad fueled the growing US economy:

First big business in the US. A magnet for financial investment. The key to opening the West. Aided the development of other

industries.

Causes of Rapid IndustrializationCauses of Rapid Industrialization

3. Technological innovations. Bessemer and open hearth

process Refrigerated cars Edison

o “Wizard of Menlo Park”o light bulb, phonograph,

motion pictures.

3. Technological innovations. Bessemer and open hearth

process Refrigerated cars Edison

o “Wizard of Menlo Park”o light bulb, phonograph,

motion pictures.

Industrial RevolutionIndustrial Revolution

First we need a new economic system!First we need a new economic system!

Capitalism- time for a handoutCapitalism- time for a handout

– Now let’s discuss the concept of capitalismNow let’s discuss the concept of capitalism

An economic belief supported by the U.S. that opposes the

government regulating business.

In the late 1800’s businesses operated without much government regulation.

This is known as laissez-fairelaissez-faire economics.

Laissez-faire means ‘allow to be’ in French or the government stays out of you

business.

Laissez faire supports our economic system of capitalismcapitalism

Laissez Faire Federal Govt.Laissez Faire Federal Govt.Laissez Faire Federal Govt.Laissez Faire Federal Govt.

From 1870-1900 Govt. did very little domestically.

Main duties of the federal govt.:

Deliver the mail.

Maintain a national military.

Collect taxes & tariffs.

Conduct a foreign policy.

Exception administer the annual Civil War veterans’ pension.

Economic system characterized by private

property ownershipIndividuals and companies compete for

their own economic gain (ProfitProfit)

Capitalists determine the prices of goods and services.

Production and distribution are privately or corporately owned.

Reinvestment of profits

Supports laissez faire

Economic system based on cooperation rather than

competition

Believes in government ownershipgovernment ownership of business and capital

Government controls production and distribution of goods.

Opposite of laissez fairelaissez faire and capitalismcapitalism

Other Look at Other Look at Economic SystemsEconomic Systems

Capitalism- You own a goat, your neighbor doesn’t so you sell goat’s milk to him. The government wants to make sure everything is “fair” so it provides a system of weights and measures and a currency to facilitate the transactions

Socialism- You own a goat, your neighbor doesn’t. The government wants to make sure everything is “fair” so it taxes you 60% of your goat’s production and gives some of that to your neighbor.

Communism- You own a goat, your neighbor doesn’t. The government wants to make sure everything is “fair” and equal so it shoots your goat.

BETWEEN 1860 TO 1900BETWEEN 1860 TO 1900•Elevator---1852

•Bessemer Process---1852•Sewing Machine---1853

•Dynamite---1867•Typewriter---1868

•Levi Blue Jeans/Basketball---1873•Telephone---1876

•Phonograph---1878•Light bulb and cash register---1879

•Zipper---1883•Gasoline automobile and skyscraper---1885

•New York City---first city to have electricity--1890•Radio---1895

•Subway---1897•X-ray---1900

Between 1800 to 1900, US Govt. issued 500,000

patents

Thomas Alva EdisonThomas Alva Edison

“Wizard of Menlo Park” “Wizard of Menlo Park”

The Light BulbThe Light Bulb

The Phonograph (1877)The Phonograph (1877)

The Ediphone or Dictaphone

The Ediphone or Dictaphone

The Motion Picture CameraThe Motion Picture Camera

Alexander Graham BellAlexander Graham Bell

Telephone (1876)Telephone (1876)

Alternate CurrentAlternate Current

George WestinghouseGeorge Westinghouse

Alternate CurrentAlternate Current

Westinghouse Lamp ad

Westinghouse Lamp ad

U. S. Patents GrantedU. S. Patents Granted

1790s 276 patents issued. 1790s 276 patents issued.

1990s 1,119,220 patents issued. 1990s 1,119,220 patents issued.

Social DarwinismSocial Darwinism British economist. Advocate of

laissez-faire. Adapted Darwin’s

ideas from the “Origin of Species” to humans.

Notion of “Survival of the Fittest.”

British economist. Advocate of

laissez-faire. Adapted Darwin’s

ideas from the “Origin of Species” to humans.

Notion of “Survival of the Fittest.”

Herbert SpencerHerbert Spencer

Social Darwinism in America

Social Darwinism in America

William Graham SumnerFolkways (1906)

William Graham SumnerFolkways (1906)

$ Individuals must have absolute freedom to struggle, succeed or fail.

$ Therefore, state intervention to reward society and the economy is futile!

$ Individuals must have absolute freedom to struggle, succeed or fail.

$ Therefore, state intervention to reward society and the economy is futile!

The ‘Robber Barons’ of the Past

The ‘Robber Barons’ of the Past

Extortion:Extortion: Forced against your will•RebatesRebates: discount or refund on “freight

charges”

•Drawbacks / Kickbacks:Drawbacks / Kickbacks: Standard Oil gave certain railroads all its shipping business if

it agreed to charge Standard Oil 25% to 50% less than its competitors

•Buyouts:Buyouts: Larger corporations forced smaller businesses to sell out

•CongressCongress was “bought out” by the monopolies

•Spies:Spies: Stealing your competitor's ideas

robber

Small businessesSmall businesses complained “monopolies”

eliminated fair competition

““Robber Barons”Robber Barons” Business leaders built their

fortunes by stealing from the public.

They drained the country of its natural resources.

They persuaded public officials to interpret laws in their favor.

They ruthlessly drove their competitors to ruin.

They paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.

““Captains of Industry”Captains of Industry” The business leaders served their

nation in a positive way. They increased the supply of

goods by building factories. They raised productivity and

expanded markets. They created jobs that enabled

many Americans to buy new goods and raise their standard of living.

They also created museums, libraries, and universities, many of which still serve the public today.

Cornelius [“Commodore”] Vanderbilt

Cornelius [“Commodore”] Vanderbilt

Can’t I do what I want with my money?Can’t I do what I want with my money?

•Formed a steamship company in 1829

•Dominated shipping along the Atlantic

•1849 established steamship that carried people from New York to San

Francisco in Gold Rush days

•Leading U.S. steamship owner, nicknamed “The Commodore”

•Gained control of the Hudson River Railroad

•Formed a steamship company in 1829

•Dominated shipping along the Atlantic

•1849 established steamship that carried people from New York to San

Francisco in Gold Rush days

•Leading U.S. steamship owner, nicknamed “The Commodore”

•Gained control of the Hudson River Railroad

•After Civil War Vanderbilt bought most railroad lines from

New York to Chicago

•1877, controlled 4,500 miles of railroads

•Worth over $100 million

•Philanthropist--donated $1 million to Vanderbilt University

•After Civil War Vanderbilt bought most railroad lines from

New York to Chicago

•1877, controlled 4,500 miles of railroads

•Worth over $100 million

•Philanthropist--donated $1 million to Vanderbilt University

William VanderbiltWilliam Vanderbilt

$ The public be damned!

$ What do I care about the law? H’aint I got the power?

$ The public be damned!

$ What do I care about the law? H’aint I got the power?

In 1856 Henry Bessemer devised a way of converting iron into steel on a

large scale. His invention involved blowing air through molten iron in a converter, or furnace, in order to burn off the

excess carbon. His invention revolutionized the

Industrial Age.

New Uses for SteelSteel used in railroads, barbed

wire, farm machinesChanges construction: Brooklyn Bridge; steel-framed skyscrapers

In 1856 Henry Bessemer devised a way of converting iron into steel on a

large scale. His invention involved blowing air through molten iron in a converter, or furnace, in order to burn off the

excess carbon. His invention revolutionized the

Industrial Age.

New Uses for SteelSteel used in railroads, barbed

wire, farm machinesChanges construction: Brooklyn Bridge; steel-framed skyscrapers

Andrew Carnegie

Andrew Carnegie:

-Background

-Steel and Pittsburg

-Railroads

-Carnegie Steel- Limited Partnership

-Secret to his success- Vertical Integration

-bought out by J.P. Morgan

•Minister of his surplus of wealth (public good)

The Gospel of Wealth:Religion in the Era of

Industrialization

The Gospel of Wealth:Religion in the Era of

Industrialization

Russell H. ConwellRussell H. Conwell

$ Wealth no longer looked upon as bad.

$ Viewed as a sign of God’s approval.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

$ Wealth no longer looked upon as bad.

$ Viewed as a sign of God’s approval.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

The effort of an individual or

organization to increase the well-

being of humankind, as by charitable aid

or donations.

PhilanthropistPhilanthropist•Gave millions to Gave millions to

colleges and libraries.colleges and libraries.

•It was the sacred duty of the wealthy to give

back to society who has given to him.

•Stressed education as a means to better one’s

self.

•Carnegie HallCartoon Carnegie

Gospel of Wealth

“On Wealth”“On Wealth”

Andrew CarnegieAndrew Carnegie

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

J.D. Rockefeller

• Background • Oil

– Growth of refining and exporting (Kerosene)– Excelsior Refinery (1863)– Standard Oil (1870)- Secrets to his success

- Horizontal Integration- Monopoly

- Business relationship with the RR?

-Trust- What is it?

Sherman Anti-Trust Act of 1890

-Retires(1897)

Well-being of mankind

•Controlled the railroad by forcing them to pay him

rebatesrebates because of the volume of

business he gave them.

•Was called “Rock a “Rock a Fellow”Fellow” by many

•Ruthless business man: “Pay no man a Pay no man a

profitprofit”

Cartoon Rockefeller

Rockefeller/Control Govt

Rockefeller was so wealthy, he dictated to the U.S. Government to protect big business---- laissez fairelaissez faire

Rockefeller would be hated by many because he had too much control over the oil industry and the government as viewed by the common

man-----Some believed he was corrupt because he took away the right to compete---free enterprisefree enterprise

Trusts control govt

Big business, monopolies controlled Congress through bribery. This is corruption

Coke fields

purchased by

Carnegie

Coke fields

Iron ore deposits

purchased by

Carnegie

purchased by

Carnegie

Coke fields

Iron ore deposits

Steel mills

purchased by

Carnegie

purchased by

Carnegie

purchased by

Carnegie

Coke fields

Iron ore deposits

Steel mills

Ships

purchased by

Carnegie

purchased by

Carnegie

purchased by

Carnegie

purchased by

Carnegie

Coke fields

Iron ore deposits

Steel mills

Ships

Railroads

purchased by

Carnegie

purchased by

Carnegie

purchased by

Carnegie

purchased by

Carnegie

purchased by

Carnegie

Vertical IntegrationVertical Integration You control all phases of production from the raw material to the finished

product

Horizontal IntegrationHorizontal Integration Buy out your competition until you have control of a

single area of industry

Regulating the TrustsRegulating the Trusts1877 Munn. v. IL

1886 Wabash, St. Louis & Pacific Railroad Company v. IL

1890 Sherman Antitrust Act in “restraint of trade” “rule of reason” loophole

1895 US v. E. C. Knight Co.

1877 Munn. v. IL

1886 Wabash, St. Louis & Pacific Railroad Company v. IL

1890 Sherman Antitrust Act in “restraint of trade” “rule of reason” loophole

1895 US v. E. C. Knight Co.