The Gilded Age (part I)Ch. 17 (p. 519-537)

What role did the presidents play in this era?

Why is this era “gilded” and with what?Who benefitted from this era? Who lost?

“What is the chief end of man?--to get rich. In what way?--dishonestly if we can;

honestly if we must.”– Samuel Clemens (aka Mark

Twain),1871 Gilded AgeGilded Age-period when corruption -period when corruption

existed in society but was existed in society but was overshadowed by the wealth of the overshadowed by the wealth of the period period

• ““gildedgilded” is when something is ” is when something is golden/beautiful on the surface but is golden/beautiful on the surface but is really cheap/worthless underneathreally cheap/worthless underneath

• Term comes from a book written about Term comes from a book written about the time period by Mark Twain and the time period by Mark Twain and Charles Dudley Warner in 1873: Charles Dudley Warner in 1873: The The Gilded AgeGilded Age– Explored political and economic corruption in

the United States– The central characters were tied together in a

government railroad bribery scheme– Depicted an American society that, despite its

appearance of promise and prosperity, was riddled with corruption and scandal

USA in the Gilded Age: 1870-1900IndustrializationIndustrialization

Reconstruction & Reconstruction & Rise of Jim CrowRise of Jim Crow

Ranching, Mining, FarmingRanching, Mining, Farming

Ringing in a new ageThe West• Farmers, ranchers, &

miners closed the last of the frontier at the expense of Indians

• Mining was the 1st attraction to the West; Miners created “instant towns” in areas where gold or silver was discovered

The South• After the failure of

Reconstruction in 1877, the South entered the Jim Crow era

Industry was regional by 1890: (a) NE had 85% of industry, (b) the sparsely-settled West provided raw materials for industry, & (c) the South was still recovering from war (made tobacco, iron & textiles; but ½ as many manufactured goods as NY state)

The Industrial North• Experienced an industrial revolution, mass immigration, &

urbanization• America became the world’s leader in railroad, steel, & oil

production

Second Industrial Revolution 1871-1914• Marked by enormous growth and

consolidation of wealth and ownership– Major Industries

• Railroads

• Automobile• Steel• Oil• Electricity• Communication

– The Industrialists or Robber Barons• William Vanderbilt (Railroads)• Jay Gould (Railroads)• Andrew Carnegie (Steel)• John D. Rockefeller (Oil)• Henry Ford (Automobiles)

Forced competitors out of business by reducing wages thereby

guaranteeing price control.

Socialism v. Capitalism• What is the role of government?

• What role should the central government play in the economic development of the country?

• How could government stop a Great Depression?

More government Less government

Liberal ConservativeSocialist CapitalistDemocrat Republican

Where do you fall

ideologically?

Inventors/InventionsInventors/Inventions • Thomas EdisonThomas Edison

– Perfected the light bulb in Perfected the light bulb in 1880, and motion picture1880, and motion picture

– Organized power plantsOrganized power plants– Established first research labEstablished first research lab

• Alexander Graham BellAlexander Graham Bell– Telephone (1876)Telephone (1876)

• Henry FordHenry Ford– Assembly LineAssembly Line

• George EastmanGeorge Eastman– Camera (1885)Camera (1885)

• Samuel MorseSamuel Morse– Telegraph (1837)Telegraph (1837)

• Wright BrothersWright Brothers– Airplane (1903)Airplane (1903)

• Christopher SholesChristopher Sholes– Typewriter (1867)Typewriter (1867)

• Guglielmo MarconiGuglielmo Marconi– RadioRadio

Samuel Morse

Alexander Graham Bell

19th Century Camera

19th Century Typewriter

Wright Brothers on 1903 Flight

Marconi

Presidents of the Gilded AgePresidents of the Gilded Age

U.S. Grant

1869-1877Rutherford B.

Hayes 1877-1881James Garfield

1881

Chester A. Arthur 1881-

1885

Grover Cleveland 1885-1889 and

1893-1897Benjamin

Harrison 1889-1893

William McKinley 1897-

1901

Scandals of the Grant Administration• During Grant’s terms as

president, material interests (money, industry) became more important than the ideology and civil rights of Lincoln’s time

• The Gilded Age was enabled partly because most presidents during this era, including Grant, were weak in relation to Congress and business interests.

• The U.S. government’s economic policy was relaxed during these years, allowing Americans to take advantage of the laissez-faire economics in increased speculation, investment, and corruption.

Jay Gould and James Fisk: The Gold Ring (1869)

• During the Civil War, Congress had authorized the Treasury to issue greenback banknotes to pay huge war debt

• Unlike the rest of the currency, greenbacks not backed by gold or silver (bimetallism) – Caused inflation and forced

gold-backed money out of circulation

• Public Credit Act (1869) guaranteed that bondholders would be repaid in gold, not greenbacks

• To strengthen the dollar, Treasury Secretary started selling Treasury gold each month and bought back high-interest greenbacks – Reduced deficit, deflated

currency

• One group of speculators, “the Gold Ring”, Jay Gould, a Wall Street trader and railroad magnate, and his partner Jim Fisk, recruited Grant’s brother-in-law to get Grant to appoint a new assistant Treasurer of the United States, who agreed to tip the men off when the government intended to sell gold.

• Tried to convince Grant and the Treasury that high gold prices would make the nation prosperous

• Gould and Fisk began to quietly stockpile gold as they hoped to sell the gold at high prices

• Gould began buying large amounts of gold, but never sold it, causing prices to rise and stocks to plummet– Gould and Fisk started

hoarding gold, driving the price higher: 30% more than 1868

• After Grant realized what had happened, Treasury sold $4 million in gold

• When government’s gold hit the market, its worth plummeted within minutes

• Investors scrambled to sell their holdings, and many of them bankrupted. This day was known as Black Friday. – Fisk and Gould escaped

significant financial harm

• The sale of gold from the Treasury defeated Gould's plan, relieving the growing economic tension and the economy resumed its post-war recovery (until 1873)

• Grant's suspected involvement also led his presidency to be called the “Era of Good Stealings”

Crédit Mobilier (1872)• Crédit Mobilier scandal

involved the Union Pacific Railroad and the fraudulent Crédit Mobilier of America construction company, which was to build the eastern portion of the First Transcontinental Railroad

• Crédit Mobilier, created by Thomas C. Durant, a vice president of the Union Pacific Railroad, was a deliberate attempt to defraud the U.S. Government and public of millions of dollars.

• It looked as if CM had been impartially chosen by the Railroad’s officers as the principal construction contractor. However, CM insiders “hired” themselves to build the railroad at inflated prices, earning them high profits

• In 1868, a Congressman involved in CM sold shares of stock in Crédit Mobilier to other congressmen, in addition to making cash bribes, to keep quiet about the illegal business

• The muckraking paper The Sun exposed the scandal during the 1872 presidential campaign

Panic of 1873• Grant signed the Coinage Act (1873), making gold the only money standard: dollars would be exchanged on demand for only gold. – End of 1873: NY stock brokerage

house fails to fully sell a bond on its own purchases in Northern Pacific Railway, and collapsed

• Collapse panicked Wall Street: other banks and brokerages with railroad stocks and bonds also collapsed – 89 of the 364 U.S. railroads went

bankrupt. – New York Stock Exchange

suspends trade 10 days

• Grant, traveled to NY to consult leading businessmen and bankers for advice on how to curb this panic, which became known as the Panic of 1873

• Grant believed that, as with the Gold Ring’s collapse, the panic was just economic flux affecting only bankers and stockbrokers

• Response: Treasury bought $10 mill. in government bonds, injecting cash into economy

• Purchases stopped Wall Street panic, but a five-year industrial depression started (Long Depression)

• To help the economy, Congress passed an inflationary policy called the Inflation Bill (1874). – Farmers/workingmen favored

addition of $64 million in greenbacks to circulation

– Eastern bankers opposed; would weaken the dollar

• Grant unexpectedly vetoed the bill because he thought it would destroy the nation’s credit– Veto was the beginning of the

Republican Party's belief in gold-backed dollar

Whiskey Ring (1875)• Employees in President

Ulysses S. Grant’s administration were accused of pocketing whiskey taxes, with the help of the liquor industry

• Grant immediately called for swift punishment. That backfired on him when he tried to protect his personal secretary, with whom he allegedly had an affair, causing an even bigger scandal.

Compromise of 1877• The Compromise of 1877 was an informal, unwritten

deal that settled the intensely disputed 1876 U.S. presidential election, pulled federal troops out of state politics in the South, and ended the Reconstruction Era.

• Through the Compromise, Republican Rutherford B. Hayes was awarded the White House over Democrat Samuel J. Tilden. Democrats complained Tilden had been cheated (also called the “Corrupt Bargain II”)

• The compromise said Southern Democrats would acknowledge Hayes as president, but only if Republicans would meet points of the compromise:

– Removal of all remaining federal troops from former Confederate States

– Appointment of at least one Southern Democrat to Hayes's cabinet

– The construction of another transcontinental railroad using the Texas and Pacific in the South

• part of the "Scott Plan," proposed by Thomas A. Scott, which initiated the process that led to the final compromise

– Legislation to help industrialize the South and improve economy

• Outgoing president, Republican Ulysses S. Grant, removed the soldiers from Florida. As president, Hayes removed the remaining troops in South Carolina and Louisiana. As soon as the troops left, many white Republicans also left and the "Redeemer" Democrats took control. African American historians sometimes call it "The Great Betrayal."

Roscoe Conkling as Mephistopheles (the devil) while Rutherford B. Hayes strolls off with the prize of the "Solid South" depicted as a woman. The caption quotes Goethe: "Unto that Power he doth belong Which only

doeth Right while ever willing Wrong."

Rise of the “spoilsmen”

• In the early 1870s, leadership of the Republican Party (mostly in the North) passed from reformers of the antebellum/CW era… – Thaddeus Stevens (13th

Amendment, “radical”)– Charles Sumner

• To political manipulators under the influence of state party bosses.– Roscoe Conkling (NY)– James Blaine (ME)

• These “spoilsmen” were deeply involved in patronage, or giving jobs and gov’t favors (spoils) to their supporters. – This would end with the

assassination of Garfield

Corruption in GovernmentCorruption in Government• Patronage or Spoils

System- giving government jobs to loyal party workers or friends (popularized by Andrew Jackson)– Were not qualified– Used position to get

money from government (graft)

• President James Garfield is assassinated by disappointed office seeker denied a position in the spoils system government

James Garfield

The assassin, Charles Guiteau

Republicans Split• Roscoe Conkling was also

the leader of the Republican faction known as the “Stalwarts”

• stalwart—someone/something who is stubborn or unchanging

• Believed and furthered the idea of the patronage system and continued to believe that sectional appeals (“waving the bloody shirt”) were still valid even after gradual end of Reconstruction in the South

• James G. Blaine of Maine led the Republican faction known as “Half Breeds” – Nickname came from

willingness to depart from Stalwart orthodoxy

• Many, including President Hayes, believed the patronage system contributed to the scandals and graft during Grant’s presidency

• Civil service reform became a popular cause among the Half Breeds

“IS THERE TO BE A POWER BEHIND THE THRONE?”

by Thomas Nast, May 1881

Nast opened this series of cartoons by showing Senator Roscoe Conkling (at left) struggling with Secretary of the Treasury James G. Blaine for influence over President James Garfield. Conkling hoped that his friends would be appointed to political positions by the president.

Pendleton Civil Service Act 1883

• Attempted to end patronage/spoils System

• Created the Civil Service Commission which required appointed govt. officials to pass the Civil Service Exam to base jobs on merit (qualifications) instead of friendship

• Federal employees did not have to contribute to campaign funds and could not be fired for political reasons President Chester A. Arthur

signed Pendleton Act into effect

The Gild

Breakers of the Vanderbilt Family

The Astor Family

The Boldt Castle

The Mount of Edith Wharton

Lockwood-Mathews Mansion

“Big Business”•Monopolies (trusts): Companies that

controlled the majority of one industry:– Rockefeller’s

Standard Oil– Carnegie’s

U.S. Steel– Vanderbilt’s

railroads

•Trusts -A group of separate companies placed under the control of a single managing board

•Critics called these practices unfair and the business leaders “Robber Barons”

Rationalizing Big Business• Social Darwinism

– Used Darwin’s theory to explain business, promoted by Harvard professor William Graham Sumner

– Natural Selection, Survival of the Fittest

– Laissez-faire -policy that US had followed since inception to not allow govt. to interfere with business

• Govt. should not interfere• Sherman Anti-Trust Act

of 1890– Law outlawing a

combination of companies that restrained interstate trade or commerce; important to prevent monopolies. Not initially enforced properly.

• Gospel of Wealth -belief that the wealthy are “chosen by God” to be successful and were therefore responsible to look out for the well being of those less fortunate. Many Industrialist shared wealth although rarely through direct welfare. Started museums, etc.– Captains of Industry: a

positive idea that industrial leaders worked hard and deserved their wealth

Andrew Carnegie• A Scottish immigrant, Andrew

Carnegie helped build the American steel industry—Carnegie Steel Co. (originally started as an ironworks foundry)

• 1900 Carnegie Steel produced more of the metal than all of Great Britain – Richest man in the world at the

time

• One of the first philanthropists, gave his collected fortune away to cultural, educational and scientific institutions for "the improvement of mankind." (Gospel of Wealth)– Carnegie Hall, NYC– Carnegie-Mellon University– Over 2,500 public libraries– $350 million by the time he died

Carnegie was unusual because he preached for the rights of laborers to unionize and to protect their jobs.

• However, Carnegie's steel workers were often pushed to long hours and low wages-- Homestead Strike of 1892

Building a monopolyBuilding a monopoly(as described by Andrew Carnegie)(as described by Andrew Carnegie)

• Vertical IntegrationVertical Integration– A process in which a A process in which a

company buys out all of company buys out all of the suppliers. (Ex. coal the suppliers. (Ex. coal and iron mines, ore and iron mines, ore freighters, RR lines)freighters, RR lines)

• Horizontal ConsolidationHorizontal Consolidation

-A process in which a -A process in which a company buys out or company buys out or merges with all merges with all competing companies competing companies (JP Morgan bought out (JP Morgan bought out Carnegie steel and Carnegie steel and other companies)other companies)

The Steel Industry’s Impact on The Steel Industry’s Impact on AmericaAmerica

• Bessemer Process-Bessemer Process- developed around 1850 developed around 1850 injected air into molten injected air into molten iron to remove iron to remove impurities and make impurities and make steel-a lighter, more steel-a lighter, more flexible, rust resistant flexible, rust resistant metalmetal

• Steel is used in Steel is used in railroads, farm railroads, farm equipment, canned equipment, canned goodsgoods

• Engineers use steel to Engineers use steel to create skyscrapers and create skyscrapers and longer bridges longer bridges (Brooklyn Bridge)(Brooklyn Bridge)

View Steel Industry Video

J.P. Morgan

• Industrialist and Industrialist and financier who financier who started U.S. Steel started U.S. Steel from Carnegie from Carnegie Steel and other Steel and other companiescompanies

• Became 1Became 1stst billion- billion- dollar corporationdollar corporation

• Bailed out the U.S. Bailed out the U.S. economy on more economy on more than one occasionthan one occasion

John D. Rockefeller

• He was a co-founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust

• As kerosene and gasoline grew in importance, became the world's richest man and the first American worth more than a billion dollars– Often cited as the richest person in

history • Like Carnegie, was a philanthropist

under the Gospel of Wealth:– An abolitionist– Creator of Spelman College– Major donator to the University of

Chicago and other major medical universities

– Owned a large portion of real estate in Manhattan, NYC

Cornelius (“The Commodore”) and W.H. Vanderbilt

• Originally a steamboat entrepreneur, C. Vanderbilt became a railroad magnate

• Initially did not think his son was fit for the job– W.H. became president of Central

and Hudson River Railroad, Lake Shore and Michigan Southern Railway, the Canada Southern Railway, and the Michigan Central Railroad

• An active philanthropist, giving extensively to a number of philanthropic causes:– Funded the Metropolitan Opera– Funded College of Physicians and

Surgeons at Columbia University. – In 1880, he provided the money for

Vanderbilt University in Nashville, Tennessee

"The Great Race for the Western Stakes, 1870," Cornelius Vanderbilt versus James Fisk

Thomas Edison(“The Wizard of Menlo Park”)

• An American inventor and businessman. He developed many devices that greatly influenced life around the world, including:– Phonograph– motion picture camera– Long-lasting electric light bulb. one

of the first inventors to apply the principles of mass production and large-scale teamwork to the process of invention, and because of that, he is often credited with the creation of the first industrial research laboratory.

• One of the first to apply the mass production and large-scale teamwork to the process of invention

• Created the first industrial research laboratory – Later electrical genius Nicola Tesla

worked for Edison and is (unofficially) credited with many of his inventions

• 1,093 US patents in his name• Inventions established major new

industries world-wide:– electric light/power, power

utilities– sound recording, motion pictures – Telecommunications: stock

ticker, mechanical vote recorder, battery for an electric car, recorded music device

Videos

• The Gilded Age

• “Traits of a Titan” from the History Channel’s The Men Who Built America

• Captains of Industry (biography.com)