Mr. LongAP US History

Why were the best men not involved in politics during this period known as the Gilded Age?• Answer is that there is a booming private

economy due to the industrial revolution = PROFIT!

Until 1870 agriculture was America’s leading industry.

We import more then we export until end of Civil War (1865)

Industrial change is possible b/c of Foreign investment Foreign Labor (immigrants) Foreign/Domestic Trade (new markets) Technology (inventions/revolution)

Society (American’s lives) would change with industry!

The Civil War increased industrial development ( EX: Railroad)

Railroad:• Promised greater national unity: Union had to

link California to itself or might be lost.

• Could bring prosperity to frontier towns

• Problem: RR’s are very expensive to build Require government subsidies (Land/Money)

Deadlock over who would get the RR ended when South seceded.

Congress commissions two RR Corp.1. Union Pacific RR (1,086mi) Started in Omaha, Neb and went West Irish immigrant workers

2. Central Pacific RR (689mi) Began in California and went East Chinese immigrant workers Harder b/c they had to go through Sierra Nevada’s

“Wedding of the Rails”• Union Pacific and Central Pacific are

connected at Ogden, Utah in 1869.

• Brought the East and West together in on of the most significant engineering feats of the day.

This transcontinental RR creates new markets

RR Consolidation• We now have western lines welding

together with existing eastern lines.

• Cornelius Vanderbilt- Great Railroad owner in NY (NY Central Line) He implements two great improvements to

Railroading.

1. Steel Rails (safer and more economical)2. Standard gauge of track width (universal)

New Mechanization

• Westinghouse Air Brakes (efficiency/safety) Allowed the operator to stop quicker Resulted in less RR accidents

• Pullman Palace “sleeping” Cars (comfort/travel) Long trips now comfortable

(sleeping/eating)

What the Railroad accomplished

1. Spurred the economic growth of the US2. Opened up the West w/ its wealth of resources

Mining, agriculture, new markets

3. Led to urbanization movement at the end of 19th century.

4. Stimulated immigration (new ideas/pop)5. Changed the land 6. Changed time

Standard time (time-zones)

Big Business (especially the RR) is very corrupt!• Fleecing: defraud of money/property, to

swindle EX: Credit Mobilier Construction Company

• Stock Watering RR promoters inflated their claims about a RR line’s

assets and profitability and sold stock and bonds in excess of RR actual value (Cows at market)

• Bribes Judges, Legislators, etc.

Big Business = industrial monarchs• Used gov to benefit themselves • These relationships were defensive alliances to

protect profits. Results of Corruption in Big Business

• Who is hurt = Small farmers (they want action taken: The Grange)

Had to pay higher shipping rates

Cost more to ship something from South to North then from North to South

Railroad is the leader in Big Business = few have a lot of control over many.

• Reasons American are slow to action: Dedicated to free enterprise

Believe that competition is key to trade success and economic growth

American Dream States can’t regulate interstate commerce

Wabash St. Louis and Pacific RR Company v Illinois

The Federal Gov would have to get involved…(Wabash vs. Illinois 1886)

• Interstate Commerce Act of 18871. Required rates be “reasonable and just”2. Railroads must publish their rates3. No rate discrimination on short haul/long haul4. Set up Interstate Commerce Commission (ICC) In charge of making sure railroads obeyed this legislation

First large scale attempt by Washington to regulate business in the interest of society at large!

Reasons for Rapid Industrial Expansion

1. Liquid Capital Millionaire class/Foreign investment

2. Natural resources could reach factories (transp) Coal, oil, iron, etc

3. New Larger Market encouraged mass-producing inventions

4. New Machines meant you could replace skilled labor with unskilled labor

Cheaper labor

5. New ideas were flourishing (inventions) Thomas Edison

Vertical Integration- to combine into one organization all phases of manufacturing from mining to manufacturing.

EX: Andrew Carnegie (Steel King)

Horizontal Integration- allying w/ competitors to monopolize a given market.

• Owned 90% of countries oil refineries

EX: John D. Rockefeller (Standard Oil)

Interlocking Directorates- members of a corporate board of directors serving on the board of multiple corporations.

EX: J. P Morgan (Banking)

New battle cry of the US = “Steel is King”

• This marks a shift from agriculture (cotton) to industrial (Steel).

• How do we see steel holding the US together? Skyscrapers Machines Railroad

Steel = Food, Shelter and Transportation

From 1870-1900 US went from scarce producer to producing 1/3 of the world’s supply of steel.

REASONS:1. Cornelius Vanderbilt- NY Central RR2. Bessemer Process (most important) New cheaper way to make steel. Blow cold air on red-hot iron to take away impurities =

steel. Steel is stronger then iron

Formed US Steel in Pittsburgh “Steel City”

Used Vertical integration tactic to monopolize the market.

By 1900 he was producing ¼ of nations Bessemer Steel

J. P Morgan bought out Carnegie for $400 million. • US Steel Corp. = 1st

Billion $ company in US.

Carnegie gave away $350 million • Thought he would die

disgraced with so much wealth. Carnegie Mellon University

New Industry = Oil

• “Drake’s Folly” 1859 in PA = “black gold”

• Kerosene = 1st Major Product Cheaper then whale oil Market killed by invention of electricity

• Oil industry revived by invention of internal combustion engine and automobile. Gasoline

Oil King = John D. Rockefeller (Standard Oil Company)

• By 1877 he controlled 95% of oil refineries in the country = monopoly (horizontal integration)

Created a TRUST in 1882 for consolidation and control of prices.

He is extremely powerful

Social Darwinism• Belief that the fittest survive in both nature

and society. “survival of the fittest” Believed that industrial/urban problems are part of a

natural evolutionary process that humans cannot control.

Created by Herbert Spencer and William Graham Sumner

• The wealthy industrial and business leaders (Rockefeller, Carnegie, Morgan, etc) used Social Darwinism to justify their success.

Social Darwinism = millionaires are a product of natural selection

What did the people think of this?• Thought was if the rich could pull

themselves up from nothing so could the poor. “AMERICAN DREAM”

Gospel of Wealth• Belief that, as the guardians of society’s wealth,

the rich have a duty to serve society.

• Promoted by Andrew Carnegie Philanthropist

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Social Gospel: Reform movement based on belief that Christians have a responsibility to confront social problems.

At the onset the local and state legislatures tried to tackle the issue.

PROBLEM:1. States could not control interstate commerce only

Congress could per the Constitution of the United States.

2. People thought they could rise to the top like the rich had

3. Big Business would incorporate in “easy states” (EX: NJ)

Governments reaction to Trusts:

1. Interstate Commerce Act of 1887 Already in your notes…

2. Sherman Anti-Trust Act (1890)1. Forbid combinations in restraint of trade PROBLEMS: They make no distinction between a “good/bad” Trust To many loopholes for Big Business attorneys to get out of

EFFECTS: Curbed Labor Unions b/c they were said to restraint trade

Where is industry? • Most of industry post-Civil War = North

Draws to the South• Natural Resources (coal and iron ore)• Cheap Labor (hillbillies/displaced farmers)• Agriculture (textiles: most successful industry in S)

Negatives of Southern Industry• Northern RR charge more to ship from South to North then

from North to South. (who is in political control after Civil War?)

IMPACTS:1. Increase in wealth in US2. Increase in standard of living, more

physical comforts3. Increase in urban population (immigrants)4. New way of life Self producing farmers now become wage earners Time Factory Life

5. Increase in class divisions/struggle 1/10 of people owned 9/10 of nations wealth in 1900

Women are the most effected group during the new move to industry!

• New economic opportunity (sewing machines) This delays marriage and child bearing

Labor is the Key to industries success!

KEY TRENDS:1. Immigrants, women and children expanded

the labor force significantly.2. Machines replaced skilled workers3. Large corporations (monopolies) dominated

the American economy4. Corporations developed national and even

international markets for their goods.

Key Unions:1. Knights of Labor2. Industrial Workers of the World

(IWW)3. The American Federation of Labor

(AFL)

Key Strikes:1. Homestead Strike (1892)2. Pullman Strike (1894)

Knights of Labor

• Up to 730,000 members led by Terence V. Powderly

• Members: unskilled and semiskilled workers, including women, immigrants and African Americans.

• Goal: Strove for a cooperative society in which laborers, not capitalists, owned the industries in which they worked.

Industrial Workers of the World

• Led by “Mother” Jones, Elizabeth Flynn, and Big Bill Hayward

• Members: strove to unite all labors like the Knights.

• Goal: Embraced class conflict and endorsed violent tactics.

“An injury to one is an injury to all”

American Federation of Labor

• Led by Samuel Gompers

• Members: skilled workers in craft unions (specialties)

• Goal: Against violence, concentrated on issues such as higher wages, shorter hours and better working conditions.

Pullman Strike (1894)• The Pullman Palace Car Company lowered wages

during the Economic Crisis of 1893 while keeping prices/rent the same in company towns.

• Strike halted substantial portion of American RR commerce

• Ended: when President Cleveland sent federal troops to “protect” rail carried mail, but in reality to crush the strike.

• WHAT DOES THIS SHOW US ABOUT THE FEDERAL GOV?

Corporations are strong and big and have government influence.

• Laborers in US are paid more than other nations Gov doesn’t feel sorry for them.

• Immigrants provided cheap labor Better off here then in their homeland

• New Machines displaced employees