AP 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 US
2. 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 1887
1. Required rates be “reasonable and just”
2. Railroads must publish their rates
3. No rate discrimination on short haul/long haul
4. 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 RR
2. 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
__________________________________________________
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 US
2. Increase in standard of living, more
physical comforts
3. 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 workers
3. Large corporations (monopolies) dominated
the American economy
4. Corporations developed national and even
international markets for their goods.
Key Unions:
1. Knights of Labor
2. 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
