Innovation and the Rise of Big Business in the Gilded Age 1877-1901

Innovation and the Rise of Big Business in the Gilded Age 1877-1901

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Description: The Gilded Age, the period between the end of Radical Reconstruction (1877) and the beginning of the Progressive Era (1901), was a brassy, flamboyant age dominated by big business values, political corruption, and extremes of wealth and poverty. During the Gilded Age, the United States changed from a predominantly rural agrarian nation to an urban industrial one. Major Developments - Establishing the foundation for 20th century America, the period witnessed these major developments:Industrialization, Urbanization, Immigration.

 
Author: Edrene S. McKay PhD  | Visits: 384 | Page Views: 535
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Contents:
The Gilded Age
The Rise of Big Business

A Brassy, Flamboyant Age
• The Gilded Age, the period
between the end of Radical
Reconstruction (1877) and
the beginning of the
Progressive Era (1901), was
a brassy, flamboyant age
dominated by big business
values, political corruption,
and extremes of wealth and
poverty.
• During the Gilded Age, the
United States changed from
a predominantly rural
agrarian nation to an urban
industrial one.

Major Developments
• Establishing the
foundation for 20th
century America,
the period
witnessed these
major
developments:
• Industrialization
• Urbanization
• Immigration

The Age of Energy
• According to Howard
Mumford Jones, the
period was, an "Age
of Energy.” Americans
showed tremendous
energy and
persistence in their
activities.

New Types of Organization
• They were willing to
experiment with
new types of
organization (the
corporation, labor
unions, and ethnic
neighborhoods).

New Ideas
• They were receptive to new ideas (Social
Darwinism, the Gospel of Wealth, and the
Horatio Alger success formula ).

Originality
• They showed
originality in
confronting their
problems (the
Interstate Commerce
Act and the Sherman
Antitrust Act)

Took Problems into 20th Century
• However, most
problems generated by
the Age of Energy -- the
unequal distribution of
wealth, large-scale
unemployment, urban
crowding, the decline of
farm income, and
reckless exploitation of
natural resources -would carry over into
the 20th century.

Breakup of Island Community
• By the turn of the
century, most
Americans
experienced what
Robert Wiebe in The
Search for Order
(1967) called the
breakup of the
"island community."

Distant Corporations
• The self-sufficient,
isolated, rural
communities, that once
had satisfied people's
needs, were replaced by
distant corporations.
These impersonal
giants, located primarily
in the Northeast, now
manufactured the
products, services, and
ideas that once had
been obtained locally.

Controlled Nation’s Economy
• Swallowing up independent
companies to form trusts,
they controlled the nation's
food supply, fashioned its
clothing, household
furnishings, and tools,
dominated its methods of
transportation, and
published its books,
magazines, and
newspapers.

Life Profoundly Changed
• Allan Nevins & Henry Steele Commanger
provide a vivid description of the impact of
trusts on the "island community:"
The life of the average man, especially if
he was a city dweller, was profoundly
changed by this development. . . . When
he sat down to breakfast he ate bacon
packed by the beef trusts, seasoned his
eggs with salt made by the Michigan salt
trust, sweetened his coffee with sugar
refined by the American Sugar trust, lit his
American Tobacco Company cigar with a
Diamond Match Company match.

Standardization
• Then he rode to
work on a bicycle
built by the bicycle
trust or on a trolley
car operating under
a monopolistic
franchise and
running on steel
rails made by United
States Steel. . .

Lack of Control
• What the average man
noticed most was the effect
of trusts on the business life
of his community. Local
industry dried up, factories
went out of business or were
absorbed, mortgages were
placed with Eastern banks
or insurance companies,
and neighbors who worked
not for themselves but for
distant corporations were
exposed to the vicissitudes
of policy over which they
had no control.

From Agriculture to Industry
• During the Gilded
Age, the United
States experienced
a rapid shift from an
agricultural
economy to an
industrial one.

The Way We Were in The Gilded Age: 1877-1901
Who We Were

How We Lived

1880

1890

1900

Population
(millions)

50.2

63.0

76.0

Pop. per sq.
mile

16.9

21.2

25.6

1880

1890

1900

Gallon of
milk

$0.16

$0.17

$0.30

Loaf of
bread

$0.02

$0.02

$0.03

71.8% 64.9%

60.4%

New
auto

N/A

N/A

$500

Percent urban 28.2% 35.1%

39.6%

Gallon of
gas

N/A

N/A

$0.05

Percent native
94.4% 87.1%
born

84.4%

New
house

Percent
immigrant

15.6%

Average
income

Percent rural

5.6%

12.9%

$4,500 $5,800
$480

$660

$4,000
$637

Rapid Industrialization
• An abundance of natural
resources, developments in
technology, new inventions,
an adequate labor supply, a
growing domestic market,
and federal support for
industrial projects contributed
to this rapid industrialization.
By 1890, the value of
industrial goods and
services, for the first time,
exceeded that of agricultural
products.

Captains of Industry
• Entrepreneurs with
the talent, vision,
and willingness to
take risks were able
to achieve
unprecedented
wealth and power.

Standard Oil Trust
• In 1882, John D.
Rockefeller formed the
Standard Oil Trust and
consequently dominated
95% of the production,
refining, and marketing of
oil in the United States.

Horizontal Consolidation
• The merger of
competing
companies in one
area of business,
like oil refining,
was known as
horizontal
consolidation.

Raw material

Independent
Companies

Horizontal Consolidation
Manufacturing
Refineries,
pipelines, tankers

Product
Distribution
Fuel, kerosene,
oil, tar

Standard Oil
Trust

Independent
Companies

Vertical Consolidation
• It was often accompanied by vertical
consolidation of industries, in which a firm
would strive to control all aspects of production
from acquisition of raw materials to final
delivery of finished products.
Raw material
Vertical
Consolidation

Manufacturing
Product
Distribution

U.S. Steel

Giant Corporations
• By 1900, two-thirds of
all manufactured goods
were being produced by
giant corporations. Swift
and Armour dominated
meat packing, the Duke
family controlled
tobacco, and Andrew
Carnegie took over
every aspect of steel
production.

Swift

armour

1889 Duke Tobacco Advertisement

U. S. Steel Corporation
• When he retired in 1901,
he sold Carnegie Steel to
financier J. P. Morgan for
over $400 million dollars.
Morgan subsequently
reorganized the company
into the United States
Steel Corporation.

USS

Equal Protection of the Law
• In 1886, the Supreme
Court set a precedent
that has been
interpreted to mean that
corporations have the
same rights as living
persons under the
Fourteenth Amendment
to the Constitution.*
*

Before oral argument took place in
Santa Clara County v. Southern
Pacific Railroad Company, Chief
Justice Waite announced: "The court
does not wish to hear argument
on the question whether the provision in the Fourteenth Amendment to the Constitution,
which forbids a State to deny to any person within its jurisdiction the equal protection of
the laws, applies to these corporations. We are all of the opinion that it does."

Corporate Personhood
• From that point on, the 14th
Amendment, enacted to protect
rights of freed slaves, was used
routinely to grant corporations
constitutional "personhood."
Justices have since struck down
hundreds of local, state and
federal laws enacted to protect
people from corporate harm
based on this premise. Armed
with these "rights," corporations
increased control over
resources, jobs, commerce,
politicians, even judges

Citizens United
• In Citizens United v.
Federal Election
Commission (2010), the
Supreme Court ruled that
the government may not
ban political spending by
corporations in candidate
elections.

Federal Regulation of Trusts
• The Sherman
Antitrust Act of
1890 outlawed all
contracts,
combinations, or
conspiracies in
restraint of trade,
and all monopolies

Theodore Roosevelt: Trust Buster
• President Theodore
Roosevelt was
successful in cases
against the Northern
Securities Company,
the meatpacker trust,
the tobacco trust, and
the Standard Oil
Company.

The Transcontinental Railroad
• The first transcontinental
railroad was completed
when the rails of the Union
Pacific, reaching westward
from Omaha, Nebraska, and
those of the Central Pacific
Railroad, reaching eastward
from Sacramento, California
were joined, completing the
coast-to-coast connection.
The telegraph signaled a
waiting nation: "DONE!"

Joining of the Central and Pacific Railroads, May 10, 1869, Promontory, Utah

How Railroads Changed America
• Railroads changed American
life in many ways:










Travel took less time.
Mail arrived faster.
Railroads brought new jobs.
Local stores profited from train
traffic.
Sales were not limited to local
markets.
Unfamiliar items appeared locally.
Railroads moved settlers to new
locations.
Railroads tied the nation together.
Transportation charges decreased.

Problems of the Railroad Era
• Too many railroads
were built.
• Over-expansion
frequently ended in
bankruptcies.
• Failures spread
economic disaster to
workers, businesses,
and farmers.
• Railroads resorted to
discriminatory practices

Discriminatory Practices
• Rebate: a partial kick back of
a large company's shipping
costs in exchange for all of its
freight business.
• Long and Short Haul Abuses:
a short journey where no
competition existed cost
more than a long one where
two or more lines competed.
• Graft: officials bribed public
officials by giving out free
train passes.

Regulation of the Railroads
• The principle that states could
regulate commerce entirely local
in character was established by
Munn v. Illinois.
• The Interstate Commerce Act of
1887 applied to trains that crossed
state lines. It prohibited pooling,
rebates, discrimination in rates
and services, and required that all
charges should be just and
reasonable. It also provided for an
Interstate Commerce Commission
to supervise the administration of
the act.

Bibliography


Adapted from SparkNotes: SAT U.S. History: Industrial Revolution

Swift

USS

armour

1889 Duke Tobacco Advertisement