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The Gilded Age _part I_ Ch. 17 _p. 519-537_ by pengtt


									   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 Age-period when corruption existed in
                      society but was overshadowed by the
                      wealth of the period

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

                   • Term comes from a book written about the
                     time period by Mark Twain and Charles
                     Dudley Warner in 1873: The Gilded 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: 1870-1900
Ranching, Mining, Farming

                            Reconstruction &
                            Rise of Jim Crow
               Ringing in a new age
 The West                                 The South
 • Farmers, ranchers, &                   • After the failure of
   miners closed the last of                Reconstruction in 1877,
   the frontier at the expense              the South entered the
   of Indians                               Jim Crow era
 • Mining was the 1st attraction to
   the West; Miners created
   “instant towns” in areas where
   gold or silver was discovered

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                Forced competitors out of
                             business by reducing wages thereby
           • Steel
                                 guaranteeing price control.
           • Oil
           • Electricity
           • Communication
        – The Industrialists or Robber Barons
           • William Vanderbilt (Railroads)
           • Jay Gould (Railroads)
           • Andrew Carnegie (Steel)
           • John D. Rockefeller (Oil)
           • Henry Ford (Automobiles)
     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       Where do you fall Conservative
         Socialist  ideologically?   Capitalist
         Democrat                   Republican
• Thomas Edison
   – Perfected the light bulb in
     1880, and motion picture
   – Organized power plants
   – Established first research lab             Samuel Morse
                                                                                Wright Brothers on
                                                                                1903 Flight
• Alexander Graham Bell
   – Telephone (1876)
• Henry Ford
   – Assembly Line
• George Eastman
   – Camera (1885)                                19th Century

• Samuel Morse                                    Typewriter                      Marconi

   – Telegraph (1837)
• Wright Brothers
   – Airplane (1903)
• Christopher Sholes
   – Typewriter (1867)
• Guglielmo Marconi                                              19th Century
   – Radio
                              Alexander Graham Bell
   Presidents of the Gilded Age

U.S. Grant       Rutherford B. Hayes               James Garfield            Chester A. Arthur
                     1877-1881                         1881                     1881-1885

     Grover Cleveland
   1885-1889 and 1893          Benjamin Harrison                William McKinley
          -1897                   1889-1893                        1897-1901
Scandals of the Grant Administration
• During Grant’s terms as         • The Gilded Age was
  president, material interests     enabled partly because
  (money, industry) became          most presidents during
  more important than the           this era, including Grant,
  ideology and civil rights of      were weak in relation to
  Lincoln’s time                    Congress and business

                                  • 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
             Jay Gould and James Fisk:
               The Gold Ring (1869)
• During the Civil War, Congress had        • One group of speculators, “the
  authorized the Treasury to issue            Gold Ring”, Jay Gould, a Wall
  greenback banknotes to pay huge war
  debt                                        Street trader and railroad magnate,
                                              and his partner Jim Fisk, recruited
• Unlike the rest of the currency,            Grant’s brother-in-law to get Grant
  greenbacks not backed by gold or            to appoint a new assistant
  silver (bimetallism)                        Treasurer of the United States,
   – Caused inflation and forced gold-        who agreed to tip the men off
      backed money out of circulation         when the government intended to
                                              sell gold.
• Public Credit Act (1869) guaranteed
  that bondholders would be repaid in
  gold, not greenbacks                      • Tried to convince Grant and the
                                              Treasury that high gold prices
• To strengthen the dollar, Treasury          would make the nation prosperous
  Secretary started selling Treasury gold
  each month and bought back high-
  interest greenbacks                       • Gould and Fisk began to quietly
   – Reduced deficit, deflated currency       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      • The sale of gold from the Treasury defeated
                                  Gould's plan, relieving the growing
• Investors scrambled to sell     economic tension and the economy resumed
  their holdings, and many of     its post-war recovery (until 1873)
  them bankrupted. This day
  was known as Black
  Friday.                       • Grant's suspected involvement also led his
   – Fisk and Gould escaped       presidency to be called the “Era of Good
      significant financial       Stealings”
                  Crédit Mobilier (1872)
•   Crédit Mobilier scandal involved the     •   In 1868, a Congressman involved in
    Union Pacific Railroad and the               CM sold shares of stock in Crédit
    fraudulent Crédit Mobilier of America        Mobilier to other congressmen, in
    construction company, which was to           addition to making cash bribes, to
    build the eastern portion of the First       keep quiet about the illegal business
    Transcontinental Railroad
                                             •   The muckraking paper The Sun
•   Crédit Mobilier, created by Thomas C.        exposed the scandal during the 1872
    Durant, a vice president of the Union        presidential campaign
    Pacific Railroad, was a deliberate
    attempt to defraud the U.S.
    Government and public of millions of

•   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
• Grant signed the Coinage Act (1873),
  making gold the only money                    Panic of 1873
  standard: dollars would be
  exchanged on demand for only gold.         • Response: Treasury bought $10 mill.
   – End of 1873: NY stock brokerage           in government bonds, injecting cash
      house fails to fully sell a bond on      into economy
      its own purchases in Northern
      Pacific Railway, and collapsed
                                             • Purchases stopped Wall Street panic,
                                               but a five-year industrial depression
• Collapse panicked Wall Street: other         started (Long Depression)
  banks and brokerages with railroad
  stocks and bonds also collapsed
                                             • To help the economy, Congress
   – 89 of the 364 U.S. railroads went         passed an inflationary policy called
      bankrupt.                                the Inflation Bill (1874).
   – New York Stock Exchange                    – Farmers/workingmen favored
      suspends trade 10 days                       addition of $64 million in
                                                   greenbacks to circulation
• Grant, traveled to NY to consult              – Eastern bankers opposed; would
  leading businessmen and bankers for              weaken the dollar
  advice on how to curb this panic,
  which became known as the Panic of
  1873                                       • Grant unexpectedly vetoed the bill
                                               because he thought it would destroy
                                               the nation’s credit
• Grant believed that, as with the Gold         – Veto was the beginning of the
  Ring’s collapse, the panic was just              Republican Party's belief in gold
  economic flux affecting only bankers and         -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

• 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     Roscoe Conkling as Mephistopheles
         economy                                                   (the devil) while Rutherford B. Hayes
                                                                   strolls off with the prize of the "Solid
•   Outgoing president, Republican Ulysses S. Grant, removed       South" depicted as a woman. The
    the soldiers from Florida. As president, Hayes removed the     caption quotes Goethe: "Unto that
    remaining troops in South Carolina and Louisiana. As soon      Power he doth belong Which only
    as the troops left, many white Republicans also left and the
                                                                   doeth Right while ever willing Wrong."
    "Redeemer" Democrats took control. African American
    historians sometimes call it "The Great Betrayal."
        Rise of the “spoilsmen”
• In the early 1870s,         • To political manipulators
  leadership of the             under the influence of
  Republican Party (mostly      state party bosses.
  in the North) passed from      – Roscoe Conkling (NY)
  reformers of the               – James Blaine (ME)
  antebellum/CW era…          • These “spoilsmen” were
   – Thaddeus Stevens (13th     deeply involved in
     Amendment, “radical”)      patronage, or giving jobs
   – Charles Sumner             and gov’t favors (spoils)
                                to their supporters.
                                 – This would end with the
                                   assassination of Garfield
     Corruption in Government
• Patronage or Spoils System-
  giving government jobs to
  loyal party workers or
  friends (popularized by
  Andrew Jackson)                 James Garfield
   – Were not qualified
   – Used position to get
      money from government
• President James Garfield is
  assassinated by disappointed
  office seeker denied a
  position in the spoils system

                                         The assassin, Charles Guiteau
                  Republicans Split
• Roscoe Conkling was also the      • James G. Blaine of Maine led
  leader of the Republican            the Republican faction known
  faction known as the                as “Half Breeds”
  “Stalwarts”                          – Nickname came from
                                         willingness to depart from
                                         Stalwart orthodoxy
• stalwart—
  someone/something who is
  stubborn or unchanging            • Many, including President
                                      Hayes, believed the patronage
                                      system contributed to the
• Believed and furthered the          scandals and graft during
  idea of the patronage system        Grant’s presidency
  and continued to believe that
  sectional appeals (“waving the
  bloody shirt”) were still valid   • Civil service reform became a
  even after gradual end of           popular cause among the Half
  Reconstruction in the South         Breeds
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
The Gild
                                The Boldt Castle

                                                            The Astor Family

   Breakers of the Vanderbilt Family

Lockwood-Mathews Mansion                           The Mount of Edith Wharton
                   “Big Business”
• Monopolies (trusts): Companies that controlled the
  majority of one industry:
 – Rockefeller’s
   Standard Oil
 – Carnegie’s
   U.S. Steel
 – Vanderbilt’s

• 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                     • Gospel of Wealth -belief that
   – Used Darwin’s theory to             the wealthy are “chosen by
     explain business, promoted by       God” to be successful and
     Harvard professor William           were therefore responsible to
     Graham Sumner                       look out for the well being of
   – Natural Selection, Survival of      those less fortunate. Many
     the Fittest                         Industrialist shared wealth
   – Laissez-faire -policy that US       although rarely through direct
     had followed since inception        welfare. Started museums, etc.
     to not allow govt. to interfere      – Captains of Industry: a
     with business                          positive idea that industrial
       • Govt. should not interfere         leaders worked hard and
• Sherman Anti-Trust Act of                 deserved their wealth
   – Law outlawing a combination
     of companies that restrained
     interstate trade or commerce;
     important to prevent
     monopolies. Not initially
     enforced properly.
  Andrew Carnegie
• A Scottish immigrant, Andrew
  Carnegie helped build the American
  steel industry—Carnegie Steel Co.
  (originally started as an ironworks
• 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       Carnegie was unusual because he
  mankind." (Gospel of Wealth)               preached for the rights of laborers
    –   Carnegie Hall, NYC                   to unionize and to protect their
    –   Carnegie-Mellon University           jobs.
    –   Over 2,500 public libraries
                                             • However, Carnegie's steel
    –   $350 million by the time he died
                                             workers were often pushed to long
                                             hours and low wages--
                                             Homestead Strike of 1892
                Building a monopoly
         (as described by Andrew Carnegie)
• Vertical Integration
   – A process in which a
     company buys out all of
     the suppliers. (Ex. coal and
     iron mines, ore freighters,
     RR lines)
• Horizontal Consolidation
   -A process in which a
     company buys out or
     merges with all competing
     companies (JP Morgan
     bought out Carnegie steel
     and other companies)
    The Steel Industry’s Impact on
• Bessemer Process-
  developed around 1850
  injected air into molten
  iron to remove impurities
  and make steel-a lighter,
  more flexible, rust
  resistant metal
• Steel is used in railroads,
  farm equipment, canned
• Engineers use steel to
  create skyscrapers and
  longer bridges (Brooklyn
  Bridge)                       View Steel Industry
      J.P. Morgan
• Industrialist and
  financier who started
  U.S. Steel from
  Carnegie Steel and
  other companies
• Became 1st billion-
  dollar corporation
• Bailed out the U.S.
  economy on more
  than 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
• 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
   – 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
•   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
•   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,
"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.         • 1,093 US patents in his name
  He developed many devices that greatly        • Inventions established major new
  influenced life around the world,               industries world-wide:
  including:                                       – electric light/power, power
   – Phonograph                                       utilities
   – motion picture camera                         – sound recording, motion
   – Long-lasting electric light bulb. one of         pictures
      the first inventors to apply the             – Telecommunications: stock
      principles of mass production and               ticker, mechanical vote
      large-scale teamwork to the process of          recorder, battery for an electric
      invention, and because of that, he is           car, recorded music device
      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
    – Later electrical genius Nicola Tesla
      worked for Edison and is (unofficially)
      credited with many of his inventions
• The Gilded Age
• “Traits of a Titan” from the History
  Channel’s The Men Who Built America
• Captains of Industry (

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