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

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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?

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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

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USA in the Gilded Age 1870-1900
Industrialization
Ranching, Mining, Farming
Reconstruction Rise of Jim Crow
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Ringing in a new age

• The 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)
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The Industrial North

• Experienced an industrial revolution, mass
  immigration, urbanization
• America became the worlds leader in railroad,
  steel, oil production

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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.
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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
  Conservative
• Socialist
  Capitalist
• Democrat
  Republican

Where do you fall ideologically?
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Inventors/Inventions

• Thomas Edison
• Perfected the light bulb in 1880, and motion
  picture
• Organized power plants
• Established first research lab
• Alexander Graham Bell
• Telephone (1876)
• Henry Ford
• Assembly Line
• George Eastman
• Camera (1885)
• Samuel Morse
• Telegraph (1837)
• Wright Brothers
• Airplane (1903)
• Christopher Sholes
• Typewriter (1867)
• Guglielmo Marconi
• Radio

Wright Brothers on 1903 Flight
Samuel Morse
19th Century Typewriter
Marconi
19th Century Camera
Alexander Graham Bell
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Presidents of the Gilded Age
U.S. Grant 1869-1877
Chester A. Arthur 1881-1885
Rutherford B. Hayes 1877-1881
James Garfield 1881
Grover Cleveland 1885-1889 and 1893-1897
Benjamin Harrison 1889-1893
William McKinley 1897-1901
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Scandals of the Grant Administration

• During Grants terms as president, material
  interests (money, industry) became more important
  than the ideology and civil rights of Lincolns
  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. governments economic policy was relaxed
  during these years, allowing Americans to take
  advantage of the laissez-faire economics in
  increased speculation, investment, and
  corruption.

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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 Grants
  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

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• 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 governments 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

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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 Railroads 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

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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 Rings
  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 nations credit
• Veto was the beginning of the Republican Party's
  belief in gold-backed dollar

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Whiskey Ring (1875)

• Employees in President Ulysses S. Grants
  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.

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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."
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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 govt favors
  (spoils) to their supporters.
• This would end with the assassination of Garfield

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Corruption 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
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Republicans Split

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

• Roscoe Conkling was also the leader of the
  Republican faction known as the Stalwarts
• stalwartsomeone/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

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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.
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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
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The Gild
The Boldt Castle
Breakers of the Vanderbilt Family
The Mount of Edith Wharton
Lockwood-Mathews Mansion
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Big Business

• Monopolies (trusts) Companies that controlled
  the majority of one industry
• Rockefellers
• Standard Oil
• Carnegies U.S. Steel
• Vanderbilts 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

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Rationalizing Big Business

• Social Darwinism
• Used Darwins 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

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Andrew Carnegie

• A Scottish immigrant, Andrew Carnegie helped
  build the American steel industryCarnegie 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

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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)

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The Steel Industrys Impact on America

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

View Steel Industry Video
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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

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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

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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

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

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Videos

• The Gilded Age
• Traits of a Titan from the History Channels
  The Men Who Built America
• Captains of Industry (biography.com)