Re-thinking History

"Education is our passport to the future, for tomorrow belongs to the people who prepare for it today." Malcolm X "Go confidently in the direction of your dreams." Henry David Thoreau

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Friday, September 19, 2008

The Gilded Age, 1870-1895

Information for this blog is taken from American Promise, (2009), which is on reserve at the library. As language is important to the study of history, take into consideration the introduction of the term 'slum' to the American vocabulary during this era.

In addition, as this issue emerged during my lecture this past semester, the term 'third world' used during the Cold War, (but mentioned during the lecture) referred to nations that did not align themselves with the West (NATO) or with Russia and communism. These countries were born as colonies of powerful nations, exploited by western imperialists, who left these countries to fend for themselves and face the challenges of state and nation building on their own. Politically, this term emerged from the 1955 Bandung Conference, which resulted in the Nonaligned Movement. However, it is important to note that leaders of underdeveloped countries have contributed to the demise of their citizens, as political and economic corruption was prevalent in Africa and Latin America during the decolonization period. We need to be careful as scholars not to be careless with terms that might have a different meaning that often includes the experiences and emotions of citizens in the global community.

For additional insight into this issue, please read A. Escobar, Encountering Development: The Making and Unmaking of the Third World. (1995); Chalmers Johnson, Blowback: The Costs and Consequences of American Empire, (2004); Michael J. Twomey, A Century of Foreign Investment in the Third World, (2000); Frantz Fanon, Richard Philcox, Jean-Paul Sartre, The Wretched of the Earth: Frantz Fanon (Translated by Richard Philcox), (2005) Historian Peter Burnell has suggested that the term 'third world' has outlived its usefulness, and with the end of the Cold War, the term has lost some of its clarity. Political theorist Hannah Arendt has suggested that "the Third World is not a reality but an ideology."

  • Mark Twain and Charles Dudley Warner, The Gilded Age, (1873) Twain left no one unscathed in his critique of this 'get-rich-quick' era; politicians, lobbyists, Wall Street financiers, small-town boosters, miners and the general public were discussed in this satire. Despite the glitter of the Gilded Age, as Twain’s titled implied, a darker side of this era was visible; the corrupt partnership of business and politics in the administration of Ulysses S. Grant, (1869-1877).
  • The political corruption characterized the administration of Grant existed in the 1880s, as the spoils system-(awarding jobs for political purposes)-remained the practice in party politics at all levels of government in the Gilded Age.
  • Party factionalism plagued the Republican Party. Stalwarts: (Senator Roscoe Conklin: supporters of Grant and the spoils system); James G. Blaine, Maine: (Half-Breeds: charges of corruption) and Mugwumps, who straddled the fence and would jump ship in 1884, in favor of Democratic presidential nominee, Grover Cleveland, the reform governor of New York
  • Republican Rutherford B. Hayes tried to find a middle ground between supporters of the spoils system and those who intended to reform it.
  • The Scandal of 1884: Was considered "the most vilest campaign ever waged," as Cleveland's hometown newspaper, Buffalo Telegram, printed that Cleveland had fathered an illegitimate child in an affair with a local widow. Cleveland, a bachelor took responsibility for this child, to save the reputation of his married law partner, who may have actually fathered this child. A public rallies, supporters of James G. Blaine taunted Cleveland. However, Blaine overlooked an anti-Catholic slur directed towards Catholic voters. This oversight offended Irish American voters, whom Blaine had counted on to leave the Democratic Party and support Blaine due to his Irish background.
  • In addition, Twain argued that Congress was for "sale to the highest bidder and the intimacy between government and business meant that politicians, from senators, to representatives and even members of the executive branch were on the payroll of business interests." As one journalist stated, “Standard Oil had done everything to the Pennsylvania legislature expect to refine it,” as the “oil combination,” owned two state senators. Nelson Aldrich, a powerful Republican Rhode Island senator, whose daughter married John D. Rockefeller, Jr., did not object to being called “senator from Standard Oil.”
  • Twain’s tale described a tale in an age when the promise of wealth led as many to ruin as to riches. In the Gilded Age, fortunes were made and lost, often with devastating results, as Wall Street panics, like those in 1873 & 1893 periodically interrupted the good times and plunged the country into economic depression. Small business’s suffered and families starved, as big business and government made deals that protected only the ‘strongest’ of the nation while leaving the rest of the country in hardship.
  • President Cleveland second term in office was ushered in by the Panic of 1893, the worst depression the country had yet seen. However, it was this distinct relationship between businessmen, such as J.P. Morgan and the President Cleveland that would save the gold standard. Individuals and investors had traded banknotes for gold during the Panic of 1893. The Treasury’s gold reserves had dipped extremely low and many were worried that obligations would not be met. Morgan and a group of bankers offered to purchase gold abroad and restock the Treasury. Although Cleveland’s controversial agreement with Morgan saved the gold standard, the winter following the economic depression was one of the worst time in American history. A firm believer in limited government, Cleveland insisted that nothing could be done to help with unemployment, extreme freezing temperatures and hunger. Cleveland believed that the act threatened economic confidence. Yet, it was Cleveland’s great faith in the gold standard that prolonged the depression, favored creditors over debtors and caused immense hardship for millions of Americans.
  • The Gilded Age witnessed the expansion of the scale and scope of American industry. Old industries like iron transformed into modern industries, such as U.S. Steel. The expansion of the nation’s rail system in the decades following the Civil War played a vital role in the transformation of the American economy. New rail lines created a national market and fueled a new consumer culture that enabled businesses to expand from a regional to a nationwide scale.

Railroads: America's First Big Business

  • The railroads became America’s first business. The first transcontinental railroad was completed in 1869 when the tracks of the Union Pacific and Central Pacific railroads came together at Promontory Point, Utah, linking new markets in the West to the nation’s economy. (Big Four=Leland Stanford, President. Collis P. Huntington, VP, Charles Crocker, Construction Supervisor; Mark Hopkins, Treasurer)

  • Jay Gould, a notorious speculator concentrated on buying and selling railroad stock and was not interested in transporting customers or operation of the railroads. Gould operated in the stock market like a shark, looking for vulnerable railroads, buying enough stock to take control and threatening to undercut his competitors, until they bought him out at a high profit.

  • The Pennsylvania Railroad by the 187s boasted a payroll of more than 55,000 workers and a capital of more than $400 million. This railroad company was responsible for increased industrial development in the South.

  • The Republican Party worked closely with the railroad business interests, subsidizing the transcontinental railroad system with land grants of a 100 million acres and $64 million in tax incentives and direct aid.

  • On the eastern seaboard, railroad companies fiercely competed for business and several owners established "pool" which enabled the railroads to set rates and divide up territory. However, angry farmers in the Midwest, who despised unfair shipping practices of the railroads organized to fight for railroad legislation.

  • The Patrons of Husbandry, or The Grange, founded in 1867 became an independent political movement and elected Grange members to state offices, which made it possible for several Midwestern states to pass legislation that regulated railroads.

  • 1877: Munn v. Illinois; The Supreme Court ruled in favor of state regulation but became more conservative in the 1880s and 1890s, interpreting the Constitution to protect business from taxation, regulation, labor organization and anti-trust legislation.

  • 1886: Santa Clara County v. Southern Pacific Railroad; Court struck down state laws regulating railroad rates and deemed labor unions unconstitutional.

  • 1886: Wabash v. Illinois; Court reversed its previous ruling (Santa Clara County v. Southern Pacific Railroad) and stated that because railroads crossed state boundaries, they fell outside state jurisdiction.

  • Interstate Commerce Act (1887) was passed during Grover Cleveland's first administration (1885-1889) and established the nation's first federal regulatory agency, the Interstate Commerce Commission, to oversee the railroad industry.

  • Sherman Antitrust Act (1890); This act outlawed "pools" and "trust," ruling that business could no longer enter into agreements to restrict competition.

Andrew Carnegie, Steel and Vertical Integration

  • Carnegie, a Scottish immigrant, who was a millionaire by thirty years of age, capitalized from Henry Bessemer's development of producing iron cheaper from pig iron and became one of the first to support "King Steel."
  • Although he generously gave away nearly $300 million to public libraries, Carnegie made inhuman demands on his labor force; demanding 12 hour days at 6 days a week with low pay in dangerous working conditions and pitted managers against one another.
  • Pioneered as system of "vertical integration," which meant, "that there was never a price, profit, or royalty paid to an outsider." All aspects of the business, from mining ore, to its transport to the Great Lakes to the production of steel were controlled by Carnegie.
  • The Gospel of Wealth, essay written by Carnegie defending the concentration of wealth during the Gilded Age and support for philanthropy.
  • By 1900, steel was used to support elevated trains in New York and Chicago; supported the first steel bridge to span the Mississippi River and was instrumental is assisting the U.S. Navy to become a powerful force during this era.

John D. Rockefeller, Standard Oil & the Trust

  • Discovery of oil in Pennsylvania by Edwin Drake in 1859; called black gold.
  • Start up costs for oil refineries was low.
  • Rockefeller founded Standard Oil Company in 1870 and eventually controlled 9/10 of the oil-refining business. Rockefeller used 'horizontal integration,' and controlled only the oil refining business, in contrast to Carnegie, who controlled all aspects of his steel empire, from the ground up.
  • Prior to the automobile and gasoline, crude oil was refined into lubricating oil for machinery and kerosene for lamps, the major source of lightening in the 19th century prior to the invention of gas lamps or electric lighting.
  • Rockefeller demanded secret rebates from the railroads in exchange for his steady business, as these rebates allowed Rockefeller to drive out competitors through predatory pricing.
  • In 1882, Rockefeller pioneered a new form of corporate structure, the "trust", which allowed trustees to coordinate policy among refineries by swapping stock, which allowed Rockefeller to obtain a virtual monopoly on the oil-refining business. The Standard Oil "trust" laid the foundation for trusts in sugar, whiskey and matches.
  • In 1888, New York State ordered an inquiry into the holdings of Standard Oil.
  • As the federal government responded to public pressure to outlaw the trust in 1890, with the Sherman Antitrust Act, Standard Oil changed course and reorganized as a holding company. The holding company brought competing companies under one central administration without violating anti-trust laws.
  • The Sherman Antitrust Act proved to be weak against Standard Oil and in 1895, the Supreme Court ruled in, United States v. E.C. Knight Company, that 'manufacture' did not constitute 'trade.' This ruling allowed companies, such as the American Sugar Refining Company to control 98% of the production of sugar.
  • Ida B. Tarbell, "History of Standard Oil", McClure's Magazine, investigation into the methods Rockefeller used to take over the oil industry; her articles largely shaped public opinion of Rockefeller. Her father's smaller refinery in Pennsylvania was bought out by Standard Oil.

Mass Marketing, Advertising and Consumer Culture

  • By the 1880s, a national market for consumer goods was made possible by the railroad. Manufacturers used methods of mass production and mass distribution to create the first large-scale consumer business in the U.S.
  • Gustavus Swift: meatpacking vertically integrated
  • Henry John Heinz: efficient methods of canning & bottling; network of sales offices and created a buying and storing organization with local farmers.
  • Ladies Home Journal: nearly 1/2 million subscribers in the 1880s.
  • Advertisements for Jello-O, Hershey chocolate bars, electric lights and telephone

J.P. Morgan and Finance Capitalism

  • Business's during remaining decades of the Gilded Age, replaced partnerships and sole proprietorship's with corporate structure.
  • Finance capitalism: Investment sponsored by banks and bankers.
  • Bankers brought order and reorganized major industries following the panic of 1893.
  • Morgan acted as a power broker and reorganized the railroads by using his own capital in the 1890s and created industrial giants such as General Electric and U.S. Steel.
  • Directly challenged Carnegie in 1898 and paid Carnegie's asking price of $480 million (9.6 billion today) to acquire Carnegie Steel, which "signaled the passing of one age and the arrival of another." Carnegie represented "the old entrepreneurial order, while Morgan represented the new corporate world."
  • Morgan formed United States Steel in 1901 and became the largest corporation in the world, with a capital of 1.4 billion.

The City and Labor During the Gilded Age

  • Brooklyn Bridge, fourteen years to build and cost 30 men their lives; caissons
  • Chicago gave birth to the modern skyscraper.
  • Between 1870 & 1900, eleven million people moved into the cities. Industrial centers, such as Pittsburgh, Chicago, New York and Cleveland attracted workers.
  • By the 1870s, the world was conceptualized as "three interconnected geographic regions."
  • Industrial Core: In the U.S., St. Louis, Chicago, Richmond and Louisville. Outside the U.S., Toronto, Glasgow, Berlin, Warsaw, Barcelona, Milan.
  • Agricultural Core: Canada, Russia, Poland, much of Scandinavia, southern Spain, the U.S. South and U.S. western plains, central and northern Mexico, hinterlands of Northern China and southern islands of Japan.
  • Underdeveloped Countries: Caribbean, Central and South America, the Middle East, Africa, India and most of Asia. Ties between this part of the world and the industrial core were cemented by the late 19th century. Occupations included working on plantations and railroads, mines and ports. This was a huge network of labor managed by foreign powers, "that staked out spheres of influence and colonies in this vast region."
  • Before 1880, the majority of immigrants came from North and Western parts of Europe and included German, Irish, English and Scandinavian immigrants.
  • After 1880, this pattern shift as immigrants came from South and Eastern parts of Europe and included Italians, Hungarians, Eastern European Jews, escaping the pogroms, Turks, Armenians, Poles, Russians and Slavic immigrants.
  • Great Fire of 1871 destroyed three square miles and left 18 thousand people homeless.
  • 1882: Chinese Exclusion Act and Angel Island (1910-detention center for Asian immigrants)
  • Race as a social construct: Apparent with the testimony of an Irish dockworkers who boasted "that he hired only white men to load cargo, and excluded Poles and Italians."
  • Women often came to U.S. as mothers, wives and daughters, except for Irish women, who were single-wage laborers. Women's occupational role shifted during this time, from domestic, to factory worker to office workers and sales clerks. Women workers were often called 'typewriters' and perceived as indistinguishable from the machines they operated.
  • The Great Railroad Strike of 1877: The Baltimore and Ohio Railroad declared a 10% increase for stockholders and a 10% decreased for railroad workers. ($70 to $30 a day)
  • Brakemen in Virginia went on strike and this action touched off a nationwide uprising that spread rapidly across the country. As the strike spread, violence erupted, which lead to property damage and deaths. Governors in nine states defined the strike as an "insurrection" and called for federal troops to protect scab crews and maintain peace.
  • The Knights of Labor: first mass organization of America's working class; 1878 launched a membership drive to organize workers regardless of skill, sex, race, or nationality. Advocated worker's democracy that embraced public ownership of railroads, an income tax, equal pay for women workers and abolition of child labor.
  • American Federation of Labor: Samuel Gompers desired to organize skilled workers, such as machinists and locomotive engineers and use strikes to obtain objectives such as higher pay and better working conditions.
  • Chicago May 1 1886: Protest the 12 hour work day and support the eight-hour day. 45,000 workers paraded down Michigan Avenue. However, two days later, strikers attacked scabs outside the McCormick reaper works and police opened fire, kiling or injuring six men. Radicals organized a rally for May 4th in Haymarkey Square to protest the police action. However, when police ordered the crowd to disperse, a incidinary device was thrown into the police ranks. Stunned at first, the police injured more than thirty citizens, killed a number of others and lost seven of their own during this melee. The bomb blast at Haymarket delivered a blow to the eight-hour day movement and to the Knights of Labor.
  • Tammany Hall, William Marcy Tweed, Democratic Party machine (a political party oragnized at the grass roots level and its purpose was to win elections and reward its folllowers often with jobs on city's payroll. At the bottom of the machine were district captains, who in return for votes, provided services for their constituents, such as obtaining coal to housing a evicted family. At the top were powerful ward bvosses who distrivuted lucrative franchises for subways and streetcars. "They formed a shadow government, more powerful than the city's elected officials. The cost of Tweed's rule was enormous, as the New York City courthouse, with a budget of $250,000 cost taxpayers $1.4 million. This sum represented bribery, kickbacks and the "greasing of many palms."
  • Growing class divisions emerged in patterns of lesiure during the Gilded Age. The poor and working class relaxed in dance halls, music house, ball parks and amusement arcades. Saloons were central to worker's lives, and served informally as political headquarters, employment agencies and union halls.
  • Central Park, architect Fredrick Law Olmstead and partner Calvert Vaux 1873
  • Coney Island, 1890