1. Gilded Age

2. Definition of Gilded Age

4. Essential Question
Industrialization increased the standard of living and the opportunities of most Americans, but at what cost?

5. Causes of Rapid Industrialization
Steam Revolution of the 1830s-1850s.
The Railroad fueled the growing US economy:
First big business in the US.
A magnet for financial investment.
The key to opening the West.
Aided the development of other industries.

6. Causes of Rapid Industrialization
Technological innovations.
Bessemer and open hearth process
Refrigerated cars
Edison
“Wizard of Menlo Park”
light bulb, phonograph, motion pictures.

7. Industrial Revolution
First we need a new economic system!
Capitalism- time for a handout
Now let’s discuss the concept of capitalism

8. Laissez faire supports our economic system of capitalism
An economic belief supported by the U.S. that opposes the government regulating business.
In the late 1800’s businesses operated without much government regulation. This is known as laissez-faire economics.
Laissez-faire means ‘allow to be’ in French or the government stays out of you business.
Laissez faire supports our economic system of capitalism

9. Laissez Faire Federal Govt.
From  Govt. did very little domestically.
Main duties of the federal govt.:
Deliver the mail.
Maintain a national military.
Collect taxes & tariffs.
Conduct a foreign policy.
Exception  administer the annual Civil War veterans’ pension.

10. Economic system characterized by private property ownership
CAPITALISM
Economic system characterized by private property ownership
Individuals and companies compete for their own economic gain (Profit)
Capitalists determine the prices of goods and services.
Production and distribution are privately or corporately owned.
Reinvestment of profits
Supports laissez faire

11. Economic system based on cooperation rather than competition
SOCIALISM
Economic system based on cooperation rather than competition
Believes in government ownership of business and capital
Government controls production and distribution of goods.
Opposite of laissez faire and capitalism

12. Other Look at Economic Systems
Capitalism- You own a goat, your neighbor doesn’t so you sell goat’s milk to him. The government wants to make sure everything is “fair” so it provides a system of weights and measures and a currency to facilitate the transactions
Socialism- You own a goat, your neighbor doesn’t. The government wants to make sure everything is “fair” so it taxes you 60% of your goat’s production and gives some of that to your neighbor.
Communism- You own a goat, your neighbor doesn’t. The government wants to make sure everything is “fair” and equal so it shoots your goat.

13. Between 1800 to 1900, US Govt. issued 500,000 patents
KEY INVENTIONS
BETWEEN 1860 TO 1900
Elevator
Bessemer Process
Sewing Machine
Dynamite
Typewriter
Levi Blue Jeans/Basketball
Telephone
Phonograph
Light bulb and cash register
Zipper
Gasoline automobile and skyscraper
New York City---first city to have electricity--1890
Radio
Subway
X-ray
Between 1800 to 1900, US Govt. issued 500,000 patents

14. Thomas Alva Edison
“Wizard of Menlo Park”

15. The Light Bulb

16. The Phonograph (1877)

17. The Ediphone or Dictaphone

18. The Motion Picture Camera

19. Alexander Graham Bell
Telephone (1876)

20. Alternate Current
George Westinghouse

21. Alternate Current
Westinghouse Lamp ad

22. U. S. Patents Granted 1790s  276 patents issued.

23. Social Darwinism British economist. Advocate of laissez-faire.
Adapted Darwin’s ideas from the “Origin of Species” to humans.
Notion of “Survival of the Fittest.”
Herbert Spencer

24. Social Darwinism in America
Individuals must have absolute freedom to struggle, succeed or fail.
Therefore, state intervention to reward society and the economy is futile!
William Graham Sumner Folkways (1906)

25. The ‘Robber Barons’ of the Past

26. Rebates: discount or refund on “freight charges”
ROBBER BARRONS
robber
Extortion: Forced against your will
Rebates: discount or refund on “freight charges”
Drawbacks / Kickbacks: Standard Oil gave certain railroads all its shipping business if it agreed to charge Standard Oil 25% to 50% less than its competitors
Buyouts: Larger corporations forced smaller businesses to sell out
Congress was “bought out” by the monopolies
Spies: Stealing your competitor's ideas
Small businesses complained “monopolies” eliminated fair competition

27. “Captains of Industry”
CAPTAINS OF INDUSTRY OR ROBBER BARONS
“Robber Barons”
Business leaders built their fortunes by stealing from the public.
They drained the country of its natural resources.
They persuaded public officials to interpret laws in their favor.
They ruthlessly drove their competitors to ruin.
They paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.
“Captains of Industry”
The business leaders served their nation in a positive way.
They increased the supply of goods by building factories.
They raised productivity and expanded markets.
They created jobs that enabled many Americans to buy new goods and raise their standard of living.
They also created museums, libraries, and universities, many of which still serve the public today.

28. Cornelius [“Commodore”] Vanderbilt
Can’t I do what I want with my money?

29. CONRELIUS VANDERBILT Formed a steamship company in 1829
Dominated shipping along the Atlantic
1849 established steamship that carried people from New York to San Francisco in Gold Rush days
Leading U.S. steamship owner, nicknamed “The Commodore”
Gained control of the Hudson River Railroad

30. CONRELIUS VANDERBILT
After Civil War Vanderbilt bought most railroad lines from New York to Chicago
1877, controlled 4,500 miles of railroads
Worth over $100 million
Philanthropist--donated $1 million to Vanderbilt University

31. William Vanderbilt The public be damned!
What do I care about the law? H’aint I got the power?

32. BESSEMER PROCESS New Uses for Steel
In 1856 Henry Bessemer devised a way of converting iron into steel on a large scale.
His invention involved blowing air through molten iron in a converter, or furnace, in order to burn off the excess carbon.
His invention revolutionized the Industrial Age.
New Uses for Steel
Steel used in railroads, barbed wire, farm machines
Changes construction: Brooklyn Bridge; steel-framed skyscrapers

33. Andrew Carnegie

34. Andrew Carnegie:
-Background
-Steel and Pittsburg
-Railroads
-Carnegie Steel- Limited Partnership
-Secret to his success- Vertical Integration
-bought out by J.P. Morgan

35. Minister of his surplus of wealth (public good)

36. The Gospel of Wealth: Religion in the Era of Industrialization
Wealth no longer looked upon as bad.
Viewed as a sign of God’s approval.
Christian duty to accumulate wealth.
Should not help the poor.
Russell H. Conwell

37. PHILANTHROPY
The effort of an individual or organization to increase the well-being of humankind, as by charitable aid or donations.

38. Philanthropist Gave millions to colleges and libraries.
ANDREW CARNEGIE
Philanthropist
Gave millions to colleges and libraries.
It was the sacred duty of the wealthy to give back to society who has given to him.
Stressed education as a means to better one’s self.
Carnegie Hall
Cartoon Carnegie

39. GOSPEL OF WEALTH
Gospel of Wealth

40. “On Wealth” The Anglo-Saxon race is superior.
“Gospel of Wealth” (1901).
Inequality is inevitable and good.
Wealthy should act as “trustees” for their “poorer brethren.”
Andrew Carnegie

41. J.D. Rockefeller

42. Background
Oil
Growth of refining and exporting (Kerosene)
Excelsior Refinery (1863)
Standard Oil (1870)
Secrets to his success
Horizontal Integration- Monopoly
- Business relationship with the RR?
-Trust- What is it?
Sherman Anti-Trust Act of 1890
-Retires(1897)
Well-being of mankind

43. Was called “Rock a Fellow” by many
JOHN ROCKEFELLER
Controlled the railroad by forcing them to pay him rebates because of the volume of business he gave them.
Was called “Rock a Fellow” by many
Ruthless business man: “Pay no man a profit”
Cartoon Rockefeller

44. Rockefeller/Control Govt
Rockefeller was so wealthy, he dictated to the U.S. Government to protect big business---- laissez faire
Rockefeller/Control Govt

45. Rockefeller would be hated by many because he had too much control over the oil industry and the government as viewed by the common man-----Some believed he was corrupt because he took away the right to compete---free enterprise

46. Big business, monopolies controlled Congress through bribery
Big business, monopolies controlled Congress through bribery. This is corruption
Trusts control govt

47. MONOPOLIES AND TRUSTS

48. VERTICAL AND HORIZONTAL INTEGRATION
Vertical Integration You control all phases of production from the raw material to the finished product
Coke fields
Iron ore deposits
Steel mills
purchased by Carnegie
Coke fields
Iron ore deposits
Steel mills
Ships
Railroads
purchased by Carnegie
Coke fields
Iron ore deposits
Steel mills
Ships
purchased by Carnegie
Coke fields
Iron ore deposits
purchased by Carnegie
Coke fields
purchased by Carnegie
Horizontal Integration Buy out your competition until you have control of a single area of industry
MONOPOLY

50. Regulating the Trusts 1877  Munn. v. IL
1886  Wabash, St. Louis & Pacific Railroad Company v. IL
1890  Sherman Antitrust Act
in “restraint of trade”
“rule of reason” loophole
1895  US v. E. C. Knight Co.