1. Industrialization & the Gilded Age
US History

2. The Gilded Age The term “Gilded Age” was first used
by Mark Twain and Charles Dudley Warner as the title of a book that satirized the ostentatious and conspicuous shows of wealth prominent in the U.S. from the Civil War until the turn of the century ( ). To “gild” something means to coat or paint with gold or a gold-colored substance; in effect, it takes something that may not be very valuable and makes it seem like it is.

3. Rise of American Industrialism
Before the Civil War
Small and independent firms
Limited size = limited potential (no specialization)
Workers didn’t see themselves as disadvantaged; no real sense of class consciousness
Resulting from the Civil War…
Standardized, mechanized mass production
De-skilling & long hours for the labor force
Urbanization (immigrants…)
Economies of Scale (Bigger = better)
More produced = cheaper to produce
Advantage: large firms w/ lots of $$$
All part of American capitalism…

4. Adam Smith “invented” the theory of capitalism back in 1776…
“Smith was among the first to make a clear and convincing case that when individuals follow their own self-interest, it automatically works to the benefit of society as a whole. As individual competitors pursue their own maximum profit, they are all thus forced to be more efficient. This results in cheaper goods in the long run. Free competition in all markets and with all goods and services is thus to be encouraged; government intervention serves only to make operations less efficient and is thus to be avoided. The same principles apply to international trade. There should be a minimum of government interference in the way of duties, quotas and tariffs. Smith’s is the classical argument in support of free trade.”
Gerald F. Cavanagh, American Business Values in Transition (Englewood Cliffs, New Jersey: Prentice-Hall, 1976), pp

5. Causes of American Industrial Growth
Western Mining
Immigration
Gov’t subsidies & tax concessions to RRs
Advances in communication
Corporation charters
Laissez Faire attitude of gov’t
Bessemer process
New sources of power
High tariffs
National Markets
Yankee ingenuity & entrepreneurship

6. Invention & Innovation
Spirit of Innovation
US issues 676,000+ patents
Inventors improve lives + receive fame & fortune
Steel is King
Replaces iron on RRs, skyscrapers, bridges…
Electricity → widespread
Telegraph & telephone, elevators
Machines ↑ production
Mass production
Assembly lines…
New York City Skyscraper, 1901

7. The Assembly Line Reading: The Assembly Line
Video: I Love Lucy, Assembly Line
Ford Automobile factory assembly line

8. Along with capitalism grew up the idea of Survival of the Fittest
“Herbert Spencer ( ) proposed a harsh “survival of the fittest” philosophy. The bright and able contribute most to society, and so are to be encouraged and rewarded. The poor, the weak, and the handicapped demand more than they contribute, and so should not be supported but rather allowed to die a natural death. Contact with harsh and demanding reality is a maturing experience that should not be diluted be well-intentioned but in reality destructive charities and handouts. If “natural” principles were followed, evolution and the survival of the fittest in the competition of human life would be the result. Spencer did not set out to examine any particular society and its values; rather, his critique was proposed as “culture free.” According to Spencer, it applied to all people for it was derived from basic, organic principles of growth and development. Spencer applied to society the same principles that Charles Darwin saw in biological life—hence the name, Social Darwinism.”
Cavanaugh, American Business Values in Transition, p.11

9. Social Darwinism
“The growth of a large business is merely survival of the fittest…. The American Beauty Rose can be produced in the splendor and fragrance which bring cheer to its beholder only by sacrificing the early buds which grow up around it. This is not an evil tendency in business. It is merely the working-out of a law of nature and a law of God.”
J.D. Rockefeller’s statement to his Sunday School class quoted in William H. Ghent, Our Benevolent Feudalism (New York: MacMillan, 1903), p.29

10. Big Businessmen consolidated their businesses
Monopoly (first Rockefeller tried this…)
Control of one industry by one firm
Ex: US West Communications/ATT
Trust (then Rockefeller invented this…)
Stockholders entrust stocks to one central organizer.
Acts as a monopoly but bypasses monopoly laws
Cartel (Rockefeller never did this)
Organization of all major players in the market
Control production in order to control prices
Ex: OPEC

11. Others, like Andrew Carnegie followed the “Gospel of Wealth”
“This then, is held to be the duty of the man of Wealth; First, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere agent and trustee for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves….”
Andrew Carnegie, 1913
Andrew Carnegie, “Wealth,” North American Review, CXLVIII (June 1889), pp

12. Other “Robber Barons” (or should we call them “Captains of Industry”?
John Jacob Astor (real estate, fur) – New York City
Jay Cooke (finance) – Philadelphia, Pennsylvania
Charles Crocker (railroads) - California
Daniel Drew (finance) – New York state
James Buchanan Duke (tobacco) – near Durham, North Carolina
James Fisk (finance) – New York state
Henry Morrison Flagler (RRs, oil, Standard Oil – NYC & Palm Beach
Henry Clay Frick (steel) – Pittsburgh and New York City
John Warne Gates (steel)
Jay Gould (railroads)
Edward Henry Harriman (railroads) – New York state[6]
Milton S. Hershey (Chocolate)
Mark Hopkins (railroads) - California
J. P. Morgan (banking, finance, steel, industrial consolidation) New York City
Henry B. Plant (railroads) – Florida
Leland Stanford (railroads) – Sacramento, California and San Francisco, California
Cornelius Vanderbilt (railroads)
Okay, shoot me. I got this list from Wikipedia.com; the graph is from Robber Barons, J. Bradford DeLong
University of California at Berkeley, January 1, 1998

13. Squalid housing tenements were referred to as "Dens of Death.“

14. The space allowed by law between the backs of tenements, from which tenants got their 'fresh' air and 'light', was barely 10 feet.  Then as now in New York, the higher the apartment, the higher the rent.  You must pay extra for 'air' and 'light'.  This often meant an 8 story walk-up.  Men, women and children died every summer by rolling off the rooftops in their sleep, where they took refuge in the sweltering heat.

15. New York City Tenement Population, 1870s & 1880s
Statistical Snapshot of New York City Tenement Population
Population of New York City, 1870
942,242
Population of tenements in New York City, 1869
468,492 (tenement = a house occupied by 4 or more families)
Population of New York City, 1880
1,206,299
Population of tenements in New York City, 1888
1,093,701 (tenement = a house occupied by 3 or more families)
Population of tenements in New York City under 5 years old, 1888
143,243

16. Government Response to the Consolidation of Business
1887 Interstate Commerce Act
Regulated RRs travelling between states
Outlawed monopolies (i.e. pooling & predatory rate cutting)
Sherman Anti-Trust Act of 1890
Poorly worded, weak and ineffective
Challenged by the Supreme Court
Groundwork for later ant-trust legislation
Hepburn Act, 1906
Fed government to set RR rates (based on ICC)

17. Organized Labor Responds
Labor Unions Emerge
2 million members by 1904
Knights of Labor
American Federation of Labor
Wobblies
Strikes and Violence
Railway workers strike
Pullman strike
Business Response to Labor
Gov’t regulated unions
Fear of Marxism, socialism & communism…
Labor unions demonstrating a strike in NYC, 1914

18. Marxism’s Main Tenets History = “haves” vs. “have nots”
French Revolution
1848 European Revolutions
Social/economic equality follows
civil/legal equality
Iron Law of Wages
The “end of history” is the creation of a classless society…
Workers must always be fighting the war
Bourgeoisie uses small wins to weaken the workers’ resolve
Individuals eventually lose themselves to their (social) class
Karl Marx

19. Content- The Communist Manifesto
“The worker is deprived of the wealth he has himself created! The state is a committee of bourgeoisie for the exploitation of the people! Religion is a drug to keep the workingman quietly dreaming upon imaginary heavenly rewards! The worker’s family, his wife and children, have been prostituted and brutalized by the bourgeoisie!”
“Let the ruling classes tremble at a communist revolution. The proletarians have nothing to lose but their chains. They have a world to win. Workingmen of all countries, unite!”
Can you see how people in the US might be wary of industrial laborers working together?