The Gilded Age1865-1900

“covered in gold” - beneath the gold is a decaying structure

An era of growth and political scandal

US transitioning to a world power

Times of boom and bust…

Manufacturing for war/Let down after the war

Expansion westward Need for new inventions Depression (deflation) Crop/Cattle prices fall dramatically

Communism vs. Capitalism

Communism – mid 1800’s

Karl Marx – German philosopher

Community provides for all regardless of social rank

Capitalism Entrepreneurs –

motivated by wealth and wanting to better their lives

Self-reliant individualism – harder I work the more I will get

Horatio Alger Jr. – writer, “rags to riches” stories

Social Darwinism

Herbert Spencer – adapted Darwin’s biological theory to societal issues

“survival of the fittest” “fittest” people would rise to positions

of wealth and power “unfit” would fail

Way to organize business ownership

Has existed since colonial times

Sells shares of stock to raise money

Profits paid out in the form of dividends

Includes a board of trustees

Group of corporations run as a single enterprise

Reduces competition in the industry by eliminating inefficient business practices

Exclusive control of an industry

Little to no competition

Control over price and quality of product

“let people do as they choose”

No government intervention

Also known as free enterprise

Private ownership based on free market competition (sets price)

Big Business in America

Who are the rising stars in America’s second industrial revolution?

Robber Barons

Businessman that dominated a particular industry

Gained enormous wealth Practiced anti-competitive business

practices/strategies Gain market share Eliminate competition Set prices and standards as you wish

A. Carnegie, J.D. Rockefeller, C. Vanderbilt, H. Ford

Andrew Carnegie

Steel Carnegie Steel Company

Entrepreneur (risk-taking business people)

Little knowledge of steel industry but outstanding at running a company

How did he gain an edge over his competition? Lower production costs

Economies of scale Vertical integration

Owning all steps used in turning raw materials into finished goods

Iron mines, railroads, steamship lines, warehouses

Andrew Carnegie

Retired the richest man alive (at the time)

Philanthropy Gospel of Wealth

It is the obligation/duty of the richto advance society

Henry Bessemer/ Bessemer Process

Age of Iron Cheap to make Technology available and reliable Rust Weak

Age of Steel William Kelly (US) and Henry Bessemer (UK)

Steel Produce it cheaper Stronger material

Allowed for the advancement of railroads and skyscrapers (both significant in the growth of cities)

Bessemer Process (1855); low cost method of converting iron to steel Process had existed for more than 100 years before

Bessemer; however, never on a commercial scale until the mid 1800’s

Products Nails Screws Needles Girders Rail ties

Steel mills sprang up throughout the country Pittsburgh; steel-making capital

Good transportation (rivers) Coal mines Polluted waters Grey skies

Henry Bessemer/ Bessemer Process

John D. Rockefeller

Oil Refining Standard Oil Company Strategy to eliminate competition Vertical Integration Horizontal Integration

Wealthiest man in American history 1/65 of US GDP

Cornelius Vanderbilt Railroads

As water travel slowed investment in railroads began across the country

Controlled lines within some of the largest US cities New York, Chicago, Cleveland

Began connecting smaller lines to urban areas Efficiency (lower costs)

1877 – controlled 4,500 miles of rail Personal wealth estimated at $100 million

Railroad standardization & consolidation

Civil War railroads Track width Length – Where does it take you? Location

US expansion Demand for movement of goods and people

increased Standardization and consolidation lowered costs

Standardization – tracks universal width Consolidation – merger of smaller companies into

one larger, more efficient company Did not have to change trains/tracks/companies

George Westinghouse

Railroad Westinghouse Air Brake Company

Compressed air brake As the railroad industry grew…

The industry was looking for improvements

Long time before Westinghouse’s air brake was accepted/embraced

George Pullman

Railroad Designed and manufactured comfort passenger rail car Sleeping, dining, luxurious cars

Company towns Inspired by poor urban conditions Promote education, healthy living and peace among workers

Pullman controlled every aspect of daily life, bred dissatisfaction

J.P. Morgan

Banker and financier Lender of money to corporations Stockholder – bought his way onto many

Board of Director’s seats Making decisions for the company (benefiting

him) Eliminating competition Increasing profits

General Electric United States Steel Company

First business worth more than $1 billion

J.P. Morgan vs. Uncle SamWho dominates?

Sherman Antitrust Act - 1890

Angered by anti-competitive business strategies (monopolies, trusts, consolidation) the American public (small businesses) sought reform in free capitalism system

Intentionally creating a monopoly or suppressing trade or controlling supply was made illegal

Proved to be weak and ineffective legislation Those in power often benefited from large

corporations, trusts and monopolies (turn the other cheek)