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An American "Gilded Age"

The final decades of the 1800s in the US were to be known as a gilded age. It was a product of an economic surge that came with growth of the railroads, which benefitted the steel industry, which benefitted from high tariffs. There was also the factory system and the growth of farming, ranching, and mining. Hay and feed for horses remained a big part of the economy.

There was blacksmithing, saddle-making, harness-making and the construction of horse-drawn wagons, carriages, buggies and sleighs. The manufacture of ready-made clothing boomed, as did the lumber business. For the thirsty there were the breweries in St. Louis and Milwaukee, and Elgin Illinois had its watch industry. In the 1880s, those working in cities rose to 40 or 45 percent of the nation's workforce. Chicago was manufacturing farm machinery and railroad equipment. Steel production was booming in Chicago and Pittsburgh, helped by the US government buying steel ships to strengthen its navy.

Coal and iron deposits in the southern Appalachian mountains gave rise to steel production in the city of Birmingham, Alabama. The South in the 1880s was abandoning its dependence on cotton and beginning to diversify, including the growing of fruit and vegetables and developing its timber industry.

With the economy governed by mass behavior and everybody pursuing what he thought was his interest, investors competing with other investors, sometimes moved by immodesty and excessive exuberance or by inflated expectations. There were investment bubbles, declining profits and panics. There were the recessions of 1869-70, the panic of 1873 followed by five years of recession or depression (call it what you will). There was the recession of 1882-85, 1890-91, and the panic of 1893-97.

Meanwhile, manufacturing had been concentrating into fewer hands. Successful capitalists were extending their ownership of operations. Small businesses thought they were losing their ability to compete, and they and some academics didn't like the trend toward consolidations and monopolies. In the 1880s, states began outlawing what was called the "trusts." A monopolistic corporation chartered in one state could move to another state, but in 1890 the Sherman Antitrust Act became law, based on the power of Congress to regulate interstate commerce. Trusts were outlawed on the ground that they interfered with interstate commerce or foreign trade. This move by Congress was frustrated, however, by the Supreme Court, with "trustbusting" having to wait for the 20th century and Theodore Roosevelt.

Many just trying to get by were annoyed with those who were rising in wealth. Farm modernization and mechanization was disrupting the smaller family farms, provoking farmers to organize protest movements as never before, and they organized against what they thought were unfair shipping rates by the railroads. There was labor organizing, wage earners joining together to bargain with their employers or to strike for better hours, pay and working conditions. Child labor and compulsory elementary education were issues. Owners, on the other hands, wanted to be able to manage their businesses without interference from those who were hired to do a job or interference from a government bureaucracy. There was the belief among them that to compete properly they should pay their employees as little as possible, and some believed that keeping employees at their job six days per week and 10 or 12 hours each day kept them from the free time with which humanity did sinful things.

Wealth creation, meanwhile, was feeding the kind of corruption called payoffs. A few big-city politicians were getting rich receiving payoffs from corporations. Wanting money like other ambitious go-getters, city officials had been swindling their city, which inspired attempts at reform but with only minor success.

A laissez faire or free-market ideology was championed by an influential Yale sociologist and former Calvinist preacher, William Graham Sumner (1840-1910). He spoke up for liberty and survival of the fittest and against reformers bent, he thought, on making an imperfect world worse. He described labor unions as having been formed for the purpose of complaining and furnishing "an easy living to some officers who do not want to work." (He also coined the term "ethnocentrism" and was opposed to imperialism.)

As was his sociologist colleague Herbert Spencer, Sumner was a Social-Darwinist. And so too was the industrialist John D. Rockefeller (1839-1937), one of the country's most famously wealthy. Rockefeller started working at the age of sixteen as an assistant bookkeeper. He was thrifty and thoughtful. He became adept at calculating transportation costs, which served him when he acquired his own business. With a partner, he began working as a commission merchant in hay, meats, grains and other goods. He did well, saw opportunity and in 1863 opened his first oil refinery. With the tendency to demonize often stronger than the urge to analyze, he would by 1902 be described as a vicious money-grabber, labeled as a "Robber Baron" and accused of making his fortune by chicanery. He was accused of monopolizing the oil trade (which mostly produced kerosene before the automobile created a demand for gasoline in the 20th century. But he was basically honest. Although a Social Darwinist he was interested in people enough to teach Sunday school. From the age of sixteen he had given a small percentage of his income to charity. There was little philanthropy by the wealthy in the early 1880s, but in 1884 Rockefeller funded a college for African-American women in Atlanta. And he would become one of the first great benefactors of medical science, founding in 1901 the Rockefeller Institute for Medical Research.

Another successful Social Darwinist labeled as a Robber Baron was Andrew Carnegie (1835-1919). Carnegie believed that superior people, no matter that they were poor, should have access to libraries so they could pick themselves up by their bootstraps. Toward the end of the century he established schools and universities in the United States, 660 libraries in Britain and Ireland, 125 in Canada, libraries in Australia, New Zealand, Serbia, the Caribbean, and Fiji. His first library in the United States opened in 1889.

Another unpopular success was J.P. Morgan (1837-1913), regarded as one of the most brilliant businessmen, financiers and investors of the nineteenth century. He was an enemy of labor unions. But he wanted government regulation to reduce chaos in the economy — chaos such as construction of more than one privately owned railroad in the same area. He was concerned about economy and efficiency, and he recognized the benefits of cooperation, that all endeaver was not individuals against other individuals. (There is cooperation among animals of the same species.) And with the government unwilling establish some kind of cooperative effort, Morgan used his financial power to consolidate industries, believing he was doing so not for his own profit but for the sake of the economy.

The US Economy in 1900

By 1900, only 18.3 percent of women sixteen or older were earning wages outside the home. Some of these women were adamant union members, but unionized workers were only 3 percent of the population. And there were virtually no minimum wage laws, and as yet no Social Security. With the wealthy able to gather more wealth at a faster rate than others, by 1900 the wealthiest 2 percent of the population had more than a third of the nation's wealth, while the wealthiest 10 percent had roughly 75 percent. (In 2017 this last figure was about the same: at 76 percent.)

The United States by 1900 had become a world leader in applied technology. (From 1860 to 1890 the US issued 500,000 patents.) And with a population of 76 million (about half that of Germany, France, Britain and Ireland combined) the US was the leading industrial power, with 23.6 percent of the world's manufacturing output, compared to 18.5 percent for Britain, 8.8 percent for Russia and 6.8 percent for France (Rise and Fall of the Great Powers, Paul Kennedy, p149).

And between 1840 and 1900, the real incomes of Americans outside the Southern states had been rising at a rate of 1.5 percent per year — income measured outside inflation, according to what money could buy. (Joseph D. Reid Jr, Market Institutions and Economic Progress in the New South 1865-1900, p 33, 1981.)


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