Chapter 17 -- Business and Politics in the Gilded Age, 1870-1895  


A.   The Gilded Age

1.      Name comes from novel of same name

2.      Metaphor for “progress” of late 19th century  

I.      Old Industries Transformed, New Industries Born 

A.   Railroads: America's First Big Business

1.      Largest industry in U.S.

2.      Model for other businesses


B.   Andrew Carnegie, Steel, and Vertical Integration

1.      An American success story

2.      Applied railroad lessons to steel industry

3.      Perfected “vertical integration”

4.      “Run the factories full  

a)    Homestead

5.      De-skilling


C.   John D. Rockefeller, Standard Oil, and the Trust

1.      John D. Rockefeller king of oil

2.     Perfected Horizontal integration

a)      Railroad rebates undercut competition

b)      Bought out or drove competitors out of market

3.      Trust companies, holding companies to avoid taxation, regulation

4.      Moved to "Vertical Integration"

5.      Target of criticism


D.   New Inventions: Electricity and the Telephone

1.      1876 Alexander Graham Bell invented telephone

2.      1879 Thomas Alva Edison invented electric light bulb

3.      Both inventions spawned huge monopolistic corporations


II.      From Competition to Consolidation

A.   J. P. Morgan and Finance Capitalism

1.      Financial needs huge

2.      Owners vs. managers

3.      J.P. Morgan, “Morganization”  


B.   Social Darwinism and the Gospel of Wealth

1.      Based on Darwin’s "survival of the fittest"

a)      Govns, individuals shouldn’t interfere

2.      Andrew Carnegie softened with Gospel of Wealth

a)      Strongest prospered, but obliged to help weak


A.   Political Participation and Party Loyalty

1.      Parties dominated political life    

2.      Spoils system at center of politics

  B. Sectionalism and the New South

1.      Parties regional after Reconstruction

a)      Northeast, black south: Republican

b)      White South : Democrat  

2.      Parties exploited racial  biases of voters

3.    Economic needs outweighed old animosities

a)   Southern economy wrecked in Civil War

b)    Northern industries relocated South  

--      Lower wages

--      Raw materials (i.e., cotton, tobacco)

c.      Profits from New South went north  


B.    Gender, Race, and Politics

1.    “Separate Spheres,” "sphere ideology" = male/public, female/private

2.    world of business, politics men’s sphere, women's sphere home and family 

3.    concept restricted women's participation in politics

4. Southerners mixed ideas re race/gender to restrict black suffrage 

5. Ida B. Wells launched antilynching campaign  

a.      Wells schoolteacher turned newspaper editor

b.      Wells collected data on lynching, published expose

c)      said whites fabricated claims of black sexual assault on white women

d)      Real reason economic and sexual competition

e)      White men the real rapists

6.      Wells' writings helped inform black women’s organizations (Alpha, Buffalo Women's Club)

7. 1892 National Association of Colored Women formed, worked for federal anti-lynching bill  

C.    Women's Politics: The Origins of the Suffrage and Temperance Movements 

1.    Elizabeth Cady Stanton, Susan B. Anthony launched movement for woman suffrage  

a) 1848 Seneca Falls convention start of American woman's movement

b)    called by Stanton

2.    Leaders prominent in abolitionism, social purity, temperance movement

a)  Women attracted to temperance campaign from beginning

b) Woman's Crusade 1873

c.      WCTU organized 1874

d.      Goals public education, prohibition of sales  

e.    1879 debate over woman suffrage divided organization;     Suffrage supporters under Frances Willard took over


A.    Corruption and Party Strife

1.     Democrats, Republicans dominated by business interests, frequently corrupt

a)  party ticket

2.      Grant administration one of most corrupt  

3.    Mugwumps attempted to reform

a)      Civil service reform  

B.      Garfield's Assassination and Civil Service Reform

1.    Republican James Garfield won White House 1880  

a)      killed by office-seeker

2.      Suggested spoils system not the best way to fill political offices

3.     Death increased calls for civil service reform

4.      result: Pendleton Act (1883) required some job applicants to pass civil service exam


C.   Reform and Scandal: The Campaign of 1884

1.      Republican candidate James G. Blaine

2.    beaten by Democrat Grover Cleveland

a)      Negative campaigning  


V.      Economic Issues and Shifting Political Alliances

A.   The Tariff and the Politics of Protection

1.      Continuously raised during, after Civil War

a)      Good for industrialists, bad for everyone else

b)      Took too many consumer dollars out of economy 

2.      1888 presidential election revealed voter preferences

a)      Anti-tariff Cleveland won popular vote

b)      High-tariff McKinley won electoral college & election

c)      Fed immediately raised tariff to highest level ever  

3.      Voters punished Republicans in next election

a)      Supported third party -- “Populists” -- in 1890

b)      Sent Cleveland to White House 1892 


B.   The Railroads, the Trusts, and the Federal Government

1.      Railroads too powerful, controlled both political parties

2.      The Grange a farmers’ political pressure group

a)      Success in state elections

b)      Grange laws set freight, passenger rates

c)      Courts upheld (1877) Munn v. Illinois

d)      Overturned (1886) Wabash v. Illinois

3.      1887 Interstate Commerce Act  created the Interstate Commerce Commission

a)      Too weak to do anything

b)      Set precedent, first watchdog agency


4.      1890 Sherman Antitrust Act intended to break up monopolies as “restraint of trade”

a)      Loophole for holding companies made ineffective

b)      railroads used to break up labor unions!  

5.      Acts showed public favored govn regulation of business



C.   The Fight for Free Silver

1.      Deflation caused by falling prices, govn policy

a)      Union (Republicans) printed $ millions to finance Civil War

b)      1 gold dollar = 3 paper dollars

c)      govn began withdrawing paperbacks to get to 1:1

d)      By 1878, paper and gold at 1:1

2.      Deflation bad for borrowers, good for lenders

a)      size of debt goes up as supply of money shrinks


3.      Farmers supported Greenback Party and “free silver”

a)      Greenbackers wanted more paper dollars in circulation

b)      Silverites wanted govn to mint and circulate silver coin

4.      Western states favored "free silver"

                       5.      1878 Bland - Allison Act -- govn to buy silver & circulate as coin

a)      Didn't help  

6.      1890 Sherman Silver Purchase Act increased govn purchase of silver

a)      Didn't help  

D.      Panic and Depression

1.    Depression of 1893 caused by railroads

a)     Overbuilt, costs higher than revenues

b)      When rrs defaulted on loans, banks failed

c)      When rrs failed, steel & other industries collapsed, more banks failed 

2.      1895 J.P. Morgan & banking syndicate saved U.S. gold reserves

a)      Europe heavily invested in America, esp. rrs

b)      Worried about Populists; sold bonds for gold

c)      U.S. gold reserves fell from $100 million to $45 million

-- 1895, dropping $2 million per day

-- February 1895 gold reserves = $9 million, against $12 million in claims on U.S. Treasury

d)      Morgan group sold $62M in gold-backed bonds abroad, replaced U.S. gold