Business and Politics in the Gilded Age

• Railroads are essential to the expanding nation - demand a variety of other resources (lumber, coal, etc.)

• RRs privately built (huge competition) with big government aid

• Corporations allow for massive capital

• System requires standardization of time, gauge

• Failures lead to consolidation, few lines dominate

• Andrew Carnegie integrates the steelmaking process

• Steel makes new age possible & feeds RRs, both require coal

• Boom to exploit natural resources is on

• Rockefeller& Standard Oil - economies of scale & sweetheart deals to drive out competitors

• Trusts & holding companies help form combinations restraining trade (Std held 90% of oil business)

• Bell invents telephone - AT&T builds network through regional "Baby Bells"

• Communication boom fuels business

• Edison invents lightbulb & launches General Electric

• Electric light changes American way of life.

• Vertical Integration - control every aspect of production - starts with Swift in meatpacking

• Consolidation: movement to combine firms & build scale, key is capital

• J. P. Morgan & financiers "rescue" failing businesses & consolidate into larger organizations essentially run by banks

• Oligopolies become new order

• Social Darwinism - must compete so that society will evolve & move forward, some must perish

• Gospel of Wealth - duty of wealthy to help the poor

• Supreme Court protects Laissez-faire (unregulated competition, supposed to produce best product at lowest price)

• Spoils system reinforces party loyalty

• Politics played big social role, parties built on demographic lines (Reps: old protestants, Dems: RCs & new imms)

• Old south stays Dem

• Calls for a New South built on industry - but northern bankers maintain control

• Black men seen as threat to "white womanhood"

• Lynching used to terrorize - response to shifting social structure

• Women remain involved in politics: Suffrage & Temperance

• Corruption: spoils system - senators owned by corporations

• Reps split into Stalwarts, Half Breeds & Mugwumps

• Garfield’s elected in 1880 on reform platform, quickly assassinated

• Support for Civil Service reform grows - Pendleton Act puts many jobs under merit system

• Scandalous Campaign of 1884: Blaine vs. Cleveland (D)

• Tariff is a hot issue because it protects industry but puts burden on farmers

• Reps try to build new coalition based on protectionism, win & boost tariffs

• Dems sweep them out in 1890

• Grangers push for regulation of RRs

• 1890: Sherman Anti-Trust Act (weakened by SC)

• Some push for "Free Silver" to help boost credit & raise prices

• Panic and Depression of 1893 worst yet - economy interwoven & vulnerable to business cycle

• Cleveland refuses to leave Gold Standard