The Gilded Age

Mark Twain –In a satirical novel written with Charles D. Warner, The Gilded Age: A Tale of Today 1873, Twain engages in social commentary concerning the state of our fast changing cities. –Twain refers to this as a “Gilded,” as opposed to Golden, Age, meaning the prosperity and culture that is seen is only on the surface and major problems lurk beneath the surface. Why it this called a Gilded Age?

Causes of Industrial Growth: Expansion of the Railroads Technological Boom New sources of energy Social Darwinism

Business Characteristics: Old Characteristics:New Characteristics

Business Characteristics: Old Characteristics: One owner or a single partner Sold goods or product locally Sold a single product Many goods made by an individual for their own use. (Not for sale) New Characteristics

Business Characteristics: Old Characteristics: One owner or a single partner Sold goods or product locally Sold a single product Many goods made by an individual for their own use. (Not for sale) New Characteristics Larger pools of capital Wider geographic area Multiple operations- no longer specialized Role of ownership New ideas of management Social Darwinism

Types of Businesses: PartnershipSole Proprietor OWNED BY TWO OR MORE PEOPLE. PROFITS AND LOSSES SHARED BY PARTNERS. OWNED BY ONE PERSON. THE OWNER KEEPS ALL PROFITS AND INCURS ALL LOSSES.

CORPORATION

SELLS SHARES OF STOCK TO THE PUBLIC. IF IT MAKES MONEY ITS INVESTORS RECEIVED PROFITS IN THE FORM OF DIVIDENDS AND INCREASED STOCK VALUES.

Trust

TRUST STOCKHOLDERS OF A COMPANY TRANSFER THEIR SHARES OF STOCK TO A BOARD OF TRUSTEES WHO IN TURN ISSUE TRUST CERTIFICATES ON WHICH THE COMPANY PAYS DIVIDENDS. THE BOARD OF TRUSTEES RUNS THE COMPANY. THIS REDUCES THE NUMBER OF PEOPLE INVOLVED IN THE CONTROL OF THE COMPANY

HOLDING COMPANY

MANUFACTURES NOTHING. SOLE PURPOSE IS TO OWN ENOUGH STOCK OF A GIVEN COMPANY TO CONTROL IT. BANKS GOT INVOLVED THROUGH THE FINANCING OF SUCH VENTURES.

Monopoly Complete control of a product or service

HORIZONTAL INTEGRATION/CONSOLIDATION

COMBINES COMPANIES IN THE SAME LINE OF BUSINESS. ITS PURPOSE IS TO REDUCE COMPETITION. Used by John D. Rockefeller in his Standard Oil Company

VERTICAL INTEGRATION/CONSOLIDATION

BRINGS ALL STAGES OF THE LADDER OF PRODUCTION FROM RAW MATERIALS TO FINAL STAGES UNDER THE CORPORATION’S CONTROL. ITS PURPOSE IS TO CUT COST. Used by Andrew Carnegie and his Carnegie Steel Company.

Robber Barons or Captains of Industry? Those individuals who established large businesses in the late 1800’s JP Morgan Andrew Carnegie Cornelius Vanderbilt John D. Rockefeller James Hill

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; … and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer… to produce the most beneficial results for the community—the man of wealth thus becoming the mere trustee and agent 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." —From "Wealth," by Andrew Carnegie, North American Review (1889) "Law? Who cares about the law. Hain't I got the power?" —Comment alleged to have been made by Cornelius Vanderbilt, when warned that he might be violating the law

Effects of growth: Laissez- Faire used by the Government Raised the standard of living Gap between rich and poor widens Immigration increases Cities see large growth Increased Jobs Children go to work Sherman Anti-trust Act Poor work environment Labor unions form US becomes an industrial power Movement from rural to urban areas