Chapter 18 Business and Politics in the Gilded Age

Politics in the Gilded Age The term Gilded Age is meant to describe a period in our country ’ s history that: Economically, there was a thin layer of “prosperity,” while at the same time, there was much poverty and corruption.

What was the Gilded Age? O It is the period between after the Civil War and before World War I. O A time of enormous growth in O Industry O Immigration O Labor O Urbanization-growth of inner cities O Corruption in government and

Laissez Faire O An economic belief supported by the business owners who oppose any government intervention to regulate business practices. O In the late 1800’s businesses operated without much government regulation. This is known as laissez-faire economics. O Laissez-Faire in French means allow to be or the government stays out of your business. O Laissez-faire supports our economic system of capitalism. O Laissez-faire believe that the market regulates itself, and therefore government regulation or intervention is not necessary.

Capitalism O The economic system characterized by private property ownership. O Individuals and companies compete for their own economic gain (PROFIT) O Capitalists determine the prices of goods and services. O Production and distribution are privately or corporately owned business O Reinvestment of profits O Supports laissez faire

Socialism O An economic system based on cooperation rather than competition. O Belief that government ownership of business and capital. O Government controls production and distribution of goods O The opposite of laissez faire is capitalism. O This clip will bring a greater understanding to laissez faire capitalism O 7:51

Social Darwinism O This is the idea that social progress is a result of relentless competition. O Wealth was the sign of the fittest and poverty was a sign of unfitness of survival.

Old Industries Transformed, New Industries Born O Old Industry like iron dramatically transformed into modern industries. O New Industry was steel which changed the railroad industry. O People like Jay Gould. Andrew Carnegie and John D. Rockefeller became financial titans and transformed the American economy. O New industries included oil refining, electric light and power

Railroads/Infrastructure O America’s first big business O Privately owned and publically financed with land grants from the government. O Jay Gould got into the railroad business early on. O He sought out railroads near bankruptcy and bought enough stock to take control. O His business strategy was buying and selling railroad stock.

Big Business Tycoons O Cornelius Vanderbilt was another well known tycoon of the railroad and shipping industry. O 3:57 (Vanderbilt) O The telegraph developed along side the railroad made Samuel Morse wealthy. This revolutionized how businesses communicated and replaced the pony express. O Jay Gould could not resist another economic opportunity and snatched control of Western Union and gained a monopoly of the telegraph industry.

Steel Industry O Andrew Carnegie a titan in the steel industry. O His business was the biggest in the world. O His industry grew out of the railroad industry because of the demand for railroads. O Steel was stronger and better than iron which was not as durable.

Vertical Integration O Carnegie Steel prospered with the use of the Bessemer process-steel replaces iron. O He owned companies where he controlled all phases of production from the raw material to the finished product. O In the steel business, “an observer noted, “there was never a price, profit or royalty paid to an outsider”” O He bought railroad lines to transport his products.

John D. Rockefeller O Standard Oil and the trust O Major source of lighting O Trust-Companies in related fields combine under the direction of a single board of trustees. O Shareholders have no say O america/videos 4mins america/videos

Horizontal Integration O Rockefeller could expand his business further. O He could own his competitors oil refineries O This creates a giant oil company that had lower production costs. O This was another method of industrial control. O 11:00mins

Carnegie Steel and competition O His managers of his companies were forced to compete against to save their jobs. O carnegie/videos/the-men-who-built-america- andrew-carnegie 5:00 carnegie/videos/the-men-who-built-america- andrew-carnegie

Oil Competition O Since the price to buy or build an oil refinery was so low there was competition from the new petroleum industry. Ultimately JD Rockefeller succeeded in controlling 90% of oil refining business

Politics in the Gilded Age The Spoils System - describes how elected officials appointed friends and supporters to government jobs, regardless of their qualifications. As the result of “spoils,” government became packed full of unqualified, dishonest employees.

Politics in the Gilded Age civil service - describes the portion of government that is made up of non- elected workers. During the gilded age, as the result of “patronage,” there were many unqualified individuals working in civil service jobs. patronage - the activity of distributing or appointing government positions as a form of reward to those who have contributed to political campaigns, or helped politicians in one way or another.

Politics in the Gilded Age O subsidy - a payment made by government to encourage the development and manufacture of certain products or industries. O Unfortunately, during the gilded age, subsidies were sometimes abused by corrupt individuals.

Politics in the Gilded Age ~ import tariff - a tax placed on foreign goods. ~ It is sometimes called a “ protective ” tariff because its purpose is to protect American industry. ~ import, or “ protective tariffs ” place taxes on lesser expensive foreign made goods.