President Grant & the Importance of the Railroads “Era of Good Stealings”

The Grant Administration Laissez faire – Govt. did little to regulate businesses; working conditions or trade Spoils System/Patronage Hiring “unqualified” friends or supporters for govt. positions Numerous domestic scandals involving Grant’s subordinates

Black Friday Jay Gould and James Fisk attempted to corner the gold market in the US Helped by President Grant’s brother in law Millions were lost as stock prices plummeted Inadvertently led to the end of Reconstruction as people refused to vote for Republicans over fear of corruption “Era of Good Stealings”

Whiskey Ring Millions of dollars in liquor taxes were stolen by numerous government employees over several states Over 110 convicted, including President Grant’s personal secretary

Railroad Corruption Credit Mobilier corruption scandal RR defrauded the US government of land and money Later found some US politicians profited too Huge RR profits led to calls for regulation to protect average Americans Almost cost Grant reelection Revealed growing tension between social classes out West

Railroads and Expansion Pacific Railway Act – Millions of acres given to railroad companies for building tracks and telegraph lines 1st Transcontinental Railroad completed at Promontory Point, Utah in 1869 5 transcontinental railroads built between 1869 and 1893

Railroads were needed to ship food from the West to the East Government subsidized RR’s Good for US economy Led to the creation of time zones; train schedule

©2004 Wadsworth, a division of Thomson Learning, Inc ©2004 Wadsworth, a division of Thomson Learning, Inc. Thomson Learning™ is a trademark used herein under license. Railroad Expansion, 1870–1890

Railroads and Immigration Widespread Chinese & Irish immigration to build the railroads led to persecution Chinese Immigration Act of 1882 – Barred Chinese Immigration to the West Coast Fear that they would not assimilate

The Gilded Age

The “Gilded Age” Era marked by extreme wealth among rich and extreme poverty among poor Conspicuous consumption was encouraged Buying things to show your rich “Keeping up with the Joneses”

Business Leaders John D. Rockefeller – Standard Oil Andrew Carnegie – Carnegie Steel Cornelius Vanderbilt – Railroads JP Morgan – Banking Thomas Edison / General Electric Jay Gould – Banking / Railroads

Two separate views arise of business leaders Captains of Industry Robber Barons Social Darwinism - Some individuals work harder, are smarter, and deserve more rewards Survival of the fittest / strongest

Captains of Industry Wealthy business leaders have earned what they have through hard work, dedication (smarter) Provide Jobs, Pay Taxes to the govt. Philanthropy – giving large sums of money to charity Carnegie gave millions to public libraries aka “Gospel of Wealth” Many gave to universities Vanderbilt, Carnegie Mellon

Robber Barons Common nickname for business leaders among the working class They got unbelievably rich while workers lived in tenements (slums) Workers worked long hours in unsafe conditions for little pay and no benefits No Insurance, Overtime, Vacations

You get hurt you get fired Kids worked the same hours as adults Cities were crowded, filthy, and polluted Disease and crime were the norm

2nd Industrial Revolution Emergence of US Corporate America, 1865-1900

An Expansive and Volatile Economy All sectors expanding, especially manufacturing Economic power brought political influence and corruption Railroad industry was the backbone of economic growth Bessemer process was the most important Made steel much cheaper to produce Led to a dramatic increase in skyscrapers

Development of new technology Electric Power Gasoline-powered internal combustion engine Led to rise of related industries Light bulb, elevators, telephone

Value Added by Economic Sector, 1869–1899 ©2004 Wadsworth, a division of Thomson Learning, Inc. Thomson Learning™ is a trademark used herein under license. Value Added by Economic Sector, 1869–1899 (in 1879 prices)

Change in Distribution of the American Workforce, 1870–1920 ©2004 Wadsworth, a division of Thomson Learning, Inc. Thomson Learning™ is a trademark used herein under license.

Creation of Corporations Rise of large corporations created national markets and mass production and distribution Corporation – Large business, buy stock Get a cut of the company profits Complicated corporate hierarchies Board of Directors, Advisors, etc.

Managing Factories Scientific management Frederick Winslow Taylor, The Principles of Scientific Management (1911) Jobs were broken down into the most routine and quickest tasks Removed the skill from most jobs Allowed businesses to pay workers much less Henry Ford and the Assembly Line

The Monopoly Game Corporations began to consolidate to overcome market competition Horizontal Consolidation – A business takes control of most of its competitors Vertical Consolidation – A business takes control of a supply chain Monopoly – common term for Horizontal and vertical integration Prices go up, quality down

The Role of Government? Laissez faire – Govt. did little to regulate businesses; working conditions, trade, monopolies Sherman Anti-Trust Act Allowed govt. to break up monopolies Commonly used against labor unions at first U.S. Vs E.C. Knight Company Supreme Court overruled parts of the Sherman Anti-Trust Act S.C reversed their decision in the 1930’s

©2004 Wadsworth, a division of Thomson Learning, Inc ©2004 Wadsworth, a division of Thomson Learning, Inc. Thomson Learning™ is a trademark used herein under license. Industrial America, 1900–1920

Discussion Questions Discuss the factors which contributed to the dramatic industrial growth of the United States in the late 19th century.