1. Era 6 Review

2. Railroads:
The military demand led to an abundant amount of business for American railroads.
the Union Pacific and Central Railroad corporations, which both received 60 million acres in land grants and 20 million in loans from the government.

3. RAILROAD MAP

4. Iron vs. Steel
The sudden rise in railroads caused a demand for a new metal other than iron.
It’s during this time that steel began to become a popular metal for construction.

5. Iron vs. Steel
Steel production was revolutionized during the period by Andrew Carnegie with the Bessemer process.
A new technology, which shot a blast of air through melted iron, burning off carbon and impurities..

6. Coal, rubber
Due to the boost in the railroad industry, and the need for these materials in the war, the demand for such goods as coal and rubber increased.

7. Technology and Industrial Growth
Food Processing
Modern food processing technology in the 19th and 20th century was largely developed to serve military needs.

8. Food Processing canned goods
Technology and Industrial Growth
Food Processing
canned goods
Pasteurization, discovered by Louis Pasteur in 1862, was a significant advance in ensuring the micro-biological safety of food.

9. Mining Drilling, Dynamite, and Hydraulic water pumps were used.
Technology and Industrial Growth
Mining
Drilling, Dynamite, and Hydraulic water pumps were used.

10. Farming mechanization tractor, fertilizer pesticides
Technology and Industrial Growth
Farming
 mechanization 
 tractor,
 fertilizer
pesticides 

11. Ranching
Barbed wire, refrigerated railcars transformed the ranching industry
Homestead Act of 1862 offered 160 acres of free public land to any family who settled for at least five years

12. “Robber Barons”
Implies that the business leaders build their fortunes by stealing from the public.
Many people worked in sweatshops.
Drained public resources and bribed government officials to interpret laws in their favor.
Ruthlessly drove competitors out of business
Paid poorly, dangerous working conditions.

13. “Captains of Industry”
Leaders “serve” nation by increasing types of goods and lowering price.
Creating many jobs.
Donation of large amounts of money for good causes.
Carnegies Gospel of Wealth

14. Political Cartoons: Robber Barons
TRANSPARENCY
Political Cartoons: Robber Barons

15. Sec 1: Technology and Industrial Growth
Innovation Drives the Nation
Main Idea:
By the late 1800s, electricity's’ availability led to the development of many products.
The number of patents grew much during this time and businessmen invested heavily in these new innovations.
Witness History: Celebrating the Nation’s Centennial
Note Taking: Reading Skill: Identify Causes and Effects
Color Transparencies: Industry in the United States
Progress Monitoring Transparency
Sec 1: Technology and Industrial Growth

16. The Railroads
On May 10, 1869, the 1st transcontinental railroad was finished.
In 1883, the railroads adopted a national system of time zones to improve scheduling.
The growth of railroads led to the development of many towns throughout the western part of the United States.
As a result, the clocks in broad regions of the country showed the same time, a system we still use today.

17. Railroads and Industry
Faster, cheaper way of transporting goods.
Led to developing the Midwest and West.
They created national markets.
They provided a model for big business.
Railroads played a key role in revolutionizing business and industry in the United States in several key ways.
They encouraged innovation in other industries.
Bessemer Process Technological

18. Rail Map

19. Industrial Age Electricity allowed cities to develop.
Like the industrial revolution, the industrial age was sparked by electricity vs.. steam.
Electricity is more portable than steam power.
This let you build your factories anywhere you wanted v. having to build them near a power source.
Instead you could build it near your raw materials or market or labor supply or in an area of cheap land or taxes.
Electric motors, were much more flexible than steam engines.
Steam engines had to be large because they use large amounts of fuel and water.
Electric motors could be make in whatever size best suited your needs.
Many cities followed the example of Richmond VA and replaced horse-drawn cars were public trolley systems.
As trolley-car lines spread outward from the center of town, so did new construction.
Cities grew large and their populations became more dispersed.

20. Telegraph Invented by Samuel F. B. Morse.
Changed communications dramatically.
Newspaper sales skyrocket.
Big advantage for the North during the Civil War. Lincoln could communicate with his generals while it took the South much longer.
People became accustom to hearing about news less than 24 hour after it happened. This changed the way that people look at the news.
Sales increased along with the influence of the press.
Papers began carrying detailed local and national news.
America was getting more of a sense of what it was like being a “nation”
26,000 at civil wear end.
Over a million by 1900.

21. The Light Bulb
Thomas Alva Edison
Also invented the phonograph, the motion picture camera, and the microphone.
Had over a thousand patents.
Another area to which people applied electric power was to illumination.
Light bulb pretty important.
They were already in use, called arc lamps because an arc of light was created by jumping an electric current between two sticks of carbon.
By 1880 several cities had installed arc lights on their major streets.
Arc lights were not an efficient way to use electricity.
What needed to be done was to replace the carbon sticks with a filament that would glow for a long time without melting or exploding.
Edison tried thousands of possible filaments. Including hairs from his assistants’ beards.
The best substance turned out to be carbonized bamboo from Japan.
Later the bamboo was replaced by the metallic chemical element tungsten.

22. Thomas Edison

23. Telephone-1876 By Alexander Graham Bell Became very popular quickly.
1.5 million by 1900.
“Talking Telegraph”
The Telephone. During the tedious experiments that followed, Bell reasoned that it would be possible to pick up all the sounds of the human voice on the harmonic telegraph he had developed for sending multiple telegraph messages.
Then, on June 2, 1875, while Bell was at one end of the line and Watson worked on the reeds of the telegraph in another room, Bell heard the sound of a plucked reed coming to him over the wire. Quickly he ran to Watson, shouting, "Watson, what did you do then? Don't change anything."
After an hour or so of plucking reeds and listening to the sounds, Bell gave his assistant instructions for making a pair of improved instruments.
These instruments transmitted recognizable voice sounds, not words. Bell and Watson experimented all summer, and in September 1875, Bell began to write the specifications for his first telephone patent.
The patent was issued on March 7, Three days later, Bell transmitted human speech for the first time. Bell and Watson, in different rooms, were about to try a new type of transmitter that Bell had briefly described in his patent.
Then Watson heard Bell's voice saying, "Mr.. Watson, come here. I want you!" Bell had upset the acid of a battery over his clothes, but he quickly forgot the accident in his excitement over the success of the new transmitter.

24. Bell’s first Call
Bell demonstrated his telephones at the Centennial Exposition in Philadelphia in June 1876.
One of the judges, the Emperor Dom Pedro of Brazil, was impressed by Bell's instruments. The British scientist Sir William Thomson (later Lord Kelvin) called the telephone "the most wonderful thing in America."
Bell and Watson gave many successful demonstrations of the telephone, and their work paved the way for commercial telephone service in the United States.
The first telephone company, the Bell Telephone Company, came into existence on July 9, 1877.
Two days later, Bell married Mabel Hubbard, and they sailed to England to introduce the telephone there.
The Bells returned home in 1878 and moved to Washington, D.C.
Bell did not take an active part in the telephone business.
But he was frequently called upon to testify in lawsuits brought by men claiming they had invented the telephone earlier, including the American inventors Elisha Gray and Thomas Edison.
Several suits reached the Supreme Court of the United States. The Court upheld Bell's rights in all the cases.

25. Switch Board Operators
Changes in the workplace.

26. Steel Strong, long lasting and easy to shape.
This new industrial age would of not been possible without it.
Bessemer Process.
Both wood and cast iron, which people used in earlier machines, are harder materials than steel and harder out easily.
It is also difficult to mold them to exact specifications.
Before the civil War, only a few thousand tons of steel were produced in the US.
Very expensive and used for only special items such as swords and high grade tools.
New techniques made it much cheaper and efficient.
By the 1890’s millions of tons of liquid steel were pouring out of open-hearth furnaces.
Most mills were in PA
Barbed wire, canning ,railroad rails.

27. Carnegie

28. John D. Rockefeller
Powerful Industrialist who created Standard Oil Company and controlled the oil industry.

29. JD Rockefeller Pic

30. Cornelius Vanderbilt
Early railroad tycoon who used investments to gain control of a large portion of the railroad lines.
Vanderbilt University.

31. Milton Hershey Pierre Samuel Dupont
Entrepreneur who developed his fortune through candy making.
Pierre Samuel Dupont
Began with selling gunpowder which led to controlling the chemical industry.

32. Charles Goodyear
Vulcanized Rubber: Process that made rubber more practical for industrial use.
Much harder, more durable.
Charles Spencer Goodyear (December 29, July 1, 1860) was the first American to vulcanize rubber, a process which he discovered in 1839 and patented on June 15, Although Goodyear is often credited with its invention, modern evidence has proven that the Mesoamericans used stabilized rubber for balls and other objects as early as 1600 BC.[1]
Goodyear discovered the vulcanization process accidentally after five years of research. Joseph Holt later described Goodyear as having showed "almost superhuman perseverance" in his search for a more stable rubber.[2]
Vulcanization, or curing of rubber, is a chemical process in which polymer molecules are linked to other polymer molecules by atomic bridges. The end result is that the springy rubber molecules become cross-linked to a greater or lesser extent. This makes the bulk material harder, much more durable and also more resistant to chemical attack. It also makes the surface of the material smoother and prevents it from sticking to metal or plastic chemical catalysts.
This heavily cross-linked polymer has strong covalent bonds, with strong forces between the chains, and is therefore an insoluble and infusible, thermosetting polymer or thermoset.
The process is named after Vulcan, Roman god of fire.

33. Gustavus Swift Inventor of the refrigerator railcar.
Enabled meat to be shipped long distances without spoiling.
Lead to a boom in the cattle industry.

34. George Westinghouse Developed air breaks for trains.
Develop AC electricity (vs. DC)

36. Chapter 8 Politics, Immigration, and Urban Life (1870–1915)
America: Pathways to the Present
Chapter 8
Politics, Immigration, and Urban Life
(1870–1915)
Copyright © 2003 by Pearson Education, Inc., publishing as
Prentice Hall, Upper Saddle River, New Jersey. All rights reserved.

37. The Business of Politics
Chapter 15, Section 1
The Gilded Age suggests that there was a glittering layer of prosperity that covered the poverty and corruption that existed in much of society.
Term coined by Mark Twain.

38. Scandal under Grant Black Friday
Jay Gould and James Fisk try to use the government to artificially raise the price of gold on the New York Stock Exchange, then sell the gold at a huge profit.
Causes a financial panic in 1869.
Ulysses S. Grant's popularity slipped as his presidency progressed and scandals damaged his reputation. None struck closer to home than Black Friday -- the collapse of the U.S. gold market on September 24, 1869.
At the root of the scandal were two well-known scoundrels, Jay Gould and Jim Fisk. The two financiers had worked together in 1868, when they used stock fraud and bribery to keep Cornelius Vanderbilt from taking control of the Erie Railroad, which they owned. Now, they tried their hands at cheating Wall Street investors.
When Ulysses S. Grant took office, he seemed ready to continue Andrew Johnson's money policy. Like Johnson, Grant tried to improve the economy by reducing the supply of greenbacks, or paper dollars. He did so by using gold to buy dollars from citizens at a discount and replacing them with currency backed by gold.
This policy, if carried out, would spoil the plans of Gould and Fisk. They hoped that the government would hold onto its gold. Meanwhile, they would buy up as much gold as they could, and watch the value rise. When the price of gold got high enough to gain them a huge profit, they would sell. But if Grant decided to put more gold on the market by trading it for greenbacks, the price would stay too low.
To convince Grant not to sell gold, the two schemers recruited a man named Abel Rathbone Corbin. Corbin, also a financier, had married Grant's sister Virginia. Gould and Fisk used Corbin to get close to Grant. Again and again, the men arranged to meet Grant at social gatherings involving the Corbins. Gould and Fisk used these occasions to talk about government money policy. Corbin backed them in these discussions, in which the financiers argued against the government sale of gold.
Grant's response to their ideas was ambivalent, but the men were encouraged by his hospitality and willingness to engage them in conversation. They worked hard to minimize their risk. Corbin convinced Grant to name General Daniel Butterfield as assistant treasurer of the United States. Part of Butterfield's job was to handle government gold sales on Wall Street. In return for a piece of the action, Butterfield agreed to tip the schemers off when the government was ready to sell gold.
The plan seemed like an easy way to get rich -- until it fell through. Grant became suspicious of Corbin's sudden interest in the gold market. And when he discovered a letter from his sister to his wife discussing the matter, he knew he was being conned. Grant was furious. He sent word that Corbin should stop his plan immediately. Soon after, Grant ordered the sale of $4,000,000 in government gold.
Starting on September 20, Gould and Fisk had started to buy as much gold as they could. Just as they planned, the price went higher. At its highest point on September 24, the price of an ounce of gold reached more than thirty dollars above what it was when Grant took office. But when the government gold hit the market, so did panic.
Within minutes, the price of gold plummeted, and investors scrambled to sell their holdings. Many investors had obtained loans to buy their gold. With no money to repay the loans, they were ruined.
Among those who lost big on Black Friday was Abel Corbin. The wily Gould escaped disaster by selling his gold before the market began to fall. In the Congressional investigation that followed, General Daniel Butterfield was removed from his post. But loyal Republicans refused to allow the testimony of Virginia Corbin and First Lady Julia Grant.
Black Friday scarcely put a dent in Jay Gould's financial career. Within five years, he controlled the Union Pacific Railroad. Gould went on to control a number of other interests, including the Western Union Telegraph Company and the Manhattan Elevated Railroad. Fisk's luck -- and Fisk himself -- proved shorter lived. In 1872, after arguments over money and a Broadway showgirl named Josie Mansfield, a fellow financier named Edward Stokes shot Fisk dead.

39. Scandal under Grant Whiskey Ring
a group of mostly Republican politicians were able to siphon off millions of dollars in federal taxes on liquor
the scheme involved an extensive network of bribes involving tax collectors, storekeepers, and others.

40. Scandal under Grant Credit Mobilier Scandal
Company overcharged government for the building of railroads
Bribed government officials, offering stock at a lower price that the market price.
Stole millions from the American public.
Garfield was one of those who accepted bribes.

41. The Spoils System
Under the Spoils System, candidates for political office would offer potential jobs in exchange for $upport/votes.
Under the Spoils System, candidates for political office would offer potential jobs in exchange for votes.The spoils system also gave supporters access to money and political favors.
During the Gilded Age, the Republicans and Democrats had roughly the same number of supporters. To keep party members loyal, candidates rewarded supporters and tried to avoid controversial issues.
The Republicans appealed to the industrialists, bankers, and eastern farmers. They favored the gold standard, high tariffs, and the enforcement of blue laws, regulations that prohibited certain activities people considered immoral.
The Democratic party attracted the less privileged groups such as northern urban immigrants, laborers, southern planters, and western farmers.
The Republicans appealed to the industrialists, bankers, and eastern farmers.

42. Arthur Reforms the Civil Service
After Garfield’s assassination, President Arthur was able get congressional support for the Pendleton Civil Service Act.
This act classified government jobs and tested applicants.
Those the most qualified received the jobs.
It also stated that federal employees could not be required to contribute to campaign funds and could not be fired for political reasons.

43. Arthur Reforms the Civil Service

44. cartoon
Monopolies and trust are depicted as running the government

45. The Business of Politics
In the late 1800’s businesses operated without much government regulation. This is known as laissez-faire
If regulation benefited business—business supported regulation.

46. Regulating Railroads
The Granger Movement:
Group of farmers that collectively tried to fight abuse from the railroads.
Railroads would charge different rates for different customers, the farmers often paying more.
Durant's Big Scam
In this January 2003 essay, New Yorker financial columnist James Surowiecki investigates the Crédit Mobilier scandal behind the financing of the Union Pacific railroad, and compares it to the Enron scandal nearly a century and a half later.
As the 1990s came to an end, journalists and pundits began suggesting that we were living in a "new Gilded Age." At the time, the phrase conjured up the culture of the boom, replete with titans of industry, slick-talking hucksters, and the excesses of the nouveaux riche. What few suspected, though, was that the late nineties would prove to be a new Gilded Age in another, and more important, respect: the pervasiveness of business corruption and financial chicanery. Just as many of the great fortunes of the late nineteenth century were the product of accounting hocus-pocus, stock-market manipulation, and outright fraud, so too many of the supposed success stories of the late twentieth century were revealed to be little more than paper empires. From a certain angle, in fact, the two eras look almost eerily similar, especially when it comes to their quintessential scandals: the Crédit Mobilier scandal of the 1860s and the Enron scandal of the past few years.
An Attractive Deal The Crédit Mobilier scam was born out of a simple reality: in the 1860s, the U.S. government wanted a transcontinental railroad more than investors did. While a railroad across the Rockies had a glorious air to it, the project also carried an enormous amount of risk, and risk is generally something investors prefer to avoid. As a result, when Congress chartered the two companies -- the Union Pacific and the Central Pacific -- that would build the transcontinental railroad toward each other, it had to make the deal as attractive as possible. (Hundreds of thousands of dollars in bribes, by all indications, also had something to do with the legislators' largesse.) By the time construction on the Union Pacific really got going (after an initial attempt quickly ground to a halt), the Union Pacific had been given huge land grants for each mile it completed, mineral rights on the land, and hefty subsidies for construction. The result was that what had previously looked a fool's errand suddenly became a seemingly sure thing.
Paying Themselves to Build It Not sure enough for the men who controlled the Union Pacific, though. There was still the chance, after all, that, even with the subsidies and land grants, running the railroad might not be a profitable endeavor. In fact, Thomas Durant, who was vice-president of the U.P. in its early days, was convinced that all the real money to be made was in constructing the road, not operating it. So Durant and his fellow promoters they came up with a seemingly foolproof plan: instead of paying outside contractors to build the railroad, the U.P.'s biggest stockholders would just pay themselves. They took over an ephemeral construction company, the Crédit Mobilier of America, which just happened to win the contract to build 667 miles of Union Pacific railroad. The Crédit Mobilier charged the railroad tens of millions of dollars more than the actual cost of construction, all of which went right into the pockets of the men who were supposedly running the Union Pacific. By the time they were done, they'd cleared at least $23 million (and perhaps considerably more), and the U.P. was on the verge of bankruptcy. Everyone who had invested in the railroad but not the construction company found themselves with nearly worthless securities on their hands.
The Enron Scheme A century and a half later, executives at the energy company Enron took a similar opportunity to enrich themselves. The schemes at Enron were far more complex than those at the Crédit Mobilier, but the idea was the same: funnel money from the company to outside businesses controlled by company executives. In Enron's case, these outside businesses were small partnerships that bore exotic names like Jedi, Chewco, and Raptor. The partnerships were created so Enron could offload risk and debt and hide losses, making its financial statements look better. The partnerships were supposed to be independent -- like the Crédit Mobilier -- but they were really just façades, with many of them actually run by Enron executives. The executives who set up and ran the partnerships -- like the company's C.F.O., Andy Fastow -- walked away with tens of millions of dollars, and in some cases earned 1,000% returns on their investments in the space of months. At the same time, as all these backroom deals were making the company look financially stronger than it actually was, the company's top brass was selling hundreds of millions of dollars in Enron stock. When the news of the company's dubious accounting and questionable finances broke, Enron's stock price went into a death spiral, dragging the company along with it. Within a few months, it was bankrupt, leaving the company's shareholders with nothing. The top executives, of course, all walked away with their fortunes intact.
Lining Their Own Pockets The stories of the Crédit Mobilier and Enron are similar because both involve the same basic crime: self-dealing. Self-dealing is what economists call it when the people running companies look to line their own pockets instead of those of the companies' owners, and it's a problem that capitalist economies have a hard time avoiding. That's because the people who own companies (the shareholders) are not the people who run companies (the managers), and supervising managers to make sure they're following the straight and narrow is not an easy task. The shareholders and bondholders of the Union Pacific trusted Thomas Durant and Oakes Ames (the congressman who eventually pushed Durant aside at the top of the railroad and the Crédit Mobilier) to do their best to make money for the railroad. But Durant and Ames were more interested in doing their best to make money for themselves, even at the expense of the U.P. In the same way, prosecutors charge, when Andy Fastow set up Enron's outside partnerships, he wasn't looking for the best deal for Enron shareholders. He was looking for the best deal for himself.
History Repeats Itself The remarkable thing, of course, is that Enron happened despite the safeguards against corruption that have been put in place, in no small part because of scandals like the Crédit Mobilier. When Ames pulled off his scams, after all, America's capital markets were still relatively immature, shareholder rights were ill-defined, and there were no federal regulators. For that matter, Wall Street as we know it -- theoretically independent firms providing outside counsel to investors -- barely existed. So it's perhaps not too surprising that the swindle was so easy. In the case of Enron, though, none of these excuses apply. Instead, the system simply failed, as every check on executive misconduct -- accountants, Wall Street analysts, lawyers, regulators -- either turned a blind eye or actively participated in the schemes. In a sense, it was as if all the lessons that the scandals of the nineteenth century had taught us had to be learned all over again.
The Big Losers The bitterest lessons, of course, were learned by the investors who lost billions as the value of Enron's stock disappeared almost overnight. One imagines that they felt much the same way the Union Pacific investors and government bondholders did when they realized that almost half of the company's capital had been pocketed by the Crédit Mobilier crowd. In both cases, greed overcame skepticism, and the necessary rule of caveat emptor was abandoned because of the promise of outsized profits. The flood of government money and free land that the Union Pacific was given was much the same played the same role as the seemingly infinite wealth that the 1990s stock-market bubble promised. As a general rule of financial history, fraud and scandal inevitably accompany financial manias, and what the New Economy was to the new Gilded Age the railroad was to the old.
Punishing the Perpetrators There are, of course, important differences between the two stories. Although there was a lot of talk a year ago about Enron as a political scandal, the reality is that its impact has been confined mainly to the business pages. Oakes Ames was a congressman who corrupted many of his colleagues by handing out shares in the Crédit Mobilier to forestall an investigation into the company. But Enron's efforts to use political influence to save itself failed. In the same vein, although Ames was censured by Congress, no one in the Crédit Mobilier case was ever prosecuted. In the case of Enron, the accounting firm Arthur Andersen has already been effectively put out of business after being convicted of obstruction of justice for its role in the scandal, Andy Fastow has been indicted on 78 counts of fraud, and an investigation into what the people at the top of the company knew is still continuing. We may not have made much progress in learning how to stop self-dealing, but perhaps we've gotten a little better at punishing it.
Scandals in Retrospect There is, though, an even more important difference which reflects less well on our own time. Although the founders of the Union Pacific were undoubtedly crooks and self-dealers who played fast and loose with government money and pocketed millions, all their chicanery did not stop them from building a railroad across the country. Seven years after the U.P. was chartered, after all, the final spike in the U.P.'s road was laid. In fact, while scandals like the Crédit Mobilier were endemic during the Gilded Age (Mark Twain's novel of the same name is about little else), the railways that were built during that time transformed the U.S. economy. In Enron's case, once it went bankrupt, it became difficult to see what its founders and managers had really built. Enron was supposedly the new-model energy company, light on hard assets, able to trade everything from electricity to bandwidth, a corporation that owned little but its intellectual property. And so it has left almost no trace behind, nothing but empty trading floors and used Aeron chairs. A century after the Crédit Mobilier news broke, people were still riding trains on the U.P. line. A century from now, all that will be left of Enron will be a few lines in an old business history book.

47. Regulating Railroads
Was successful in regulating the railroads and grain warehouses
 Granger Laws: series of laws passed to regulate railroad freight rates and rebates and to address long- and short-haul discrimination and other railroad abuses against farmers.
Durant's Big Scam
In this January 2003 essay, New Yorker financial columnist James Surowiecki investigates the Crédit Mobilier scandal behind the financing of the Union Pacific railroad, and compares it to the Enron scandal nearly a century and a half later.
As the 1990s came to an end, journalists and pundits began suggesting that we were living in a "new Gilded Age." At the time, the phrase conjured up the culture of the boom, replete with titans of industry, slick-talking hucksters, and the excesses of the nouveaux riche. What few suspected, though, was that the late nineties would prove to be a new Gilded Age in another, and more important, respect: the pervasiveness of business corruption and financial chicanery. Just as many of the great fortunes of the late nineteenth century were the product of accounting hocus-pocus, stock-market manipulation, and outright fraud, so too many of the supposed success stories of the late twentieth century were revealed to be little more than paper empires. From a certain angle, in fact, the two eras look almost eerily similar, especially when it comes to their quintessential scandals: the Crédit Mobilier scandal of the 1860s and the Enron scandal of the past few years.
An Attractive Deal The Crédit Mobilier scam was born out of a simple reality: in the 1860s, the U.S. government wanted a transcontinental railroad more than investors did. While a railroad across the Rockies had a glorious air to it, the project also carried an enormous amount of risk, and risk is generally something investors prefer to avoid. As a result, when Congress chartered the two companies -- the Union Pacific and the Central Pacific -- that would build the transcontinental railroad toward each other, it had to make the deal as attractive as possible. (Hundreds of thousands of dollars in bribes, by all indications, also had something to do with the legislators' largesse.) By the time construction on the Union Pacific really got going (after an initial attempt quickly ground to a halt), the Union Pacific had been given huge land grants for each mile it completed, mineral rights on the land, and hefty subsidies for construction. The result was that what had previously looked a fool's errand suddenly became a seemingly sure thing.
Paying Themselves to Build It Not sure enough for the men who controlled the Union Pacific, though. There was still the chance, after all, that, even with the subsidies and land grants, running the railroad might not be a profitable endeavor. In fact, Thomas Durant, who was vice-president of the U.P. in its early days, was convinced that all the real money to be made was in constructing the road, not operating it. So Durant and his fellow promoters they came up with a seemingly foolproof plan: instead of paying outside contractors to build the railroad, the U.P.'s biggest stockholders would just pay themselves. They took over an ephemeral construction company, the Crédit Mobilier of America, which just happened to win the contract to build 667 miles of Union Pacific railroad. The Crédit Mobilier charged the railroad tens of millions of dollars more than the actual cost of construction, all of which went right into the pockets of the men who were supposedly running the Union Pacific. By the time they were done, they'd cleared at least $23 million (and perhaps considerably more), and the U.P. was on the verge of bankruptcy. Everyone who had invested in the railroad but not the construction company found themselves with nearly worthless securities on their hands.
The Enron Scheme A century and a half later, executives at the energy company Enron took a similar opportunity to enrich themselves. The schemes at Enron were far more complex than those at the Crédit Mobilier, but the idea was the same: funnel money from the company to outside businesses controlled by company executives. In Enron's case, these outside businesses were small partnerships that bore exotic names like Jedi, Chewco, and Raptor. The partnerships were created so Enron could offload risk and debt and hide losses, making its financial statements look better. The partnerships were supposed to be independent -- like the Crédit Mobilier -- but they were really just façades, with many of them actually run by Enron executives. The executives who set up and ran the partnerships -- like the company's C.F.O., Andy Fastow -- walked away with tens of millions of dollars, and in some cases earned 1,000% returns on their investments in the space of months. At the same time, as all these backroom deals were making the company look financially stronger than it actually was, the company's top brass was selling hundreds of millions of dollars in Enron stock. When the news of the company's dubious accounting and questionable finances broke, Enron's stock price went into a death spiral, dragging the company along with it. Within a few months, it was bankrupt, leaving the company's shareholders with nothing. The top executives, of course, all walked away with their fortunes intact.
Lining Their Own Pockets The stories of the Crédit Mobilier and Enron are similar because both involve the same basic crime: self-dealing. Self-dealing is what economists call it when the people running companies look to line their own pockets instead of those of the companies' owners, and it's a problem that capitalist economies have a hard time avoiding. That's because the people who own companies (the shareholders) are not the people who run companies (the managers), and supervising managers to make sure they're following the straight and narrow is not an easy task. The shareholders and bondholders of the Union Pacific trusted Thomas Durant and Oakes Ames (the congressman who eventually pushed Durant aside at the top of the railroad and the Crédit Mobilier) to do their best to make money for the railroad. But Durant and Ames were more interested in doing their best to make money for themselves, even at the expense of the U.P. In the same way, prosecutors charge, when Andy Fastow set up Enron's outside partnerships, he wasn't looking for the best deal for Enron shareholders. He was looking for the best deal for himself.
History Repeats Itself The remarkable thing, of course, is that Enron happened despite the safeguards against corruption that have been put in place, in no small part because of scandals like the Crédit Mobilier. When Ames pulled off his scams, after all, America's capital markets were still relatively immature, shareholder rights were ill-defined, and there were no federal regulators. For that matter, Wall Street as we know it -- theoretically independent firms providing outside counsel to investors -- barely existed. So it's perhaps not too surprising that the swindle was so easy. In the case of Enron, though, none of these excuses apply. Instead, the system simply failed, as every check on executive misconduct -- accountants, Wall Street analysts, lawyers, regulators -- either turned a blind eye or actively participated in the schemes. In a sense, it was as if all the lessons that the scandals of the nineteenth century had taught us had to be learned all over again.
The Big Losers The bitterest lessons, of course, were learned by the investors who lost billions as the value of Enron's stock disappeared almost overnight. One imagines that they felt much the same way the Union Pacific investors and government bondholders did when they realized that almost half of the company's capital had been pocketed by the Crédit Mobilier crowd. In both cases, greed overcame skepticism, and the necessary rule of caveat emptor was abandoned because of the promise of outsized profits. The flood of government money and free land that the Union Pacific was given was much the same played the same role as the seemingly infinite wealth that the 1990s stock-market bubble promised. As a general rule of financial history, fraud and scandal inevitably accompany financial manias, and what the New Economy was to the new Gilded Age the railroad was to the old.
Punishing the Perpetrators There are, of course, important differences between the two stories. Although there was a lot of talk a year ago about Enron as a political scandal, the reality is that its impact has been confined mainly to the business pages. Oakes Ames was a congressman who corrupted many of his colleagues by handing out shares in the Crédit Mobilier to forestall an investigation into the company. But Enron's efforts to use political influence to save itself failed. In the same vein, although Ames was censured by Congress, no one in the Crédit Mobilier case was ever prosecuted. In the case of Enron, the accounting firm Arthur Andersen has already been effectively put out of business after being convicted of obstruction of justice for its role in the scandal, Andy Fastow has been indicted on 78 counts of fraud, and an investigation into what the people at the top of the company knew is still continuing. We may not have made much progress in learning how to stop self-dealing, but perhaps we've gotten a little better at punishing it.
Scandals in Retrospect There is, though, an even more important difference which reflects less well on our own time. Although the founders of the Union Pacific were undoubtedly crooks and self-dealers who played fast and loose with government money and pocketed millions, all their chicanery did not stop them from building a railroad across the country. Seven years after the U.P. was chartered, after all, the final spike in the U.P.'s road was laid. In fact, while scandals like the Crédit Mobilier were endemic during the Gilded Age (Mark Twain's novel of the same name is about little else), the railways that were built during that time transformed the U.S. economy. In Enron's case, once it went bankrupt, it became difficult to see what its founders and managers had really built. Enron was supposedly the new-model energy company, light on hard assets, able to trade everything from electricity to bandwidth, a corporation that owned little but its intellectual property. And so it has left almost no trace behind, nothing but empty trading floors and used Aeron chairs. A century after the Crédit Mobilier news broke, people were still riding trains on the U.P. line. A century from now, all that will be left of Enron will be a few lines in an old business history book.

48. Regulating Railroads
In 1887, Congress passed the Interstate Commerce Act
Did not have the power to set railroad rates, but to “regulate”
Often overruled in the Supreme Court.
Durant's Big Scam
In this January 2003 essay, New Yorker financial columnist James Surowiecki investigates the Crédit Mobilier scandal behind the financing of the Union Pacific railroad, and compares it to the Enron scandal nearly a century and a half later.
As the 1990s came to an end, journalists and pundits began suggesting that we were living in a "new Gilded Age." At the time, the phrase conjured up the culture of the boom, replete with titans of industry, slick-talking hucksters, and the excesses of the nouveaux riche. What few suspected, though, was that the late nineties would prove to be a new Gilded Age in another, and more important, respect: the pervasiveness of business corruption and financial chicanery. Just as many of the great fortunes of the late nineteenth century were the product of accounting hocus-pocus, stock-market manipulation, and outright fraud, so too many of the supposed success stories of the late twentieth century were revealed to be little more than paper empires. From a certain angle, in fact, the two eras look almost eerily similar, especially when it comes to their quintessential scandals: the Crédit Mobilier scandal of the 1860s and the Enron scandal of the past few years.
An Attractive Deal The Crédit Mobilier scam was born out of a simple reality: in the 1860s, the U.S. government wanted a transcontinental railroad more than investors did. While a railroad across the Rockies had a glorious air to it, the project also carried an enormous amount of risk, and risk is generally something investors prefer to avoid. As a result, when Congress chartered the two companies -- the Union Pacific and the Central Pacific -- that would build the transcontinental railroad toward each other, it had to make the deal as attractive as possible. (Hundreds of thousands of dollars in bribes, by all indications, also had something to do with the legislators' largesse.) By the time construction on the Union Pacific really got going (after an initial attempt quickly ground to a halt), the Union Pacific had been given huge land grants for each mile it completed, mineral rights on the land, and hefty subsidies for construction. The result was that what had previously looked a fool's errand suddenly became a seemingly sure thing.
Paying Themselves to Build It Not sure enough for the men who controlled the Union Pacific, though. There was still the chance, after all, that, even with the subsidies and land grants, running the railroad might not be a profitable endeavor. In fact, Thomas Durant, who was vice-president of the U.P. in its early days, was convinced that all the real money to be made was in constructing the road, not operating it. So Durant and his fellow promoters they came up with a seemingly foolproof plan: instead of paying outside contractors to build the railroad, the U.P.'s biggest stockholders would just pay themselves. They took over an ephemeral construction company, the Crédit Mobilier of America, which just happened to win the contract to build 667 miles of Union Pacific railroad. The Crédit Mobilier charged the railroad tens of millions of dollars more than the actual cost of construction, all of which went right into the pockets of the men who were supposedly running the Union Pacific. By the time they were done, they'd cleared at least $23 million (and perhaps considerably more), and the U.P. was on the verge of bankruptcy. Everyone who had invested in the railroad but not the construction company found themselves with nearly worthless securities on their hands.
The Enron Scheme A century and a half later, executives at the energy company Enron took a similar opportunity to enrich themselves. The schemes at Enron were far more complex than those at the Crédit Mobilier, but the idea was the same: funnel money from the company to outside businesses controlled by company executives. In Enron's case, these outside businesses were small partnerships that bore exotic names like Jedi, Chewco, and Raptor. The partnerships were created so Enron could offload risk and debt and hide losses, making its financial statements look better. The partnerships were supposed to be independent -- like the Crédit Mobilier -- but they were really just façades, with many of them actually run by Enron executives. The executives who set up and ran the partnerships -- like the company's C.F.O., Andy Fastow -- walked away with tens of millions of dollars, and in some cases earned 1,000% returns on their investments in the space of months. At the same time, as all these backroom deals were making the company look financially stronger than it actually was, the company's top brass was selling hundreds of millions of dollars in Enron stock. When the news of the company's dubious accounting and questionable finances broke, Enron's stock price went into a death spiral, dragging the company along with it. Within a few months, it was bankrupt, leaving the company's shareholders with nothing. The top executives, of course, all walked away with their fortunes intact.
Lining Their Own Pockets The stories of the Crédit Mobilier and Enron are similar because both involve the same basic crime: self-dealing. Self-dealing is what economists call it when the people running companies look to line their own pockets instead of those of the companies' owners, and it's a problem that capitalist economies have a hard time avoiding. That's because the people who own companies (the shareholders) are not the people who run companies (the managers), and supervising managers to make sure they're following the straight and narrow is not an easy task. The shareholders and bondholders of the Union Pacific trusted Thomas Durant and Oakes Ames (the congressman who eventually pushed Durant aside at the top of the railroad and the Crédit Mobilier) to do their best to make money for the railroad. But Durant and Ames were more interested in doing their best to make money for themselves, even at the expense of the U.P. In the same way, prosecutors charge, when Andy Fastow set up Enron's outside partnerships, he wasn't looking for the best deal for Enron shareholders. He was looking for the best deal for himself.
History Repeats Itself The remarkable thing, of course, is that Enron happened despite the safeguards against corruption that have been put in place, in no small part because of scandals like the Crédit Mobilier. When Ames pulled off his scams, after all, America's capital markets were still relatively immature, shareholder rights were ill-defined, and there were no federal regulators. For that matter, Wall Street as we know it -- theoretically independent firms providing outside counsel to investors -- barely existed. So it's perhaps not too surprising that the swindle was so easy. In the case of Enron, though, none of these excuses apply. Instead, the system simply failed, as every check on executive misconduct -- accountants, Wall Street analysts, lawyers, regulators -- either turned a blind eye or actively participated in the schemes. In a sense, it was as if all the lessons that the scandals of the nineteenth century had taught us had to be learned all over again.
The Big Losers The bitterest lessons, of course, were learned by the investors who lost billions as the value of Enron's stock disappeared almost overnight. One imagines that they felt much the same way the Union Pacific investors and government bondholders did when they realized that almost half of the company's capital had been pocketed by the Crédit Mobilier crowd. In both cases, greed overcame skepticism, and the necessary rule of caveat emptor was abandoned because of the promise of outsized profits. The flood of government money and free land that the Union Pacific was given was much the same played the same role as the seemingly infinite wealth that the 1990s stock-market bubble promised. As a general rule of financial history, fraud and scandal inevitably accompany financial manias, and what the New Economy was to the new Gilded Age the railroad was to the old.
Punishing the Perpetrators There are, of course, important differences between the two stories. Although there was a lot of talk a year ago about Enron as a political scandal, the reality is that its impact has been confined mainly to the business pages. Oakes Ames was a congressman who corrupted many of his colleagues by handing out shares in the Crédit Mobilier to forestall an investigation into the company. But Enron's efforts to use political influence to save itself failed. In the same vein, although Ames was censured by Congress, no one in the Crédit Mobilier case was ever prosecuted. In the case of Enron, the accounting firm Arthur Andersen has already been effectively put out of business after being convicted of obstruction of justice for its role in the scandal, Andy Fastow has been indicted on 78 counts of fraud, and an investigation into what the people at the top of the company knew is still continuing. We may not have made much progress in learning how to stop self-dealing, but perhaps we've gotten a little better at punishing it.
Scandals in Retrospect There is, though, an even more important difference which reflects less well on our own time. Although the founders of the Union Pacific were undoubtedly crooks and self-dealers who played fast and loose with government money and pocketed millions, all their chicanery did not stop them from building a railroad across the country. Seven years after the U.P. was chartered, after all, the final spike in the U.P.'s road was laid. In fact, while scandals like the Crédit Mobilier were endemic during the Gilded Age (Mark Twain's novel of the same name is about little else), the railways that were built during that time transformed the U.S. economy. In Enron's case, once it went bankrupt, it became difficult to see what its founders and managers had really built. Enron was supposedly the new-model energy company, light on hard assets, able to trade everything from electricity to bandwidth, a corporation that owned little but its intellectual property. And so it has left almost no trace behind, nothing but empty trading floors and used Aeron chairs. A century after the Crédit Mobilier news broke, people were still riding trains on the U.P. line. A century from now, all that will be left of Enron will be a few lines in an old business history book.

49. Populist Party 1892
Set up by farmers out West who had similar goals, The People’s Party
Wanted the Government to take over the railroads.
Had impact on elections of the time, but quickly faded.

50. Dawes Act of 1887 Each Indian family was granted 160 Acre Farm
This was out west, the land was poor farming land, and 160 acres was not enough to support a family.
The Governments attempt to assimilate Indians into American culture.
Set up schools, missions to convert Indians to Christianity.

51. Changed dress, customs of Indians to be like mainstream American Culture.

52. Gospel of Wealth Jacob Riis Settlement Houses
Mr. Martin you are one of the coolest teachers ever! I’m glad the school year is going by because I can’t WAIT for graduation but then again I’m sad because I don’t want my short 1st semester being your peer mentor to end! :[ Maybe I can still stray in here somehow, haha. ASIAN PRIDE! :D