1. Economic Expansion from 1865-1900

2. What was the Gilded Age?  Term coined by Mark Twain  Increase in industrialization  Things appeared great on the surface, but below there were problems.

3. Economic Expansion through New Markets  Businessmen and Government Officials looked outside of U.S. Borders Pacific: Hawaii – calls for annexation in the 1890s (sugar) Asia: Philippines – gained after the Spanish American War ○ 1899 – Open Door Policy in China; US could trade freely with China

4. The United States by 1900  Leading industrial power in the world Outproduced all European powers  Why? Wealth of natural resources Tremendous labor supply Increasing population Large investment of capital Extreme ingenuity and productivity ○ More than 400,000 patents filed from 1860-1900 Business-friendly government policies ○ Subsidies, land-grants, loans, and protective tariffs  A new class of entrepreneurs and enterprise

5. Revolution in Metals  Iron production increases Why? ○ The building of rail lines ○ 40,000 new miles of track  The rise of steel More durable and versatile Uses: ○ Trains, rail lines, Girders for construction Steel industry ○ Centered in Pittsburgh Close to iron ore and coal

6. The Petroleum Industry  Oil Used for fuel More importantly it provided a means of lubrication for steel machines Industry centered in Pennsylvania ○ Early oil fields

7. Rise of the Railroad  Fivefold increase in RR’s following the Civil War Created: ○ Mass production ○ Mass markets ○ Mass consumption ○ Economic specialization  1860- 30,000 miles  1880- 93,000 miles  1900- 193,000 miles

8. The Transcontinental

9. The Modern Corporation  Organized to finance large-scale projects Ex. Transcontinental Railroad  Limited liability Individuals could buy stock in these corporations only risking what they invested  New managerial techniques Division of responsibilities Hierarchy of control Middle managers

10. Consolidation of Companies  Horizontal Integration Combining like companies into one large company  Vertical Integration Taking over of all business that a company relied on

11. Why consolidation?  Businessmen felt too many competing companies meant Instability in market Potential ruin  By the end of the 19 th century 1% of companies controlled 33% of manufactoring

12. The Development of Tycoons  Andrew Carnegie Steel Tycoon Creates a vertically integrated company ○ Controlled the processing of steel from the mine to the market No middlemen Finances endeavors personally and through stoke holders Sells his business to banker J.P. Morgan for $450 million ○ U.S. Steel Corporation

13. The Development of Tycoons  John D. Rockefeller Buys out other refineries (horizontal) Built barrel factories, warehouses, pipelines (vertical) Standard Oil Company ○ Controlled 90% of refined oil in the U.S.

14. Criticisms of Big Business  Many argued that this new economy created opportunities for advancement  The Myth of the “Self- Made Man” Most of the new business tycoons were from positions of wealth and privilege ○ Ex. Cornelius Vanderbilt Horatio Algier’s stories of “rags to riches”

15. Survival of the Fittest  Social Darwinism Herbert Spencer ○ Argued that society benefitted from the elimination of the unfit ○ Economics were controlled by a natural law, law of competition.

16. Philanthropy in the Late 19 th Century  Andrew Carnegie’s Gospel of Wealth Excess money should be put to good use ○ Devoted large portions of wealth to the creation of libraries and schools

17. Problems with Monoply  By the end of the 19 th century many criticized the growth of large industries High artificial prices ○ No competition Unstable economy ○ Production outpaced demand Limited opportunities for the individual

18. Problems with Monopoly  The Concentration of Wealth By 1890’s, 10% controlled 90% of the nation’s wealth The New Class of Multi-millionaires ○ Vanderbilts, Morgan, Carnegie, Rockefellers ○ Mansions, yachts, and lavish parties ○ Wealthy neighborhoods Park Avenue (NY) Gold Coast (Chicago) Nob Hill (SF)

19. Increasing Inequality  The Standard of living was increasing for all However, the wealth gap was increasing between the rich and poor