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Gilded Age

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Gilded Age

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  1. Gilded Age Business and Politics

  2. "What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must."-- Mark Twain-1871

  3. The Gilded Age: A Tale of Today • The term was coined by writers Mark Twain and Charles Dudley Warner in their book satirizing what they believed to be an era of serious social problems hidden by a thin gold gilding.

  4. An era of widespread growth where the U.S. leaped ahead of Britain in industrialization. • A relative few became extremely wealthy and exerted enormous economic and political power • The rapid growth was punctuated by economic depressions in 1873, 1893,

  5. Homes of the Gilded Age

  6. Andrew Carnegie • Faced with sudden poverty in Scotland, Andrew Carnegie's family emigrated to America. • Determined to escape poverty, Carnegie went on to become the richest man in the world.

  7. ‘Vertical Integration’ • ‘vertical integration’ a system of business organization that allowed him to control every aspect of the steel business • He cut costs to boost productivity; workers had low wages, long hours, dangerous conditions • By 1900, Carnegie Steel was the best-known manufacturer in the nation

  8. Railroad Industry led to a Steel Industry • Carnegie led the transition from iron to steel • Built the biggest steel industry in the world • Built most up to date plant (near Pittsburgh)

  9. San Jose’s Carnegie Library • After amassing a fortune by crushing his competitors and exploiting his workers, Carnegie, in a move that underscored his inner conflicts, systematically gave away millions.

  10. Railroads: America’s First Big Business • After Civil War, Americans built the greatest railroad network in the world • By 1900, US had 193,000 miles of track, more than all of Europe and Russia combined

  11. Government encouraged rail growth with cash subsidies and land grants • Lack of planning led to overbuilding and increased competition • Because of competition local owners tried to “pool” areas and set rates • Stock market began to play a key role in American economy—capital could now be represented by stocks and not just tangibles such as land or machinery

  12. Jay Gould: ‘Most Hated Man in America’ • Jay Gould, master of corporate expansion through stocks • Men like Gould refused to honor, so many railroads failed • The public disliked men like Gould for ruining competitors and emphasis on financial markets—‘most hated man in America’

  13. Rockefeller and Standard Oil

  14. John D. Rockefeller Standard Oil and the Trust • In the 1860s and 1870s, it did not take a lot of capital to build an oil refinery • Lots of competition • Rockefeller founded Standard Oil in 1870 • He demanded secret rebates from the railroads in exchange for his steady business, so he could undercut competitors

  15. The Trust • 1882, Rockefeller pioneered a new form of corporate structure—the trust • The “trust” operates the business on behalf of trustees. • Consolidates decision-making and financial policy for large businesses

  16. Monopoly • It allowed Standard Oil trustees to hold stock in various refinery companies ‘in trust’ and to coordinate policies between refineries • This gave Rockefeller a monopoly of the oil refining business

  17. New kind of corporates structure • Paved the way for the establishment of trusts in other industries • When the government threatened to outlaw the trust as a violation of free trade, Standard Oil changed its tactics and reorganized as a holding company • This combined competing companies under one central administration

  18. Standard Oil • By 1890 Standard Oil ruled more than 90% of the oil business

  19. Ida Tarbell • Journalist Ida Tarbell exposed Rockefeller’s unsavory business practices in a series of articles in McClure’s Magazine from 1902 to 1905 contributing to the American public’s unfavorable opinion of Rockefeller