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A US "Gilded Age"

The final decades of the 1800s in the US were to be known as a gilded age. This came with growth of the railroads, benefitting the steel industry — which benefitted from high tariffs. There was also the factory system, and there was the growth of farming, ranching, and mining. /

Hay and feed for horses remained a big part of the economy. There was also blacksmithing, saddle-making, harness-making and the construction of horse-drawn wagons, carriages, buggies and sleighs. The manufacture of ready-made clothing boomed, as did the lumber business. For the thirsty there were the breweries in St. Louis and Milwaukee, and Elgin Illinois had its watch industry. Farm machinery and railroad equipment were being manufactured in Chicago. There and in Pittsburgh, steel production was booming – with perhaps 200 deaths a year in a single steel plant. The US government was buying steel ships to strengthen its navy.

In the 1880s, those working in cities rose from 40 to 45 percent of the nation's workforce. Coal and iron deposits in the southern Appalachian mountains gave rise to steel production in the city of Birmingham, Alabama. The South in the 1880s was abandoning its dependence on cotton and beginning to diversify, including the growing of fruits and vegetables and developing its timber industry.

The economic growth was, of course, uneven. Investors were at times moved by excessive or misplaced exuberance. There were inflated expectations, investment bubbles, declining profits and panics. There were the recessions of 1869-70, the panic of 1873 followed by five years of recession or depression — call it what you will. There was the recession of 1882-85, 1890-91, and the panic of 1893-97.

Meanwhile, production capacities had been concentrating into fewer hands. Successful capitalists were extending their ownership of operations. Small businesses thought they were losing their ability to compete, and they and some academics didn't like the trend toward consolidations and monopolies. In the 1880s, states began outlawing what was also called the "trusts." A monopolistic corporation chartered in one state could move to another state, but in 1890, came the Sherman Antitrust Act, based on the power of Congress to regulate interstate commerce. Trusts were outlawed on the ground that they interfered with interstate commerce or foreign trade. This move by Congress was frustrated, however, by the Supreme Court, and "trustbusting" had to wait for the 20th century and Theodore Roosevelt.

Many were becoming annoyed with those who were rising in wealth. Farm modernization was disrupting family farms, provoking farmers to organize protest movements as never before, and they organized against what they thought were unfair shipping rates by the railroads. There was labor organizing, wage earners joining together to bargain with their employers or to strike for better hours, pay and working conditions. Child labor and compulsory elementary education were issues. Owners, on the other hands, wanted to be able to manage their businesses, their creations, without interference from a labor union or government bureaucracies. There was the belief that they had to pay their employees as little as possible to compete, and some believed that keeping employees at their job six days per week and 10 or 12 hours each day kept them away from the free time with which humanity did sinful things.

Economic growth and wealth creation meanwhile was feeding the kind of corruption called payoffs. A few big-city politicians were getting rich receiving payoffs from corporations. City officials had been swindling their city, which inspired attempts at reform but with only minor success.

A laissez faire or free market ideology was championed by an influential Yale sociologist and former Calvinist preacher, William Graham Sumner (1840-1910). He spoke up for liberty and survival of the fittest and against reformers bent on making an imperfect world worse. He described labor unions as having been formed for the purpose of complaining and furnishing "an easy living to some officers who do not want to work." (He also coined the term "ethnocentrism" and was opposed to imperialism.)

As was his sociologist colleague Herbert Spencer, Sumner was a Social-Darwinist. And so too was the industrialist John D. Rockefeller (1839-1937(, one of the country's most famously wealthy. Some were scapegoating Rockefeller, seeing evil not in anything like a free market capitalist economy but Rockefeller himself.

Rockefeller had started working at the age of sixteen as an assistant bookkeeper — with no Donald Trump-like advantage from his father (who was a con artist). Rockefeller became adept at calculating transportation costs, which would serve him when he acquired his own business. He would eventually be described as a vicious money-grabber, labeled as a "Robber Baron" and accused of making his fortune by chicanery. He was accused of monopolizing the oil trade (which mostly produced kerosene before the automobile created a demand for gasoline in the 20th century. But he was basically honest. Although a Social Darwinist he was interested in people enough to teach Sunday school. He was religiously devout — a Northern Baptist. From age of sixteen he gave a small percentage of his income to charity. There was little philanthropy by the wealthy in the early 1880s, but in 1884 Rockefeller funded a college for African-American women in Atlanta. And he would become one of the first great benefactors of medical science, founding in 1901 the Rockefeller Institute for Medical Research.

Another successful Social Darwinist labeled as a Robber Baron was Andrew Carnegie (1835-1919). He believed that superior people, no matter that they are poor, should have access to libraries, so they could pick themselves up by their bootstraps. In the latter part of the century he established schools and universities in the United States, 660 libraries in Britain and Ireland, 125 in Canada, libraries in Australia, New Zealand, Serbia, the Caribbean, and Fiji. His first library in the United States opened in 1889.

Another unpopular success was J.P. Morgan (1837-1913), regarded as one of the most brilliant businessmen, financiers and investors of the nineteenth century. He was an enemy of labor unions. What he wanted was government regulation to reduce chaos in the economy. And with the government unwilling to do this, Morgan used his financial power to consolidate industries, Morgan believing he was doing so not for his own profit but for the sake of the economy.

By 1900, only 18.3 percent of women sixteen or older were earning wages outside the home. Some of them were adamant union members. But however adverse to timidity the common workers in the United States, by the end of the century Unionized workers were only 3 percent of the population. Also in 1900 there were virtually no minimum wage laws, and there was as yet no social security. In 1900 the wealthiest 2 percent had more than a third of the nation's wealth, while the wealthiest 10 percent had roughly 75 percent. (In 2017 this last figure was about the same: at 76 percent.)

The United States was a world leader in applied technology. (From 1860 to 1890 the US issued 500,000 patents.) And with a population of 76 million (about half that of Germany, France, Britain and Ireland combined) the US was the leading industrial power, with 23.6 percent of the world's manufacturing output, compared to 18.5 percent for Britain, 8.8 percent for Russia and 6.8 percent for France.

And since 1840, the real income of people (outside the Southern States) had been rising at a rate of 1.5 percent per year. Measured in 1840 dollars the per capita income of non-Southerners in 1840 was $114, and by 1900 it had risen to $282. ("White Labor, Black Labor, and Agricultural Stagnation," by Joseph D. Reid Jr, Market Institutions and Economic Progress in the New South 1865-1900, p 33, 1981.) Marx had died in 1883 believing that capitalism's contradictions and dysfunctions would eventually inspire in Hegelian fashion its replacement, but in the US there was as yet no sign of revolution around the corner.


Copyright © 2017 by Frank E. Smitha. All rights reserved.