1.8 The Gilded Age and Big Business
The term Gilded Age is one that historians use to describe the period of rapid urbanization, industrialization, and change from 1870 to about 1895. The term comes from a novel of the same title written by Mark Twain. On the surface life was full of glitter, peace, and prosperity – it was gilded in gold and attractively shiny. Beneath the surface, life was far from pretty, and it certainly wasn’t prosperous for most Americans.
America’s rise as an industrial and agricultural giant in the late 19th century is partly due to sheer visibility. Between 1869 and 1899, the nation’s population nearly tripled, farm production more than doubled, and the value of manufactures grew six-fold. Within three generations of the Civil War, the nation, which had long been a predominantly rural society, dependent upon household production and governed by the requirements of the land and the rhythms of the seasons, burst forth as the world’s preeminent economic power. The United States became a highly structured, increasingly centralized, urban-industrial society buffeted by the imperatives of mass production, mass consumption, and time-clock efficiency. Bigness emerged as the prevailing standard of corporate life, and social tensions worsened with the rising scale of business enterprise.
The “second” Industrial Revolution created huge corporations that came to dominate the economy during the late 19th century. An older economy dependent upon small business and craftspeople could not satisfy the rapidly growing national market. This process of industrial combination and concentration, whether the result of natural economic forces or human machinations, transformed the nation’s economy and social order. It also provoked widespread dissent and the emergence of an organized labor movement.
The Railroads
The railroads created the first great concentrations of capital, spawned the first massive corporations, made the first of the vast fortunes that would define the Gilded Age, unleashed labor demands that united thousands of farmers and immigrants, and linked many towns and cities. National railroad mileage tripled in the twenty years after the outbreak of the Civil War, and tripled again over the four decades that followed. Railroads impelled the creation of uniform time zones across the country, gave industrialists access to remote markets, and opened the American West. Railroad companies were the nation’s largest businesses. Their vast national operations demanded the creation of innovative new corporate organization, advanced management techniques, and vast sums of capital. Their huge expenditures spurred countless industries and attracted droves of laborers. And as they crisscrossed the nation, they created a national market, a truly national economy, and, seemingly, a new national culture.1
The railroads were not natural creations. Their vast capital requirements required the use of incorporation, a legal innovation that protected shareholders from losses. Enormous amounts of government support followed. Federal, state, and local governments offered unrivaled handouts to create the national rail networks. Lincoln’s Republican Party—which dominated government policy during the Civil War and Reconstruction—passed legislation granting vast subsidies. Hundreds of millions of acres of land and millions of dollars’ worth of government bonds were freely given to build the great transcontinental railroads and the innumerable trunk lines that quickly annihilated the vast geographic barriers that had so long sheltered American cities from one another.
In addition to being the first big business, railroads were the first magnet for the great financial markets, and the first industry to develop a large-scale management bureaucracy. The railroads opened the West, connected raw materials to factories and markets, and in doing so created a national market. At the same time, they were themselves gigantic markets for iron, steel, lumber, and other capital goods.
The shady financial practices of the railroad men earned them the label of “robber barons,” an epithet soon extended to other “captains of industry” as well. The building of both the Union Pacific and Central Pacific induced shameless profiteering through construction companies controlled by insiders, which overcharged the railroad companies.
The prince of the railroad robber barons was Jay Gould, a secretive trickster who mastered the fine art of buying rundown railroads, making cosmetic improvements, paying dividends out of capital, and selling out for a profit, meanwhile using corporate funds for personal speculation and judicious bribes.
Innovation and Industrialization
As railroad construction drove economic development, new means of production spawned new systems of labor. Many wage earners had traditionally seen factory work as a temporary stepping-stone to attaining their own small businesses or farms. After the war, however, new technology and greater mechanization meant fewer and fewer workers could legitimately aspire to economic independence. Stronger and more organized labor unions formed to fight for a growing, more-permanent working class. At the same time, the growing scale of economic enterprises increasingly disconnected owners from their employees and day-to-day business operations. To handle their vast new operations, owners turned to managers. Educated bureaucrats swelled the ranks of an emerging middle class.
Industrialization also remade much of American life outside the workplace. Rapidly growing industrialized cities knit together urban consumers and rural producers into a single, integrated national market. Food production and consumption, for instance, were utterly nationalized. Chicago’s stockyards seemingly tied it all together. Between 1866 and 1886, ranchers drove a million head of cattle annually overland from Texas ranches to railroad depots in Kansas for shipment by rail to Chicago. After travelling through modern “disassembly lines,” the animals left the adjoining slaughterhouses as slabs of meat to be packed into refrigerated rail cars and sent to butcher shops across the continent. By 1885, a handful of large-scale industrial meatpackers in Chicago were producing nearly five hundred million pounds of “dressed” beef annually.2 The new scale of industrialized meat production transformed the landscape. Buffalo herds, grasslands, and old-growth forests gave way to cattle, corn, and wheat. Chicago became the Gateway City, a crossroads connecting American agricultural goods, capital markets in New York and London, and consumers from all corners of the United States.
Technological innovation accompanied economic development. For April Fool’s Day in 1878, the New York Daily Graphic published a fictitious interview with the celebrated inventor Thomas A. Edison. The piece described the “biggest invention of the age”—a new Edison machine that could create forty different kinds of food and drink out of only air, water, and dirt. “Meat will no longer be killed and vegetables no longer grown, except by savages,” Edison promised. The machine would end “famine and pauperism.” And all for $5 or $6 per machine! The story was a joke, of course, but Edison nevertheless received inquiries from readers wondering when the food machine would be ready for the market. Americans had apparently witnessed such startling technological advances—advances that would have seemed far-fetched mere years earlier—that the Edison food machine seemed entirely plausible.3
In September 1878, Edison announced a new and ambitious line of research and development—electric power and lighting. The scientific principles behind dynamos and electric motors—the conversion of mechanical energy to electrical power, and vice versa—were long known, but Edison applied the age’s bureaucratic and commercial ethos to the problem. Far from a lone inventor gripped by inspiration toiling in isolation, Edison advanced the model of commercially minded management of research and development. Edison folded his two identities, business manager and inventor, together. He called his Menlo Park research laboratory an “invention factory” and promised to turn out “a minor invention every ten days and a big thing every six months or so.”4 He brought his fully equipped Menlo Park research laboratory and the skilled machinists and scientists he employed to bear on the problem of building an electric power system—and commercializing it.
By late fall 1879, Edison exhibited his system of power generation and electrical light for reporters and investors. Then he scaled up production. He sold generators to businesses. By the middle of 1883, Edison had overseen construction of 330 plants powering over sixty thousand lamps in factories, offices, printing houses, hotels, and theaters around the world. He convinced municipal officials to build central power stations and run power lines. New York’s Pearl Street central station opened in September 1882 and powered a square mile of downtown Manhattan. Electricity revolutionized the world. It not only illuminated the night, it powered the Second Industrial Revolution. Factories could operate anywhere at any hour. Electric rail cars allowed for cities to build out and electric elevators allowed for them to build up.
Economic advances, technological innovation, social and cultural evolution, demographic changes: the United States was a nation transformed. Industry boosted productivity, railroads connected the nation, more and more Americans labored for wages, new bureaucratic occupations created a vast “white collar” middle class, and unprecedented fortunes rewarded the owners of capital. These revolutionary changes, of course, would not occur without conflict or consequence (see Chapter 16), but they demonstrated the profound transformations remaking the nation. Change was not confined to economics alone. Change gripped the lives of everyday Americans and fundamentally reshaped American culture.5
Notes
- See Richard White, Railroaded: The Transcontinentals and the Making of Modern America (New York: Norton, 2011).
- William Cronon, Nature’s Metropolis: Chicago and the West (New York: Norton, 1991), 239.
- David Hochfelder, “Edison and the Age of Invention,” in A Companion to the Reconstruction Presidents 1865–1881, ed. Edward O. Frantz (Chichester, UK: Blackwell, 2014), 499.
- Thomas Edison, as quoted at “Edison and Innovation Series – The Invention Factory,” Thomas A. Edison Papers, Rutgers, accessed January 23, 2019, http://edison.rutgers.edu/inventionfactory.htm.
- Hochfelder, “Edison and the Age of Invention,” 499–517.
