The Gilded Age and the Progressive Era, 1870s-1920
Learning Objectives
Specific factors that led to unprecedented economic growth in the United States during this period.
The political, social, and economic impact of this growth on the American people.
How and why movements to reform much of American life started during this period.
The nature and extent of the success of these reform movements.
Timeline
Sep 1873: The Panic of 1873
May 1893: The Panic of 1893
Jul 1890: The Sherman Anti-Trust Act
Sep 1901: Theodore Roosevelt becomes president
Jun 1906: The Pure Food and Drug Act
Oct 1907: The Panic of 1907
Feb 1913: Ratification of the 16th Amendment, authorizing a federal income tax
Apr 1913: Ratification of the 17th Amendment, deciding Senate elections by popular vote
Dec 1913: Federal Reserve Act
Aug 1920: US women win the right to vote
Introduction
The period between 1870 and 1920 was a period of remarkable economic expansion and development for the United States, recovering from the Civil War and becoming the world's greatest economic power by the end of the 19th century.
This era saw the strengthening of capitalism, leading to immense wealth for some, but also mass urbanization and poor living/working conditions for many.
The Progressive Movement emerged as a reform campaign challenging unregulated capitalism and demanding changes in society, government, and economic management.
Significant political and constitutional changes occurred, shifting the balance of power between the federal government and individual states.
Presidents Theodore Roosevelt (1901-09) and Woodrow Wilson (1913-21) provided leadership and solutions to problems caused by rapid industrialization.
3.1 Why was the late 19th century an age of rapid industrialisation?
The rapid industrialization after 1870 was attributed to:
Availability of raw materials (coal, iron ore)
A supportive political system with minimal regulation
Technological and business innovation
Availability of capital and a developed banking system
The unrestricted growth of large businesses
Protective tariffs and growing export markets
Strong social attitudes sympathetic to capitalism
Federal System: The US Constitution gave limited powers to the federal government in Washington DC, with individual states retaining most powers, such as economic regulation.
State Legislature: Each state has a democratically elected legislative body with the power to pass laws, except for those specifically given to Congress by the Constitution.
Tariffs: Taxes imposed on imported goods to make domestic products more competitive and as a major source of federal government income.
The impact of the Civil War
The Civil War stimulated economic growth by:
Creating demand for war materials (guns, ammunition, clothing).
Encouraging mass production and new distribution methods.
Developing a capital-raising system on Wall Street.
Introducing a paper currency ('greenback').
Evolving the banking system to manage increasing money supply.
Raising tariffs to protect American goods.
Population growth
Population growth was crucial for industrial expansion by providing:
A workforce for industries
An agricultural workforce to feed the population.
Consumers for products.
This growth resulted from natural increase (decline in death rate) and immigration.
Infant mortality rate: Decreased from approximately 181 per 1000 births in 1860 to 151 by 1890 and 96 by 1910.
Life expectancy for men rose from 44 years in 1860 to 57 years in 1920.
The workforce grew from 11.2 million in 1860 to 24 million in 1890 and to 29 million by 1900.
Real wages: Income expressed in terms of purchasing power, as opposed to the actual income earned.
Land availability
The availability of land was important for industrialization.
The Homestead Act of 1862 opened up millions of acres in the western United States to settlement. Any US citizen who paid a small fee would receive 160 acres of land in the West. Over 1.6 million did.
Increased farm productivity due to mechanization and knowledge dissemination by the Department of Agriculture (established in 1862).
The growth of the railroads
Railroads were transformative for industrialization by:
Opening up the West.
Facilitating the transportation of raw materials and finished products.
Enabling the growth of cities and industries.
Transport prices dropped from 2 cents per mile per ton in 1865 to 0.75 cents per mile per ton in 1900.
By 1890, American railroads were carrying about 79 billion tons per mile of rail each year.
By 1900, the railways employed nearly 1 million workers, and their construction had employed many thousands more.
The railway stimulated demand. The 311 000 km of track needed a lot of steel, and that steel needed a lot of coal to make it.
Active governmental support was shown for railroad expansion through land grants (over 170 million acres of public land).
The availability of raw materials
America possessed key raw materials for industrialization:
Coal deposits (essential for factories, mills, railways).
Iron ore.
Cotton from the South.
Timber from western and northern forests.
Technological innovations, such as electrical power and the telephone
Patent: The right given by the law for an inventor to be the only person allowed to make, and profit from, an invention, usually for a fixed period of years.
Carnegie and United States Steel
Andrew Carnegie (1835-1919) was a Scottish immigrant who dominated steel production using the Bessemer process.
He also knew that this steel was much better for railway track as it was stronger and more hard-wearing.
His company made a profit of million.
Labor union: An organisation of employed people, who earn their living in the same type of work as one another, such as coalminers. The union campaigns for higher wages and better working conditions for its members, and defends them against unfair dismissal or mistreatment by their employer. It might also pursue a political agenda. These organizations were also known as trade unions.
Edison and electrical power
Thomas Edison (1847–1931) commercialized electricity through inventions like the light bulb and developed the first great industrial research laboratory.
Bell and the telephone
Alexander Graham Bell (1847-1922) patented the telephone, leading to the establishment of the Bell Telephone Company (later AT&T) which had a monopoly by 1880.
Capital availability
Capital was crucial for industrialization.
By 1870, a highly sophisticated capital-raising system, the stock market, had developed in New York.
By 1865, the annual turnover on the New York Stock exchange was over billion and, by 1880, it was the second largest money market in the world.
Dividend: When an individual invests in a company, known as buying a share, they expect to get a financial return on that investment. Companies pay this out every year in what is called an annual dividend. So, if a dividend is , and you have invested in a company, you will get .
The growth of trusts and corporations including robber barons
Sherman Anti-Trust Act: This was designed to restrict concentration of economic power in too few hands, which could interfere with trade or reduce economic competition.
Corporation: A legally recognised firm. It is quite separate from its owners. It is owned by its shareholders who share in the profits and losses the corporation makes.
Trust: A simple, but legal, device to avoid some state laws which prevented companies established in one state from owning property in another state or shares in other companies.
The effects of minimal legislation
Minimal governmental regulation facilitated the growth of corporations and trusts.
Trusts helped this massive expansion. Some states had existing laws that prevented a company set up in that state from owning property in another state or from owning shares in other companies.
Henry Flager found a way to avoid these laws by creating a trust.
The Sherman Anti-Trust Act of 1890 was not effectively enforced.
Corporations could own a large number of railways. It could hire the management it wanted to run them. It could sue (and be sued). It could buy, sell and own property in many states.
Industries under one-man control
With the growth of trusts a significant number of major industries gradually came under the control of one man.
These trusts were usually controlled by a single individual.
Oil was the first industry to be controlled by one man.
Robber barons: A phrase used first of all at this time by journalists, and later by historians. It was originally used in the Middle Ages to describe how a noble and his followers were able to force money from local people and travellers in a system that varied between taxation and a protection racket.
John D. Rockefeller and Standard Oil
Rockefeller controlled Standard Oil using aggressive practices & gained monopoly.
In 1886, an investigating committee of the US Senate reported: It is well understood in commercial circles that the Standard Oil Company tolerates no competition. Its settled policy and firm determination is to crush out all who may be rash enough to enter the field against it; that it hesitates at nothing in the accomplishment of this purpose, in which it had been remarkably successful, and that it represents the acme [high point] and perfection of corporate greed in its fullest development.
By , he controlled the domestic and foreign oil market and the whole industry from the oil wells to the automobile's lubricating oil and petrol tank. His organisation also made the asphalt which made the roads which the automobiles drove on.
Rockefeller created the Standard Oil Company through very aggressive business methods and came to dominate the oil industry in the United States. He was the first American billionaire.
J. P. Morgan and investment banking
J.P. Morgan consolidated railways and invested in various industries, gaining significant influence.
In 1901, he took over Carnegie's steel empire and created the United States Steel Corporation. This was the world's first billion-dollar corporation.
Trade policies and protectionism
Congress imposed protective tariffs to favor American-made goods and the government enforced them.
Congress happy to impose protective tariffs and the government enforced them. The intention of the tariffs was to ensure that foreign-made goods were always more expensive than home-produced ones, therefore protecting US producers.
There was rapid industrialisation in the US in the final three decades of the 19th century. This was due to a combination of human dynamism, unlimited resources, bold entrepreneurship, plenty of labour and great demand, as well as a lack of serious obstacles or regulation.
3.2 How great were the consequences of rapid economic growth in the late 19th century?
The downsides of rapid economic growth included:
Abuse of political power.
Concentration of wealth
Impact of economic recession had on industrial workers and their families.
Impact of urbanization on living conditions.
There were inevitable human consequences.
Unregulated capitalism had its failings.
The principal criticisms that could be made of this rapid growth were: * The accumulation of political power, and the abuse of that power, by powerful men in the rapidly growing cities who became known as the 'bosses' * The concentration of wealth and political power held by the robber barons
The impact that economic recession had on industrial workers and their families
The impact of urbanisation on living conditions, housing, health and safety.
New immigration from southern and eastern Europe
Immigrant labor was crucial for industrialization, as they were desperate for jobs and willing to work long hours.
Demand for cheap labor led to the United States welcoming them.
It was one of the most remarkable migrations in modern history as millions of Americans moved west, and millions more new 'Americans' arrived.
Industrial growth and periods of economic recession
The period between 1860 and 1914 was overall one of economic growth but there were three major setbacks which demonstrated how fragile the American economic system was. There were three major 'panics' when growth stopped and unemployment rose rapidly. They came in 1873, 1893 and 1907.
The Panic of 1873
The first major recession to hit the United States came in 1873 The principal cause was speculative railroad expansion.
Unemployment rose to 14% in 1873-74, and wages were cut.
The Panic of 1893
Known as the 'Great Depression', it had the same causes.
Unemployment rose to 13 million by 1894.
The government provided no support for the unemployed.
The Panic of 1907
This was known as the 'rich man's panic'.
The focus of both its causes and results was primarily the New York stock exchange, Wall Street.
J.P. Morgan was to play a major role in alleviating this crisis too but overall this crisis was different from previous ones.
Unemployment rose to 11%, and poverty increased.
The concentration of wealth and political power held by the robber barons
In newly industrialized US, small no. of businessmen succeed in mastering American business.
By the time of his death in 1913, J. P. Morgan's organizations controlled resources of over billion.
This was more than the collective resources of the 22 states to the west of the Mississippi river.
Perhaps it was unusual that most of these tycoons gave away much of their fortunes. Men like Carnegie gave museums, libraries and universities large amounts of money. Hospitals and medical research benefitted as well.
The impact of urbanisation on living conditions
U.S. towns before this period had a system of local government which was adequate for small towns. As many hundreds of thousands of new citizens arrived into these towns, along with factories and railroads, there were problems.
Dumbbell tenement buildings: Accommodation blocks, five to seven stories high, built with two air shafts on the inside, and designed to house as many people as possible in as little space as possible. They always lacked light, ventilation and proper sanitation.
The majority of tenements did not have access to clean water or effective sewage disposal until well into the 20th century. Sewage was dumped in the streets or open sewers. The large number of horses that used the streets added to the filth. Street cleaning was limited or non-existent. Unsurprisingly, cities became breeding grounds for ill-health.
Living conditions were dreadful in many of these tenements. The aim of the landlords was to squeeze as many people as possible into limited space so as to maximise their profits. No attention was paid to important factors such as safety, heat, ventilation, light, clean water or sewage disposal.
Diseases such as cholera, smallpox (for which a vaccination had been available for decades), measles, diphtheria, tetanus, tuberculosis and, above all, cholera, were widespread and killed thousands housed in these appalling living conditions. The average life expectancy for a man living in Chicago or Philadelphia at this time was 44 years and was 48 years for a woman. In rural areas, the life expectancy was 54 for men and 55 for women.
The management of cities and the growth of the 'boss' system
'Bosses', and their organisations - known as `machines' - provided for these varied needs.
William M. 'Boss' Tweed rose through the New York political system and he and his associates dominated both the city and the state until his arrest for corruption.
There were several elections in New York where more people voted for the Tweed-approved local candidate than there were actual residents entitled to vote.
Tweed raised money for city improvements but much of it ended up in his own pockets.
Housing, health and safety
Industrialisation leads to urbanisation. As we have seen, after the Civil War, US cities grew in size and population
Slum housing; unsanitary conditions; pollution from factories.
In 1890, it was estimated that 7300 children lived in just three city blocks. In New York in 1890, over 1 million people, about two-thirds of the city's population, were crammed into about 32 000 'dumbbell' tenement buildings.
Working conditions
The first really accurate survey of working life in the USA came in 1900. In that year, over 35000 men, women and children were killed in industrial accidents and over injured. In some industries, such as mining and meat-packing, you were more likely to be killed, seriously injured or contract a serious disease caused by your working conditions than to avoid these disasters. Almost no compensation schemes were available. Fewer than of working men lived over the age of . It seemed that people worked in unsafe conditions until they died. At the same time, there were over million children under the age of working in factories.
Standard work week was 60 hours.
From 1902 to 1907, factory inspectors produced an unofficial journal, including the following three extracts:
The rise of organised labour in industry and agriculture
The labor unions
US Constitution gave people a right to associate and communicate freely, but there were many barriers which stopped the new industrial workforce from getting better pay and working conditions
There were also many divisions within the labor movement. Some were more concerned with looking after the interests of the better-paid and highly skilled men rather than the low-paid unskilled men. Some were racist and others wanted to ban immigration. Some were committed socialists aiming to end capitalism. Reaching agreement on objectives was difficult.
The first attempt to form a nationwide trade union in the United States came in 1866, with the National Labor Union.
The Knights of Labor recruited members from a wide range of industries and was open to both skilled and unskilled workers.
A new national labour organisation emerged in 1886, the American Federation of Labour (AFL), but it too was to have limited success. It was a loose federation of craft unions working towards improving pay, benefits, hours and working conditions, and it was sternly opposed to immigration.
Farming organisations
With the opening of the Midwest to farming after the Homestead Act, thousands settled there and created new farms.