THE GILDED AGE 1865-1900: AMERICA’S JUNIOR YEARAnother Scalia Bump and Stumble through American History

©2009 JM Scalia. No reprint without permission.

 

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INTRODUCTION: A PSYCHOLOGICAL COMPARISON OF YOUR COUNTRY . . . AND YOU

 

Ya know, the one thing about history is that it is the purest form of truth, and therefore doesn’t change, regardless of revisionist “historians” who offer opinions as fact based on their unique perspective. I mean, the pre-Ike Gilded Age is the same as the post-Ike Gilded Age; no Class 3 blowhard with 100 mile an hour winds can change that. So, in order to soak up what we need to know about this really weird period of American history we’re gonna pull a Scalia Special on it: We’re gonna get in, do our duty, then get out.

OK, troopers, here’s a stone-cold fact: you are America, and America is you. From a developmental standpoint this is far truer than you realize. Although obviously different in nature, America has undergone the same growing pains and frustrations as you throughout your developmental years. From our nation’s founding (birth), through its infancy, and into early adolescence America fought and struggled to grow up, lessen her dependence on her mother (country) and find her own identity. With leadership from men like Thomas Jefferson, Alexander Hamilton, Aaron Burr, my man Andrew Jackson, and other true believers like John C. Calhoun and Henry Clay, it is small wonder that our nation slugged it through childhood with a schizophrenic national identity. Think of all the influences you had-good and bad- in your formative years: just like you, by the onslaught of puberty America just could not figure out who or what she was. I call this America’s Purgatory; you might think of it as her time in middle school. In any event, it’s a real mess.

 

Now, such national and personal chaos carries the danger of self-destructive behavior; think of the pains of Manifest Destiny and slavery alongside those absurd years of middle school, in which both America and you were getting a bit too big for your collective britches. Sure enough, in 1861 both Northern and Southern internal passions exploded in to a horrendous Civil War, in which both factions tried their darndest to destroy America’s fragile experiment in representative democracy. I mean, no one said this experiment would be easy, but JEEEZ! With over 625,000 Americans dead and untold maimed for life, this was a devastating, although necessary, growing pain to endure. It would have been preferable for the nation to have been assigned the five years of the war in ISS, but passions ran far too high for that, and consequently fools (many of whom never saw a lick of fighting) followed their hearts rather than listen to their brains. (Wow, high school juniors would NEVER be guilty of that, would they?)

 

In any event, it is the extraordinary effects of this horribly destructive war that interests us. Although the Civil War settled some of America’s adolescent sectional turmoil (slavery, after all, is NOT a national policy steeped by any stretch of the imagination in maturity or morality), it most certainly created new, more complex problems. And, as a consequence, America had to discover a fact of life that most high school juniors I have known throughout my innumerable years know all too well: when one door of chaos closes, another flies open, usually with far too much force and fanfare. The opening and closing of these chaotic “doors” in your lives is known as high

school (particularly your junior and senior years); this newly-opened door of American chaos that flew open in 1865 and lasted until the turn of the century in 1900 is known by the name given to it by Mark Twain: the Gilded Age.

 

 

GROWTH OF AMERICAN BUSINESS AND AMERICAN LABOR

 

Section I: The Corporate Consolidation of American Industrialization

 

The Gilded Age: It all starts and revolves around $$$$$$$$$$$$$$$$$$$$ (uh, that would be money): making money, making more money, keeping others from getting money, making even more money, wallowing around in money, bathing in money (ugh, bad visual). We’ll start where the means through which people made money underwent a drastic change, the end result of which was the mass consolidation of American business into the hands of a relatively few people.

THERE ARE SIX BASICS WITH WHICH YOU SHOULD BE INTIMATELY FAMILIAR. First, after the Civil War, ALL of America underwent a change from an agrarian economy to an industrial economy.1[1] There are several reasons, but primary among them was post-Civil War America’s status as an emerging world economic power, as in, DOH! we weren’t one before. To keep up with those pesky Germans, Russians, sneaky Japanese (who knows what they are up to!) and those infernal British, (who still want us back as colonies) we were forced to industrialize . . . and QUICK!

Secondly, as America began this industrialization she discovered that small local markets for locally-produced commodities (anything that is produced for purchase is a commodity) were rapidly growing into large national markets.2[2] Consequently, America experienced growth from small local businesses to large national corporations for the simple fact that local yokel businesses could not keep up with the growing national demand. This still occurs, and you see it all the time: move over, Joe Bob’s Five and Dime, here come Wal-Mart . . . and Target . . . ad naseum.3[3]

Thirdly, when a country’s economy undergoes industrialization and her markets explode to national, even global, proportions, it becomes incumbent on government, for the good of the rest of us (ie non-rich), to exercise some sort of control.4[4] Herein lies the agenda for the centralization of economic control; in other words, bringing the control of all American business under a common, or central, roof. PHEW!!! YOU SHOULD BE SMELLING THE VILE STENCH OF POLITICS HERE . . . . and you’d be right. Because Americans are by nature

1[1] We know that the North had been developing an industrial society since the days of the Lowell Girls, but this agenda took off on socio-economic steroids after the war. The South . . . well, better late than never, huh? 2[2] Think back to the birth of the market economy in the early 1800’s . . . turnpikes and canals stoked America’s first venture into a market-driven economy; after the war the advent of the railroad would accelerate and expand this growth to unprecedented, national (and ultimately global) levels.3[3] As in “on and on; its enough to make you puke!”4[4] Pay attention to this, it will become VERY important when we discuss things such as socialism, communism, Fidel Castro, and Hugo Chavez.

hustlers for a quick buck,5[5] it is not surprising that a few wealthy individuals were able to amass huge business organizations through measures (legal and otherwise) by which they (a) got very rich, and (b) stayed very rich.

Fourth on our list is probably the most important result of industrialization, and another factor that still exists today. Simply put, unless you have some rules or regulations to prevent it, massive industrialization controlled by a few wealthy individuals results in a very small upper, wealthy class and a disproportionately huge lower, poor class, a fact very well known to that dude Marx (Karl, not Groucho). This is known as a widening of the socio-economic gap (good idea to become VERY familiar with that term).6[6] Now, there IS a middle class, but they are neither large enough, mobile enough, nor politically powerful enough to act as a barrier between the two other classes.7[7] This is dangerous; revolutions are born this way (back to Fidel and Hugo again!) The centralization and consolidation of economic control within a narrowly-defined faction results in amazing amounts of wealth in one extreme, and a disproportionate absence of wealth in the other. Since it really stinks to be poor, lower class working people (you know, the ones that actually DO THE WORK that makes the big bucks for the fat cats) ain’t gonna play this game for very long before they become fed up with it. As a result, this widening socio-economic gap will result in growing social dissent (lots of PO’d people) and will introduce both socialism8[8] and its offshoot, organized labor, to America. It won’t be pretty, either.

Number five . . . . now, you folks ain’t dumb; you know what is going to happen when very rich dudes who desperately want to stay rich come into contact with politicians who have the power to do just that. Oh man, talk about corruption! More on this later, but for right now it is important to know that during this period of industrialization those lovely folks in Washington DC will favor the growth and stability of big business at the expense of other aspects of the economy (such as agriculture, small business, etc.) Duh; wonder why?

At last, number six. During this time, it is obvious that with the advantages of government help and centralized control, American business is going to grow rapidly, and I mean human growth hormone-style growth: getting really big really fast. As a result, and this may not be such a bad thing, the size and scope of America’s economy will grow in proportion with the size to the size and scope of American business. In other words, “what’s good for American business is good for America.” Of course, that may not be necessarily good for every aspect of American society, because obviously, in this sort of arrangement, not everyone can share the wealth. Stay tuned, we’ll be looking at this little item a bit down the road.

Ah, there’s one more little jewel. The worst that could happen to a prospective business tycoon (think of the little dude on the Monopoly board) was if that infernal national government began sticking its nose where it didn’t belong: YOUR BUSINESS!! (Hmmm, if you consider the rotten stench of questionable business dealings it seemed like the appropriate place for the government’s nose to be . . . go figure). Anyway, those businessmen and their Republican Party cohorts who guided the consolidation of American business developed and supported a political-economic policy known as laissez faire , which simply meant that the less the government regulated business the better off everyone (meaning businessmen) would be. This policy has been the guiding economic principle behind party politics ever since. You need to be VERY familiar with this term: laissez faire, which means no government interference with business.

 

Section I ESSAY ALERT:

5[5] Dr. Walter McDougal has written a three-volume history of the United States based upon his argument that the history of America is the history of hustlers. Makes a good point, too.6[6] Socio-economic class simply means basing the members of a society’s personal status on how much wealth they have . . . or don’t have. You know, the “have’s” and the “have nots.” Or like teachers, the “have no lives.” 7[7] It is important to remember that a solid, mobile middle class is the basis for any successful capitalist (ie democratic) government.8[8] LOTS more on this later, but as a VERY simplistic point of reference socialism is a political-economic system that stresses public ownership of business, rather than private ownership. Because of the sheer size of industrial society and economy, socialism typically comes in various forms depending on the amount of social integration of the economy (a major argument in DC right now).

Might be a good idea to be able to explain the six steps of corporate consolidation.

 

 

Section II. The First BaronsOK, basic premise of business, and I mean any business at any time, anywhere: anytime you have wads of

available (in this case, government) money floating around, you will have expanded opportunities for corruption and scandal. The more money, the more opportunities. OK, time to use your deductive powers: since the railroads were the number one top dog big cheese all-encompassing overall business of businesses of the era, to what business do YOU think the bulk of federal money was made available? OK, here’s another one. Because of the ease with which any goober could grab a share of this federal money bonanza, there were (to say the least) a lot of questionable (and I’m being kind here) business dealings. Because of these “shady” business dealings, these unscrupulous (a nice way of saying “crook”) businessmen became known by their nickname: The Robber Barons.

*The Credit Mobilier Scandal. One of the first and most famous of the great railroad scandals (although when compared to, oh, let’s say Enron for example, it pales by comparison). Still, it shows how the system was manipulated by these Baron people. First of all, Credit Mobilier was a railroad consulting/construction company formed, owned, and supported by wealthy investors (something’s smelling bad here), including a few members of Congress (WOAH!!! REALLY BIG STINK NOW!!) These bastions of the public trust used their congressional influence to help Credit Mobilier obtain railroad construction contracts, most significantly the Transcontinental Railroad, which had oodles of federal funding. Now, after receiving the contract, Credit Mobilier would use sub-standard materials, near-slave immigrant labor, and any measure to cut costs, while all the while over-charging the government. Were they successful? Well, they charged the Union Pacific Railroad $94 million for a job that actually costs $44 million. Fifty million profit? Not bad for a day’s graft. Still, these guys couldn’t hold a candle to this next dude, the king of the railroad crooks: Jay Gould.

*Jay Gould. This guy was a crook, no other way to put it. Here’s how his successful railroad scam worked:1. Buy old, run down, worthless funky railroads whose owners wanted to take their losses and get out of the

business . . .and there were many.2. Make cosmetic improvement; in other words, paint them, install new cushions, etc, everything but actually

repair that which made them worthless in the first place.3. Advertise that you are offering stock in the greatest financial opportunity of the day. “That’s right! Don’t

get left out! Don’t be a doofus! Why be an ordinary slob when now you can be a railroad owner and get rich quick! Call “1-800-IMA-SUCKER” NOW!!!!!!!”9[9]

4. When someone buys stock, they will receive part of the company’s profit back in something called a dividend, in other words, their share of the profit. The more shares of stock you hold the larger your dividend will be. Of course, no profit, no dividend. Also, no profit, and stock owners try to sell their stock, and it becomes less valuable. Gould was able to get federal funds to improve his crappy railroads, but instead of repairing his trains he paid dividends out of them. See what he’s doing? He is making his stockholders think he is (and they are) making a profit (due to their receiving dividends) and thus is driving up the value of the stock. When other yokels see this, guess what? THEY WANT SOME OF THE ACTION, AND ALSO BUY GOULD’S STOCK, which is, obviously, absolutely worthless in real value. It only appears valuable because of the dividend payments coming from phony profits. Gould only did this to drive the value, and hence the price, of his stock up, and when he reached the end of his federal money (which only he knew) he would sell the entire railroad, lock, stock, and barrel at the phony inflated price driven high by the phony dividend. The poor suckers who bought the stock were left to realize that they owned a worthless, crappy railroad with fresh paint and new upholstery . . . one in which they could never recover their losses. By the time the investors realized they had been cheated, Gould was a million miles away, laughing all the way to the bank. This was getting punked big-time; compared to Gould and his ilk, MTV ain’t nothing but a rookie. Oh yeah, the inevitable question: did Gould ever get caught? Oh yes, dozens of times. But give him a little credit here, anyone this brilliant isn’t going to stay caught for long. Gould simply reached deep into his

9[9] Well, yes, they did have telephones back then, but no 800 service. Just part of a pathetic joke on my part; get used to them. They are all I have.

pockets and avoided prosecution by bribing law enforcement officials. Since a Gould bribe was often more than a poor cop was making in a year, Ol’ Jay paid the man and merrily went along his way. He was truly one of the greats, and while many argue about whether all of these business giants were legitimate or not, no one can argue that Jay Gould was an out-and-out crook: a true Robber Baron. *Commodore Cornelius Vanderbilt. Here’s a quick quote from the ol’ Commodore: “The law? What

law? Who has time for the law? Ain’t I got the power?” Any doubt about his feelings for rules, regulation, and fair play? Vanderbilt made his first fortune in steamboat shipping before the Civil War, but because of the war switched to railroads. Why? Well, because (a) most rail lines were safely located in the North, and (b) unlike steamships, trains didn’t sink. Anyway, once Vandy discovered the unlimited possibilities of making money through the railroads, he jumped at the concept of consolidation, or the combining of several individual companies in order to create one huge company.10[10] See, Vandy used the consolidation of several different rail lines into a larger whole to corner the early railroad market. Did it work? By 1900 two-thirds of all American railroad mileage was controlled by only seven companies, and five of those were owned in various forms by Commodore Cornelius Vanderbilt. You tell me if it worked.

 

Section II ESSAY ALERT: How did the railroads influence:*Business practices*The federal government’s relationship with business*Speculation

 Section III: Robber Barons or Captains of Industry?

 

*Social Darwinism. Before we even get to the real heavy hitters, we have to understand their motivation, you know, the “WHY?” of their endeavors.. Yeah, I know, greed is a major incentive to these guys, but there is also a deeper psychological reason running through their minds: the belief in Social Darwinism.

In 1859, Charles Darwin changed human thought with the publication of his masterpiece On the Origin of Species.11[11] Darwin hypothesized that life on earth had evolved through the ages through a process of natural selection, in which living beings either adapted to their environment and hence continued to grow or died off as other, more robust species took their place. In other words, either adjust and adapt or someone else will come and take your cookies. In 1894, an English goof named Herbert Spencer applied Darwin’s respected theory to his own pseudo-science known as Social Darwinism. Spencer declared that, like animals in nature, human beings in society also evolved in line with natural selection. In Spencer’s version, the upper classes in society were successful because they were stronger and fitter than the weaker, lower classes. They worked harder, were smarter, and were more willing to do whatever it took to get ahead, while the weaker souls were consigned to be the worker bees and let someone take care of them. In other words, huge sums of wealth and power were a natural result of “survival of the fittest” (a term Spencer himself coined). Not surprisingly, the super wealthy adored Spencer’s theory, as it legitimized and moralized their claim to social and economic superiority. Uh huh, OK.

John D. Rockefeller: Oil. When it comes to downright cutthroat business, you need not look further than John

D. Rockefeller, the Pit Bull of the Robber Barons. Rockefeller saw the potential of oil at an early age, and in 1870 formed the Standard Oil Company of Ohio. As Rockefeller’s oil holdings grew, so did the sheer volume of the amount of oil he was both pumping from the ground and refining in his refineries. Rockefeller waved this volume

10[10] Today we call this a “corporate merger,” as in Time Warner or Exxon Mobile. Same animal, different name. Ethical? Not always. Legal? Yep. Lucrative? Oh my God yes!11[11] With his theory of evolution and its premise of natural selection Darwin also guaranteed that preachers all over the world would always have a Sunday morning sermon topic: Evolution versus Creationism. The debate goes on.

in front of the railroads noses to gain favorable shipping rates (remember that the cost to ship a product adds to its cost to consumers). In return, favored railroads would ensure that they gained Rocky’s business by offering rebates, or discounts given only to Rockefeller in order to keep the huge volume. In addition, the railroads further sucked up to Rocky by spying and reporting on his competitor’s shipments. The ultimate result was two-fold: Rockefeller could do you a favor and offer to buy you out, or, if you wanted to take him on, he would simply drop his prices so low that you could not compete with him.12[12] He owned so much of the market that he could afford to take a loss, while his competition could not. I tell ya, he could smell your fear a mile away. Rockefeller was so adept at this that in one six-week period in 1879, he was able to buy out or otherwise obtain twenty-two of his twenty-six competitors. The rest he left to fight over the scraps.

*Vertical Integration. Rockefeller was able to corner the oil market through a process known as vertical integration. Simply put, he was able to use his product’s price as a weapon. How? Easy. The price of oil, then and now, contains many “hidden” costs such as the costs of shipping, containers, pipelines, the storage facilities, the refineries, railroad cars, to mention a few. Now if you had to buy all of these extra necessities from a middleman, their costs could actually control your price. Rocky would have none of that, so he simply cut his hidden costs by eliminating the middleman. Rocky made his own stuff: barrels, refineries, pipelines, storage tanks, railroad cars . . . everything that Standard Oil used was designed, built, and produced in-house. Rocky owned it all. And that’s not all. Because Rockefeller owned all of the pipelines and storage facilities, which he good-heartedly allowed his poor competitors to use, he also controlled his competition’s railroad access to these facilities, which meant that he also controlled their shipping prices. This guy didn’t miss a trick, because, after all, oil ain’t much of nothin’ if you can’t refine it and ship it. And no one has ever refined it, shipped it, and controlled it like John D. Not even the Arabs.

*Seizing the market. OK, before we continue, we need to look at how these guys were able to seize and control practically all of the American economy during the Gilded Age. Remember when we said that they used measures, both legal and otherwise, to guarantee that they became and stayed rich? Well, here are some of those measures.

First on our list is the old standard, the monopoly. Indeed, the popular board game was designed after this Robber Baron strategy, in which a single person or company acquires control over all of a given commodity. That’s why you put all of those hotels on Park Place: to bankrupt your competition.

Secondly, we have the oligopoly. Sort of a sick cousin to the monopoly, this is the same except that it involves several people or firms that control a commodity.

Thirdly we have the cartel, an ugly word. This occurs when a few firms produce the same commodity, control its price, then control or restrict its availability to consumers. Why do I say its ugly? Because today America is enslaved by an Arab oil cartel called OPEC (the Organization of Petroleum Exporting Countries), one in which Arab nations produce tons of oil, then control the price as well as our access to it. This cartel is why we pay so much for gasoline, and why the Middle East matters so much to us. Ugly.

I left this jewel, the trust, for the last, because it is the one that caused all the fuss. In an effort to combat the monopoly, several states had laws that forbade companies from owning property across state lines. Not a problem. Rockefeller and the boys simply formed trusts, in which all stockholders allowed an “impartial” panel of trustees control all of their holdings. Legally, all the stock was part of a common fund, and technically not a monopoly; actually nothing had changed because you know that these trustees were in no way impartial. They took their marching orders from the Rockefellers of the world.

Rockefeller and his kind knew that the trust was too transparent to work forever, and they were right. In 1890, Congress passed the Sherman Anti-Trust Act, which outlawed any illegal combination that restricted competition or trade. Sounds great, but the Act was pretty much a flop. Why? Remember this, troops: it is one thing to pass a law. It is entirely another to enforce it. Who in their right mind was going to take the Robber Barons to court when they owned the law? For the next ten years, no one. But after the turn of the century . . . . well, you’ll see. Don’t go away.

*Andrew Carnegie: Steel. Carnegie is the warm and fuzzy Robber Baron, mainly because after he made his fortune he spent the remainder of his life giving it away. Still, how he achieved Baron status is a study in Mr. Opportunity knocking, then kicking the door in.

12[12] Many times Rockefeller would just drop his price to equal the size of the shipping rebates he was receiving, while directing his railroads to increase the shipping price of his competition. This dude was a Great White-variety shark.

While a young man visiting England, Carnegie arranged to meet Henry Bessemer and was consequently introduced to Bessemer’s claim to fame, the Bessemer Process of making steel from pig iron. Sensing the vast potential of steel Carnegie brought the process to America. Once he began to produce steel, his business skyrocketed due to the huge demand for the new material. Where Rockefeller used price to control the market, Carnegie used this demand to gain control over the steel market. Carnegie produced at economies of scale, in which he increased the amount of production in order to keep his price low. You know that as long as a demand exists, you can charge a lower price and still make money due to volume. Carnegie could, his competition could not. The overall effect was that Carnegie was able to “bleed”his competition to a point where they had no choice but to sell out to him at his price . . . which was always rock bottom.

Carnegie was a strict adherent to Social Darwinism, but he also believed that the ability to become wealthy was not only a result of natural selection, but also a gift from God. In his book The Gospel of Wealth Carnegie stated that all wealthy people have an obligation to both God and society to give back portions of their fortunes to benefit society. Because of this, Carnegie is best remembered as the founder of Carnegie Hall, as well as the Carnegie Endowment for the Preservation of World Peace. Indeed he was the Baron with the heart of gold.

*JP Morgan: Money. I had to save this guy for last because he is the kingpin, the daddy, the godfather of them all. Morgan would be a beast today with little adjustment for the passing years. As testament to his influence, he still affects America’s economy today; he is the guy behind Chase Bank . . .that is, JP Morgan and Chase Bank. Morgan was an investment banker; in other words, he bought up medium successful business stocks then sold them for a profit. The trick here is that, much like Jay Gould, he bought up so much of an individual stock that the appearance of the stock selling would prompt other investors to also buy the stock. When the selling price began to climb, Morgan would sell at a profit. Because of his success companies would become dependent upon him to buy their stock just to get it moving. See the opportunity here? Morgan began to exert tremendous influence over the success of these stocks, and because of this he also gained a disproportionate amount of power over these companies. Morgan used this power to demand that his people be placed on the company’s board of directors; when he had enough people on the boards he would use their votes to outvote the remaining board members. This is a corporate takeover; they still occur today.

Morgan had his grubbies in everything. Unlike Vanderbilt, Rockefeller or Carnegie Morgan’s holdings covered all aspects of the economy, including railroads and partnerships with Rockefeller. We are talking real power here. However, Morgan’s greatest achievement was his consolidation of the steel industry. As we have seen, Andrew Carnegie believed that the wealthy should return some of their wealth to society, so while still in his thirties Carnegie retired. Now, he had no intention to sell Carnegie Steel, and when approached aboard an ocean liner en route to England by JP Morgan to sell his company Carnegie said no. Morgan told Carnegie to name his price, but still Carnegie refused to sell. Finally, after Morgan approached him at dinner one evening, to get rid of the pest Carnegie wrote on a napkin the ridiculous sum of $500,000, knowing fully well that Morgan would never pay THAT much. Morgan sent the napkin back to Carnegie with a $500,000 check enclosed. Carnegie sold. With the Carnegie holdings, Morgan formed United States Steel, a corporation whose total worth on paper made it the first billion dollar corporation.

*Horizontal Integration. Morgan’s consolidation of the steel industry illustrates his philosophy of market control. While Rockefeller and Carnegie preferred to eliminate the middleman and thus save money through vertical integration, Morgan simply believed that the best way to control the market was to simply eliminate the competition. In horizontal integration a company buys up all the competition and consequently could care less about controlling costs and prices. Morgan amassed such a personal fortune that, in 1893, when the United States government went broke due to a economic depression, Morgan loaned the country the money to bail it out. Jeez, we could sorta use him now . . . .

 

OK, one more thing here of vital AP/Dual importance:

 

Many people believe that these men weren’t any more Robber Barons than was the Pope, or even Father Schismatic Gillespie. These men, regardless of the means by which they gained their wealth, still believed that they had a social responsibility. All of them, even Rockefeller and Morgan, gave millions of dollars to charity; many of

their contributions are still active today. Also, the means by which they achieved their wealth might have been unorthodox and perhaps seem questionable, but with the notable exception of Jay Gould they were not entirely illegal.13[13] Because they did what they did and were relentless in their determination, they were able to guide the nation through the stormy seas of industrialization, hence their nickname of “Captains of Industry.” In order to compete economically on a global level and grow as a modern nation, America had to undergo this journey sooner or later. Under the watch of these men, America was able to achieve what she set out to do: become an industrial behemoth, one with which the world would be soon forced to reckon.

 

Section III ESSAY ALERT: Here are your questions: *Which do you think they were: Robber Barons or Captains of Industry?

*Were they necessary? Why or why not?*Where would America have been without them?*Compare and contrast Andrew Carnegie’s Gospel of Wealth and Herbert Spencer’s theory of Social Darwinism.

 

 

Section IV: Industrialization and the Rest of “US”

 

Because it was so relentless and evolved so rapidly, American industrialization had an insatiable appetite. It gobbled up natural resources, untold tons of money, in some cases social morality, but most of, it simply devoured people. Industry needs labor, as much as it can get, and when it can’t find enough it goes out hunting for it. During the Gilded Age American business fed its appetite for people in several ways, all of which involved mass movements of people both immigrating from afar and migrating within the United States. *The Second (or New) Immigration. During the Civil War, with all of the able-bodied young men fighting down South and thus robbing northern factories of their work force, Congress passed the 1864 Contract Labor Law, which allowed businesses to go overseas (particularly Ireland) and hire workers to come to America. The businesses would pay for the immigrant’s passage, a debt the immigrant could only repay with his labor.14[14] One problem: the passage to America cost a lot of money. The immigrant worker was paid very little money. See where this is heading? Well, you do, and the businesses did, but unfortunately, immigrants didn’t. They were so desperate to get out of their crappy lives in Europe that they didn’t give a rat’s patoot about the circumstances under which they would be forced to live in order to do so. As such, even after the end of the Civil War, immigrant labor continued to flood into American cities from across the Atlantic. Unlike the first, or old, wave of immigration in the 1820s and 1830s, in which the majority of immigrants came from northern and western Europe (Britain, Ireland, Germany, Scandinavia) this second, or new, surge included multitudes from southern and eastern Europe (Italy, Spain, Greece, Hungary, Russia, Jews) as well as from China.15[15]

13[13] Plain and simple: you can’t break a law that doesn’t exist.14[14] Back in colonial times, joint stock company stockholders did the same thing to stock Jamestown with English settlers; you remember it as indentured servitude. 15[15] Important to notice that while the first immigration, with the obvious exception of Irish, were of German, Scandinavian, and English descent (ie Protestant) and consequently were basically like most native-born Americans in the 18th century, folks in the second immigration were not. They spoke strange languages, had weird social habits, and worse of all: they were Catholic or Jewish. This ain’t gonna go over well. And don’t even go there with those Chinamen . . .

In any event, by the 1870s and 1880s the Robber Barons were turning flips in the streets due to the influx of all this cheap labor. Factory jobs were incredibly simple (even a caveman could do it!) and there were oceans of cheap laborers wandering the streets looking for work. Who cared if they could not speak the language? Who gave a flip if they didn’t like their hazardous work environment or meager wages? Say ya don’t like it? See ya! Don’t let the door hit you in the butt on your way out. There are hundreds more (including those recent arrivals from the Deep South who used to be slaves) who will do your job, probably for less money and be darned glad they have it. Life be good for the Barons.16[16]

*Migration from Within. Heck, Americans ain’t stupid. I mean, if wads of immigrants are coming over here to take easy available jobs in the cities that don’t depend on the weather for a paycheck, don’t you thing Americans know about it also? As far as rural Americans were concerned, it was a no-brainer, and for two very good reasons. First of all, on the farm, you depended on several factors in order to get paid, most of which involved either drought, floods, blizzards, good weather, crop failures, insects, or whichever mood the Almightily might be in. Secondly, in the cities lie Mr. Opportunity, just a-knockin’ away. There were lots of available jobs, and the only impediment to getting paid and possibly getting ahead in life was getting your lazy butt out of bed and off to work. Show up, get paid. Case closed. As a result of this migration, between 1870 and 1900 approximately 100 million Americans pulled an opposite “Green Acres,”17[17] by moving off of the farm and into the cities. That’s a lot of people cramming into areas that were already full of immigrants and had very little space in which to house any new arrivals. If you are sensing trouble here, you’re right. Big, nasty trouble.

Life in the City . . . well, to be brutally honest, it sucked, no way around it. Immigrants were drawn to the cities because (a) that’s where the only jobs they could perform18[18] were, and (b) that’s where the other immigrants like them were. Consequently, the inner cities became cesspools of filth and disease that is requisite with massive overcrowding. Most immigrants were forced to live in filthy, overcrowded apartment buildings called tenements, located primarily in the cheapest areas of the cities known as slums. Many died of diseases born by destitution and poverty, indeed the infant mortality rate in New York in 1878 hovered around a staggering 70%! However, because their sheer numbers provided an endless supply of cheap labor, the ill and infirm were typically considered not worth the effort to keep them alive. This tendency was not isolated to New York or the eastern industrial cities; it didn’t matter in which city an immigrant might relocate, their situation was consistent: outside of their menial labor they simply didn’t matter.

Obviously, these people had no means by which they could represent themselves politically. As a result, some enterprising politicians began to tap this enormous source of support to build effective, powerful political machines. Typically identified with the Democrats, these men would offer immigrants that which they could not achieve by any other means: a shot at a decent life. The most infamous of these “bosses” was William “Boss” Tweed, who ran the Democratic political machine in the immigrant-infested precincts of New York City. Tweed’s organization, known as Tammany Hall, was based primarily on immigrant support and facilitated through Tweed’s to promise immigrants sanitation, running water, street lights, even food and health care in exchange for votes. Tweed’s graft and corruption extended deep into New York City politics and was perpetuated by the simple

16[16] It shouldn’t come as a surprise that the competition for jobs among immigrant workers, native born American workers, and newly-freed African Americans got a tad testy at times. In some cases, blood flowed in the streets as the factions fought each other over available jobs. American workers hated the foreign workers because they worked for less money and therefore took American jobs, and everyone hated the former slaves. When you spend over two hundred years working for noting, a penny is as fortune. They worked cheaper than everyone. 17[17] Sometimes I forget how young you are, or, rather, how old I am. “Green Acres” was a bad television show about a rich New York lawyer who sold everything and moved (with his ditzy Hungarian wife) to a really crappy farm in a place called Hooterville (really, that was the name of the town). Best thing about the show was his next door neighbor, Arnold the Pig. Yep, it was THAT bad, dahling.18[18] These poor folks possessed no marketable skills or education, heck, most couldn’t even speak the language. Consequently when they arrived in America they were fresh meat for those who would prey upon their condition . . . and prey they did. The only advantage they possessed was, despite their condition, at least they were white . . . which open up a whole new can of worms.

fact that it mattered not how many votes Tammany actually received, it mattered only that Tweed’s boys counted the votes. Ah, democracy in action.

*Life in the Factory. Urban immigrants primarily worked in the factories. Now, please understand that working in a Gilded Age factory was all the justification for college anyone needed. It sucked, and I mean really bad. Workers had no rights, such as a decent living wage, a safe work environment, tolerable hours, and what’s worse, they had no way to obtain any rights. Factories were filthy places, fit only for subspecies like freshmen, so naturally, we need to go in and take a look around.

         Hours. Although some states required that businesses limit their workers to no more than ten hours a day, it was largely ignored. Most factories worked as long as they darn well pleased, which was usually between twelve and sixteen hours a day, six and seven days a week. Some employees of Carnegie Steel, employing the scale of economies philosophy, worked as much as eighty-four hours a week. That’ll take the fight right out of you.

In the coal mines (an entirely different version of hell) workers were literally worked to death due to the presence of deadly toxic and explosive gases19[19] and coal dust, which filled your lungs with poison. These poor souls went underground before daylight, breathed poison all day, and came back above ground well after the sun had set . . . and all for the privilege of dying of Black Lung before their thirtieth birthday, if they were lucky.          Piecework. Workers were not paid by the hour, as they are now, but rather by the amount they produced.

This is called piecework, in which you are paid a set amount per piece of whatever it is you are making. The faster you worked, the more you produced, the more money you made. The downside? Well, anytime you get in a hurry something suffers, and in this case it was often safety, and always quality. Today, China suffers from this. They make a ton of junk, and produce it at superhuman production rates. We Americans, of course, gobble it up as quickly as we can. Problem is, the price and the quality are the same: cheap.

         The Sweatshop. REMEMBER THIS: Labor is always the most expensive burden a company must bear. Period. Whether it is a textile mill, automotive plant, or school district, labor costs money. OK, in the Gilded Age, companies would cut some of their labor costs by having their employees work in absolute hellholes called sweatshops. Why “sweatshops?” Because adequate ventilation costs money, and cheap labor simply wasn’t worth the added cost. Sadly, this practice still pops up from time to time here in America, and far too often in Third World countries.20[20]

*The Wages of Wages, or what near non-existent pay costs you. Pay was horrible in the factories (remember: labor is a burden to employers), and rarely enough off of which to live. Immigrant families especially suffered; because their cultures called for large families they had more mouths to feed. In order to do so, entire families had to go to work: mom, dad, and yes, the kids. Whether or not your kids worked often meant the difference between food and starvation.

*Working Girls (no, not THAT kind of work . . . behave!) Girls typically did not work in factories at as early an age as boys, but by their teens they were forced out of primary school and into the factory. Higher-level education (if you want to call it that, what an oxymoron!) was the sole property of males, and the responsibility of covering the lost income due to their brother’s being at school fell to the girls. Also, because they were female, they

19[19] Miners would take a caged canary underground with them before working in a shaft. If the bird died, they knew there was poisonous gas present, and the air would have to be evacuated before they could get to work. If the bird lived, they knew that the air was relatively safe . . . for the time being. The bird stayed with them the entire time they were underground; their lives depended on it. 20[20] A few years back, Nike came under fire for using sweatshop labor in Vietnam. Those $150.00 Air Jordans only cost about $20 bucks (mostly in materials) to make, so to cut labor costs Nike outsourced the production to Vietnam, where workers in that Communist “worker’s paradise” were working in absolute squalor and making around a buck a day. When American outrage produced zilch from Nike founder Phil Knight, Americans turned their anger towards His Airness: Michael Jordan.

did not receive the same wage as men. Therefore, when they did replace men they had to work longer hours to make the same amount. This is a trap with no bottom.

*Child Labor. This was America’s greatest tragedy, and would have never been allowed to exist except that, you guessed it: children worked for practically nothing! If you could keep the little boogers from running amok (which they often did by chaining kids to their machines) you could actually get a decent day’s work from them. By 1900, one in every five children were full-time employees in factories throughout America.21[21] How could this happen in America? Simple: parents needed the income, without it they would most likely starve.

*Charities: Jane Addams and Hull House. Obviously the horrid condition of poor working families disgusted some Americans and brought forth a few efforts to try and offer some relief. After all, there were no government agencies to care for the poverty-stricken, and with Robber Baron control over Congress there weren’t gonna be any anytime soon. The most famous charity was founded in Chicago by Jane Addams, and was called Hull House. Here, families (native-born American, immigrant, and African American) could come to take classes to learn how to read, learn English, participate in activities, sometimes even eat . . . anything to take their minds away from the drudgery of their daily lives. However well-intentioned, facilities like Hull House still cost money, and such charity was frowned upon by the Social Darwinists who ran things. Their attitude? “Harrumph, harrumph . . . poverty, you see, is a social weakness. Its what you get for being neither strong nor fit enough for success. You are poor because YOU’RE WEAK!!!!!! WEAK, I TELL YOU, WEAK!!!!! Ahem, so, you see, poverty is your natural, just reward for your weakness. BECAUSE YOU ARE WEAK BEYOND IMAGINATION!!!!! Charity only feeds this weakness (THAT YOU HAVE BECAUSE YOU ARE UNBELIEVABLY WEAK!!!!!), and is thus harmful to society.” OK . . . . due to these attitudes, and in a sad irony, charitable facilities such as Hull House struggled with their own existence while they were trying to help their constituents struggle with theirs. Because, we have learned, they were, well . . . . weak. But for how long?

 

 

Section IV ESSAY ALERT:*Contrast and compare the lives of industrial immigrant workers of the Gilded Age and antebellum slavery in the American South.*Working as an immigrant was no fun. Discuss their lot in life with regard to:

1. Working conditions2. Demographics of the Gilded Age workforce (men, women, children)3. The demographics of migration and immigration and its affect on American urban life.

 

 

Section V: The Forgotten Fight Back

 

You can’t just keep on abusing people before it comes back to bite you in the rump. See, the reason Mark Twain called this era “The Gilded Age” was that, on the surface everything appeared wonderful and prosperous, a society that was truly golden. But underneath this golden appearance (or gilding, as Twain called it), in places (such as the inner cities) where you don’t find “proper” people, that’s where the true story and identity of the age dwelled and spread like a virus. No, it wasn’t pretty, and subsequently was ignored, and because it would only disappear if one chose not to think about it, it festered . . .and festered . . .and festered. As a result, just like an infected sore, it was bound to burst, and burst it did.

21[21]By “children” we’re talking about kids between five and sixteen years old, with the majority being in the ten to fourteen year old range

*The Socio-Economic Gap Widens Even Further. Never in American history was the gap between the haves and the have-nots been so wide. Think of this as a the Grand Canyon, with no bridge to cross it. In a healthy socio-economic environment, the middle class serves as the bridge. But in the Gilded Age, the have-nots did not cross because there was no viable way to do so. They sat on their side of the socio-economic canyon and became more frustrated by the day.

Now, those in charge weren’t so stupid as to not realize the dangers here; after all, such conditions were part of the prime recipe for revolution. As a result, the have-nots were informed that theirs was not a lost cause and were urged that the key to becoming a have was to work hard, save your money, and one day “their ship would come in” (like the big boys really believed this; heck, who do you think owned these ships that were supposedly ready to come in?). A series of “rags to riches” books, written by Horatio Alger, told inspiring stories of young boys (no girls) living in near-fatal poverty who picked themselves up by their bootstraps and, through hard work and playing strictly by the rules, were able to achieve a measure of success. While this meteoric rise did occur from time to time, most notably by Andrew Carnegie (the rags to riches poster boy) it was the promise, rather than the reality, of success that was supposed to keep the working multitudes at bay. By late century, it wasn’t working.

*The Blessing and Curse of the Immigrants. Remember the second (new) immigration? Well, these folks brought more with them than the Mafia, pasta, and knishes (a Jewish food). They brought revolution.Most of the new immigrants originated from political backgrounds in which they had no control over whom or what governed them. As such, they had no way of exercising that lovely consequence of Locker’s Social Contract (REVIEW: What can the people do if their rights are being abused by the government?), nor could they exercise any form of free speech. (Well, I suppose they could, but they would end up jailed or dead, in which case discretion is the better part of valor . . . in other words, the smart money said keep your mouth shut.) Because of this they were ready listeners when a new idea of social justice (or anything that would improve their lot in life) bounced down the path. In 1848, a really bouncy idea popped up, and a whole bunch of folks listened . . .and listened well.

* Karl Marx and Socialism. There’s that dirty word: socialism. There was a time in American where I could be jailed for writing this. Seriously. It continues to be a loaded word, it remains a controversy to us today. Simply put, Americans are capitalists, and pure capitalists hate socialism. Case closed.

In 1848, a German professor named Karl Marx collaborated with Frederick Engel and wrote one of the most powerful and influential books of all time: The Communist Manifesto. In this book Marx and Engel lay forth their argument against the injustice of European industrial society, stated their theory of why and how it occurred, and most ominously, presented a plan by which it could be eliminated. IMPORTANT TO REMEMBER: You must understand that Marx’s ideas held tremendous appeal for poor people because they offered hope, and when you realize that at any given time in human history the majority of the world’s people will be living in poverty, you can understand how truly powerful Karl Marx was . . . and still is. Socialism is a social, political, and economic philosophy that promotes public ownership (meaning ownership by all of the people) of the means of production,22[22] as opposed to the capitalist’s desire for private ownership. To Marx, the only way for this to occur was for the workers to rise up together and overthrow (through violent revolution if necessary) the capitalists and forcibly seize the means of production. In the Communist Manifesto Marx famously wrote “Workers of the world, unite! You have nothing to lose but your chains.” Once this occurred, the wealth of a country could be evenly and equally distributed to all citizens, eliminating the presence of socio-economic classes. Everyone would hold hands, quit bathing, sing “Kumbayah,” and work together for the betterment of the society as a whole. No rich, no middle class, no poor. In Marx’s words “from each according to his abilities to each according to his needs.”

Most Americans saw (and still regard) socialism as a threat to American ideals such as free enterprise,23[23] liberty, and property. From our twenty-first century perspective, in which we have battled socialism all over the world for over one hundred years, we know its limitations, witnessed it weaknesses, and see how, in most cases, it simply doesn’t work. However, in nineteenth century America this was a huge threat, and when paired with the

22[22] “Means of production” includes everything-buildings, transportation, machinery, raw materials, and yes, labor-required to produce a commodity. Marx argued that only the workers could own their labor, so naturally they had the right to any part of profit for which their labor was responsible. Not a popular idea here in America.23[23] Free enterprise is the right to create and own your own business, from which you receive the profits if you do well or bear the losses of you don’t. Bill Gates loves American free enterprise; in most socialist countries he would have been forced to turn over Windows to the government and work for the military.

enormous numbers of hacked-off poor working people to whom socialism is aimed, it scared the pants off of folks. They were right to be worried: the garden was ripe for planting socialism in America; someone need only to sow the seed.

*The Anarchists. There was another screwy philosophy heading into America during the New Immigration: anarchy. Simply put, anarchists oppose ALL forms of government, even government by the people. They supported the violent overthrow of governments everywhere, sort of a social-political Al Qaida of its day. True, most of them were out and out kooks and nutcases, but they were dangerous kooks and nutcases. The real only thing that they had in common with the socialists was their hatred of the status quo (Latin, meaning “the way things are”) and the rights of the working class. Now, Socialists were goofy and scary, but not nuts like the anarchists. It is the combination of these two groups, both intentional and unintentional, that will cause problems, serious problems, and end of costing hundreds of lives.

*America: Meet the Labor Union. First of all, lets get this straight: while their basic beliefs are similar, not all labor unions are socialist by nature. Its hard to envision the members of the NFL Player’s Union, which consists of a collection of twenty-something year old millionaires, willingly giving it all up to the rest of society so they can live on some California commune with women who don’t shave their legs or armpits. The fact that they are millionaires runs opposite to the basic concept of socialism, a classless society. That said, I can now look at how socialism lay the groundwork for the American labor movement without fear of personal bodily injury, property damage, or GOD FORBID offending anyone.

American workers REALLY liked the idea of their owning their own labor, and admit it: it makes sense. If a company’s research and development department created and patented a machine to do the same work as a person, the company would own the machine, right? Ok, same concept. Company provides labor through machine, company owns labor. Worker provides labor through his own work, worker owns labor. This led workers to the idea (and a good one) that separate we are nothing to the bosses. However, together we pose a huge chunk of their profit, because without our collective work (the sum of their labor, which is the finished product), they ain’t getting’ squat. Consequently, if we band together and a go to the boss as a group we can negotiate a deal for use of our labor. In other words, we can go in collectively and bargain a price for our labor. This is the basic foundation of the American labor union: the right of collective bargaining for specific goals. Without this, unions cannot function, because their strength is ALWAYS in numbers. How unions can get obtain these goals is the second basic idea behind the union: the strike. Give us what we want or we will refuse to work and shut you down. It works, and really well.

Labor unions have been around since before the Civil War. One of the first unions was the Knights of Labor, formed in 1869. The Knights were an industrial union, meaning that they allowed anyone—skilled, unskilled, black, white male, and female— to join. The Knights’ basic weakness was that they forgot the basics idea of the labor union—collective bargaining for specific goals—and instead focused on “pie in the sky” idealism such as affordable housing, and end to discrimination, and women’s rights. These weren’t labor issues; they were social issues, and as such fit more of a socialist agenda than the goals of a labor union. The adverse side affect? These issues attracted the poor and displaced, but also anarchists and revolutionaries, a demographic that would haunt organized labor for years. On the management side, well, American businessmen couldn’t provide these even if they wanted to. In addition, the Knights found the strike to be distasteful, and let’s face it: if there is no danger of being shut down and losing money why in the world would a business even listen to the Knights? You’re right, they didn’t.

* Haymarket Square. In 1886, a primarily-German anarchist group associated with the Knights of Labor held a demonstration outside of the International Harvester factory in Chicago in a park known as Haymarket Square. The gathering was designed to protest worker demands for an eight hour work day, as well as explain the virtues of socialism and anarchism (if there are indeed any to explain). To keep the peace, International Harvester called upon the mayor to send police to keep the mob peaceful. All was going fairly well until one of those idiot anarchists threw a bomb into the crowd, killing a policeman. The police fired into the crowd, and a riot broke out. The overall effect was that Americans all over the country associated the anarchist’s bombing with the Knights of Labor, and with labor unions in general, and this gave America a bad taste in its mouth regarding unions. Haymarket pretty much finished off the Knights; they were borderline socialists, and by the 1890s had gone the way of the dinosaur: extinct.

In 1886, a New York cigar maker named Samuel Gompers formed the American Federation of Labor (AFL). The AFL was a craft union, meaning its membership was restricted to those who had a specific craft: machinists, shoemakers, electricians, etc. Also, when the AFL went to bargain with management they focused on specific “meat and potatoes” issues such as working hours, wages, and working conditions: items that could be provided by the company. Lastly, the AFL was a true believer in the strike, and they used it quite well. The result of Gompers’ creation and leadership is that the AFL is still with us today, and one of the most powerful labor unions in America.

*The Great Strikes: Homestead and Pullman. Two violent incidents in the 1890s dealt the American labor movement a near-fatal blow: the Homestead Steel Strike and Pullman Railroad Strike.In 1892, the Carnegie Steel Mill in Homestead Pennsylvania decided to cut costs by replacing human workers with labor-saving machinery. Knowing full well that the union would go nuts over this, mill manager H.C. Frick (Carnegie was vacationing in Scotland, but the cost saving idea was all his) declared that from that point on, all bargaining with labor would be done on an individual basis, and NOT collectively. Of course, the union protested what amounted as a union-busting move, and struck the mill the next day. Frick retaliated by hiring “scabs” (non-union workers to work in place of union workers during a strike) along with three hundred Pinkerton detectives to protect them. The strikers attempted to storm the mill to get at the scabs, but were fought off by the Pinkertons, who realized that eventually the strikers would storm and seize the mill. Consequently, the following morning, the detectives floated up the Monongahela River on barges in order to sneak in the back way and defend the building from the inside. The strikers, however, was waiting, and opened fire on the detectives. Rather than face a fate of either drowning or being shot, the Pinkertons finally surrendered. All told, six Pinkertons and three workers died. Six days later the Pennsylvanis National Guard showed up to escort the scabs to and from work, and as time went on striker resistance faded. Tensions ran high for six months, when at last union opposition ceased. The damage to the union was catastrophic, and not because they lost lives. Then and now, unions depend on the support of the American people, and the violence and sight of soldiers protecting Americans going to work was enough to convince most Americans that labor unions were bad news, and most definitely un-American.

The death blow for the American labor movement in the late nineteenth century occurred in 1894 at the Pullman Palace Car Company in Pullman, Illinois. The town of Pullman was supposedly a model company town in which all employees were required to live and shop. In 1893, with the country in the midst of a depression, the Pullman company laid off over half of its workforce of 5,500, cut the remaining worker’s wages anywhere from 25% to 40%, while at the same time actually raising the worker’s rent and bills. Well, that dog ain’t gonna hunt, so the American Railway Union24[24] went on strike. It is important to remember that Pullman had a monopoly on rail cars; every train that rode the rails did so with Pullman cars. When the union struck, they refused to build anymore cars, and when the railroad’s cars began to fall apart, they were up the creek. Railroad traffic across the country ground to a halt. Knowing what you do about the importance of the railroad, you can see where this is a huge problem for the entire country. The Illinois state attorney called for President Grover “the Rover” Cleveland to send in the army, but Cleveland responded that the Constitution would not allow him to interfere with the strike unless the operation of the federal government was threatened. This is where Grover’s light went on (one of the few times that Cleveland’s light going on did not involve a woman; they didn’t call him the Rover for nothing), because the trains were the ONLY method by which the mail was delivered. Because the post office was a government agency, Grover could legally send in the army to protect the mail. He did, and soon afterward the strike was busted. Once again, the union was seen as threatening the American way of life, and after the Pullman strike American unions went into hiding for the next 50 or so years. They will, however, be back.

Section V ESSAY ALERT:*What was the appeal of Marxism on urban immigrant industrial workers? Explain.*Examine the relationship between socialism and the labor movement.*Contrast and compare the Knights of Labor and the American Federation of Labor.

1. Membership2. Agenda/goals3. Reasons for success/failure

24[24] The American Railway Union was founded by Eugene V. Debs. Later on, Debs will run for president as a Socialist, and come darned close to winning, receiving over 500,00 popular votes. More on Eugene further down the line.

*Contrast and compare Haymarket Square

, the Homestead strike, and the Pullman Strike.