Analyze the Effects That the Wealthiest Individuals of the Gilded Age Had on America
Analyze the Effects That the Wealthiest Individuals of the Gilded Age Had on America
As the American Civil War came to an end, an era of phenomenal economic growth was spurred by a second Industrial Revolution. It touched all geographic areas of America, evident in increased farm output and labor efficiency. The magnificent flow of goods generated could be efficiently transported by freshly lain transcontinental railroads made of Bessemer steel. Presiding over these late nineteenth century developments was a new class of extremely wealthy industrialists, the main beneficiaries of the era’s prosperity.
They dominated substantial sectors of the new economy such as steel, oil, banking, and rail transportation. While these individuals created and donated outstanding wealth, they also engineered one of American history’s most corrupt and unequally heterogeneous time periods, dubbed the Gilded Age by Mark Twain. Such ambiguity blurs the legacy of these incredible few, who some call “robber barons” and other call “captains of industry”. However, neither polarity is completely accurate. The wealthiest Americans during the Gilded Age had both positive and negative effects on American society.
While a large group of individuals amassed incredible wealth during the Gilded Age, there existed an even more elite group consisting of individuals that rank among the richest men in history. It included John D. Rockefeller, Andrew Carnegie, Jay Gould, James Fisk, and J. P. Morgan. To understand their later deeds, one must understand the strikingly similar environments in which these men came of age. For example, all of the aforementioned men were born in the Northeast during the Second Great Awakening, an environment in which principles such as self-discipline, frugality and efficiency were highly valued.
Preachers of the time period endorsed the Calvinist view that “where you find the most religion, you find the most worldly prosperity”, while poverty was considered a condition of the lazy and spiritually weak (Chernow 55). Like many others have done in history, the wealthiest industrialists established religion as the concrete foundation on which they justified their actions. With the exception of J. P. Morgan, the most affluent robber barons also grew up with little material means. Carnegie worked as a bobbin boy at age 14, earning about $1. 20 a week, and
Rockefeller picked potatoes for 37 cents a day in his youth (“Andrew Carnegie”, Chernow 32). These challenging living conditions further instilled frugality and grit inside the destined business leaders of America, qualities that would help them conquer industrial America. Most of the future industrialists also entered the business world in their teenage years. Sixteen-year-old Rockefeller so furtively pursued employment that he visited businesses from early morning to late afternoon six days a week for six weeks until he finally found a job as a bookkeeper (Chernow 44-45).
Additionally, they were all in their early twenties when the Civil War began. Amusingly, not one of them enlisted; each hired a replacement for $300 instead (Zinn 255). The young entrepreneurs sought to benefit financially during the war instead of fighting in it, although most supported the Union cause (Chernow 70). The road that each of these extraordinary men walked led them into a monumental era. War raged, new industries boomed, and they had the chance to take advantage of their rapidly changing surroundings. Few in history had as fortuitous opportunities as these men who were born in the right place at the right time.
The Civil War gave young industrialists an opportunity to flaunt their business acumen during “wartime prosperity”. However, with the exception of John D. Rockefeller, who quadrupled his and his associate’s company profits and then bought the company through fair and hard work, their ascent during the period was generally cluttered with acts of questionable morality. In one notorious negotiation, J. P. Morgan bought 5,000 rifles for $3. 50 each and sold them for $22 each to an army general, making a handy $90,000. It was later found that the rifles shot off the thumbs of the soldiers using them.
However, no compensation was given because the purchase was an authentic legal contract (Zinn 255). In addition, Jay Gould and James Fisk heftily profited from trading railroad stocks. With inside information, they unfairly beat out rival speculators. James Fisk also commonly sold war commodities for triple their market price to desperate armies (Josephson 66). These young men were still largely in a developmental stage during the Civil War, but their actions during the time period heavily foreshadowed their later actions. Postbellum America was said to be “the most fertile in American history for chemers and dreamers” (Chernow 97). The young industrialists naturally continued to increase their wealth in the decades after the war with blazing speed, but the actions they made to do so further polluted their legacy and adversely affected American society. Perhaps the most notorious robber baron was John D. Rockefeller. During the war, the twenty-five year old had bought his condescending associates out and then opened Cleveland’s largest oil refinery. “It was the day that determined my career” he later said (Chernow 87). After the war, Rockefeller sought to further expand his business.
He established the Standard Oil Company, a trust with $1 million dollars in capital, with the goal of controlling all of the oil industry (Chernow 134). An action that largely epitomizes his company’s chicanery is the formulation of the South Improvement Company, a collusion with three powerful railroads to increase Standard Oil stakes. Under the SIC, Standard Oil would receive a payment for every barrel of oil shipped by his refineries as well as other refineries, a deal that would discourage railroads to ship oil from refineries outside the SIC, virtually rendering it impossible for small refineries to survive.
In exchange, Rockefeller promised to meet a daily shipping quota which would stabilize railroad profits (Chernow 136). When struggling Cleveland refineries heard of the SIC plan, they immediately protested. The plan eventually failed; however, while the plan was intact, Rockefeller bought 22 out of 26 Cleveland refineries in one month, a shopping spree dubbed the Cleveland Massacre (Chernow 145). One Cleveland refiner’s daughter said “Father went almost insane over this terrible upset to his business. His whole life was embittered by this experience”.
Countless similar stories were told as Rockefeller ruthlessly conquered the oil industry by means of horizontal integration. “The day of combination is here to stay. Individualism has gone, never to return” he said (Chernow 148). Whenever legitimate competition arose, Standard Oil took extreme measures to corral it. When a rival pipeline company threatened Standard Oil’s dominance, Standard Oil hired lawyers to act as farmers and landowners who opposed pipeline construction, bought entire valleys of land, persuaded companies to not sell construction supplies to the rival company, and generously bribed legislatures (Chernow 207-209).
Using similar coercive means as well as outright bribery, Rockefeller came to control 95% of the oil industry by 1877, eventually accumulating a fortune that makes him the richest man in American history (Bailey, Kennedy, and Cohen 541, Chernow 505). His success inspired countless business leaders to form trusts that further disproportioned American wealth, hence indirectly harming America socioeconomically on top of his colossal direct harm. Other industrial captains also amassed their fortunes at the expense of others.
Railroad builders such as James Hill, Vanderbilt, and the Big Four employed Irish and Chinese workers at the cost of one or two dollars a day. Hours were long and the work was dangerous. In just 1889, 22,000 railroad workers were killed or injured (Zinn 256). The most famous demonstration of railroad labor unrest was the Great Railroad Strike of 1877 which was triggered by wage cuts. 100 people died, and millions of dollars of property was damaged (Carrigan). The steel industry also generated aggrieved workers.
Two-thirds of the workers at Andrew Carnegie’s largest steel manufacturing plant, Homestead, earned $1. 40 every 12 hour workday, barely enough to keep a family above the poverty line of $500/year. Asked about working conditions, one Homestead worker said, “I lost forty pounds the first three months I came into the business. It sweats the life out of a man. I often drink two buckets of water during the twelve hours; the sweat drips through my sleeves, and runs down my legs and fills my shoes” (Reilly 8).
The wealthy inequality created by big businesses like Carnegie’s begot class warfare. In 1892, Homestead workers went on strike after the manager decided to cut wages and break the union. When Pinkerton detectives failed to stop the riot, federal troops were called in (Zinn 276). The Gilded Age naturally produced monopolistic big businesses that were owned by immensely wealthy individuals due to the nature of the technological innovations of the time period. They established an unfortunate precedent of greed and “survival of the fittest” in American society.
One must also never forget the hundreds of thousands of forgotten men who toiled twelve hour workdays to enlarge a few men’s coffers. Much like the actions of the Spanish conquistadores, those of the wealthiest industrialists of the Gilded Age are mainly noted for their detrimental effects. However, this Black Legend of the late nineteenth century is not entirely accurate. It is true that greed and inequality loomed over them; however, they also developed the American supereconomy. For example, aided by the Bessemer process, Andrew Carnegie led a dramatic increase in steel production.
In 1880, one million tons of steel were produced. By 1910, output reached 25 million tons, largely thanks to Carnegie’s innovative vertical integration (Zinn 254). Incredibly, before the 20th century, Carnegie Steel Company was producing more steel than all of Great Britain (Roark, Johnson, and Cohen 633). Rockefeller also utilized his unmatched executive skills to create a remarkably efficient business machine. For example, by applying thirty-nine drops of solder on cans of oil instead of forty, he saved $2,500 a year early in his career.
In time, this tweak saved the Standard Oil Company hundreds of thousands of dollars, and Rockefeller constantly sought for such minute enhancements (Chernow 180-181). His genius can be seen in his jaw-dropping wealth; in 1902, his income was $58 million, over a billion dollars in 1996 dollars (Chernow 504). From 1865 to 1900, the American economy grew eightfold, and this was largely thanks to the talents of the industrialists who aided America in becoming the world superpower it is today (Watts). The 19th century industrialists also did not solely harm the common man.
For example, Rockefeller’s monopolization of the oil industry ruined many common men, but it benefited even more by making kerosene widely available. This was because of Standard Oil’s foundational principle: “that the larger the volume the better the opportunities for the economies, and consequently the better the opportunities for giving the public a cheaper product without the dreadful competition” (Chernow 150). Rockefeller accomplished just this, as the price of refined oil was cut in half as a result of his enterprise.
Because of Rockefeller, millions could light their homes for a penny an hour, a cost that would be much higher if not for Rockefeller’s dominance (Folsom 83). Perhaps the advances he gave to the common man outweighed his sins against the relatively few in the oil industry. Adhering to the doctrines of Andrew Carnegie’s Gospel of Wealth, the wealthiest industrialists donated stupendous amounts of money to charitable causes. In 1911, the Carnegie Corporation was founded, a charitable enterprise with $125 million in starting capital founded by none other than Andrew Carnegie.
To this day, it is one of the highest ranked charitable foundations with over $2 billion in assets for education, prevention of deadly conflict, and strengthening of human resources (Traub). As an extremely devout Christian, Rockefeller donated money from his very first paycheck, a fact that renders any extremely stingy and greedy portrayal of him false. “I have my earliest ledger and when I was only making a dollar a day I was giving five, ten, or twenty-five cents” he said. What distinguished Rockefeller from other great donors was his generous funding of medical research, an interest sparked by his father’s shady career.
When asked about building medical facilities, Carnegie once said “That is Mr. Rockefeller’s specialty. Go see him”. In 1901, the Rockefeller Institute of Medical Research was founded. Its work produced the first American Nobel Prize for medicine (Chernow 478-9). In 1910, Rockefeller fought hookworm on a global scale and within five years, it was nearly eradicated (Chernow 481). In donating to charitable causes, Rockefeller managed his charitable expenditures as he would with Standard Oil.
By his death in 1936, he had given away $550 million, making him American society’s greatest philanthropist (Bailey, Kennedy, and Cohen 576). One area that almost all of the late nineteenth century capitalists contributed to was education. Rockefeller himself supported UChicago, Huntington, two Negro colleges, and the famous Tuskegee Institute. Carnegie personally contributed $60 million to the construction of public libraries (Bailey, Kennedy, and Cohen 576). Many others also contributed to America’s education. Cornell, Duke, Vanderbilt, and Stanford were all captains of industry.
The colleges that they founded are among America’s top colleges to this day. Largely thanks to the donations of the industrialists, the illiteracy rate fell from 20 percent in 1870 to 11 percent in 1900.. It has been said that “a free government cannot function successfully if the people are shackled by ignorance” (Bailey, Kennedy, and Cohen 573). Thus, the donations of the wealthiest industrialists have had a profound effect on American society as young men and women in schools and libraries across the country to this day have been influenced by them.
During the Gilded Age, the combination of laissez-faire economics, post-war sentiment, and technological innovation led to a spur of rapid change that forever altered the American landscape. The wealthiest industrialists of the time period became wealthy by taking advantage of its developments. In retrospect, late nineteenth century American society can largely be viewed as the results of the influences of the industrialists. The effects had no definitive net impact, but they did forever shape American society.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 12 October 2016
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