Posts Tagged ‘The Gilded Age’

How Economic Growth Between 1860 and 1929 Changed American Society

November 29, 2012 Leave a comment

The economic growth during the period of United States history from the Civil War to the Great Depression immeasurably shaped the way that business was conducted, regulated, perceived, and combated, greatly molding the state of current commercial activity and society.  From protective tariffs, “trust-busting”, and labor union formation to industrial development and sophisticated financial markets, this era experienced a dynamic evolution in the natures of business, society, and government, and the way that the three areas affect one another.

When discussing this time frame, it is convenient to divide it into four sub-eras: The Civil War and Reconstruction, The Gilded Age, The Progressive Era, and The Roaring Twenties.  While each of these sub-eras unquestionably exerts significant resemblances and commonalities with its predecessors and successors, this arrangement provides an effective means of analyzing the evolution of business, society, and economic development within the period of 1860-1929.

The Civil War and Reconstruction viewed through the lens of economic development is a fascinating perspective, as much of the peripheral and underlying causes and effects of the dispute was related to business and politics, such as Southern frustration with national protectionist policies, railroad and infrastructure development, and the evolution of the national workforce and economy. According to the section entitled “Northern Industry in the Civil War” of The Historical Times Encyclopedia of the Civil War, edited by Patricia L. Faust: “One major economic result of the war was that it helped change the U.S. from a country with an essentially agrarian society to one dependent on mechanization and a national market system.”[1]  This quote illustrates the reasons that the American Civil War is regarded as one of the first industrial wars, in large part due to the alignment of sophisticated distribution and supply networks from  modernized railroads, which were employed by the Union and are often cited as one of the distinct advantages that helped assure its overall victory.  The emphasis on and growth of railroads continued into the Reconstruction Era, culminating in the completion of the First Transcontinental Railroad in 1869 (which began during the war in 1863).  According to Charles Perrow, the interconnected railroad network not only improved business logistics and communication, but also had a massive influence on how new large companies would assemble their management structures and finances:

As tracks expanded across geographic areas, the sheer size of operations—from surveying and engineering to scheduling and accounting—required organization on a massive scale. The systems to support the new industry—in management, finance, business analysis, and distribution—shaped the infrastructure from which the modern business enterprise would emerge.[2]

The Reconstruction Era experienced countless opinions and theories on how to repair and rebuild the South following the war; specifically, conflicting proposals existed on to what degree and how to convert the region from an agrarian economy based on agriculture and slave labor to a modern industrialized economy in the mold of the Northern urban cities.

As Reconstruction came to a close, the days of the business tycoons began to emerge.  This era come to be known as “The Gilded Age,” due to humorist and author Mark Twain’s satirical take on the morals of its socioeconomic climate.  The figures of this era were the nation’s first industrial magnates, notably: Cornelius Vanderbilt in railroads, John D. Rockefeller in oil, Andrew Carnegie in steel, and J.P. Morgan in utilities and finance, among others.  In fact, according to Financial Institutions and Markets, by Murray E. Polokoff, it was financing by bankers like Morgan which made the accumulations of capital that made the birth of big business possible[3]  (44).

While considerable ethical debates surround the actions and tactics of these “robber barons”, as they were disparagingly referred to, the impact of their developments of nascent ventures into conglomerate industries and corporations on modern business and society is inarguable.  The most pervasive and fundamental contributions that shaped modern business can perhaps best be summarized in the following passage from the article “Comparative Perspectives on the Gilded Age and Progressive Era”, by Ballard Campbell:

As corporations multiplied and as various industrial sectors developed, the workforce shifted proportionately toward wage labor in manufacturing, mining, sales, and services.  Innovations in railroads, steam shipping, and electronic communications increasingly linked American producers to markets around the world, integrating the United States into the emerging ‘global’ economy.[4]

In addition to the aforementioned effects on the development of the companies themselves, the period also revolutionized the way they attained capital and financial assets: “Toward the end of the century… Large-scale enterprises were becoming increasingly common in manufacturing as a result of internal growth… As they became more common, large industrial firms began to offer their shares for public purchase” 3 (44).  Modern stock markets and exchanges trace much of their influence to the developments of the gilded age.  Also, the use of protectionism by a Republican-dominated Presidency in the era foreshadowed impending growth of political-corporate entanglement.  The Gilded Age completed the shift that was occurring during Civil War and Reconstruction from an agrarian nation to an industrialized workforce based on wage labor.  Such business and labor growth also led to a large wave of immigrants seeking to strike it big in the land of opportunity. The Sherman Antitrust Act of 1890 was an influential piece of legislation that would be a precursor to further regulatory action in the 20th century.  Finally, the fruits of The Gilded Age were not all devoted to business developments and profits.  According to Business, Government, and Society: A Managerial Perspective: “By the late 1800s it was growing apparent to the business elite that prevailing doctrines used to legitimize business defined its responsibilities too narrowly”[5] (127).  Massive philanthropic endowments and contributions from the age’s most prominent figures such as Carnegie and Rockefeller would change corporate roles in social responsibility and the public’s expectations of it.

Outcry against the excess of The Gilded Age caught the eye of a Populist, and later Progressive Movement trail blazed by William Jennings Bryan.  Bryan believed in advancing labor unions, which were slow to develop during the Gilded Age, and longed for the rural society of the past based on populism and morality, which he believed had been stained by the greed of unfettered capitalism.  He also supported bimetallism, which he believed would help spur economic growth. According to The Smart Aleck Guide to American History by Adam Selzer: “Bryan made a speech about it, saying that you could tear down the cities and they would grow back up, but if you tore down the farms, the country was done for”[6] (148).   Bryan unsuccessfully ran for President twice and lost to William McKinley, the industrialists’ candidate, in 1896 and 1900.  However, with the assassination of McKinley in 1901, Vice President Theodore Roosevelt assumed duty and would become the face of the Progressive movement.  The lasting legacies of the Progressive Era were a larger precedent and authority for business regulation, the growth and power of labor unions and workers’ rights, and the burgeoning automobile industry led by Henry Ford’s moving assembling line’s ability to provide cars to everyday citizens.  Also, World War I saw a growth in the power of federal income tax and a shifting economic climate from mobilization and demobilization.

What followed WWI and the Progressive Era was a period known as the Roaring Twenties.  According to “The Twenties: A Decade of Turmoil”: “The 1920s provided something of a roller coaster ride for the American people… The progress made toward reform under progressives Presidents Roosevelt and Wilson slowed to a crawl, as many Americans began to feel the need for a break from the moral intensity of the Progressive Era.”[7]  The Roaring Twenties is regarded as one of the premier eras of culture in America, as movements such as the flappers, The Jazz Age, and a new wave of immigration led to a new eclectic and unique American identity.  The further growth of stock and credit markets in the 1920’s led to spendthrift consumption and speculation by both consumers and businesses, which would play a role in causing The Great Depression.

The social, economic, and business waves during the years of 1860-1929 were encompassing, alternating, and extremely influential.  Much of current American society’s perceptions of labor, business, and living standards were greatly shaped by the actions of this time period.  While the positives and negatives of many of the outcomes can be debated ad nauseum, the rise in living standards and overall level of wealth that occurred in these years played an immense role in creating our modern socio-economic and political environment.

[1] The Historical Times Encyclopedia of the War: “Northern Industry in the Civil War” ed. Faust, Patricia L.

[2] Charles Perrow, Organizing America: Wealth, Power, and the Origins of Corporate Capitalism. Princeton: Princeton University Press, 2002, p. 215.

[3] Polakoff, Murray E., Durkin, Thomas A. et al.  Financial Institutions and Markets, 2nd ed.

[4] Comparative Perspectives on the Gilded Age and Progressive Era.  Ballard Campbell.

The Journal of the Gilded Age and Progressive Era , Vol. 1, No. 2 (Apr., 2002), pp. 154-178

[5] Steiner, John F., Steiner, George. A. Business, Government, and Society: A Managerial Perspective Texts and Cases, 13th ed.

[6] Selzer, Adam.  The Smart Aleck’s Guide to American History.  2009