The Gilded Age (part I)
Ch. 17 (p. 519-537)
What role did the presidents play in this era?
Why is this era “gilded” and with what?
Who benefitted from this era? Who lost?
“What is the chief end of man?--to get rich. In what
way?--dishonestly if we can; honestly if we must.”
– Samuel Clemens (aka Mark Twain),1871
Gilded Age-period when corruption existed in
society but was overshadowed by the
wealth of the period
• “gilded” is when something is
golden/beautiful on the surface but is really
cheap/worthless underneath
• Term comes from a book written about the
time period by Mark Twain and Charles
Dudley Warner in 1873: The Gilded Age
– Explored political and economic corruption in the
United States
– The central characters were tied together in a
government railroad bribery scheme
– Depicted an American society that, despite its
appearance of promise and prosperity, was riddled
with corruption and scandal
USA in the Gilded Age: 1870-1900
Ranching, Mining, Farming
Industrialization
Reconstruction &
Rise of Jim Crow
Ringing in a new age
The West
• Farmers, ranchers, &
miners closed the last of
the frontier at the expense
of Indians
• Mining was the 1st attraction to
the West; Miners created
“instant towns” in areas where
gold or silver was discovered
Industry was regional by 1890: (a) NE
had 85% of industry, (b) the sparselysettled West provided raw materials for
industry, & (c) the South was still
recovering from war (made tobacco, iron
& textiles; but ½ as many manufactured
goods as NY state)
The South
• After the failure of
Reconstruction in 1877,
the South entered the
Jim Crow era
The Industrial North
• Experienced an industrial revolution, mass immigration, & urbanization
• America became the world’s leader in railroad, steel, & oil production
Second Industrial Revolution 1871-1914
• Marked by enormous growth and
consolidation of wealth and ownership
– Major Industries
• Railroads
• Automobile
• Steel
• Oil
• Electricity
• Communication
Forced competitors out of
business by reducing wages thereby
guaranteeing price control.
– The Industrialists or Robber Barons
• William Vanderbilt (Railroads)
• Jay Gould (Railroads)
• Andrew Carnegie (Steel)
• John D. Rockefeller (Oil)
• Henry Ford (Automobiles)
Socialism v. Capitalism
• What is the role of government?
• What role should the central government play in the
economic development of the country?
• How could government stop a Great Depression?
More government
Less government
Liberal
Where do you fall Conservative
Socialist
Capitalist
ideologically?
Democrat
Republican
Inventors/Inventions
• Thomas Edison
– Perfected the light bulb in
1880, and motion picture
– Organized power plants
– Established first research lab
• Alexander Graham Bell
– Telephone (1876)
• Henry Ford
– Assembly Line
• George Eastman
– Camera (1885)
• Samuel Morse
– Telegraph (1837)
• Wright Brothers
– Airplane (1903)
• Christopher Sholes
– Typewriter (1867)
• Guglielmo Marconi
– Radio
Wright Brothers on
1903 Flight
Samuel Morse
19th Century
Typewriter
Alexander Graham Bell
Marconi
19th Century
Camera
Presidents of the Gilded Age
U.S. Grant
1869-1877
Rutherford B. Hayes
1877-1881
Grover Cleveland
1885-1889 and
1893-1897
Benjamin Harrison
1889-1893
James Garfield
1881
Chester A. Arthur
1881-1885
William McKinley
1897-1901
Scandals of the Grant Administration
• During Grant’s terms as
president, material interests
(money, industry) became
more important than the
ideology and civil rights of
Lincoln’s time
• The Gilded Age was
enabled partly because
most presidents during
this era, including Grant,
were weak in relation to
Congress and business
interests.
• The U.S. government’s
economic policy was
relaxed during these
years, allowing
Americans to take
advantage of the laissezfaire economics in
increased speculation,
investment, and
corruption.
Jay Gould and James Fisk:
The Gold Ring (1869)
• During the Civil War, Congress had
authorized the Treasury to issue
greenback banknotes to pay huge war
debt
• Unlike the rest of the currency,
greenbacks not backed by gold or
silver (bimetallism)
– Caused inflation and forced goldbacked money out of circulation
• Public Credit Act (1869) guaranteed
that bondholders would be repaid in
gold, not greenbacks
• To strengthen the dollar, Treasury
Secretary started selling Treasury
gold each month and bought back
high-interest greenbacks
– Reduced deficit, deflated currency
• One group of speculators, “the
Gold Ring”, Jay Gould, a Wall
Street trader and railroad magnate,
and his partner Jim Fisk, recruited
Grant’s brother-in-law to get Grant
to appoint a new assistant
Treasurer of the United States,
who agreed to tip the men off
when the government intended to
sell gold.
• Tried to convince Grant and the
Treasury that high gold prices
would make the nation prosperous
• Gould and Fisk began to quietly
stockpile gold as they hoped to sell
the gold at high prices
• Gould began buying large
amounts of gold, but never
sold it, causing prices to
rise and stocks to plummet
– Gould and Fisk started
hoarding gold, driving
the price higher: 30%
more than 1868
• After Grant realized what
had happened, Treasury
sold $4 million in gold
• When government’s gold
hit the market, its worth
plummeted within minutes
• Investors scrambled to sell
their holdings, and many of
them bankrupted. This day
was known as Black
Friday.
– Fisk and Gould
escaped significant
financial harm
• The sale of gold from the Treasury defeated
Gould's plan, relieving the growing
economic tension and the economy resumed
its post-war recovery (until 1873)
• Grant's suspected involvement also led his
presidency to be called the “Era of Good
Stealings”
Crédit Mobilier (1872)
•
Crédit Mobilier scandal involved the
Union Pacific Railroad and the
fraudulent Crédit Mobilier of America
construction company, which was to
build the eastern portion of the First
Transcontinental Railroad
•
Crédit Mobilier, created by Thomas C.
Durant, a vice president of the Union
Pacific Railroad, was a deliberate
attempt to defraud the U.S.
Government and public of millions of
dollars.
•
It looked as if CM had been
impartially chosen by the Railroad’s
officers as the principal construction
contractor. However, CM insiders
“hired” themselves to build the
railroad at inflated prices, earning
them high profits
•
In 1868, a Congressman involved in
CM sold shares of stock in Crédit
Mobilier to other congressmen, in
addition to making cash bribes, to
keep quiet about the illegal business
•
The muckraking paper The Sun
exposed the scandal during the 1872
presidential campaign
• Grant signed the Coinage Act (1873),
making gold the only money
standard: dollars would be
exchanged on demand for only gold.
– End of 1873: NY stock brokerage
house fails to fully sell a bond on
its own purchases in Northern
Pacific Railway, and collapsed
• Collapse panicked Wall Street: other
banks and brokerages with railroad
stocks and bonds also collapsed
– 89 of the 364 U.S. railroads went
bankrupt.
– New York Stock Exchange
suspends trade 10 days
• Grant, traveled to NY to consult
leading businessmen and bankers for
advice on how to curb this panic,
which became known as the Panic of
1873
• Grant believed that, as with the Gold
Ring’s collapse, the panic was just
economic flux affecting only bankers and
stockbrokers
Panic of 1873
• Response: Treasury bought $10 mill.
in government bonds, injecting cash
into economy
• Purchases stopped Wall Street panic,
but a five-year industrial depression
started (Long Depression)
• To help the economy, Congress
passed an inflationary policy called
the Inflation Bill (1874).
– Farmers/workingmen favored
addition of $64 million in
greenbacks to circulation
– Eastern bankers opposed; would
weaken the dollar
• Grant unexpectedly vetoed the bill
because he thought it would destroy
the nation’s credit
– Veto was the beginning of the
Republican Party's belief in
gold-backed dollar
Whiskey Ring (1875)
• Employees in President
Ulysses S. Grant’s
administration were
accused of pocketing
whiskey taxes, with the
help of the liquor
industry
• Grant immediately called
for swift punishment.
That backfired on him
when he tried to protect
his personal secretary,
with whom he allegedly
had an affair, causing an
even bigger scandal.
Compromise of 1877
•
The Compromise of 1877 was an informal, unwritten deal
that settled the intensely disputed 1876 U.S. presidential
election, pulled federal troops out of state politics in the
South, and ended the Reconstruction Era.
•
Through the Compromise, Republican Rutherford B. Hayes
was awarded the White House over Democrat Samuel J.
Tilden. Democrats complained Tilden had been cheated
(also called the “Corrupt Bargain II”)
•
The compromise said Southern Democrats would
acknowledge Hayes as president, but only if Republicans
would meet points of the compromise:
– Removal of all remaining federal troops from former
Confederate States
– Appointment of at least one Southern Democrat to
Hayes's cabinet
– The construction of another transcontinental railroad
using the Texas and Pacific in the South
• part of the "Scott Plan," proposed by Thomas A.
Scott, which initiated the process that led to the
final compromise
– Legislation to help industrialize the South and improve
economy
•
Outgoing president, Republican Ulysses S. Grant, removed
the soldiers from Florida. As president, Hayes removed the
remaining troops in South Carolina and Louisiana. As soon
as the troops left, many white Republicans also left and the
"Redeemer" Democrats took control. African American
historians sometimes call it "The Great Betrayal."
Roscoe Conkling as Mephistopheles
(the devil) while Rutherford B. Hayes
strolls off with the prize of the "Solid
South" depicted as a woman. The
caption quotes Goethe: "Unto that
Power he doth belong Which only
doeth Right while ever willing Wrong."
Rise of the “spoilsmen”
• In the early 1870s,
leadership of the
Republican Party (mostly
in the North) passed from
reformers of the
antebellum/CW era…
– Thaddeus Stevens (13th
Amendment, “radical”)
– Charles Sumner
• To political manipulators
under the influence of
state party bosses.
– Roscoe Conkling (NY)
– James Blaine (ME)
• These “spoilsmen” were
deeply involved in
patronage, or giving jobs
and gov’t favors (spoils)
to their supporters.
– This would end with the
assassination of Garfield
Corruption in Government
• Patronage or Spoils Systemgiving government jobs to
loyal party workers or
friends (popularized by
Andrew Jackson)
– Were not qualified
– Used position to get
money from government
(graft)
• President James Garfield is
assassinated by disappointed
office seeker denied a
position in the spoils system
government
James Garfield
The assassin, Charles Guiteau
Republicans Split
• Roscoe Conkling was also the
leader of the Republican
faction known as the
“Stalwarts”
• stalwart—
someone/something who is
stubborn or unchanging
• Believed and furthered the
idea of the patronage system
and continued to believe that
sectional appeals (“waving the
bloody shirt”) were still valid
even after gradual end of
Reconstruction in the South
• James G. Blaine of Maine led
the Republican faction known
as “Half Breeds”
– Nickname came from
willingness to depart from
Stalwart orthodoxy
• Many, including President
Hayes, believed the patronage
system contributed to the
scandals and graft during
Grant’s presidency
• Civil service reform became a
popular cause among the Half
Breeds
“IS THERE TO BE A POWER
BEHIND THE THRONE?”
by Thomas Nast, May 1881
Nast opened this series of cartoons
by showing Senator Roscoe
Conkling (at left) struggling with
Secretary of the Treasury James G.
Blaine for influence over President
James Garfield. Conkling hoped
that his friends would be
appointed to political positions by
the president.
Pendleton Civil Service Act 1883
• Attempted to end
patronage/spoils System
• Created the Civil Service
Commission which
required appointed govt.
officials to pass the Civil
Service Exam to base jobs
on merit (qualifications)
instead of friendship
• Federal employees did not
have to contribute to
campaign funds and could
not be fired for political
reasons
President Chester A. Arthur
signed Pendleton Act into
effect