The Gilded Age: Scandal and Corruption (1870 - 1896)

Mark Twain: The Gilded Age

• Twain co-authored the book
• "gilded" implies shoddiness; fakeness; cheap commercialism
• the novel was about a social climber, with a "get-rich-quick" scheme
• there's show, but no substance, like a gold-painted trinket
• also denotes a fascination with gold - wealth and power
• social challenges
  • battle between the haves and the have-nots
  • gold standard v. greenbacks
  • powerful v. wanting-power
• the nation grows in wealth, but corruption appears everywhere

Immigrants

• despite the 600,000+ losses of the Civil War, the Census of 1870 was 25% higher than the previous decade
• the US is now the third most populous nation in the world (behind Russia and France)
• farmers struggle, but businesses and industry boom
• American seemed to be a dreamland of opportunity for immigrants
• provides industry with an unmatched labour force
• immigrants with skill could become entrepreneurs and earn good money
• those with relatives already in the US adapted better
• starting brand new didn't work as well; didn't have a strong support base
• often, ethnic groups gathered in enclaves within cities
  • these were neighbourhoods of Germans, Poles, etc.
  • would last for a long time, but not as common any more
• cities become filled with tens of thousands of people
  • workers had to live close to their workplace, as they didn't have transportation
  • huge labour-intensive factories were ringed by multi-story tenement buildings
  • lodging offered shelter, and nothing else
  • buildings were jammed - often have night/day shifts for home as well as work

Politics

• government at all levels say itself as the provider of essential services - roads, justice, etc.
  • not responsible for individual welfare
  • to them, citizens were responsible for their own fates
• neighbourhood associations grew to bridge the gap between government and what people needed
  • help new arrivals with jobs, support for small businesses, legal assistance, etc.
  • did ask a price - set up a system to pay them back (for example, with votes), and they gained power
  • leaders began to be known as "bosses", ran for office and got elected
    • loyalty was to their associations - gave them success and votes
    • loyalty was not to the elected position - often corrupt
  • these associations became the city government in some places
  • government was influence by "machine politicians" - bosses who controlled votes via their associations
  • politicians are beholden to the bosses

Tammany Hall, New York City (1860s-1870s)

• the headquarters of the Democratic Party in New York
  • headed by William Marcy "Boss" Tweed
  • graft, bribery, rigged elections
  • took $200 million from the city
  • some of the money was used to create jobs, public buildings, etc. - some was used to make Tweed's life comfortable
  • helped the local economy and the local people
  • building prices were inflated with kickbacks
  • some of the money was truly helpful - widows, orphans, poor, sick, unemployed
  • those who objected to the system could "disappear"
• Thomas Nast, political cartoonist
  • worked for Harper's Weekly
  • in 1871, he began to bring to light the corruption of Tweed
  • his cartoons were so damaging, they would lead to the downfall of Tweed
  • Tammany Hall offered Nast $100,000 to stop, but he refused
  • he became a celebrity
  • in 1873, a successful campaign against Tweed caused him to flee to Spain; he was recognised there by the Nast cartoons and sent back to the US
  • Nast is also famous for the Republican elephant, Democratic donkey, Santa Claus
• Samuel Tilden
  • responsible for prosecuting Tweed, who was convicted, jailed, and died in jail
  • because of this, he got the 1876 Democratic nomination for President; lost to Hayes by 1 electoral vote

Reformers

• against the machines
• began to lobby for more government in social services
• wanted openness and public scrutiny
• city, state, national governments began to consider the welfare of society in their planning and budgeting
• the political machine will not totally go away, though

Corruption in Business and Government

• from the end of the Civil War to the 20th century, new methods of industrialisation, transportation, etc. lead into the "Second Industrial Revolution"
• business grows rapidly, but the government is naïve about business
  • doesn't know how businesses make money - both legally and illegally
  • didn't have the quality leadership to deal with cutthroat businessmen - the best men arein business
  • so, the government did nothing: "hands-off", "laissez-faire", "leave-to-do" policy
  • also, business is growing - so let them keep going, it's good for the nation
  • even when it became clear that control would be necessary, the government didn't know where to start
  • America didn't like corruption, but didn't want to force government involvement that might slow growth
• government made growth easier through incorporation
  • early in the century, business through corporations became legal
  • by creating a corporation, individual stockholders are only at risk for the amount of their original investment
  • also, it's easy to raise capital by selling more stock
  • allows businesses to grow and develop
• holding companies
  • one company buys the assets of another
  • thus, corporations can gain control over many other businesses
• interlocking directorate
  • people on the board of directors of various corporations are also on the boards of competing corporations
  • allowed by the government's "hands-off" policy
• leads to many scandals
  • to some, the lack of regulation was necessary for growth, but it brings with it scandal
  • Union Pacific railroad; Credit Mobilier; etc.
  • the worker was abused and taken advantage of
  • deregulation allowed the US to become a world leader in business

Spoils System

• the spoils system expands during the Gilded Age
  • politicians give jobs to their family, supporters, etc.
  • often, these people weren't qualified
• Hamilton Fish - Grant's Secretary of State
  • re-organised the Department of State
  • attempt to adhere to a merit system, where applicants had to pass a competency exam
  • considered a visionary
  • this idea of merit is more talked about than it is utilised elsewhere
• battle over reform leads to split in Republican Party
  • Liberal Republican Party nominated Horace Greeley (editor of the New York Tribune) for President against Grant
  • two factions arise: Stalwarts and Halfbreeds
  • the Stalwarts were in favour of the patronage and spoils system
  • the Half-Breeds were reformers, in favour of merit-based appointments
• no major reform would be undertaken until the 1881 assassination of James A. Garfield
  • 6 months into his term, he was assassinated by Guiteau, who was angry because he had been denied a patronage job
  • Arthur, Garfield's replacement, had been a Stalwart, put on the ticket to pacify that faction
  • not a big reformer, but that changes because of public outcry over Garfield's assassination
  • created the Civil Service Commission, which impacted 10% of jobs
• Pendleton Civil Service Reform Act
  • said that each new President has the ability enlarge the percentage of civil servants (merit-based jobs)
  • this would not need a Congressional vote
  • everyone would get equal treatment when applying for jobs [except veterans, widows of veterans, and disable veterans]

Industrial Expansion

• America becomes an industrial and agricultural giant
• by 1894, was the world's greatest manufacturing power
• abundant natural resources
• created new industries and new opportunities faster than any other nation
• a rush of new immigrants provided labour
• industry and agriculture grow rapidly - railroads, canals, new markets
• expand internationally
• farmers begin to focus on single crops, producing for the nation and for the world
• organise factories that specialise in a few products
• railroads help bind the nation together
  • connect raw material with factories
  • become a huge market for steel, coal, etc.
  • become so huge, that 4 time zones are created to manage schedules
  • commuter trains move workforce
• technological innovation
  • in the 1790s, the patent office issued 200 patents
  • from 1860-1890, there were 400,000 patents issued
  • much technological innovation and applied science
  • possibly the most significant was the 1876 telephone
  • in 1885 American Telephone and Telegraph was founded
  • Thomas Edison is credited with many inventions, among them the phonograph and light bulb (1879)
  • with the backing of JP Morgan, Edison Electric provided current to 85 customers in New York City

Captains of Industry

• many individuals stand out for their contributions
• called "robber barons" or "captains of industry"
• Andrew Carnegie
  • from Scotland, came to Pennsylvania
  • in 1872, he met Bessemer, who had a new, inexpensive and easy, process for changing iron into steel
  • Carnegie then focussed his business on steel, founding the J. Edgar Thomson Steelworks in 1875
  • he utilised vertical integration, owning every phase of steel production - steamships, mines, factories, etc.
  • he was able to increase efficiency and quality while decreasing cost by controlling all the variables
  • in times of recession, he bought out competitors
  • by 1900, produced 25% of the nation's steel
  • he sold his steel holdings to investment banker JP Morgan for $500 million; Morgan will turn the US Steel Corporation into the world's first $1 billion corporation
  • richest man in America at the time
  • he spent the rest of his life in philanthropy, giving about $350 million to public libraries, parks, universities, etc.
• John D. Rockefeller
  • Standard Oil Company
  • ruthless businessman, perfected the trust (a method of acquiring stock to create a monopoly)
  • when he felt the market had too much oil, his profits were reduced, so he forced competitors to close
  • by 1877, he controlled 95% of the US oil refineries and had a virtual monopoly on the entire world petroleum market
  • justified his wealth by saying God had given it to him
  • donated some $500 million to philanthropy
• Vanderbilt - merged 13 railroad to create the New York Central Railroad
• Swift and Armour monopolised meat packing
• Sears Roebuck started mail-order catalogues
• the government's laissez-faire attitude allows these monopolies to develop
• competition between old business and new, rapidly changing and "new rich" companies
• new battle of have/have-not and old/new
• wealthy businessmen use Darwin's Origin of the Species to justify their success
• Sumner, Spencer, and others created Social Darwinism
  • millionaires are the product of natural selection
  • the biggest, brightest succeed, the others fail - "survival of the fittest" was coined by Spencer
• Spencer promoted free-market capitalism, feeling that Social Darwinism was the logical explanation for crowding out small businesses; to him, fostering the "good-for-nothings" at the expense of the "good" was a cruelty
• Carnegie's "Gospel of Wealth"
  • felt that the wealthy had to prove that they were morally responsible
  • concentration of wealth was necessary for society to progress
  • the contract between the labourer and the millionaire was a sign of the progress of society
  • in the long run, disparity of wealth is good for the race
  • the rich are responsible for giving back and creating opportunities in education, etc.
  • give others the power to become rich

Attempts at Reform

• begins at the state level
• attempt to regulate the railroads
• the government begins to take a stronger role in the economy
• 1887 - Interstate Commerce Act
  • passed in response to farmers who were being discriminated against by the railroads
  • required that all railroads charge "reasonable" rates and publish those rates; different rates could not be charged unless they were published
  • created the Interstate Commerce Commission to supervise the railroad and investigate complaints
  • it had quasi-legislative and quasi-judicial abilities
    • created by Congress
    • could create laws to accomplish its goal
    • if the law wasn't followed, it could find the railroad to be guilty
  • however, all decisions were subject to the interpretation of the (pro-business) actual court system
  • initially, it wasn't very successful; but it was the beginning of the government's interference in the economy
• Sherman Anti-Trust Act (1890)
  • signed by Benjamin Harrison
  • any combination (trust, etc.) in restraint of commerce is illegal
  • designed to placate the masses - it wasn't enforcable
  • ironically, the first time it was used was to break up labour unions

Changing Workforce

• machines became more common; demand for unskilled workers increased
• many immigrants, women, and children are a part of the workforce
• the concept of wage slaves arises - not paid much; replaceable if ill, etc.
• company towns
  • not much transportation is available, so companies build towns near to the factories for their workers
  • owners of the business control the town - rent, prices, etc.
  • part of wages goes into paying for housing
  • many people live in one house - can't afford individual homes
• workers had at least a 10-hour day
• no health or safety considerations
• social transformations affects every aspect of life in America
  • delayed marriage - women work alongside men
  • dirty tenements
  • high rate of disease

Union Organisations

• Commonwealth v Hunt/ (1842) - Massachusetts Supreme Court ruled that strikes were not illegal, but the decision wasn't necessarily accepted by businesses
• National Labour Union (1866)
  • first national labour organisation
  • supported workers' rights - 8-hour workday, arbitration, paper money
  • ended by the death of their leader
• Knights of Labour (1869 - 1893)
  • Uriah Stephens initially formed a secretive group; Powderly ended the rituals and membership increased
  • they staged a successful riot over reduced wages for workers on the Wabash railroad
  • one of the anarchists involved in the Haymarket Square riot had a membership card, causing them to become associated with anarchy; membership drastically decreased
• American Federation of Labour (1886)
  • unified various local union
  • advocated 8-hour day, safety laws, etc.
  • favoured closed shops, where only union workers could be hired
  • only allowed skilled workers to join
  • highly successful
• Major Strikes
  • "Molly Maguires"
    • coal miners in Pennsylvania resorted to violence to express their frustration
    • Pinkerton detectives arrested 20 leaders and some were hung
  • Great Railroad Strike (1877)
    • first nation-wide strike
    • railroad workers walked off the job and blockaded trains following pay cut
    • Rutherford B. Hayes ended the strike with federal troops
  • Homestead Strike
    • steel workers in Carnegie's plant were locked out
    • the union was broken, and Homestead remained deunionised until 1937
  • Pullman Strike (1894)
    • railroad workers went on strike, stopping almost all train service in the midwest
    • Cleveland sent federal troops in on the premise that the strike hindered the delivery of the US mail (Constitutional grounds)

Chinese Immigrants

• beginning in 1848, large numbers of Chinese came to America
• discovery of California gold prompted people from all over the world to seek their fortunes there
• this coincided with political and economic hardship in China
• most settled the Western coast and worked in gold mines
• Burlingame Treaty (1868)
  • most favoured nation status granted to China
  • opens door to immigration without restrictions
  • by 1880, Chinese form about 9% of the population of the state
• most were single males ("coolies") - wanted to become rich and return home to China
• they also played a large role in building the railroad
• failed to assimilate
  • didn't care about American culture
  • didn't feel a need to join, as they planned on leaving
• when the railroad is complete and the mines are empty, about 1/2 went back to China
• the rest didn't have an easy life
• many worked as domestic servants, learning new skills that weren't required in China (cooking, cleaning, etc.)
• started Chinatown enclaves
• some white workers began to attack the Chinese, as cheap Chinese labour was taking their jobs
• Dennis Kearney
  • naturalised Irish immigrant
  • formed the Workingmen's Party
  • one goal is to remove Chinese workers, so they terrorise them
  • attempted to rewrite constitution to deny the Chinese votes and jobs
  • his movement would go national
• Chinese Exclusion Act (1882)
  • banned all Chinese immigration for next 10 years; then it could be renewed
  • in 1902, it is made indefinite
  • immigration not reopened until 1943

New Immigration (1880s)

• Immigrants Prior to 1880
  • from the British Isles and Western Europe
  • literate, relatively well-off
  • from countries with democratic governments
  • Protestant (except the Irish)
  • similar customs to America
  • easily assimilated
• Immigrants After 1880
  • shift to Southern and Eastern Europe - Italians, Slavs, Czechs, Russians, etc.
  • sharply contrasted to "old" immigrants
  • illiterate, poor, no democratic experience, Jewish, Orthodox, Catholic
  • settled in New York, Chicago and created enclaves
  • these immigrants came to outnumber "natives" in many cities
  • bring different customs, clothes, etc.
  • because of large numbers and enclaves, didn't assimilate well
  • tried to maintain old lifestyle - published their own newspapers, ran their own schools (rise of parochial schools), teach their own religion and language
  • sometimes didn't teach English at all
  • poor education, economy, persecution in Europe sent them to America
  • Contract Labour Law (1864)
    • federal government encouraged immigration
    • businesses or the federal government can pay for immigrants to come to US, then takes their wages in repayment
  • the development of the steamship meant that the passage to American was safe and comfortable; competition in the industry meant that prices were low
  • most entered through New York
    • some entered through Boston, New Orleans, and other places
    • at first, went through the state-run Castle Garden
    • Castle Garden was closed after a Congressional investigation that revealed the lack of record-keeping, the filth, and the corruption
    • Congress funded Ellis Island (1892)
    • passing the Statue of Liberty was a symbol of hope for immigrants
    • Emma Lazarus' poem is on the base: "give me your tired, your poor…"
    • many (exaggerated) stories were spread about the opportunities of America
• Reaction
  • political corruption - political machines were made to deal with the terrible conditions
  • one person would become the leader
  • the machines provide work, help, etc.
  • Nativism, anti-foreignism
    • not new - in the 1840/50s it was anti-Irish
    • anti-immigration occurs as an issue periodically, especially when the economy is not doing well (right now)
  • these new groups were a bigger problem, as they didn't adapt as well
  • ethnic enclaves avoided American culture
  • many immigrants ("birds of passage") planned to make a fortune and then return home; they had no intention of assimilating
  • the new immigrants were seen as a threat to traditional American culture - culturally and religiously exotic
  • American Protective Association
    • formed in 1887
    • grew slowly at first, but more rapidly during 1893 economic depression
    • primary goal was to resist "Catholic conspiracies"
    • organised and voted against Catholic candidates
    • promoted immigration restrictions and stringent naturalisation requirements
  • push for legislation to limit immigrants
    • for example, a literacy test to enter the country
    • a literacy bill was vetoed by Cleveland in 1887
    • 1913, 1915, 1917 - illiteracy bills were vetoed
    • argued that immigrants were being penalised for not having had the opportunity to become educated - and America was supposed to be that opportunity
    • Immigration Act of 1917 - Congress overrode Wilson's veto, and illiterates were banned
    • Natural Origins Act of 1924 was even more restrictive

Reform Movements

• Agrarian Revolt
  • mid-1800s, farmers have a bright future - cotton, wheat prices are high
  • 1890s - problems arise quickly
  • technological advances led to overproduction, which as their main problem
  • competition
    • globalism meant that US farmers were competing with Canada, Russia, Australia
    • American crops begin to spiral down as the price plummets drastically
  • railroads play with pricing to the disadvantage of the farmer
  • banks weren't flexible, and charged enormous interest rates
  • often, farmers had to mortgage their homes and hope for a good crop
  • despite their independent nature, American farmers are pushed into groups
  • Oliver H. Kelly - the Grange
    • a farmer's group, similar to a union
    • offered education and social activities for farmers
    • by 1875, there were 800,000 members
    • "Grangers" established co-ops, which were cooperatively owned warehouses, etc.; they were run by the farmers so that there were no employment costs
    • politics - he lobbies for farmers, and will later run for office
    • as they fade, they create Farmers Alliances
  • Farmers Alliances
    • similar to the Grange, but more political
    • there were three main Alliances: North, South, and Coloured
    • well over 1 million members
    • push for political gains, but act independently - don't coordinate efforts
    • eventually, they'll reach an accord to gain power
  • People's Party (Populist Party)
    • disgruntled former members of Farmers Alliances
    • want to nationalise the railroads, telephones, telegraphs
    • gradual income tax
    • want subtreasuries
      • federal government builds large warehouses to store farmers' possessions
      • create loans secured by those possessions
      • hold items until market improved
  • the South and the West push for an expanded money supply
    • call for use of silver coinage
    • during this period, there is a major debate between "Goldbugs" and "Silverites"

Election of 1892

• involved the Grange, Farmers Alliances, greenbacks, Populists
• elected several Populist Representatives
• 4 July 1892 - gathered in Omaha, Nebraska
  • established the Populist "Omaha platform"
  • want to end injustice, oppression, and poverty caused by old political parties
  • formally put in writing all of their desires
  • also want a secret ballot and direct primaries
• the Republicans run Benjamin Harrison for President (incumbent); gets 43% of the vote, mostly the North
• the Democrats run Grover Cleveland; gets 46%, mostly the South; wins to become the only President with two non-consecutive terms
• the Populists run James Weaver; gets 8.5% of the vote (about 1 million votes) and wins 4 Western states
• the third-party effect sends a message
• the Populists could have done better, but lost Southern votes for accepting blacks
• Cleveland had carried the popular vote in three straight elections

Cleveland's Second Term

• Panic of 1893
  • started as he walked into office; he gets blamed
  • poor market, plight of farmers, railroad expansion, unsatisfied labour, limited credit, poor banks all add up
  • banks close, businesses go bankrupt, 20% unemployment
  • at this point in time, the government isn't set up for and doesn't feel that they have a role in the trouble
  • believe workers need to work harder, without government help
• Coxey's Army (1894)
  • Coxey organised a march on Washington
  • wants to persuade the government to help provide jobs
  • proposes that the government use money to create public works jobs to improve the nation's infrastructure
  • in theory, more jobs would increase spending, which would help end the recession
  • this is the seed of the idea of government involvement
  • Coxey was arrested for walking on the grass; his movement ended
• Cleveland didn't believe government should help people, or support the less fortunate

Election of 1896

• depression, and Cleveland's not helping meant that the Republicans and Populists gained power in Congress
  • the off-year elections had sent a signal to the Democratic Party that there's a problem
• as political leaders create party platforms, currency becomes the key issue
  • the Republicans calls for the gold standard to gain industrialist votes
  • the Populists called for unlimited silver coinage - want inflation and more money
• William Jennings Bryan - "Cross of Gold" speech
  • arose in Democratic convention in Chicago
  • he was a Congressman from Nebraska who was a great orator
  • captures attention while speaking in favour of silver
  • wants to repeal the Sherman Silver Purchase Act, which required the Treasury to purchase 4.5 million ounces of silver per month
  • uses his speaking skills to call for silver coinage and the end of the big business gold standard
  • speaks of a "crown of thorns" on the "brow of labour" and "crucifixion" on a "cross of gold"
  • birth of a new Democratic spokesperson
  • the Populist Party also nominates him - their loss of independence spells their doom
  • split in Democratic party - John Palmer, Illinois, also runs
• William McKinley is nominated by the Republicans, calling for high tariffs to gain industrial votes
  • he runs a front porch campaign, where he gives occasional speeches but otherwise stays at home
  • this election sees the rise of the campaign manager, as Marcus Hanna plans his election
  • raises $3 million and has brochures, newspapers, multilingual campaign literature
  • 1500 speakers sent out nationwide
  • railroads give discounts to travel to see McKinley
• Bryan
  • it was thought to be improper to blatantly pursue the Presidency, but he travelled around the country and spoke
  • took advantage of his tremendous speaking skills
  • these campaigns create a dramatic shift for the future
• Results
  • because of the poor economy, the voters change parties
  • McKinley gets most of the North, California, and Oregon (industrial areas): 51%
  • Bryan gets the agrarian South and West
  • silver/gold has little impact
• as McKinley enters office, new gold discoveries expand money supply, and economy picks up - McKinley gets the credit
• the Republicans became the party of prosperity - in power for 16 consecutive years
• because the economy is going well, the Democrats are left only with sectional followers and poor Southern farmers
• the Populist Party fades away - Bryan had lost, so they lost their gamble
  • as the economy improved, their ideas were less important
• "Realignment" - shift in party support during the election
  • the Republicans became the party of the prosperous - white-collar, industrialists, capitalists
  • following the Civil War, they had been the party of the newly enfranchised blacks
  • blacks and poor voters go the Democrats (1932 - now)