In United States history, the Gilded Age is the period from about the late 1870s to the late 1890s, which occurred between the Reconstruction era and the Progressive Era. It was named by 1920s historians after Mark Twain's 1873 novel The Gilded Age: A Tale of Today.
It was a time of rapid economic and capital growth, especially in the North and West. As American wages grew much higher than those in Europe, especially for skilled workers, and industry demanded an increasingly skilled labor force, the period saw an influx of millions of European immigrants. The rapid expansion of industrialization led to real wage growth of 40% from 1860 to 1890, spreading across the expanding labor force. The Gilded Age was also an era of visible poverty. Though some earned more, the purchasing power advantage for many workers was somewhat smaller than raw wage comparisons suggest, especially accounting for comparatively high rents. Immigrants typically settled in industrial centers, and many planned to return to Europe with their earnings. Spending was therefore kept to a minimum, leading many to crowd into unsanitary tenements. Americans had sewing machines, phonographs, skyscrapers, and even electric lights, yet many labored in the shadow of poverty especially in the South. Economic inequality grew as the concentration of wealth became more visible and contentious, with urban slums developing and growing during this era.
Railroads were the major growth industry, with the factory system, oil, mining, and finance increasing in importance. Immigration from Europe and the Eastern United States, combined with hundreds of millions of acres of land given to settlers by the federal government for free through the Homestead Acts, led to the rapid growth of the West based on farming, ranching, and mining. Labor unions became increasingly important in the rapidly growing and industrializing cities. Two short nationwide depressions—the Panic of 1873 and the Panic of 1893—briefly interrupted growth and caused violent labor strife.
The South remained economically devastated after the American Civil War. The South's economy became increasingly tied to commodities like food and building materials, cotton for thread and fabrics, and tobacco production, all of which suffered from low prices. With the end of the Reconstruction era in 1877 and the rise of Jim Crow laws, African American people in the South were stripped of political power and voting rights and were left severely economically disadvantaged. Nationally, African Americans endured the period as the nadir of American race relations.
The political landscape was notable in that despite rampant corruption, election turnout was comparatively high among all classes (though the extent of the franchise was generally limited to men), and national elections featured two similarly sized parties. The dominant issues were cultural (especially regarding prohibition, education, and ethnic or racial groups) and economic (tariffs and money supply). Urban politics were tied to rapidly growing industrial cities, which increasingly fell under control of political machines. In business, powerful nationwide trusts formed in many major industries, stifling competition in the market and some even effectively creating monopolies. The consequential amassing of a huge portion of the nation's wealth by a few "robber barons" resulted in their correspondingly enormous influence in politics, government, economy and society in general. Unions crusaded for the eight-hour working day, workplace health and safety laws, and the abolition of child labor; middle-class reformers demanded civil service reform, food and drug purity and public health, prohibition of liquor and beer, and women's suffrage.
Local governments across the North and West built public schools chiefly at the elementary level; public high schools started to emerge. The numerous religious denominations were growing in membership and wealth, with Catholicism becoming the largest. They all expanded their missionary activity to the world arena. Catholics, Lutherans, and Episcopalians set up religious schools, and the largest of those schools set up numerous colleges, hospitals, and charities. Many of the problems faced by society, especially the poor, gave rise to attempted reforms in the subsequent Progressive Era.
Terminology
The term Gilded Age was applied to the era by 1920s historians who took the term from one of Mark Twain's lesser-known novels, The Gilded Age: A Tale of Today (1873). The book, co-written with Charles Dudley Warner, satirizes the promised "golden age" after the Civil War, portrayed as an era of serious social problems masked by a thin gold gilding of economic expansion. In the 1920s, and 1930s, the metaphor "Gilded Age" began to be applied to a designated period in American history. The term was adopted by literary and cultural critics as well as historians, including Van Wyck Brooks, Lewis Mumford, Charles Austin Beard, Mary Ritter Beard, Vernon Louis Parrington, and Matthew Josephson. For them, Gilded Age was a pejorative term for a time of materialistic excesses and widespread political corruption.
The early half of the Gilded Age roughly coincided with the middle portion of the Victorian era in Britain and the Belle Époque in France. With respect to eras of American history, historical views vary as to when the Gilded Age began, ranging from starting right after the Civil War ended in 1865, or 1873, or as the Reconstruction era ended in 1877. The date marking the end of the Gilded Age also varies, generally given as the beginning of the Progressive Era in the 1890s (sometimes as the United States presidential election of 1896).
Industrial and technological changes
Technological advances
The era was a period of economic growth as the United States jumped to the lead in industrialization ahead of Britain. The nation was rapidly expanding its economy into new areas, especially heavy industry like factories, railroads, and coal mining. In 1869, the first transcontinental railroad opened up mining and ranching in the Western United States. Travel from New York to San Francisco then took six days instead of six months. Railroad track mileage tripled from 1860 to 1880, and then doubled again by 1920. The new track linked formerly isolated areas with larger markets and allowed for the rise of commercial farming, ranching, and mining, creating a truly national marketplace. Steel production rose to surpass the combined totals of Britain, Germany, and France.
Investors in London and Paris poured money into the railroads through the American financial market centered in Wall Street. By 1900, the process of economic concentration had extended into most branches of industry—a few large corporations, called "trusts", dominated in steel, oil, sugar, meat, and farm machinery. Through vertical integration these trusts were able to control each aspect of the production of a specific good, ensuring that the profits made on the finished product were maximized and prices minimized, and by controlling access to the raw materials, prevented other companies from being able to compete in the marketplace. Several monopolies—most famously Standard Oil—came to dominate their markets by keeping prices low when competitors appeared; they grew at a rate four times faster than that of the competitive sectors.
Increased mechanization of industry is a major mark of the search for cheaper ways to create more product. Frederick Winslow Taylor observed that worker efficiency in steel could be improved through the use of very close observations with a stop watch to eliminate wasted effort. Mechanization made some factories an assemblage of unskilled laborers performing simple and repetitive tasks under the direction of skilled foremen and engineers. Machine shops grew rapidly, and they comprised skilled workers and engineers. Both the number of unskilled and skilled workers increased as their wage rates grew.
Engineering colleges were established to feed the demand for expertise, many through the federal government sponsored Morrill Land-Grant Acts passed to stimulate public education, particularly in the agricultural and technical ("Ag & Tech") fields. Railroads, which had previously invented railway time to standardize time zones, production, and lifestyles, created modern management with clear chains of command, statistical reporting, and complex bureaucratic systems. They systematized the roles of middle managers and set up explicit career tracks for both skilled blue-collar jobs and for white-collar managers. These advances spread from railroads into finance, manufacturing, and trade. Together with rapid growth of small business, a new middle class was rapidly growing, especially in northern cities.
The nation became a world leader in applied technology. From 1860 to 1890, 500,000 patents were issued—over ten times the number granted in the previous 70 years. George Westinghouse invented air brakes for trains, making them both safer and faster. Theodore Vail established the American Telephone & Telegraph Company and built a great communications network. Elisha Otis developed the elevator, allowing the construction of skyscrapers and the concentration of ever greater populations in urban centers. Thomas Edison, in addition to inventing hundreds of devices, established the first electrical lighting utility, basing it on direct current and an efficient incandescent lamp. Electric power delivery spread rapidly across cities. The streets were lit at night, and electric streetcars allowed for faster commuting to work and easier shopping.
Petroleum launched a new industry beginning with the Pennsylvania oil fields in the 1860s. The United States dominated the global industry into the 1950s. Kerosene replaced whale oil and candles for lighting homes. John D. Rockefeller founded Standard Oil Company and monopolized the oil industry. It mostly produced kerosene before the automobile created a demand for gasoline in the 20th century.
Railroads
According to historian Henry Adams the system of railroads needed:
the energies of a generation, for it required all the new machinery to be created—capital, banks, mines, furnaces, shops, power-houses, technical knowledge, mechanical population, together with a steady remodelling of social and political habits, ideas, and institutions to fit the new scale and suit the new conditions. The generation from 1865 to 1895 was already mortgaged to the railways, and no one knew it better than the generation itself.
The impact can be examined through five aspects: shipping, finance, management, careers, and popular reaction.
Shipping freight and passengers
Railroads provided a highly efficient network for shipping freight and passengers throughout the U.S., spurring the evolution of a large national market. This had a transformative impact on most sectors of the economy including manufacturing, retail and wholesale, agriculture, and finance. The result was an integrated market practically the size of Europe's, with no internal barriers, tariffs, or language barriers to hamper it, and a common financial and legal system to support it.
Basis of the private financial system
Railroad financing provided the basis for a dramatic expansion of the private financial system. Construction of railroads was far more expensive than factories. In 1860, the combined total of railroad company shares and bonds was $1.8 billion. In 1897, it reached $10.6 billion, compared to the US national debt of $1.2 billion. Funding came primarily from private finance throughout the Northeast and from Europe, especially Britain, with about 10 percent coming from the federal government, especially in the form of land grants that could be realized when a certain amount of trackage was opened. The emerging American financial system was based on railroad bonds. By 1860, New York was the dominant financial market. The British invested heavily in railroads around the world but nowhere more so than the United States. British investment came to about $3 billion by 1914. In 1914–1917, they liquidated their American assets to pay for war supplies.
Inventing modern management
Railroad management designed complex systems that could handle far more complicated simultaneous relationships than could be dreamed of by the local factory owner who could patrol every part of his own factory in a matter of hours. Civil engineers became the senior management of railroads. The leading innovators were the Western Railroad of Massachusetts and the Baltimore and Ohio Railroad in the 1840s, the Erie in the 1850s, and the Pennsylvania in the 1860s.
Career paths
The railroads invented the career path in the private sector for both blue- and white-collar workers. Railroading became a lifetime career for young men; women were rarely hired. A typical career path would see a young man hired at age 18 as a shop laborer and promoted to skilled mechanic at age 24, brakeman at 25, freight conductor at 27, and passenger conductor at age 57. White-collar career paths likewise were delineated. Educated young men started in clerical or statistical work and moved up to station agents or bureaucrats at the divisional or central headquarters.
At each level they had more and more knowledge, experience, and human capital. They were very hard to replace and were virtually guaranteed permanent jobs and provided with insurance and medical care. Hiring, firing, and wage rates were set not by foremen but by central administrators, to minimize favoritism and personality conflicts. Everything was done by the book, whereby an increasingly complex set of rules dictated to everyone exactly what should be done in every circumstance, and exactly what their rank and pay would be. By the 1880s the career railroaders were retiring, and pension systems were invented to provide for them.
Railroad controversy
America developed a love-hate relationship with railroads. Boosters in every city worked feverishly to make sure the railroad came through, knowing their urban dreams depended upon it. The mechanical size, scope, and efficiency of the railroads made a profound impression; people dressed in their Sunday best to go down to the terminal to watch the train come in. Travel became much easier, cheaper, and more common. Shoppers from small towns could make day trips to big city stores. Hotels, resorts, and tourist attractions were built to accommodate the demand. The realization that anyone could buy a ticket for a thousand-mile trip was empowering. Historians Gary Cross and Rick Szostak argue:
With the freedom to travel came a greater sense of national identity and a reduction in regional cultural diversity. Farm children could more easily acquaint themselves with the big city, and easterners could readily visit the West. It is hard to imagine a United States of continental proportions without the railroad.
The civil and mechanical engineers became model citizens, bringing their can-do spirit and their systematic work effort to all phases of the economy as well as local and national government. By 1910, major cities were building magnificent palatial railroad stations, such as Pennsylvania Station in New York City and Union Station in Washington, D.C.
There was also a dark side. By the 1870s railroads were vilified by Western farmers who absorbed the Granger movement theme that monopolistic carriers controlled too much pricing power, and that the state legislatures had to regulate maximum prices. Local merchants and shippers supported the demand and got some "Granger Laws" passed. Anti-railroad complaints were loudly repeated in late 19th century political rhetoric.
One of the most hated railroad men in the country was Collis P. Huntington, the president of the Southern Pacific Railroad, who dominated California's economy and politics. One textbook argues: "Huntington came to symbolize the greed and corruption of late-nineteenth-century business. Business rivals and political reformers accused him of every conceivable evil. Journalists and cartoonists made their reputations by pillorying him.... Historians have cast Huntington as the state's most despicable villain." However Huntington defended himself: "The motives back of my actions have been honest ones and the results have redounded far more to the benefit of California than they have to my own."
Impact on farming
The growth of railroads from 1850s to 1880s made commercial farming much more feasible and profitable. Millions of acres were opened to settlement once the railroad was nearby and provided a long-distance outlet for wheat, cattle and hogs that reached all the way to Europe. Rural America became one giant market, as wholesalers bought the consumer products produced by the factories in the East and shipped them to local merchants in small stores nationwide. Shipping live animals was slow and expensive. It was more efficient to slaughter them in major packing centers such as Chicago, Kansas City, St. Louis, Milwaukee, and Cincinnati, and then ship dressed meat out in refrigerated freight cars. The cars were cooled by slabs of ice that had been harvested from the northern lakes in wintertime and stored for summer and fall usage. Chicago, the main railroad center, benefited enormously, with Kansas City a distant second. Historian William Cronon concludes:
Because of the Chicago packers, ranchers in Wyoming and feedlot farmers in Iowa regularly found a reliable market for their animals, and on average received better prices for the animals they sold there. At the same time and for the same reason, Americans of all classes found a greater variety of more and better meats on their tables, purchased on average at lower prices than ever before. Seen in this light, the packers' "rigid system of economy" seemed a very good thing indeed.
Economic growth
During the 1870s and 1880s, the U.S. economy rose at the fastest rate in its history, with real wages, wealth, GDP, and capital formation all increasing rapidly. For example, from 1865 to 1898, the output of wheat increased by 256%, corn by 222%, coal by 800%, and miles of railway track by 567%. Thick national networks for transportation and communication were created. The corporation became the dominant form of business organization, and a scientific management revolution transformed business operations.
By the beginning of the 20th century, GDP and industrial production in the United States led the world. Kennedy reports "U.S. national income, in absolute figures in per capita, was so far above everybody else's by 1914." Per capita income was $377 in 1914 compared to Britain in second place at $244, Germany at $184, France at $153, and Italy at $108, while Russia and Japan trailed far behind at $41 and $36.
London remained the financial center of the world until 1914, yet the United States' growth caused foreigners to ask, as British author W. T. Stead wrote in 1901, "What is the secret of American success?" The businessmen of the Second Industrial Revolution created industrial towns and cities in the Northeast with new factories, and hired an ethnically diverse industrial working class, many of them new immigrants from Europe.
Wealthy industrialists and financiers such as would sometimes be labeled "robber barons" by their critics, who argue their fortunes were made at the expense of the working class, by chicanery and a betrayal of democracy. Their admirers argued that they were "captains of industry" who built the core America industrial economy and also the non-profit sector through acts of philanthropy.
For instance, Andrew Carnegie donated over 90% of his wealth and said that philanthropy was their duty—"The Gospel of Wealth". Private money endowed thousands of colleges, hospitals, museums, academies, schools, opera houses, public libraries, and charities. John D. Rockefeller donated over $500 million to various charities, over half his net worth. Reflecting this, many business leaders were influenced by Herbert Spencer's theory of social Darwinism, which justified laissez-faire capitalism, competition and social stratification.
This emerging industrial economy quickly expanded to meet the new market demands. From 1869 to 1879, the U.S. economy grew at a rate of 6.8% for NNP (GDP minus capital depreciation) and 4.5% for NNP per capita. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled. Libertarian economist Milton Friedman states that for the 1880s, "The highest decadal rate [of growth of real reproducible, tangible wealth per head from 1805 to 1950] for periods of about ten years was apparently reached in the eighties with approximately 3.8 percent."
Wages
The rapid expansion of industrialization led to real wage growth of 60% from 1860 to 1890, spread across the increasing labor force. Real wages, adjusting for inflation, rose steadily, with the percentage increase depending on the dates and the specific work force. The Census Bureau reported in 1892 that the average annual wage per industrial worker, including men, women, and children, rose from $380 in 1880 to $564 in 1890, a gain of 48%. Economic historian Clarence D. Long estimates that in terms of constant 1914 dollars, the average annual incomes of all American non-farm employees rose from $375 in 1870, to $395 in 1880, $519 in 1890 and $573 in 1900, a gain of 53% in 30 years. In New Haven, Connecticut, the average annual wage per industrial worker rose from $380 in 1880 to $584 in 1890, a rise of 54%, although some of that can be explained by higher paid men replacing lower paid women and children in the work force. After adjusting for the decline in retail prices, there was a gain of 59%.
Australian historian Peter Shergold found that the standard of living for U.S. industrial workers was higher than in Europe. He compared wages and the standard of living in Pittsburgh with Birmingham, one of the richest industrial cities of Europe. After taking account of the cost of living, which was 65% higher in the U.S., he found the standard of living of unskilled workers was about the same in the two cities. Skilled workers in Pittsburgh had about 50% to 100% higher standard of living as those in Birmingham. Warren B. Catlin proposed that the natural resources and virgin lands that were available in America acted as a safety valve for poorer workers, hence employers had to pay higher wages to hire labor. According to Shergold the American advantage grew over time from 1890 to 1914, and the perceived higher American wage led to a heavy steady flow of skilled workers from Britain to industrial America. According to historian Steve Fraser, workers generally earned less than $800 per year, which kept them mired in poverty. Workers had to put in roughly 60 hours a week to earn this much.
Wage labor was widely condemned as "wage slavery" in the working class press, and labor leaders almost always used the phrase in their speeches. As the shift towards wage labor gained momentum, working class organizations became more militant in their efforts to "strike down the whole system of wages for labor." In 1886, economist and New York Mayoral candidate Henry George, author of Progress and Poverty, stated "Chattel slavery is dead, but industrial slavery remains."
Wealth disparity
The unequal distribution of wealth remained high during this period. From 1860 to 1900, the wealthiest 2% of American households owned more than a third of the nation's wealth, while the top 10% owned roughly three-quarters of it. The bottom 40% had no wealth at all. In terms of property, the wealthiest 1% owned 51%, while the bottom 44% claimed 1.1%.
Historian Howard Zinn argues that this disparity along with precarious working and living conditions for the working classes prompted the rise of populist, anarchist, and socialist movements. French economist Thomas Piketty notes that economists during this time, such as Willford I. King, were concerned that the U.S. was becoming increasingly inegalitarian to the point of becoming like old Europe, and "further and further away from its original pioneering ideal."
According to economist Richard Sutch in an alternative view of the era, the bottom 25% owned 0.32% of the wealth while the top 0.1% owned 9.4%, which would mean the period had the lowest wealth gap in recorded history. He attributes this to the lack of government interference.
There was a significant human cost attached to this period of economic growth, as American industry had the highest rate of accidents in the world. In 1889, railroads employed 704,000 men, of whom 20,000 were injured and 1,972 were killed on the job. The U.S. was also the only industrial power to have no workers' compensation program in place to support injured workers.
Impact on human wellbeing
Despite the tremendous economic and technological growth, several significant measures of human wellbeing declined during the period and did not recover until the early 20th Century. Average life expectancy at birth, average life expectancy at 10 years old and adult height measures all trended downward during the Gilded Age, even in studies which control for factors such as demographic changes brought on by immigration.
An average white ten-year-old American boy in 1880, born at the beginning of the Gilded Age and living through it, could expect to die at age forty-eight. His height would be 5 feet, 5 inches. He would be shorter and have a briefer life than his Revolutionary forebears.Infant mortality was high, and "the average American lifespan at birth was shorter than at twenty because so many children died in early childhood that a person reaching twenty had on average more years to live than an average baby did at birth."
As immigration increased in cities, poverty rose as well. The poorest crowded into low-cost housing such as the Five Points and Hell's Kitchen neighborhoods in New York. Overcrowding spread germs; the death rates in big city tenements vastly exceeded those in the countryside. Rural death rates began to improve after 1870, but urban death rates did not improve until the 1890s, with African Americans and immigrant city dwellers continuing to suffer from high mortality into the 20th century. Different endemic diseases spread in different decades, with Tuberculosis giving way to water-borne and insect transmitted diseases like Malaria and Cholera by the end of the century.
The environmental and human welfare crises brought on by rapid industrialization led to calls for sanitary reforms, though the effects of sanitation improvements would largely not be realized until the Progressive Era. Some sanitary reforms had unintended consequences. For example, the elimination of pigs from cities led to an accumulation of trash in streets on which the animals could no longer scavenge. The installation of sewers to service flush toilets in upper and middle-class homes led to the pollution of waterways and brought an end to urban fisheries, which were a major source of nutrition for the urban poor.