To handle their sprawling new operations, owners turned to a management system made up of educated bureaucrats who swelled the ranks of an emerging middle class. At the same time, the growing scale of economic enterprises increasingly disconnected owners from their employees and day-to-day business operations. Stronger and more organized labor unions formed to fight for a growing, more-permanent working class. After the war, however, new technology and greater mechanization meant fewer and fewer workers could realistically aspire to economic independence. Many wage earners had traditionally seen factory work as a temporary stepping-stone to attaining their own small businesses or farms. Hundreds of millions of acres of land and millions of dollars in government bonds were given to build the transcontinental railroads that quickly annihilated the geographic barriers that had long separated American cities from one another.Īs railroad construction drove economic development, new means of production spawned new systems of labor. Lincoln’s Republican Party-which dominated government policy during the Civil War and Reconstruction-passed legislation granting vast subsidies. Federal, state, and local governments offered unrivaled handouts to create the national rail networks. Their immense capital requirements necessitated the use of incorporation, a legal innovation that protected shareholders from losses. Enormous amounts of government support followed. The railroads were not natural creations. And as they crisscrossed the nation, they created a national economy, and, seemingly, a new national culture. Their huge expenditures spurred countless industries and attracted droves of laborers. Their vast national operations demanded the creation of innovative corporate organizations, advanced management techniques, and vast sums of capital. Railroad companies were the nation’s largest businesses. Railroads impelled the creation of uniform time zones across the country, gave industrialists access to remote markets, and opened the American West. National railroad mileage tripled in the twenty years after the outbreak of the Civil War, and tripled again over the four decades that followed. The railroads created the first great concentrations of capital, spawned the first massive corporations, made the first of the vast fortunes that would define the Gilded Age, unleashed labor demands that united thousands of farmers and immigrants, and linked many towns and cities. By 1900, the richest 10% controlled perhaps 90% of the nation’s wealth. According to various measurements, in 1890 the wealthiest 1% of Americans owned one-fourth of the nation’s assets the top 10% owned over 70 percent. Morgan, won fortunes that, adjusted for inflation, are still among the largest the nation has ever seen. Rockefeller, steel magnates such as Andrew Carnegie, and bankers such as J. These so-called robber barons, including railroad operators such as Cornelius Vanderbilt, oilmen such as J. However, this group also came to be called the robber barons, because they often used morally questionable techniques to advance their businesses and because their extravagant lifestyles resembled those of the old European aristocracy. This time period saw the rise of wealthy industrial capitalists, sometimes called captains of industry, due to their leadership in the industrial world. “This association of poverty with progress is the great enigma of our times,” economist Henry George wrote in his 1879 bestseller, Progress and Poverty. The sudden appearance of the extreme wealth of industrial and financial leaders alongside the crippling squalor of the urban and rural poor shocked Americans. Industrial capitalism confronted Gilded Age Americans with unprecedented inequalities. Gilding is a decorative process where gold paint is applied to another surface like wood or metal, so the “Gilded Age” was one that looked beautiful at first glance, but whose shiny facade could be stripped away to reveal something plain or even ugly. The notion of a glittering world of wealth and technological innovation masking sweeping social inequities and corruption gave the era its most common label, the Gilded Age, a term borrowed from the title of an 1873 satirical novel by Mark Twain and Charles Warner. But it also produced millions of low-paid, unskilled, unreliable jobs with long hours and dangerous working conditions. Massive new companies marshaled capital on an unprecedented scale and provided enormous profits that created unheard-of fortunes. Industrial capitalism realized the greatest advances in efficiency and productivity that the world had ever seen. The Breakers, Vanderbilt residence, Newport, R.I., ca.1904.
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