History of The Gilded Age and its Victims

Because business is business, it’s strictly financial. The mindset in the Gilded Age (1865-1900) of many tycoons was one of profitability. This era in American history was highlighted by unprecedented growth in industry and economy, but these developments were constructed by selfish greed and corrupt entrepreneurs. Journalist Henry Demarest Lloyd echoed these ideas in his book Wealth against Commonwealth (1894).

The author describes how the unfairly high revenues these monopoly owner’s intake reflect their disregard of the struggling middle and lower classes. Although the Gilded age succeeded monetarily, the emerging class faced the consequences economically through the building of the Transcontinental railroad, suffered through Carnegie’s vertical integration, and politically by Rockefeller through the manipulation of America’s capitalism and trusts.

The building of the first transcontinental railroad in 1869 marked the controversies of the selling of railroad bonds and stock. During this time, the railroad industry was seeing unprecedented growth. These railroads were being constructed rapidly by immigrants from Europe and Asia. America’s first big business was on its way, although funding and financing undermined the economic separation of classes. Jay Gould is America’s pioneer railroad developer and speculator; he grew his fortune by “looking for vulnerable railroads, buying enough stock to take control, and threatening to undercut his competitors until they bought him out at a high profit.”

The growth of his wealth expanded quickly, the New York Stock exchange boomed on the selling and buying of railroad stocks. Many investors followed Gould method, but many failed due to his cornering of the market. This boom in wealth did come with its own hullabaloo, the government subsidized the transcontinental railroad system and money moved bills through Congress. This is what defined the Gilded Age, the speculation and under the table deals is why Lloyd believes that these tycoons were undermining American democracy. Methods of selling stock below market prices to partners and later selling them at higher prices was a common scheme with railroad industrialists. The consequences of these actions were felt by labors by receiving low wages and consequently America’s economy being controlled by the elite. The building of the transcontinental railroad ultimately opened the door to sly business tactics for moguls to grow their unjust money.

The introduction of Carnegie’s vertical integration developed the abuse of the labor system during the Gilded Age. In 1872, Andrew Carnegie built the world’s largest steel mill in Braddock, Pennsylvania. He utilized vertical integration which is the arrangement in which the supply chain of a company is owned by that company, from raw resources to the final product. This innovation of business cut out any middleman that would include additional costs to the business, but Carnegie was all about profit. His main business strategy was “Cut the prices, scoop the market, run the mills full; watch the costs and profits will take care of themselves.”

His most lucrative way of cutting down prices was by giving his workers the absolute minimum salary to keep expenses low and profits high. Wages were unlivable and work hours were extensive, Carnegie owned every part of the market and the jobs with them. Consequently, if workers were to quit or get fired, no jobs were available due to them all being in the steel industry. Carnegie’s vertical monopoly impoverished the labor class by abusing their need for a job by maximizing their efforts and crediting little money. These unsympathetic work policies reflect Lloyd’s point on how the elite’s interests are not in the best interest of the American people.

J.D. Rockefeller manipulated American capitalism and trusts to gain a competitive foothold on government restrictions. J.D. Rockefeller in 1870 incorporated the Standard Oil Company, which immediately prospered, he drove the company’s operations and kept margins high. Standard Oil Company began buying out its competitors, and developed horizontal integration. This led to Rockefeller concentrating only on the refining process of oil. Although profits were high, illegal business tactics were used to keep revenues continuous. Rebates from railroad companies were asked for which led to cheaper expense accounts and higher profits for owners. This allowed Rockefeller to sell his product at much lower prices and drive out competitors. Rockefeller in 1882 established a new form of business structure, the trust. The Trust allowed “Several trustees to hold stock in various refinery companies “in trust” for Standard’s stockholders. This elaborate stock swap allowed the trustees to coordinate policy among the refineries by gobbling up all the small, competing refineries.”

Rockefeller took advantage of the wild west capitalism system that was in place, he grew his monopoly to own a majority of Americas oil refineries. Rockefeller’s drive for profit made the government a fool, his company was so successful that limitations on antitrust laws from the Government were unbothered. Rockefeller took advantage of the working class by growing his money in a lucrative monopoly scheme. He created his own politics, there was nothing that could control the growth of this industry, labors couldn’t go to the government for help on the issue of an unfair workplace. Lloyd’s idea of selfish revenue is prevalent, profits were created at the expense of America’s trust in capitalism and government conviction.

The Gilded era truly operated over Mark Twain’s survival of the fittest. Economically, deals were made unethically with stock exchange. Labor forces were used up to their last drop, knowing everyone and thing is replaceable. Finally, the manipulation of government rule for profits were at the expense of capitalism. Lloyd’s view on these industrialists prove to be true because these fortunes created were by clever business moves that lacked integrity.