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THE GILDED AGE 1865-1900: AMERICA’S JUNIOR YEAR Another Scalia Bump and Stumble through American History

©2009 JM Scalia. No reprint without permission.

INTRODUCTION: A PSYCHOLOGICAL COMPARISON OF YOUR COUNTRY . . . AND YOU

Ya know, the one thing about history is that it is the purest form of truth, and therefore doesn’t change, regardless of revisionist “historians” who offer opinions as fact based on their own, uh, unique perspectives. I mean, the pre-Ike Gilded Age is the same as the post-Ike Gilded Age; no Class 3 100 mile-an-hour blowhard storm can change that. So, in order to soak up what we need to know about this really weird period of American history we’re gonna pull a Scalia Special on it: We’re gonna get in, do our duty, then get out.

WORLD’S WORST ANALOGY (I’m so ashamed)

OK, troopers, here’s a stone-cold fact: you are America, and America is you. From a developmental

standpoint this is far truer than you realize. Although obviously different in nature, America has undergone the same growing pains and frustrations as you throughout your developmental years. From our nation’s founding (birth), through its infancy, and into early adolescence America fought and struggled to grow up, lessen her dependence on her mother (country) and find her own identity. With leadership from men like Thomas Jefferson, Alexander Hamilton, Aaron Burr, my man Andrew Jackson, and other true believers like John C. Calhoun and Henry Clay, it is small wonder that our nation slugged it through its “childhood” with a schizophrenic national (as in political factionalism) identity. Think of all the influences you had in your formative years (and think to yourself; I REALLY don’t want to know): just like you, by the onslaught of puberty America just could not figure out whom or what she was. I call this America’s Purgatory; you might think of it as her time in middle school. In any event, it’s a real mess.

Now, such national and personal chaos carries the danger of self-destructive behavior; think of the pains

of Manifest Destiny and slavery alongside the disaster of your freshman year, in which both America and you were getting a bit too big for your collective britches and needed a serious beatdown. Sure enough, in 1861 both Northern and Southern internal passions exploded in to a horrendous Civil War, in which both factions tried their darnedest to destroy America’s fragile experiment in representative democracy. I mean, no one said this experiment would be easy, but JEEEZ! With over 700,000 Americans dead and untold maimed for life, this was a devastating, although arguably necessary, growing pain to endure, given the diverse nature of her pre- war direction. Lincoln put it best: “a house divided against itself cannot stand. It will either be all of one thing, or all of another. It cannot be both” Now, it would have vastly preferable for the nation to have been assigned the five years of the war in ISS or even Long Term, but passions ran far too high for that, and consequently fools (many of whom never saw a lick of fighting) followed their hearts rather than listen to their brains. (Wow, high school juniors would NEVER be guilty of that, would they?)

In any event, it is this horribly destructive war’s myriad of extraordinary effects and the subsequent

mess that was Reconstruction that interests us. Although the Civil War settled some of America’s adolescent turmoil (slavery, after all, was NOT a national policy steeped by any stretch of the imagination in maturity or morality), it most certainly created new, more complex problems. And, as a consequence, America had to discover a fact of life that most high school juniors I have known throughout my innumerable years know all too well: when one door of chaos closes, another flies open, usually with far too much force and fanfare. The opening and closing of these chaotic “doors” in your lives is known as high school (particularly your junior and senior years); this newly-opened door of American chaos that flew open in 1865, sustained its momentum throughout Reconstruction, and lasted until the turn of the century in 1900 is known by the name given to it by Mark Twain: the Gilded Age.

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GROWTH OF AMERICAN BUSINESS AND AMERICAN LABOR

Section I: The Corporate Consolidation of American Industrialization The Gilded Age: It all starts and revolves around $$$$$$$$$$$$$$$$$$$$ (uh, that would be money):

making money, making more money, keeping others from getting money, making even more money, wallowing around in money, bathing in money (ugh, bad visual). We’ll start where the means by which people made money underwent a drastic change, the end result of which was the mass consolidation of American business

into the hands of a relatively few people . . . uh, disgustingly rich people that is.

THERE ARE SIX BASICS WITH WHICH YOU SHOULD BE INTIMATELY FAMILIAR.

The defining characteristic of America during the Gilded Age was phenomenal economic growth. By the end of the 19th century, the American economy increased at the fastest rate in its history. For example, between 1865 and 1898, the output of wheat increased 256%, corn 222%, coal 800% and miles of railway track by 567%.1 Although there were many factors involved with this expansion, there were six primary reasons.

First, after the Civil War, ALL of America underwent a slow, grinding change from an agrarian

economy to an industrial economy.2 There are several reasons, but primary among them was post-Civil War America’s status as an emerging world economic power, as in, DOH! we weren’t one. To keep up with those pesky Germans, Russians, sneaky Japanese (who knows what they are up to!) and those infernal British, (who still want us back as colonies) we were forced to industrialize . . . and QUICK!

Secondly, as America began this industrialization she discovered that small local markets for locally- produced commodities (anything that is produced for purchase is a commodity) were rapidly growing into large national markets.3 Consequently, America experienced growth from small local businesses to large national

corporations for the simple fact that local yokel businesses could not keep up with the growing national demand. This still occurs, and you see it all the time: here comes Wal- Mart . . . and Target . . . ad naseum.4

Third . . . in the days of mercantilism, when a country’s economy undergoes industrialization and her markets explode to national, even global, proportions, it became incumbent on government, for the good of the nation’s interests, to exercise some sort of guiding direction.5 Herein lies the agenda for the centralization of governmental economic control; in other words, bringing the control of all American business under a common, or central, government-regulated roof. However, in the post-Civil War get-stinking-rich economic environment, there was NO place for pesky government regulation; the best circumstance was keeping the government off of your back and out of your business. OMG!!!!! PHEW!!! YOU SHOULD BE SMELLING THE VILE STENCH OF POLITICAL OPPORTUNISTS . . . AND TASTING THE BITTER BILE OF THE POTENTIAL FOR CORRUPTION . . . HERE . . . . and you’d be right. Because Americans are by nature hustlers for a quick buck,6 it is not surprising that a few wealthy individuals were able to amass huge business organizations through measures (legal and otherwise) by which they (a) became very rich, and (b) stayed very rich. American business experienced centralization all right, but all in the hands of a relative few.

Fourth on our list is probably the most important result of industrialization, and another factor that still exists today. Simply put, unless you have some rules or regulations to prevent it, massive industrialization

controlled by a few wealthy individuals results in a very small upper, wealthy class and a

disproportionately huge lower, poor class, a fact very well known to that dude Marx (Karl, not Groucho).

1 Paul Kennedy The Rise and Fall of the Great Powers (1987), 242. 2 We know that the North had been developing an industrial society since the days of the Lowell Girls, but this agenda took off on socio-economic steroids after the war. The South . . . well, better late than never, huh? 3 Think back to the birth of the market economy in the early 1800’s . . . turnpikes and canals stoked America’s first venture into a market-driven economy; after the war the advent of the railroad would accelerate and expand this growth to unprecedented, national (and ultimately global) levels. 4 As in “on and on; it’s enough to make you puke!” 5 Pay attention to this, it will become VERY important when we discuss things such as socialism, communism, Lenin, Marx, Mao, Fidel Castro, Che, and that nutjob in North Korea. 6 Dr. Walter McDougal has written a three-volume history of the United States based upon his argument that the history of America is the history of hustlers. Makes a good point, too.

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This is known as a widening of the socio-economic gap (good idea to become VERY familiar with that term).7

Now, a substantial American middle class will emerge during the Gilded Age, but it is neither large enough, nor mobile enough, nor motivated enough, nor politically powerful enough to act as a barrier between the two other classes . . . yet.8 This is dangerous; revolutions are born this way.

The centralization and consolidation of economic control within a narrowly-defined faction results in an uneven distribution of wealth, featuring amazing amounts of wealth in one extreme, and a disproportionate absence of wealth in the other. Since it really sucks to be poor, lower class working people ain’t gonna play this game for very long before they become fed up with it. As a result, this widening socio- economic gap will result in growing social dissent (lots of POPPs here: Pissed Off Poor People) and will

introduce a trend towards the socio-political ideals of socialism9 and its ultimate consequence , communism. It won’t be pretty, either.

Number five . . . . now, you guys ain’t dumb; you know what is going to happen when very rich dudes who desperately want to stay rich come into contact with politicians who have the power to do just that (or you can combine this dynamic and get Donald Trump). More on this later, but for right now it is important to know that during this period of industrialization those lovely folks in Washington DC, particularly

congressmen, will favor the growth and stability of big business at the expense of other aspects of the

economy (such as agriculture, small business, etc.) Duh; wonder why? At last, number six. During this time, it is obvious that with the advantages of government help and

centralized control, American business is going to grow rapidly, and I mean human growth hormone-style growth: getting really big really fast. As a result, the size and scope of America’s economy will grow in proportion with the size to the size and scope of American business. In other words, “what’s good for American business is good for America.” Of course, that may not be necessarily good for every aspect of American society, because obviously, in this sort of arrangement, not everyone can share the wealth. However the dynamic of national and corporate economic growth will provide the foundation for the greatest economic leviathan the world has ever seen. After all, for every queen bee there has to be a hive full of worker bees, all of whom work for the welfare of the hive. Does this division of management and labor work? Ever stuck your hand inside one of these bad boys without a glove?

Ah, there’s one more little jewel. The worst that could happen to a prospective business tycoon (think of the little dude on the Monopoly board) was if that infernal national government began sticking its nose where it didn’t belong: YOUR BUSINESS!! Anyway, businessmen and their Republican Party supporters who

guided the consolidation of American business developed and advocated a political-economic policy known as laissez faire, which simply meant that the less the government regulated business the better off

the country’s economic health would be. The level of and extent to which laissez faire has been employed

as the guiding philosophy of the national economy primary economic principle behind party politics ever

since. You need to be VERY familiar with this term: laissez faire, which means no government interference

with business.

Section II. The First Barons OK, a historic basic premise of business, and I mean any business at anytime, anywhere: anytime you

have wads of available (in this case, government) money (also known as “capital”) floating around, you will have expanded opportunities for corruption and scandal. The more money, the more opportunities. OK, time to use your deductive powers: since the railroads were the number one top dog big cheese all-encompassing overall business of businesses of the era, to what business do YOU think the bulk of federal money was made available? OK, here’s another one. Because of the ease with which any goober could grab a share of this federal money bonanza, there were (to say the least) a lot of questionable (and I’m being kind here) business

7 Socio-economic class simply means basing the members of a society’s personal status on how much wealth they have . . . or don’t have. You know, the “have’s” and the “have nots.” Or like teachers, the “have no lives.” 8 It is important to remember that a solid, mobile middle class is the basis for any successful capitalist (ie democratic) government. 9 LOTS more on this later, but as a VERY simplistic point of reference socialism is a political-economic system that stresses public ownership of business, rather than private ownership. Because of the sheer size of industrial society and economy, socialism typically comes in various forms depending on the amount of social integration of the economy.

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dealings. Because of these “shady” business dealings, these unscrupulous (a nice way of saying “crook”) businessmen became known by their nickname: The Robber Barons.

*The Credit Mobilier Scandal. Yeah, I know we’ve already read about this, but in the context of Gilded Age corruption it bears a revisit because it shows how the system was manipulated by these unscrupulous Baron people. First of all, Credit Mobilier was a railroad consulting/construction company formed, owned, and supported by wealthy investors (something’s smelling bad here), including a few members of Congress (WOAH!!! REALLY BIG STINK NOW!!) These bastions of the public trust used their congressional influence to help Credit Mobilier obtain federal railroad construction contracts (ah, the stench of internal improvements . . . Jackson warned us about this when he vetoed the Maysville Road), most significantly the Transcontinental Railroad, which had oodles of federal funding. Now, after receiving the contract, Credit Mobilier would use sub-standard materials, near slave immigrant labor, and any measure to cut costs, while all the while over-charging the government. Were they successful? Well, they charged the Union Pacific Railroad $94 million for a job that actually costs $44 million. Fifty million profit? Not bad for a day’s graft. Still, these guys couldn’t hold a candle to this next dude, the king of the railroad crooks: Jay Gould.

*Jay Gould. This guy was a crook, no other way to put it. Here’s how his successful railroad scam

worked:

Jay Gould Had His Hands in Almost Every Scam You Can Imagine

1. Buy old, run down, worthless, money-losing funky railroads whose owners wanted to cut their losses and get out of the business . . . and there were many.

2. Make cosmetic improvement; in other words, paint them, install new cushions, spray it with “New Railroad Smell” scented Febreeze . . . everything but actually repair that which made them worthless in the first place.

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3. Advertise that you are offering stock in the greatest financial opportunity of the day. Just imagine Bret Favre drawling “That’s right! Don’t get left out! Don’t be a doofus! Why be an ordinary slob when now you can own a railroad and get rich quick! Call “1-800-YOUR-A-SUCKER” NOW!!!!!!!10 If you call within the next 10 minutes we will send you free of charge the Nostril-Damus, the all new personal grooming device that trims that runaway nose hair while predicting the future.”

4. When someone buys stock, they will receive a proportionate part of the company’s profit back in something called a dividend, in other words their share of the profit. The more shares of stock you hold the larger your dividend will be. Conversely, of course, no profit, no dividend. Also, no profit, and stock owners try to sell their stock, and it becomes less valuable. Gould was able to get federal funds to improve his crappy railroads, but instead of repairing his trains he paid dividends out of them. See what he’s doing? He is making his stockholders think he is (and they are) making a profit (due to their receiving dividends) and thus is driving up the value of the stock. When other yokels see this, guess what? THEY WANT SOME OF THE ACTION, AND ALSO BUY GOULD’S STOCK, which is, obviously, absolutely worthless in real value. It only appears valuable because of the dividend payments coming from phony profits. Gould only did this to drive the value, and hence the price, of his stock up, and when he reached the end of his federal money (which only he knew) he would sell the entire railroad, lock, stock, and barrel at the phony inflated price driven high by the phony dividend. The poor suckers who bought the stock were left to realize that they owned a worthless, crappy railroad with fresh paint and new upholstery . . . one in which they could never recover their losses. By the time the investors realized they had been cheated, Gould was a million miles away, laughing all the way to the bank. (The 21st century variant of this scam is known as a Ponzi Scheme.)

5. Oh yeah, the inevitable question: did Gould ever get caught? Oh yes, dozens of times. But give him a little credit here, anyone this brilliant isn’t going to stay caught for long. Gould simply reached deep into his pockets and avoided prosecution by bribing government investigators and law enforcement officials. Since a Gould bribe was often more than a poor cop was making in a year, Ol’ Jay paid the man and merrily went along his way. How merrily?

6. Gould and the Great Gold Conspiracy. In 1869, Gould found that the one legitimate railroad of which he maintained control, the Erie, lost money every time the price of gold dropped on the national monetary market. See, as long as gold sold for about $400.00 to $450.00 paper dollars for every 100 gold dollars Midwest grain shippers shipped tons of grain on the Erie RR to foreign markets.11

Consequently, it was in Gould’s best interest that gold prices stayed high, and how did an enterprising crook guarantee that? Well, Gould knew the laws of supply and demand, so he made a highly-public display of his (as well as his cronies) buying all the gold he could get his hands on. See where this is going? When speculators saw Gould buying, they also bought gold, which consequently drove the price up . . . higher demand equals higher prices. After about a year gold’s purchase value was WAY out of proportion to its worth, which meant Gould’s railroad was making a butt load of money off of the inflated . . . not actual . . . value of gold. Alarmed that the fluctuating price of gold might cost him money, he and partner Jim Fisk conspired to corner the gold market with the intention of controlling the available supply, and thus controlling its price. The pair spread the rumor that the government was prepared to flood the market with gold (by virtue of the Resumption Act) which had the effect of driving the price down. Gould and Fisk, of course, bought up as much as they could at the lower prices before being ratted out by Grant’s brother-in-law. How was Gould able to wiggle out of this mess? When he heard that federal investigators were closing in, he kept the news to himself as slowly began to sell his holdings to his partner, Fisk, who assumed that the smart move was to keep buying. I tell ya, gotta admire the dude.

10 Well, yes, they did have telephones back then, but no 800 service. No internet, however, which explains the absence of www.Yourasucker.com. Just part of a pathetic joke on my part; get used to them. They are all I have. 11 When American grain farmers produced a surplus of grain they typically flooded the American market with grain; however too much grain and the surplus would cause the price to drop. Consequently they would either ship the surplus to Europe or let it rot in the fields. When gold, which was the currency of international trade, sold between $400-$450/100 gold dollars, European markets would take advantage of the favorable rate and buy grain.

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The Gold Barons: Gould and Fisk

In the end, in 1872 Fisk was shot by a jealous client while exiting the hotel room in the Grand Central Hotel in Manhattan that he shared with said client’s wife. Gould was able to slip away and died in 1892, filthy stinkin’ rich. Jay Gould was truly one of the greats, and while many argue about whether all of these business giants were legitimate or not, no one can argue that Jay Gould was an out-and-out crook: a true Robber Baron who knew how to manipulate the laissez faire system and doofus presidents like Grant to optimum effect.

*Commodore Cornelius Vanderbilt. Here’s a quick quote from the ol’ Commodore: “The law?

What law? Who has time for the law? Ain’t I got the power?” Ok . . . at least everyone knew where the Commodore stood on the issue of the law. Vanderbilt made his first fortune in steamboat shipping before the Civil War, but because of the war switched to railroads. Why? Well, because (a) most rail lines were safely located in the North, and (b) unlike steamships, trains didn’t sink. Anyway, once Vandy discovered the unlimited possibilities of making money through the railroads, he jumped at the concept of consolidation or the combining of several individual companies in order to create one huge company.12 See, Vandy used the consolidation of several different rail lines into a larger whole to corner the early railroad market. Did it work? By 1900 two-thirds of all American railroad mileage was controlled by only seven companies, and five of those were owned in various forms by Commodore Cornelius Vanderbilt. You tell me if it worked.

12 Today we call this a “corporate merger,” as in Time Warner or Exxon Mobile. Same animal, different name. Ethical? Not always. Legal? Yep. Lucrative? Oh my God yes!

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The Commodore

Section III: Robber Barons or Captains of Industry?

*Social Darwinism. Before we even get to the real heavy hitters, we have to understand their motivation, you know, the “WHY?” of their endeavors. Yeah, I know, all signs point to unabashed avarice as the major incentive to these guys, but as in most things historical greed in and of itself is a far too simplistic motivator; there has to be something else . . . and in Gilded Age America, there was: a deeper psychological reason running through their minds known as Social Darwinism.

In 1859, Charles Darwin changed human thought with the publication of his classic On the Origin of

Species.13 Darwin hypothesized that life on earth had evolved through the ages through a process of natural selection, in which living beings either adapted to their environment and hence continued to grow or died off as

13 With his theory of evolution and its premise of natural selection Darwin also guaranteed that preachers all over the world would always have a Sunday morning sermon topic: Evolution versus Creationism. The debate goes on.

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other, more robust species took their place. In other words, either adjust and adapt or someone else will come and take your cookies. In 1894, an Englishman named Herbert Spencer applied Darwin’s respected theory to his own pseudo-science known as Social Darwinism. Spencer declared that, like animals in nature, human beings in society also evolved in line with natural selection. In Spencer’s version, the upper classes in society were successful because they were stronger and fitter than the weaker, lower classes. They worked harder, were smarter, and were more willing to do whatever it took to get ahead, while the weaker souls were consigned to be the worker bees and let someone take care of them. In other words, huge sums of wealth and power were a natural result of “survival of the fittest” (a term Spencer himself coined). Not surprisingly, up and coming industrialists embraced Spencer’s theory, as it simultaneously legitimized and moralized their claims to social and economic domination. In addition, the policy of laissez faire fit nicely into the Social Darwinist concept; any attempt by government to regulate business would also serve as a social leveling agent. Consequently Social Darwinists believed that laissez faire guaranteed the proper social station for the haves and the have-nots.

John D. Rockefeller: Oil. When it comes to downright cutthroat businessmen, you need look no further

than John D. Rockefeller, the Pit Bull of the Gilded Age. Rockefeller realized the potential of oil at an early age, and in 1870 formed the Standard Oil Company of Ohio, today known as Exxon. Operating within a laissez

faire economic environment in which there existed no federal regulation or other controls over business

practices, Rockefeller built an empire whose effects still resonate in the 21st century.

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As Rockefeller’s oil holdings grew, so did the sheer volume of the amount of oil he was both pumping from the ground and refining in his refineries. Rockefeller, who was keenly aware of peripheral expenses like shipping, waved this volume in front of the railroads’ noses to gain favorable shipping rates (remember that the cost to ship a product adds to its cost to consumers). The sheer volume of Standard Oil shipping provided a huge windfall for the railroads, who consequently took measures to ensure that they gained and maintained John D’s business. One of these methods was the rebate, or discounts given only to Standard Oil in order to keep the huge volume. Once they had acquired the Standard Oil business the select railroads guaranteed that they would keep it by spying and reporting on John D’s competitor’s shipments. The ultimate result was two-

fold: Rockefeller could do you a favor and offer to buy you out, or, if you wanted to take him on, he would simply drop his prices so low that you could not compete with him.14 He owned so much of the market that he could afford to take a loss, while his competition could not. I tell ya, he could smell your fear a mile away. Rockefeller was so adept at this that in one six-week period in 1879, he was able to buy out or otherwise obtain twenty-two of his twenty-six competitors. The rest he left to fight over the scraps.

Puck’s View of John D’s Behemoth, The Standard Oil Company

14 Many times Rockefeller would just drop his price to equal the size of the shipping rebates he was receiving, while directing his railroads to increase the shipping price of his competition. This dude was a Great White shark variety predator who, because there were no regulatory rules, simply made up his own.

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*Vertical Integration. Rockefeller was able to corner the oil market through a process known as vertical

integration. Simply put, he was able to use his product’s price as a weapon. How? Easy. The price of oil, then and now, contains many “hidden” peripheral costs such as the costs of shipping, containers, pipelines, storage facilities, refineries, railroad cars, just to mention a few. Now if you had to buy all of these extra necessities from a middleman, their costs could actually control your price. This made absolutely no sense to John D, so he simply cut his hidden costs by eliminating the middleman. He made/built his own peripherals: barrels, refineries, pipelines, storage tanks, railroad cars . . . everything that Standard Oil used was designed, built, and produced in-house. John D owned it all.

And that’s not all. Because Rockefeller owned all of the pipelines and storage facilities, which he good- heartedly allowed his poor competitors to use, he also controlled his competition’s railroad access to these facilities, which meant that he also controlled their shipping prices. This guy didn’t miss a trick, because, after all, oil ain’t much of nothin’ if you can’t refine it and ship it. And no one has ever refined it, shipped it, and controlled it like John D . . . not even OPEC.

*Seizing the market. OK, before we continue, we need to look at how these guys were able to control practically all of the American economy during the Gilded Age. Remember when we said that they used measures to guarantee that they became and stayed rich? NOTE: Avoid presentism. From the perspective of 2016 some of these measures appear unethical due to their illegality. However, remember that at the time that these men were building their empires very few regulations existed; indeed most regulatory laws were passed after these business measures were implemented and had impacted the American economy. Consequently, the utilization of these measures fell under the old adage: you can’t break a law that doesn’t exist. Now, afterward regulatory laws were passed, well, that’s a different story for a bit later.

Anyway, here are some of those measures.

• First on our list is the old standard, the monopoly. Indeed, the popular board game was designed after this strategy, in which a single person or company acquires control over all of a given commodity. That’s why you put all of those hotels on Park Place: to bankrupt your competition. Pure survival of the fittest.

• Secondly we have the cartel, an ugly word. This occurs when a few firms produce the same commodity, get together to control its price, then control or restrict its availability to consumers. Why do I say it’s ugly? Until relatively recently America has been captive to an oil cartel called OPEC (the Organization of Petroleum Exporting Countries), one in which primarily Middle Eastern nations (as well as Venezuela) produce tons of oil, then control the price as well as our access to it. This cartel is why we have paid so much for gasoline in the past, why we consider the Middle East vital to American interests, and why our relationship with that part of the world is not exactly the best.

• I left this jewel, the trust, for the last, because it is the one that caused all the fuss. In an effort to combat the monopoly, several states passed laws that struck down interstate monopolies by forbidding companies from owning property across state lines. Not a problem. John D and his boys simply formed trusts, in which the owners formed an “impartial” panel of trustees that exercised control over their holdings. Legally, all the stock was part of a common fund (supposedly available to everyone) and technically not a monopoly; actually nothing had changed because you know that (1) this so-called “common stock” was actually owned by very few individuals with names like Rockefeller, Carnegie, Morgan et al, and (2) these trustees were in no way impartial. They took their marching orders from the Rockefellers of the world.

• Industrialists like Rockefeller knew that the trust was too transparent to work forever, and they were right. In 1890, Congress passed the Sherman Anti-Trust Act, which outlawed any illegal combination that restricted competition or trade. Sounds great; however the Act was pretty much a flop. Why? Remember this, troops: it is one thing to pass a law. It is entirely another to enforce it. So, when considering enforcement of the Sherman Act, who in their right mind was going to take on the political power of these industrial giants? Because Congress was business-friendly they were hesitant to “bite the hand that fed them” so to speak, consequently rendering the Sherman Act not much more than a paper tiger . . . for the time being, anyway. Don’t forget about it, because after the turn of the century . . . . well, you’ll see. Don’t go away.

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*Andrew Carnegie: Steel. Carnegie is the warm and fuzzy industrialist, mainly because after he made his fortune he spent the remainder of his life giving it away. However, how he obtained his wealth in the first place is a study in cutthroat business tactics, one of hearing Mr. Opportunity knocking, letting him in, and kicking the snot out of him.

Andrew Carnegie

Carnegie originally made his fortune investing in oil and railroads, but in 1861 he founded the Freedom Iron Company. He began experimenting with a new process, known as the Bessemer Process, which hardened the raw pig iron through the application of high pressure air. The results intrigued Carnegie, who in 1872 travelled to England to inspect Henry Bessemer’s steel plant. Carnegie obtained the patent right to bring Bessemer’s process in the United States and by 1883 was producing steel at his Homestead, Pennsylvania, steel plant. Once he began to mass produce steel, his business skyrocketed due to the huge demand for the new material. Where Rockefeller used price to control the market, Carnegie used demand to gain control over the steel market. Carnegie produced at economies of scale, in which he increased the amount of production in order to keep his price low. You know that as long as a demand exists, you can charge a lower price and still make money due to volume. Carnegie could, his competition could not. The overall effect was that Carnegie was able to buy out his competition by “bleeding them” to a point where they had no choice but to sell, always at his price, always rock bottom.

Carnegie was a strict adherent to Social Darwinism, but he also believed that the ability to become wealthy was not only a result of natural selection, but also a gift from God. In his book The Gospel of Wealth

Carnegie stated that all wealthy people have an obligation to both God and society to give back portions of

their fortunes to benefit society. In 1901 Carnegie sold his Carnegie Steel Corporation to JP Morgan for $480 million, making him the richest man in the world. This windfall enabled Carnegie to pursue his interest in philanthropy and consequently he devoted much of his later life giving his fortune away, particularly in the interests of education and world peace.

*JP Morgan: Money. I had to save this guy for last because he is the kingpin, the pimp-daddy, the godfather of them all. Morgan would be a beast today with little adjustment for the passing years. As testament to his influence, he still affects America’s economy today; he is the guy behind Chase Bank . . . that is, JP Morgan and Chase Bank.

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JP Morgan: One Bad Hombre

Morgan was an investment banker; in other words, he bought up medium successful business stocks then sold them for a profit. The trick here is that, much like Jay Gould, he bought up so much of an individual stock that the appearance of the stock selling would prompt other investors to also buy the stock. When the selling price began to climb, Morgan would sell at a profit. Because of his success companies would become dependent upon him to buy their stock just to get it moving. See the opportunity here? Morgan began to exert tremendous influence over the success of these stocks, and because of this he also gained a disproportionate amount of power over these companies. Morgan used this power to demand that his people be placed on the company’s board of directors; when he had enough people on the boards he would use their votes to outvote the remaining board members. This is a corporate takeover; they still occur today.

Morgan had his grubbies in everything. Unlike Vanderbilt, Rockefeller or Carnegie Morgan’s holdings covered all aspects of the economy, including railroads and partnerships with Rockefeller. We are talking real power here. However, Morgan’s greatest achievement was his consolidation of the steel industry. In 1901, on an ocean voyage to Scotland, he approached Andrew Carnegie about purchasing Carnegie’s steel holdings; however Carnegie exhibited no intention to sell. Morgan told Carnegie to name his price, but still Carnegie refused to sell. Finally, after Morgan approached him at dinner one evening, to get rid of the pest Carnegie wrote on a napkin the ridiculous sum of $400,000, knowing fully well that Morgan would never pay THAT much. Morgan sent the napkin back to Carnegie with a $480,000 check enclosed. Carnegie, who was no fool, sold. With the Carnegie holdings, Morgan formed United States Steel, a corporation whose total worth on paper made it the first billion dollar corporation.

Why did Morgan pay such an exorbitant amount? By consolidating his own steel holdings with Carnegies’ Morgan accomplished two objectives: first, he was able to parlay the acquisition into the world’s first billion dollar corporation, and second, by buying him out Morgan removed Carnegie as a competitor. Morgan out-Carnegied Carnegie. You gotta love these guys!

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Mr. Morgan Did NOT Like Having His Picture Taken

*Horizontal Integration. Morgan’s consolidation of the steel industry illustrates his philosophy of market control. While Rockefeller and Carnegie preferred to eliminate the middleman and thus save money through vertical integration, Morgan simply believed that the best way to control the market was to simply eliminate the competition. In horizontal integration a company buys up all the competition and consequently could care less about controlling costs and prices. Morgan was the master here; he amassed such a personal fortune that, in 1893, when the United States government went broke due to an economic depression, Morgan loaned the country sufficient gold bullion with which the country could bail itself out. Jeez, we could sorta use him now . . . .

PERSPECTIVE ALERT!!! Were these men evil “Robber Barons” who built their fortunes on the backs

of unknown numbers of poor laborers and failed small businessmen, or were they or gallant “Captains of Industry” who built industrial America with guile, common sense, ambition, and a sense of economic pride in America? Wow, has THAT question been asked in many a lecture hall, graduate class forum, and AP class! Truth is, many people believe that these men weren’t any more evil Robber Barons than was the Pope. These men, regardless of the means by which they gained their wealth, still believed that they had a social responsibility; their philanthropic donations totaled in the hundreds of millions of dollars. All of them, even Rockefeller and Morgan, gave millions of dollars to charity; many of their contributions are still active today. Also, the means by which they achieved their wealth might have been unorthodox and perhaps questionable, but with the notable exception of Jay Gould they were not entirely illegal.15 Because they did what they did and were relentless in their determination, they were able to guide the nation through the stormy seas of industrialization, hence their nickname of “Captains of Industry.” In order to compete economically on a global level and grow as a modern nation, America had to undergo this journey sooner or later. Under the watch of these men, America was able to achieve what she set out to do: become an industrial behemoth, one with which the world would be soon forced to reckon.

15 Plain and simple: you can’t break a law that doesn’t exist.

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Section IV: Industrialization and Everybody Else

Because it was relentless and evolved so rapidly, American industrialization had an insatiable appetite. It gobbled up natural resources, decimated the environment, costs untold tons of money, but most of all, it simply devoured people. Industry requires labor, as much as it can get, and when it can’t find enough it goes out hunting for it. During the Gilded Age American business fed its appetite for people in several ways, all of which involved mass movements of people both immigrating from afar and migrating within the United States.

*The Second (or New) Immigration. During the Civil War, with all of the able-bodied young men fighting down South and thus robbing northern factories of their work force, Congress passed the 1864

Contract Labor Law, which allowed businesses to go overseas (particularly Ireland) and hire workers to come to America. The businesses (or in most cases, the US Army, as many of these people were forced into military service) would pay for the immigrant’s passage, a debt the immigrant could only repay with his labor.16 One problem: the passage to America cost a lot of money. The immigrant worker was paid very little money. See where this is heading? Well, you do, and the businesses did, but unfortunately, immigrants didn’t.

They were so desperate to get out of their crappy lives in Europe that they didn’t give a rat’s behind about the circumstances under which they would be forced to live in order to do so. As such, even after the end of the Civil War, immigrant labor continued to flood from across the Atlantic into the immigrant processing center at Ellis Island in New York harbor, and consequently into American cities.

Eastern and Southern European Immigrants Arriving in New York Aboard the Moshulu

16 Back in colonial times, joint stock company stockholders did the same thing to stock Jamestown with English settlers; you remember it as indentured servitude.

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Ellis Island

Awaiting Processing in the Great Hall at Ellis Island

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Unlike the first, or old, wave of immigration in the 1820s and 1830s, in which the majority of

immigrants came from northern and western Europe (Britain, Ireland, Germany, Scandinavia) this second,

or new, surge included multitudes from southern and eastern Europe (Italy, Spain, Greece, Hungary, Russia, Jews) as well as from China.17

In any event, by the 1870s and 1880s American industrialists were turning flips in the streets due to the influx of all this cheap labor. Factory jobs were of the Geico variety (even a caveman, or stupid lizard, could do it!) and there were oceans of cheap laborers wandering the streets looking for work. Who cared if they could not speak the language? Who gave a flip if they didn’t like their hazardous work environment or meager wages? Say ya don’t like it? See ya! Don’t let the door hit you in the butt on your way out. There are hundreds more (including those recent arrivals from the Deep South who used to be slaves) who will do your job, probably for less money and be glad they have it. Labor-availability wise, life indeed be good in America.18

*Migration from Within. Heck, Americans ain’t stupid. I mean, if wads of immigrants are coming to America to take easy available jobs in the cities that don’t depend on the weather for a paycheck, don’t you thing Americans know about it also? As far as rural Americans were concerned, it was a no-brainer, and for two very good reasons. First of all, on the farm, you depended on several factors in order to get paid, most of which involved either drought, floods, blizzards, good weather, crop failures, insects, or whichever mood the Almightily might be in. Secondly, in the cities lay Mr. Opportunity, just a-knockin’ away. There were lots of available jobs, and the only impediment to getting paid and possibly getting ahead in life was getting your lazy butt out of bed and off to work. Show up, get paid. Case closed. As a result of this migration, between 1870 and 1900 approximately 100 million Americans pulled an opposite “Green Acres,”19 by moving off of the farm and into the cities. That’s a lot of people cramming into areas that were already full of immigrants and had very little space in which to house any new arrivals. If you are sensing trouble here, you’re right. Big, nasty trouble.

The Outskirts of Pittsburgh 1884 . . . They Left the Farm for THIS?

17 Important to notice that while the first immigration, with the obvious exception of Irish, were of German, Scandinavian, and English descent (ie Protestant) and consequently were basically like most native-born Americans in the 18th century, folks in the second immigration were not. They spoke strange languages, had weird social habits, and worse of all: they were Catholic or Jewish. This ain’t gonna go over well, and that’s only European immigration. Wait until Asians arrive out west. 18 It shouldn’t come as a surprise that the competition for jobs among immigrant workers, native born American workers, and newly- freed African Americans got a tad testy at times. In some cases, blood flowed in the streets as the factions fought each other over available jobs. American workers hated the foreign workers because they worked for less money and therefore took American jobs, and everyone hated the former slaves. When you spend over two hundred years working for noting, a penny is as fortune. They worked cheaper than everyone. 19 Sometimes I forget how young you are, or, rather, how old I am. “Green Acres” was a bad television show about a rich New York lawyer who sold everything and moved (with his ditzy Hungarian wife) to a really crappy farm in a place called Hooterville (really, that was the name of the town). Best thing about the show was his next door neighbor, Arnold the Pig. Yep, it was THAT bad, dahling.

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LIFE IN THE CITY

Overcrowding in the Cities Gave a Whole New Meaning to “Up Close and Personal”

Guess What, Troopers? This Ain’t Kingwood Drive

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Life in the City . . . well, to be brutally honest, as you can surmise it sucked, no way around it.

Immigrants were drawn to the cities because (a) that’s where the only jobs they could perform20 were, and (b) that’s where the other immigrants like them were. Consequently, the inner cities became cesspools of filth and disease that is requisite with massive overcrowding. Most immigrants were forced to live in filthy, overcrowded apartment buildings called tenements, located primarily in the cheapest areas of the cities known as slums. Many died of diseases born by destitution and poverty, indeed the infant mortality rate in New York in 1878 hovered around a staggering 70%! However, because their sheer numbers provided an endless supply of cheap labor, the ill and infirm were typically considered not worth the effort to keep them alive. This tendency was not isolated to New York or the eastern industrial cities; it didn’t matter in which city an immigrant might relocate, their situation was consistent: outside of their menial labor they simply didn’t matter.

The Boss (no, not Springsteen) . . . Obviously, these people had no means by which they could represent themselves politically. As a result, some enterprising politicians began to tap this enormous source of support to build effective, powerful political machines. Typically identified with the Democrats, these men would offer immigrants that which they could not achieve by any other means: a shot at a decent life. The most infamous of these “bosses” was William “Boss” Tweed, who ran the Democratic political machine in the immigrant-

infested precincts of New York City. Tweed’s organization, known as Tammany Hall, was based primarily on immigrant support and facilitated through Tweed’s promises to immigrants of sanitation, running water, street lights, even food and health care in exchange for votes. You saw this guy on the docks welcoming the Irish (not to mention allowing buildings to burn) in Gangs of New York.

The Grand PooBah of Corruption Incarnate:

William Marcy Tweed: The Boss of Tammany Hall

Tweed’s graft and corruption extended deep into New York City politics and was perpetuated by the fact that it mattered not how many votes Tammany actually received, it mattered only that Tweed’s boys counted the votes. Of course, if you were an immigrant you could care less about Tweed’s escapades; in exchange for your support you were able to enjoy some semblance of a normal existence. However, make no mistake about it: Tweed lied, cheated, intimidated . . . a Gilded Age Lance Armstrong.

20 These poor folks possessed no marketable skills or education, heck, most couldn’t even speak the language. Consequently when they arrived in America they were fresh meat for those who would prey upon their condition . . . and prey they did. The only advantage they possessed was, despite their condition, at least they were white . . . which open up a whole new can of worms.

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Tweed Was So Crooked He Deserves His Own Cartoon Page

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The Mascot for Tammany Hall was the Tammany Tiger. Notice Tweed in the Emperor’s Box

*Life in the Factory. The operative term for Gilded Age immigrant labor is disposable. Due to the sheer number of available workers and the non-skilled aspect of the available jobs, well, outside of their ability to perform menial labor their lives weren’t worth the proverbial plugged nickel. Urban immigrants primarily worked in the factories; please understand that working in a Gilded Age factory was all the justification for college anyone needed. It sucked, and I mean really bad. Workers had no rights, such as a decent living wage, a safe work environment, tolerable hours, and what’s worse, they had no way to obtain any rights. Factories were filthy places, fit only for subspecies like freshmen, so naturally, we need to go in and take a look around.

• Hours. Although some states required that businesses limit their workers to no more than ten hours a day, it was largely ignored. Most factories worked as long as they darn well pleased, which was usually between twelve and sixteen hours a day, six and seven days a week. Some employees of Carnegie Steel, employing the scale of economies philosophy, worked as much as eighty-four hours a week. That’ll take the fight right out of you. In the coal mines (an entirely different version of hell) workers were literally worked to death due to the presence of deadly toxic and explosive gases21 and coal dust, which filled your lungs with poison. These poor souls went underground before daylight, breathed poison all day, and came back above ground well after the sun had set . . . and all for the privilege of dying of Black Lung before their thirtieth birthday.

• Piecework. Workers were not paid by the hour, as they are now, but rather by the amount they produced. This is called piecework, in which you are paid a set amount per piece of whatever it is you

21 Miners would take a caged canary underground with them before working in a shaft. If the bird died, they knew there was poisonous gas present, and the air would have to be evacuated before they could get to work. If the bird lived, they knew that the air was relatively safe . . . for the time being. The bird stayed with them the entire time they were underground; their lives depended on it.

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are making. The faster you worked, the more you produced; the more you produced the more money you made. The downside? Well, anytime you get in a hurry something suffers, and in this case it was often safety, and always quality. Today, many Third World countries suffer from this dynamic.22 They make a ton of junk, and produce it at superhuman production rates. We Americans, of course, gobble it up as quickly as we can. Problem is, the price and the quality are the same: cheap.

• The Sweatshop. REMEMBER THIS: Labor is always the most expensive burden a company must bear. Period. Whether it is a textile mill, automotive plant, or school district, labor costs money. OK, in the Gilded Age, companies would cut some of their labor costs by having their employees work in absolute hellholes called sweatshops. Why “sweatshops?” Because adequate ventilation costs money, and cheap labor simply wasn’t worth the added cost. Sadly, this practice still pops up from time to time here in America, and is pretty much the norm in Third World countries.23

*The Wages of Wages, or what near non-existent pay costs you. Pay was horrible in the factories (remember: labor is a burden to employers), and workers rarely earned enough off of which to live. Immigrant families especially suffered; because many of their cultures called for large families they had more mouths to feed. In order to do so, entire families had to go to work: mom, dad, and yes, the kids. Whether or not your kids worked often meant the difference between food and starvation.

*Working Girls (no, not THAT kind of work . . . behave!) Girls typically did not work in factories at as early an age as boys, but by their teens they were forced out of primary school and into the factory. Higher- level education (if you want to call it that, what an oxymoron!) was the sole property of males, and the responsibility of covering the lost income due to their brother’s being at school fell to the girls. Also, because they were female, they did not receive the same wage as men. Therefore, when they did replace men they had to work longer hours to make the same amount. This is a trap with no bottom.

Shucking Oysters Full Time at Age Ten

*Child Labor. This was America’s greatest tragedy, and would have never been allowed to exist except that, you guessed it: children worked for practically nothing! If you could keep the little boogers from

22 In 2013 a controversy erupted involving Cambodian in-home piecework labor and the Dallas Cowboys. Seems like Cowboy head honcho Jerry Jones farms out all of the Cowboy’s official products manufacturing (T-shirts, caps, jerseys, and other assorted overpriced crap) to Cambodian peasants s living in filthy huts, working ungodly hours for next to nothing pay. Jerry’s markup on these items is well over 100%; he’s making a killing (I guess he has to pay for that palace he built in Arlington somehow). Despite calls from American manufacturers, labor unions, other NFL owners, and even the government, Jerry has refused to have “America’s Team” merchandise made in America. Hmm, perhaps he should rename the team “Cambodia’s Team. 23 A few years back, Nike came under fire for using sweatshop labor in Vietnam. Those $150.00 Air Jordans only cost about $15 bucks (mostly in materials) to make, so to cut labor costs Nike outsourced the production to Vietnam, where workers in that Communist “worker’s paradise” were working in absolute squalor and making around a buck a day. When American outrage produced zilch from Nike founder Phil Knight, Americans turned their anger towards His Airness: Michael Jordan, who honestly claimed he didn’t know what the hell was going on.

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running amok (which they often did by chaining kids to their machines) you could actually get a decent day’s work from them. By 1900, an average of one in every five children was a full-time employee in factories throughout America.24 How could this happen in America? Simple: parents needed the income, without it they would most likely starve.

THE TRAGEDY OF CHILD LABOR

24By “children” we’re talking about kids between five and sixteen years old, with the majority being in the ten to fourteen year old range

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Kids In The Coal Mines.

This is Why You Go To College

*Charities: Jane Addams and Hull House. Obviously the horrid condition of poor working families disgusted some Americans and brought forth a few efforts to try and offer some relief. After all, there were no government agencies to care for the poverty-stricken, and with Congress more occupied with the economy rather than social issues there weren’t gonna be any anytime soon. The most famous charity was founded in Chicago by social reformer Jane Addams, and was called Hull House.

Hull House

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The 1907 Hull House Women’s Inner-City Basketball Team. Mrs. Scalia is Third from the Right (Watch Out for Those Elbows)

Here, families (poor native-born American, immigrant, and far-too-few African American) came to assimilate themselves into American society. They took classes to learn how to read, learn English, participate in activities, eat . . . anything to take their minds away from the drudgery of their daily lives. Hull House also provided day care, as well as recreational activities to alleviate the stress of daily immigrant life. Addams was the next in a long line of women temperance/suffragette reformers; indeed part of her rationale for Hull House involved giving men something to do with their idle time besides drinking.

However well-intentioned, facilities like Hull House still cost money, and such charity was frowned upon by the Social Darwinists who ran things. Their attitude was somewhat predictable:

“Harrumph, harrumph . . . poverty, you see, is a social weakness. It’s what you get for being neither strong nor fit enough for success. You are poor because YOU’RE WEAK!!!!!! WEAK, I TELL YOU, WEAK!!!!! Ahem, so, you see, poverty is your natural, just reward for your weakness. BECAUSE YOU ARE WEAK BEYOND IMAGINATION!!!!! Charity only feeds this weakness (THAT YOU HAVE BECAUSE YOU ARE UNBELIEVABLY WEAK!!!!!), and is thus harmful to society.”

Anyway, you get the picture. Due to these attitudes, and in a sad irony, charitable facilities such as Hull House, which were primarily supported by the Catholic Church, struggled with their own existence while they were trying to help their constituents struggle with theirs because, we have learned, they were, well . . . . weak. However, you know human nature well enough that you should be asking yourself: how long can this go on?

Section V: The Forgotten Fight Back

You can’t just keep on abusing people before it comes back to bite you in the rump. See, the reason Mark Twain called this era “The Gilded Age” was that, on the surface everything appeared wonderful and prosperous, a society that was truly golden primarily due to the stunning success of the Morgans, Rockfellers, and Carnegies of America. But underneath this golden appearance (or gilding, as Twain called it), in places (such as the inner cities) where you don’t find “proper” people living in “decent” society, that’s where the other side of the story and identity of the age dwelled and spread like a virus. No, it wasn’t pretty, and was

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subsequently ignored, and because it would only disappear if one chose not to think about it, it festered . . . and festered . . . and festered. As a result, just like an infected sore, it was bound to burst, and burst it eventually did . . . albeit slowly.

*The Socio-Economic Gap Widens Even Further. Never in American history was the gap between

the haves and the have-nots been so wide. Think of this as the Grand Canyon, with no bridge to cross it. In a healthy socio-economic environment, the middle class serves as the bridge. But in the Gilded Age, the have- nots did not cross because there was no viable way to do so. They sat on their side of the socio-economic canyon and became more frustrated by the day.

Now, those in charge weren’t so stupid as to not realize the dangers here; after all, such conditions were part of the prime recipe for revolution. As a result, to try and combat the inevitability of poverty a social education program began making the rounds throughout the slums of the inner cities offering the one thing that can sustain poverty-stricken people: hope. The poor were informed that theirs was not a lost cause and were urged that the key to escaping abject poverty was to work hard, save your money, and one day “their ship would come in.” A series of “rags to riches” books, written by Horatio Alger, told inspiring stories of young boys (no girls) living in near-fatal poverty who picked themselves up by their bootstraps and, through hard work and playing strictly by the rules, were able to achieve a measure of success.

While this meteoric rise did occur from time to time, most notably by Andrew Carnegie (the rags to riches poster boy) it was the promise, rather than the reality, of success that was supposed to keep the working multitudes at bay. By late century, it wasn’t working.

*The Blessing and Curse of the Immigrants. Remember the second (new) immigration? Well, these folks brought more with them than the Mafia, pasta, and knishes (a Jewish food). They brought radical social and political ideas, many of which called for revolution. Most of the new immigrants originated from political backgrounds in which they had no control over whom or what governed them. As such, they had no way of exercising that lovely consequence of Locke’s Social Contract (REVIEW: What can the people do if their rights are being abused by the government?), nor could they exercise any form of free speech. (Well, I suppose they could, but they would end up jailed or dead, in which case

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discretion is the better part of valor . . . in other words, the smart money said keep your mouth shut.) Because of this they were ready listeners when a new idea of social justice (or anything that would improve their lot in life) bounced down the path. In 1848, a really bouncy idea popped up, and a whole bunch of folks listened . . . and listened well.

* Karl Marx and Socialism. There’s that dirty word: socialism. There was a time in American where I could be fired, or at least investigated, for even writing this. Seriously. It continues to be a loaded word, it remains a controversy to us today. Simply put, Americans are capitalists, and socialism, at least in its extreme forms, presents the greatest threat to capitalists. Case closed.

Frederick Engels and Karl Marx

In 1848, a German professor named Karl Marx collaborated with Frederick Engels and wrote one of the most powerful and influential books of all time: The Communist Manifesto. In this book Marx and Engel lay forth their argument against the injustice of European industrial society, stated their theory of why and how it occurred, and most ominously, presented a plan by which it could be eliminated. IMPORTANT TO REMEMBER: You

must understand that Marx’s ideas held tremendous appeal for poor people because they offered hope, and when

you realize that at any given time in human history the majority of the world’s people will be living in poverty, you can understand how truly powerful Karl Marx was . . . and still is.

Socialism, although social and political, is a primarily economic philosophy that promotes public ownership (meaning ownership by the people by virtue of the government) of the means of production,25 as opposed to the capitalist’s desire for private ownership. To Marx, the only way for this to occur was for the workers to rise up together and overthrow (through violent revolution if necessary) the capitalists and forcibly seize the means of production. In the Communist Manifesto Marx famously wrote “Workers of the world unite! You have nothing to lose but your chains.” Once this occurred, the wealth of a country could be evenly and equally distributed to all citizens, eliminating the presence of socio-economic classes. Freed of the pressures of a class-conscious society, everyone could now quit bathing, sit in a circle, hold hands, sing “Kumbayah” or “Michael Row the Boat Ashore” all while working together for the betterment of the society as a whole. No rich, no middle class, no poor; in Marx’s words “from each according to his abilities to each according to his needs.” A very utopian endeavor indeed; makes you wonder where the Oneida folks went wrong.

25 “Means of production” includes everything-buildings, transportation, machinery, raw materials, and yes, labor-required to produce a commodity. Marx argued that only the workers could own their labor, so naturally they had the right to any part of profit for which their labor was responsible. Not a popular idea here in America, as labor is compensated by those who take the risk by investing their own money, or “capital”. . . hence the term “capitalism.”

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Most Americans saw (and still regard) socialism as a threat to American ideals such as free enterprise,26

liberty, and property. From our twenty-first century perspective, in which we have battled Communist regimes (born of radical socialism) all over the world for over one hundred years, we know its limitations, witnessed it weaknesses, and see how, in most cases, it simply hasn’t worked . . . not to any sustainable degree, anyway. The Soviet Union collapsed under its own corrupt weight in 1989; only China can boast of success, and that’s because of their communist/capitalist hybrid government/economy. However, in nineteenth century America socialism represented a huge threat, and when paired with the enormous numbers of PO’d poor working people to whom socialism was aimed, it scared the pants off of folks. They were right to be worried, remember: there were far more dissatisfied workers than there were middle and upper class (remember the pyramid). The American Gilded Age garden was ripe for planting socialism in America; someone need only to sow the seed.

*The Anarchists. There was another radical philosophy heading into America during the New Immigration: anarchy. Simply put, anarchists opposed ALL forms of government while seeking complete individual freedom. These people even opposed government by the very people for whom they desired complete freedom (think of your 7th grade class with no teachers, administrators, or adults of any kind . . . everybody doing their own thing. My God is that scary). Anarchists supported the overthrow of governments everywhere, through violence if necessary. True, most 19th century Gilded Age anarchists were out and out kooks and nutcases, but they were dangerous kooks and nutcases. The real only thing that they had in common with the socialists was their hatred of the status quo and the rights of the working class. Now, Socialists were goofy and scary, but not nuts like the anarchists. It is the combination of these two groups, both intentional and unintentional, that will cause problems, serious problems, and end of costing hundreds of lives.

*America: Meet the Labor Union. First of all, let’s get this straight: while their basic beliefs are similar to socialism (workers gaining as much benefit from their labor as possible), not all labor unions are socialist by nature. After all, it’s hard to envision the members of the National Football League or Major League Baseball Players Associations, which consists of a collection of twenty-something year old multi-millionaires, willingly sharing their salaries equally with the rest of society so they can live on some California commune with women who don’t shave their legs or armpits and guys who are allergic to soap; after all, hygiene is a bourgeois endeavor The fact that they are multi-millionaires and consequently define the upper reaches of society sorta runs opposite to the basic, ultimate concept of socialism, a classless society. That said, I can now examine about how 19th century socialism lay the groundwork for the American labor movement without fear of personal bodily injury, property damage, or GOD FORBID offending anyone . . . save for, perhaps, smelly non-shaven Bohemians.

American workers REALLY liked the idea of their owning their own labor, and admit it: it makes sense. If a company’s research and development department created and patented a machine to do the same work as a person, the company would own the machine, right? Ok, same concept. Company provides labor through company-produced machine, company owns labor. Worker provides labor through his/her own work, worker owns labor. IMPORTANT CONCEPT ALERT!!!!! This led workers to the realization that separately they were nothing to the bosses. However, collectively they were responsible for a huge chunk of the company profit, because without labor’s collective work (the sum of their labor, which is the finished product), management gets squat. Nada. Zilch. Consequently, if labor banded together and went to the boss collectively they could negotiate a deal by bargaining for the use of their labor; in other words they could sell their labor as a commodity. This is the

basic foundation of the American labor union: the right of collective bargaining for specific goals. Without this, unions cannot function, because their strength is ALWAYS in numbers. The leverage by which unions obtain these goals is the second basic idea behind the union: the strike. The strike is a form of economic blackmail: “Give us what we want or we will refuse to work and shut you down. Hear that flapping sound? That’s the sound of your profit flying out the window. Feel that tapping on your shoulder? Those are nickels, dimes, quarters . . . ie dollar poop, reminding that they’re gonna find a new supplier since you ain’t producing darn thing.” It works, and really well.

26 Free enterprise is the right to create and own your own business, from which you receive the profits if you do well or bear the losses of you don’t. Bill Gates and the late Steve Jobs love American free enterprise; in most socialist countries they would have been forced to turn over Windows and Apple to the government and work for the military . . . with little or no pay.

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Labor unions have been around since before the Civil War. One of the first unions was the Knights of

Labor, formed in 1869. The Knights were an industrial union, meaning that they allowed anyone—skilled, unskilled, black, white male, and female— to join. The Knights’ basic weakness was that they forgot the basics idea of the labor union—collective bargaining for specific goals—and instead focused on “pie in the sky” social idealism such as an end to inner city poverty, affordable housing, and end to discrimination, and women’s rights. These weren’t labor issues; they were social issues, and as such fit more of a socialist agenda than the goals of a labor union. The adverse side effect? These issues attracted the poor and displaced, but also anarchists and revolutionaries, a demographic that would haunt organized labor for years. On the management side, well, American businessmen couldn’t provide these even if they wanted to. In addition, the Knights found the strike to be distasteful, and let’s face it: if there is no danger of being shut down and losing money why in the world would a business even listen to the Knights? You’re right, they didn’t. By 1890 the Knights were a thing of the past. However, they did not go quietly into that good night.

* Haymarket Square. In 1886, a primarily-German anarchist group associated with the Knights of Labor held a demonstration outside of the International Harvester factory in Chicago in a park known as Haymarket

Square. The gathering was designed to protest worker demands for an eight hour work day, as well as explain the virtues of socialism and anarchism. To keep the peace, International Harvester called upon the mayor to send police to keep the mob peaceful. All was going fairly well until one of those idiot anarchists threw a bomb into the crowd, killing a policeman. The police fired into the crowd, and a riot broke out. The overall effect was that Americans all over the country associated the anarchist’s bombing with the Knights of Labor and with labor unions in general, and this gave America a bad taste in its mouth regarding unions. Haymarket pretty much finished off the Knights; they were borderline socialists, and by the 1890s America had no stomach for such foolishness.

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Artist’s’ Conception of the Riot at Haymarket Square, Including Portraits of the Police Officers Killed by Anarchists’ Bombs.

Bad PR.

In 1886, a New York cigar maker named Samuel Gompers formed the American Federation of Labor

(AFL). The AFL was NOT a single union; rather it was a federation consisting of different craft unions, meaning its membership was restricted to skilled laborers, ie those who had a specific craft: machinists, shoemakers, electricians, etc. Also, when the AFL went to bargain with management they focused on specific “meat and

potatoes” issues such as working hours, wages, and working conditions: items that could be provided by the company. Lastly, the AFL was a true believer in the strike, and they used it quite well. Because the AFL was a collective endeavor, when one member craft union struck a business, they ALL struck their respective businesses. The result of Gompers’ creation and leadership is that the AFL is still with us today, and one of the most powerful labor organizations in America.

*The Great Strikes: Homestead and Pullman. Two violent incidents in the 1890s dealt the American labor movement a near-fatal blow: the Homestead Steel Strike and Pullman Railroad Strike. In 1892, the Carnegie Steel Mill in Homestead Pennsylvania decided to cut costs by replacing some human workers with labor-saving machinery. Knowing full well that the union would go nuts over this, mill manager H.C. Frick (Carnegie was vacationing in Scotland, but the cost saving idea was all his) declared that from that point on, all bargaining with labor would be done on an individual basis, and NOT collectively. Of course, the union protested what amounted as a union-busting move, and struck the mill the next day. Frick retaliated by hiring “scabs” (non-union workers to work in place of union workers during a strike) along with three hundred Pinkerton

detectives to protect them from the perimeter. The strikers attempted to storm the mill to get at the scabs, but were fought off by the Pinkertons, who realized that eventually the strikers would succeed in their attempts to storm and

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seize the mill. Consequently, the following morning, the detectives floated up the Monongahela River on barges in order to sneak in the back way and defend the building from the inside. The strikers, however, was waiting, and opened fire on the detectives. Rather than face a fate of either drowning or being shot, the Pinkertons finally surrendered. All told, six Pinkertons and three workers died.

The Pinkerton Barges Burning Behind the Homestead Steel Mill

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Six days later the Pennsylvania National Guard showed up to escort the scabs to and from work, and as time went on striker resistance faded. Tensions ran high for six months, when at last union opposition ceased. The damage to the union was catastrophic, not just because they lost lives, but because of the damage to their reputations which affected America’s perception of organized labor. Then and now, unions depend on the support of the American people, and the sight of soldiers protecting Americans going to work against attacks from fellow Americans, as well as the violence, was enough to convince most that labor unions were bad news, and most definitely un-American. It would take labor years to shake that image.

The death blow for the American labor movement in the late nineteenth century occurred in 1894 at the Pullman Palace Car Company in Pullman, Illinois. The town of Pullman was supposedly a model company town in which all employees were required to live and shop (an idea which had its genesis in Lowell, Massachusetts in the 1830s). In 1893, with the country in the midst of a depression, the Pullman company laid off over half of its workforce of 5,500, cut the remaining worker’s wages anywhere from 25% to 40%, while at the same time actually raising the worker’s rent and bills. Well, that dog ain’t gonna hunt, so the American Railway Union

27 went on strike. It is important to remember that Pullman had a monopoly on rail cars; every train that rode the rails did so with Pullman cars. When the union struck, they refused to build anymore cars, and when the railroad’s existing cars began to fall apart, they were up the creek. Railroad traffic across the country ground to a halt. Knowing what you do about the importance of the railroad, you can see where this is a huge problem for the entire country.

Pullman Strikers Try to Intimidate the US Army, Who Were Called Upon to Run the Railroad and

Were Consequently (To The Strikers) Scabs

27 The American Railway Union was founded by Eugene V. Debs. Later on, Debs will run for president as a Socialist, and come darned close to winning, receiving over 500,00 popular votes. More on Eugene further down the line.

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The Illinois attorney general called for President Grover “the Rover” Cleveland to send in the army, but Cleveland responded that the Constitution would not allow him to interfere with the strike unless the operation of the federal government was threatened. This is where Grover’s light went on (one of the few times that Cleveland’s light going on did not involve a woman; they didn’t call him the Rover for nothing), because the trains were the ONLY method by which the mail was delivered. Because the post office was a government agency, Grover could legally send in the army to protect the mail. He did, and not only did the army protect the railroad they actually assume control of its operation; this will set a precedent. Soon afterward the strike was busted. Once again, the union was seen as threatening the American way of life, and after the Pullman strike American unions went into hiding for the next 50 or so years. They will, however, be back.

Conclusion

America learned what both wealth and poverty meant during the Gilded Age. Denizens of both groups discovered the extent to which the government could or could not affect your lot in life; consequently the rich became richer, the poor became poorer. You know this can’t last. During the Gilded Age, the government, particularly the Republican-controlled Senate, aided big business to help them become big and stay big. Moderate factions will emerge and consequently attempt to reign in runaway profits for the sake of fairness and competition, but overall the Gilded Age was the era in which America learned what money was all about. Soon, however, the Great Silent Majority (a Richard Nixon term), or the great mass of common people led by farmers and, eventually, the growing middle class, will join forces to not only attempt to gain some sort of control over Big Business, but also attempt to change society.

Next on deck: The Populists, Progressives . . . and Oz.

Any Resemblance Between John D Rockefeller and C. Montgomery Burns is Purely Coincidental . . . Yeah, Right.

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