The Gilded Age and Economic Growth

Overview

• Time period: Post-Civil War, primarily the 1870s and 1880s
• Coined by Mark Twain, this era is marked by significant economic expansion
• The United States became the largest economy in the world.

Perspectives on Economic Growth

• Critics' View:

  • Wealthy industrialists seen as greedy "robber barons"
  • Accusations of market manipulation, monopolies, and worker mistreatment
  • Support for heavy government regulation to curb bad business practices

• Alternative View:

  • Intense competition among businesses
  • Rise in workers’ standard of living
  • Economic growth lifted many out of poverty
  • Heavy regulations could stifle growth and worsen outcomes

Expansion of Businesses

• Size and scope of businesses grew dramatically in the late 19th century
• Railroads were the first capital-heavy businesses to operate nationally
• Emergence of a new class of professional managers
• Mass production and factories became widespread

Management Techniques

• Horizontal Integration: Merging with competitors
• Vertical Integration: Controlling all aspects of production, from raw materials to marketing

Key Figures

• Andrew Carnegie:

  • Steel magnate who bought out competitors and innovated production processes
  • Lowered costs and set competitive prices

• John D. Rockefeller:

  • Dominated the oil industry with Standard Oil
  • Employed similar strategies to Carnegie

Economic Context

• Post-Civil War inflation ended in the 1860s; prices fell gently until the 1890s
• Beneficial for savers and consumers due to falling prices
• Farmers struggled with deflation, particularly those who had borrowed money

Agricultural Changes

• Engineering revolution increased farm productivity
• Allowed workers to transition from rural to urban areas for better opportunities

Role of Small Businesses

• Large companies could not market to all niches; small businesses thrived
• Examples: Small steel companies in Pittsburgh produced items not manufactured by larger firms

Labor Conditions

• Long working hours (average of 72 hours a week) and dangerous conditions
• Standard of living improved for many workers, especially immigrants and former farm laborers
• Comparison to farm labor: Factory work offered better prospects

Wage Growth

• Unskilled workers' wages increased by 44% from the Civil War to WWI
• Skilled workers fared even better due to demand for crafts and new skills

Immigration

• Millions of immigrants, particularly from Eastern and Southern Europe, arrived during this period
• Driven by the opportunities presented by economic growth and industrialization

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