Well hey there and welcome back to Heimler’s History. We’ve been going through unit 6 of the AP U.S. History curriculum and in this video we’re going to talk about the rise of industrial capitalism in America. So if you’re ready to get them brain cows milked, let’s get to it. So as I said in the last video, industrialism describes the change in the way things are made for sale, specifically the move toward mass production and mass consumption of goods. And generally, historians call this period of American history The Gilded Age. If something is gilded that means it’s covered in gold. But to say something is gilded tells you nothing about what’s underneath the gold. In my estimation, the Gilded Age was something akin to a gold covered turd. In this video we’re going to talk about the gold, and in the next video we’ll talk about the turd below. So during the Gilded Age in the late 1800s small, locally owned businesses basically became obsolete and defunct due to the rise of large corporations and trusts that eventually dominated entire industries, especially the railroad, steel, and oil industries. Now I talked a good deal about the railroads in the last video, so here let me just focus on oil and steel. In the oil industry, the name you need to know is John D. Rockefeller. He was the owner of Standard Oil, and as the company grew he made many shrewd business moves that forced his competitors to sell their companies to him, thus eliminating the competition. By the late 1880s Standard Oil controlled almost 90% of the oil industry. Now this particular practice of consolidation was called horizontal integration, and by definition, this just means that one company eventually buys out all its competitors until there is effectively no competition left. In the steel industry, the name you need to know is Andrew Carnegie. Carnegie was, like Rockefeller, a shrewd businessman and grew his company to the point where it dominated the steel industry, except Carnegie didn’t consolidate his interests through horizontal integration, he was more of the vertical integration persuasion. Vertical integration is when a company acquires all the complementary industries that support its business. For example, over time Carnegie was able to buy up companies that handled all parts of steel production from mining companies to processing companies to distribution companies. Again, that means complete domination of the industry with little room for competition. Now these industries and others like them grew so big and so powerful that they began increasingly looking outside the United States to gain control over foreign markets and resources. At the end of the century American is going to have the opportunity to become an empire by acquiring overseas territories, and we’ll talk an awful lot about that in another video. But here it's enough to know that many Americans had no interest in America becoming an empire since, after all, no small part of our birth narrative as a country had to do with breaking away from an empire. However, that was not the case with these industry leaders. They looked abroad into places like the Pacific Rim and Asia and Latin America and could see the opportunity to acquire new markets to sell stuff to people and new places from which they could acquire natural resources. So the impetus for empire in America is going to include a significant influence from these leaders of industry. At this point you can start to see the gold wearing thin and the turd is starting to peek out, but we’re going to cover that right back up and deal with it in the next video. Now both of these men, and the others who followed similar practices grew fabulously wealthy during this time. And there were several reasons they were able to get away with these kinds of practices. The first reason was the proliferation of laissez faire government policies. As I’ve mentioned before, laissez faire, when being translated, means something like “let alone.” And so politicians during this time almost had an allergic reaction to any government intervention or regulation over these business practices. And it could be that these politicians really believed that government regulation was harmful to the noble principles of free enterprise. Or maybe it was that guys like John D. Rockefeller kept stuffing buttloads of money in their pockets to keep them from passing regulations. You know, potato, potahto. The second reason these men were able to grow so wealthy is because they relied heavily on a large pool of underpaid laborers like immigrants, women, and children. I mentioned in a previous video that during this period there was a huge influx of immigrants from Europe, and while some of them settled in the west, the vast majority of them streamed into urban industrial centers looking for work. They were vastly underpaid, and again, there was no governmental regulation on wages, and they weren’t able to ask for higher wages because if they did, there were ten other immigrants looking for jobs who would work at the lower wage. Additionally, factory owners realized that in this age of unskilled labor they could employ women and children to work the machines as well. And they didn’t hire women because they were all progressive and waving the flag of gender equality. No, they discovered that they could employ women and pay them about a quarter of what they paid men. The third reason these kinds of business practices were tolerated was because of the application of Social Darwinism to economics. Now in case you forgot, Social Darwinism is similar to biological Darwinism. In nature, the strong eat the weak and it’s all survival of the fittest. Social Darwinism argued that if that’s how nature works, why not apply that to society? Strong nations should eat weak nations. And in this case, strong companies should eat weak companies, as is the way of nature. And in that way, these folks argued, the world’s wealth would be concentrated into the hands of those who were deemed fittest. Now all of these were standard practices for men like Rockefeller and Carnegie, and those who followed their example. However, Carnegie mitigated these brutal practices through what he called the Gospel of Wealth. Carnegie argued that those with extraordinary wealth had a duty from God to invest their wealth back into society through generous acts of philanthropy. And this wasn’t just a philosophical argument for him: Carnegie gave away something like $350 million to build libraries and concert halls and universities. So in that way, Carnegie had a little more gold than turd, and you know, small victories. Now you’ll often hear guys like Carnegie and Rockefeller and Collins Huntington and Mark Hanna referred to by one of two titles. Some folks refer to them as captains of industry. And, of course, that title presupposes a favorable opinion of them and their practices. On the other hand, you might hear them referred to as robber barrons. And that would be the more negative connotation of their contributions to American society. And the decision on which label is more appropriate, I’ll leave to you. Thanks for watching, and if you need more help on Unit 6, then click right here. 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