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. Additionally if you need
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keep making videos for you. Heimler out.