The Industrial Revolution and the Gilded Age


Industry Comes of Age is chapter 24 of the APUSH curriculum. This outline provides notes, additional facts, and links to entries to provide students with a deeper understanding of concepts and topics related to the Industrial Revolution during the Gilded Age.

Gilded Age Industrial Revolution, Overview, Outline, APUSH

The Last Spike by Thomas Hill.

Industry Comes of Age

The Industrial Revolution helped transform the United States during the Gilded Age. While railroads and steel dominated business, corruption-plagued politics. Titans of Business emerged, including Cornelius Vanderbilt, Andrew Carnegie, J.P. Morgan, and John D. Rockefeller. In response, workers organized unions and fought for better wages and working conditions.

Andrew Carnegie, Titan of Business, Gilded Age, Gospel of Wealth, NPG
Andrew Carnegie (1905), during the Gilded Age. Image Source: National Portrait Gallery.

Politics Takes a Back Seat to Industry

  • Late 19th Century observers questioned the absence of the best men in politics.
  • One explanation was their attraction to the prosperous private economy.
  • The Industrial Revolution was gaining momentum, and talented individuals sought profits over politics.
  • Their ambitions were focused on corporate control rather than political careers.
  • The nation experienced significant economic growth as a result.

Rise of the United States as an Industrial Powerhouse

  • Despite being politically less influential, the United States was on the verge of becoming an industrial powerhouse.
  • The nation was about to showcase its industrial might to the world.
  • This transformation would have far-reaching effects on the lives of millions of working Americans.

1. The Iron Colt Becomes the Iron Horse

The Industrial Revolution during the Gilded Age was partially driven by railroads, which connected East to West, and helped transform the nation.

1.2 — Railroad Expansion in the Post-War Era

  • Government-business entanglements shaped post-Civil War politics.
  • These entanglements also played a role in the nation’s industrial development.
  • The railroad construction boom was a significant part of this development.
  • In 1865, there were only 35,000 miles of steam railways in the US.
  • By 1900, this number had surged to 192,556 miles.
  • Most of the railway expansion occurred west of the Mississippi River.
  • Risky investments in railroads contributed to the Banking Panic of 1873, which triggered a four-year depression in the United States.

1.3 — The Transcontinental Railroads Connect the Nation

  • Building transcontinental railroads was costly and risky.
  • Government subsidies were required for such projects.
  • Extending rails into sparsely populated areas was unprofitable initially.
  • Private promoters were reluctant to bear heavy initial losses.
  • Congress started providing loans to cross-continent companies in 1862.
  • These subsidies were justified based on military and postal needs.
  • Massive donations of acreage paralleling the tracks were also given.
  • The railroads received 155,504,994 acres from the federal government.
  • Western states contributed an additional 49 million acres.
  • The combined land area given to railroads exceeded the size of Texas.

1.4 — Railroads and Land Grants

  • Railroads tied up extensive land for several years.
  • Land grants to railroads were allocated along the proposed routes.
  • Railroads could choose alternate mile-square sections within these belts.
  • The land allocation followed a checkerboard pattern.
  • Railroads withheld the land from other users until they determined track locations.
  • President Grover Cleveland ended this practice in 1887, opening unclaimed portions to settlement.

1.5 — A Convenient Partnership for the Government and Railroads

  • There was criticism, particularly in later years, regarding the “giveaway” of valuable land to corporations.
  • The government did receive beneficial returns, including preferential rates for postal and military services.
  • Granting land was considered a cost-effective way to subsidize the transportation system.
  • It avoided the need for new taxes or direct cash grants.
  • Railroads could utilize the land as collateral for loans or sell it.
  • The land was often sold at an average price of $3 per acre.
  • Critics sometimes overlooked the fact that the land’s value increased significantly due to railroad development.

1.6 — Transforming the Frontier

  • Frontier villages connected by railways experienced significant growth and transformation into prosperous cities.
  • Conversely, villages bypassed by railroads tended to decline and eventually became “ghost towns.”
  • Communities competed fiercely for the opportunity to host railroads.
  • Ambitious towns often offered financial incentives and other attractions to attract railroad builders.
  • In some cases, the builders exerted pressure on towns, even resorting to blackmail, to secure more generous contributions.

2. Spanning the Continent with Rails

The development of railroads during the Industrial Revolution of the Gilded Age came with scandals and relied on foreign laborers, who were poorly treated. It also led to the growth and development of what is known as the “Old West” or the “Wild West.”

2.1 — The Railroad was an Advantage for the Union

  • Deadlock in the 1850s concerning the proposed transcontinental railroad was resolved when the South seceded, leaving the North in control.
  • In 1862, following the outbreak of the Civil War, Congress took action to initiate the long-awaited transcontinental railroad.
  • A significant reason for this action was the need to strengthen the Union by connecting the Pacific Coast, particularly gold-rich California, more securely with the rest of the nation.
California Gold Rush, Gold Miners, El Dorado
Gold miners at El Dorado, California, sometime between 1848 and 1853. Image Source: Library of Congress.

2.2 — Construction of the Union Pacific Railroad

  • The Union Pacific Railroad was tasked by Congress to extend westward from Omaha, Nebraska.
  • In exchange for constructing each mile of track, the company received 20 square miles of land, alternating in 640-acre sections on both sides of the track.
  • Builders were also provided with substantial federal loans, varying from $16,000 for flat prairie land to $48,000 for mountainous terrain.
  • Actual construction of the railroad commenced in earnest after the conclusion of the Civil War in 1865.

2.3 — The Crédit Mobilier Scandal

  • The availability of lucrative loans and land grants prompted rapid progress in laying the rails.
  • Some insiders associated with the Crédit Mobilier construction company profited immensely from this endeavor, during the Presidency of Ulysses S. Grant.
  • They discreetly pocketed a staggering $73 million in profits while only investing around $50 million in high-speed construction.
  • To maintain their activities, these insiders also resorted to using relatively small sums of money to bribe congressmen into ignoring their actions.
Ulysses S. Grant, President, 1875, Portrait, WH
President Ulysses S. Grant (1875), during the Gilded Age. Image Source: White House Historical Association.

2.4 — The Railroad Workforce

  • Sweaty construction gangs, which included a significant number of Irish workers, particularly those named Patrick (commonly referred to as “Paddies”), many of whom had previously served in the Union armies.
  • These laborers worked tirelessly and energetically.
  • Notably, on a particular day, a workforce wielding sledgehammers and shovels, consisting of around five thousand individuals, managed to lay an impressive ten miles of track in a single day.
  • It was a common practice for these laborers to sing songs to boost morale and camaraderie among the workers.
  • Workers revolted against wage cuts during the Great Strike of 1877.

2.5 — Danger and Lawlessness on the Western Frontier

  • Hostile Indian attacks, in an attempt to defend their ancestral lands, frequently occurred as the railroad progressed westward.
  • When such attacks took place, laborers would momentarily abandon their tools and take up their rifles.
  • Tragically, numerous lives were lost, including both railroad workers and indigenous people, during the westward expansion of the railroad.
  • As the rail lines extended further, workers sought relaxation and companionship in tented towns known as “hells on wheels,” which could sometimes host as many as 10,000 men and occasionally featured prostitutes and performers.

2.6 — The Big Four and the Central Pacific Railroad

  • The Central Pacific Railroad was responsible for laying tracks on the California end of the transcontinental railroad.
  • This line boldly moved eastward from the burgeoning town of Sacramento, traversing the towering and snow-covered Sierra Nevada Mountains.
  • The financial support for this ambitious endeavor mainly came from a group of four individuals known as the “Big Four.”
  • The Big Four included Leland Stanford, a former Governor of California, who had influential political connections, and Collis P. Huntington, an energetic and skilled lobbyist, were prominent figures.
  • The other two were Mark Hopkins and Charles Crocker.
  • The Big Four cleverly managed their interests through two construction companies and, despite making substantial profits, avoided direct involvement in the bribery of congressmen.

2.7 — Chinese Laborers and Railroad Construction

  • The Central Pacific, like the Union Pacific, received substantial subsidies to expedite the construction of the transcontinental railroad.
  • They faced similar incentives to complete the project quickly.
  • Around 10,000 Chinese laborers played a vital role in this endeavor. They endured strenuous work from dawn till dusk, wearing basket hats.
  • The Chinese laborers were both cost-effective and efficient but sadly experienced numerous casualties, including fatalities from premature explosions and other accidents.
  • The formidable Sierra Nevada Mountains posed a significant challenge, and tensions ran high among the Big Four when progress was slow, with workers chipping away just a few inches of solid rock daily, while the Union Pacific made more rapid progress across open plains.
Chinese Worker, Central Pacific Railroad
Photograph of a Chinese worker on the Central Pacific Railroad. Image Source: Stanford Libraries.

2.8 — The Wedding of the Rails — Joining East to West

  • The completion of the transcontinental railroad culminated in a ceremonial “wedding of the rails” near Ogden, Utah, in 1869.
  • During this colorful event, two locomotives approached each other, “facing on a single track,” symbolizing the union of the East and West.
  • The ceremony included traditional elements such as breaking champagne bottles and driving a final ceremonial spike, often referred to as the golden spike.
  • Leland Stanford wielded a silver sledgehammer during this symbolic act.
  • The Union Pacific constructed a total of 1,086 miles of railroad track, while the Central Pacific built 689 miles.
Completion of the Pacific Railroad, Illustration, Harpers Weekly
This illustration depicts the locomotive engineers shaking hands at the completion of the Pacific Railroad where the Union and Central Pacific lines met. Image Source: Library of Congress.

2.9 — Celebrating the Completion of the Transcontinental Railroad

  • The completion of the transcontinental railroad marked a remarkable engineering achievement of its time.
  • It had a profound impact on the nation, firmly connecting the West Coast to the rest of the Union.
  • This new transportation link facilitated thriving trade with Asia and overcame the arid challenges of desert terrain, ultimately paving the way for the remarkable growth of the American West.
  • Many Americans viewed this achievement with great pride, comparing it to significant historical milestones such as the Declaration of Independence and the emancipation of the slaves.
  • In celebration of this accomplishment, jubilant Philadelphians rang the cracked bell of Independence Hall, emphasizing the magnitude of this achievement in American history.

3. Binding the Country with Railroad Ties

In total, five transcontinental railroad lines helped drive the Industrial Revolution during the Gilded Age.

3.1 — The Four Transcontinental Lines

  • Four transcontinental lines were completed before the end of the 19th century.
  • None of them received monetary loans from the federal government except for Union Pacific and Central Pacific.
  • All except the Great Northern received generous land grants.
  • Northern Pacific Railroad connected Lake Superior to Puget Sound and reached its terminus in 1883.
  • Atchison, Topeka, and Santa Fe went through the southwestern deserts to California, completed in 1884.
  • Southern Pacific spanned from New Orleans to San Francisco and was consolidated in the same year.

3.2 — James J. Hill and the 5th Transcontinental Line

  • The last of the five transcontinental railroads of the 19th century was completed in 1893, known as the Great Northern.
  • James J. Hill, a Canadian-American, was the driving force behind the Great Northern.
  • Hill was a significant railroad builder and had a strong sense of public duty.
  • He believed in the connection between the prosperity of his railroad and the prosperity of the area it served.
  • Hill ran agricultural demonstration trains and distributed blooded bulls to farmers in the “Hill Country” to promote agriculture.
  • His enterprise was well-organized and weathered financial storms successfully.

3.3 — The Dark Side of the Railroads

  • The development of railroads also had a darker side.
  • Pioneer builders were frequently overly optimistic.
  • They sought land bounties and extended railroads into regions with insufficient population to sustain them.
  • This resulted in railroads that led “from nowhere to nothing.”
  • When economic success didn’t materialize, they went bankrupt, causing financial losses for investors.
  • Many major railroads in the post-Civil War era went through repeated bankruptcies, mergers, or reorganizations.

4. Railroad Consolidation and Mechanization

Cornelius Vanderbilt played an important role in the development of railroads, which helped drive the Industrial Revolution during the Gilded Age.

4.1 — Cornelius Vanderbilt, the Commodore

  • The success of western rail lines was facilitated by expanding older eastern networks, notably the New York Central.
  • Commodore Cornelius Vanderbilt played a pivotal role in this endeavor.
  • Despite lacking formal education and refinement, Vanderbilt was a clear-visioned businessman.
  • Vanderbilt’s contributions included offering superior railway service at lower rates and amassing a fortune of $100 million.
  • He is remembered for contributing $1 million to the founding of Vanderbilt University in Tennessee.
Cornelius Vanderbilt, Titan of Industry, Gilded Age, NPG
Cornelius Vanderbilt (1846). Image Source: National Portrait Gallery.

4.2 — Vanderbilt’s Enhancements to Railroads

  • Two significant improvements for railroads.
  • Introduction of steel rail, popularized by Vanderbilt.
  • Steel rail was safer, more economical, and capable of bearing heavier loads.
  • Standard gauge of track width became widely used, reducing expenses and inconveniences of changing from one line to another.

4.3 — Technological Advances Improve the Railroads and Travel

  • Various refinements played a crucial role in railroading.
  • Westinghouse air brake, adopted in the 1870s, improved efficiency and safety.
  • Introduction of Pullman Palace Cars on a considerable scale in the 1860s.
  • Initially criticized as “wheeled torture chambers” and potential fire hazards due to swaying kerosene lamps.
  • Despite safety measures like telegraphs, double-tracking, and later, block signals, railroad accidents remained frequent daily tragedies.

5. Revolution by Railways

Railroads helped transform and standardize the nation as the Industrial Revolution continued during the Gilded Age.

Railroads played a significant role in Manifest Destiny and Westward Expansion by connecting the Eastern United States to the Western United States.

Railroads also helped bring a key piece of Henry Clay’s American System to reality by creating infrastructure that helped expand and grow the American economy.

5.1 — The Impact of Railroads on American Life

  • Railroads played a significant role in connecting different aspects of American life.
  • They physically united the nation and created a vast domestic market for American goods.
  • The transcontinental railroads attracted both foreign and domestic investors and allowed businesses to operate on a continental scale.

5.2 — Railroads and Industrialization

  • The railroad network was the primary driver of industrialization in the post-Civil War years.
  • Locomotives opened new markets for manufactured goods and facilitated the transportation of raw materials to factories.
  • The construction of railroads was a major source of orders for the growing steel industry.

5.3 — Railroads, Mining, and Agriculture

  • Railroads had a profound impact on mining and agriculture, particularly in the Western regions.
  • They provided transportation for farmers to access their land, transport their products to markets, and obtain manufactured goods.
  • Farm settlements developed along the railroads, similar to how they had formed near rivers in the past.

5.4 — Railroads and Urbanization

  • Railways played a significant role in the urbanization of cities during the late 19th century.
  • They facilitated the transportation of food to densely populated areas and provided both raw materials and markets for urban populations.

5.5 — Railroads and Immigration

  • Railroad companies actively promoted immigration by seeking settlers to whom they could sell land grants for profit.
  • In some cases, they offered free transportation to newcomers, further encouraging immigration.

5.6 — Environmental Impact of Railroads

  • The impact of railroads on the environment was notable, particularly in the ecologically fragile midsection of the continent.
  • Settlers following the railroads transformed tallgrass prairies into rectangular cornfields, which led to the displacement of buffalo by range-fed cattle.
  • White pine forests in the northern states were rapidly depleted for lumber, which was transported by rail to prairie farmers for construction purposes.

5.7 — Standardization of Time Zones

  • Railroads influenced the standardization of time zones in the United States.
  • Before the 1880s, each town had its own local time based on the sun’s position, causing scheduling issues for the railroads.
  • On November 18, 1883, major rail lines established four time zones for the continent, leading to the adoption of railroad “standard” time by most communities.

5.8 — Railroads and Wealth Creation — the Lords of the Rail

  • The railroad industry was a major driver of wealth creation during this period.
  • It gave rise to a new aristocracy known as the “lords of the rail,” replacing the old southern elite.
  • The railroad industry attracted speculators and investors on Wall Street, leading to the accumulation of colossal wealth by stock speculators and railroad entrepreneurs.

6. Wrongdoing in Railroading

The Industrial Revolution of the Gilded Age contributed to corruption in business and politics. The railroad industry was affected, led by men known as “Robber Barons.”

6.1 — Corruption in Railroad Promotions

  • Corruption was prevalent in the railroad industry due to the potential for overnight wealth accumulation.
  • Railroad construction companies, like the Crédit Mobilier, engaged in corrupt practices.
  • Railroad promoters developed more sophisticated methods of financial manipulation, often deceiving the public.

6.2 — Jay Gould 

  • Jay Gould was a notable figure in the railroad industry known for manipulating stocks.
  • Over nearly thirty years, he played a significant role in the fortunes of several railroads, engaging in speculative activities.

6.3 — Stock Watering Schemes

  • “Stock watering” was a favored scheme among railroad magnates.
  • It involved inflating claims about a railroad’s assets and profitability to sell stocks and bonds far beyond the actual value.
  • Promoters’ profits from such practices had a direct impact on railroad operations, forcing them to charge high rates and engage in ruthless competition.

6.4 — Tycoons Pursued Personal Interests over Public Concerns

  • The pursuit of financial gain often led railroad tycoons to neglect the public interest.
  • Cornelius Vanderbilt and his son William H. Vanderbilt are cited as examples of railroad barons who prioritized their power and profit over legal and public concerns.
  • Their actions demonstrated a disregard for the law and public welfare.

6.5 — Railroads Contributed to Political Corruption

  • Railroads wielded significant influence over public figures by engaging in corrupt practices.
  • They bribed judges and legislatures, employed lobbyists, and supported their own candidates in high office.
  • Railroads also distributed free passes to journalists and politicians, creating a culture where influential individuals felt entitled to free transportation.

6.6 — Railroad Kings as Industrial Monarchs

  • Railroad magnates became virtual industrial monarchs, with immense power and control.
  • They managed a natural monopoly that directly impacted the lives of a large portion of the population.
  • Unlike the U.S. president, they did not have term limits, allowing them to exert long-lasting influence.

6.7 — Cooperation Among Railroad Barons

  • As railroad magnates sought to protect their investments and profits, they began cooperating rather than engaging in cutthroat competition.
  • They formed defensive alliances, with one early form being the “pool,” where they agreed to divide business in a specific area and share profits.
  • Rail Barons also provided secret rebates and kickbacks to influential shippers to ensure steady traffic and manipulated rates to maximize profits, sometimes charging more for short hauls than long ones.

7. Government Bridles the Iron Horse

The Federal Government enacted important legislation as the Industrial Revolution continued during the Gilded Age. The Interstate Commerce Act of 1887 enforced new regulations and established the Federal Government’s authority regarding trade across state lines.

7.1 — Concerns about Concentrated Power

  • Many people were concerned that the concentration of power in the hands of a few railroad magnates was unhealthy and politically unacceptable.
  • Impoverished farmers in the Midwest began to question whether the nation had exchanged slavery for economic domination by the railroad plutocracy.

7.2 — American Attitudes towards Economic Injustice

  • While the American people were quick to respond to political injustice, they were slower to address economic injustice.
  • They valued free enterprise and believed that competition was essential for trade.
  • There was a strong attachment to the “American dream,” the idea that anyone could become a millionaire in a competitive economic system.

7.3 — Farmers’ Response to Economic Hardship

  • The depression of the 1870s prompted farmers to protest against their economic struggles, often attributed to the power of the railroads.
  • Organized agrarian groups like the Grange played a role in pressuring Midwestern legislatures to regulate the railroad monopoly.

7.4 — Supreme Court Ruling and Federal Regulation

  • In 1886, the Supreme Court’s Wabash case ruled that individual states had no authority to regulate interstate commerce, effectively halting state efforts to regulate railroads.
  • The federal government was deemed responsible for controlling the railroads to prevent abuses.

7.5 — The Interstate Commerce Act of 1887

  • Despite President Grover Cleveland’s reluctance, Congress passed the Interstate Commerce Act in 1887 in response to public concerns.
  • The act aimed to address issues such as rebates, pools, rate transparency, unfair discrimination against shippers, and price disparities for short and long hauls on the same line.
  • Most importantly, it established the Interstate Commerce Commission (ICC) to enforce the new regulations.

7.6 — Limited Impact of the Interstate Commerce Act

  • The Interstate Commerce Act, despite its acclaim, did not represent a decisive victory over corporate wealth.
  • Richard Olney, a prominent corporate lawyer, saw the act as a way for railroads to satisfy public demand for government oversight while maintaining nominal control.
  • It did not fundamentally challenge corporate power but provided a forum for resolving business conflicts in a more orderly manner.

7.7 — Resolution of Business Conflicts

  • The primary achievement of the Interstate Commerce Act was to provide a platform for the peaceful resolution of disputes among competing business interests.
  • It helped prevent destructive rate wars among railroads and protected them from aggressive state legislatures.
  • While modest, this contribution was important in stabilizing the existing business system.

7.8 — Significance of the Interstate Commerce Act

  • The act holds significance as the first substantial attempt by the federal government to regulate business in the interest of society as a whole.
  • It marked the beginning of a series of independent regulatory commissions in the following century, which would commit the government to overseeing and guiding the private economy.
  • The act foreshadowed the end of unregulated and aggressive business practices, emphasizing the government’s duty to protect the public interest in private enterprise.

8. Miracles of Mechanization

Immigration and inventors helped drive the Industrial Revolution during the Gilded Age.

8.1 — Postwar Industrial Expansion

  • The period of postwar industrial expansion, partly facilitated by the railroad network, witnessed significant growth in the American manufacturing sector.
  • In 1860, the United States ranked fourth among manufacturing nations, but by 1894, it had risen to become the world’s leading manufacturing nation.

8.2 — Factors Contributing to the Upsurge

  • The sudden industrial upsurge was fueled by the availability of liquid capital, which had become more abundant.
  • The Civil War, in part due to profiteering, generated immense fortunes that could be combined with foreign capital through borrowing.

8.3 — Exploitation of Natural Resources

  • The nation’s vast natural resources, including coal, oil, and iron, were now fully exploited.
  • The Minnesota-Lake Superior region, for instance, yielded rich iron ore deposits in the Mesabi Range, which became crucial for the steel industry.

8.4 — Role of Immigration

  • Massive immigration contributed to the availability of cheap and abundant unskilled labor.
  • The steel industry, in particular, relied on low-priced immigrant labor from eastern and southern Europe, often working long hours.

8.5 — American Ingenuity and Industrial Revolution

  • American ingenuity played a significant role in the Second American Industrial Revolution.
  • Techniques of mass production, pioneered by Eli Whitney, were perfected by industrial leaders.
  • A surge in American inventiveness led to the issuance of a significant number of patents between 1860 and 1890.
  • Inventions such as the cash register, stock ticker, and typewriter had a profound impact on business operations and society as a whole.
  • Urbanization was accelerated by innovations like the refrigerator car, electric dynamo, and electric railway, replacing animal-drawn transportation.

8.6 — The Invention and Impact of the Telephone

  • Alexander Graham Bell introduced the telephone in 1876.
  • Bell, a teacher of the deaf, conducted experiments to help the mute communicate, and this led to his invention of the telephone.
  • The telephone quickly gained popularity, and a vast communication network was established.
  • The telephone had a significant social impact, turning America into a nation of “telephoniacs.”
  • It also led to the employment of women as switchboard operators.
  • Initially, telephone boys were operators, but their use of profanity shocked customers.

8.7 — Thomas Edison and the Electric Light Bulb

  • Thomas Alva Edison, known for his versatility, was considered dull-witted as a boy and taken out of school due to his severe deafness.
  • Edison was not just a scientist but a tireless worker and tinkerer, famous for saying, “Genius is one percent inspiration and ninety-nine percent perspiration.”
  • He created various inventions, including the phonograph, mimeograph, dictaphone, and moving picture.
  • His most famous invention was the electric light bulb, perfected in 1879 after thousands of filament experiments.
  • Edison’s electric light bulb revolutionized lighting and daily habits.
  • It turned night into day, leading to changes in human sleep patterns.
  • Before the electric light, people slept an average of nine hours a night, but after its introduction, they slept just over seven hours.

9. The Trust Titan Emerges

Business tycoons and new methods of doing business emerged as the Industrial Revolution continued during the Gilded Age.

9.1 — Rise of the Business Tycoons

  • Business leaders of the era, despite their public statements, were generally averse to competition.
  • Tycoons like Andrew Carnegie, John D. Rockefeller, and J. Pierpont Morgan employed various strategies to circumvent competition.

9.2 — Andrew Carnegie and Vertical Integration

  • Andrew Carnegie exemplified the tactic of “vertical integration,” where he combined all phases of steel manufacturing, from mining to marketing, within his organization.
  • This approach aimed to enhance efficiency, ensure reliable supplies, maintain product quality, and eliminate intermediary costs.

9.3 — John D. Rockefeller, Horizontal Integration, and the Trust

  • John D. Rockefeller utilized “horizontal integration” by forming a trust, the Standard Oil Company, in 1870.
  • Stockholders from various smaller oil companies assigned their stock to Standard Oil’s board of directors, consolidating operations and eliminating competition.
  • Rockefeller’s ruthless tactics allowed Standard Oil to dominate the global petroleum market, and the term “trust” came to represent large-scale business combinations.
John D. Rockefeller, Titan of Business, Gilded Age, Portrait
John D. Rockefeller (1895), during the Gilded Age. Image Source: Rockefeller Archive Center.

9.4 — J.P. Morgan and the Elimination of Competition

  • J. Pierpont Morgan implemented strategies to eliminate “wasteful” competition during the 1890s depression.
  • He consolidated rival enterprises and ensured future cooperation by placing his banking syndicate’s officers on their boards of directors.
  • These arrangements became known as “interlocking directorates.”

10. The Supremacy of Steel

The Industrial Revolution introduced steel, which drove the growth of steel production and construction during the Gilded Age.

10.1 — The Dominance of Steel in the Industrial Era

  • The phrase “Steel is king!” aptly captured the spirit of the new industrialized era.
  • Steel played a pivotal role in shaping the steel civilization, serving as the foundation for skyscrapers, transportation, and daily necessities.
  • Steel production, particularly for railroads, exemplified the dominance of “heavy industry” that focused on manufacturing “capital goods” rather than consumer goods like clothing and shoes.

10.2 — Scarcity of Steel in Lincoln’s America

  • Steel was a scarce commodity in the America of Abraham Lincoln, which primarily used wood and brick for construction.
  • Iron was used for railroad rails and bridges, but steel was limited and expensive, mostly used for items such as cutlery.
  • The early iron locomotives ran on iron rails, which were both exclusive and hazardous.

10.3 — Rapid Rise of U.S. Steel Production

  • Within just two decades, the United States surpassed foreign competitors in steel production.
  • In the 1870s, Cornelius Vanderbilt of the New York Central imported steel rails from Britain.
  • However, by 1900, the United States was producing more than one-third of the world’s steel supply, equal to the combined production of Britain and Germany.

10.4 — The Bessemer-Kelly Process Transforms Steel Production

  • The transformation in steel production was primarily driven by the invention of the Bessemer process in the 1850s, which allowed for the cost-effective production of steel.
  • This process, named after a British inventor, was discovered earlier by an American, William Kelly, who attempted to use it in his iron kettle manufacturing business but faced resistance from customers.
  • Kelly’s discovery involved blowing cold air onto red-hot iron, causing it to become white-hot and eliminating impurities.
  • Initially, his attempt to apply this “air boiling” technique to his product was met with criticism, and his business suffered.
  • Eventually, the Bessemer-Kelly process gained acceptance and played a pivotal role in the development of the modern steel industry.

10.5 — Abundant Natural Resources for Steel Production in America

  • The availability of abundant coal for fuel, rich iron ore for smelting, and other essential components for steel production set America apart from other regions.
  • The nation also had a plentiful labor supply with a high level of industrial expertise.
  • These favorable conditions created the perfect environment for remarkable advancements in steel production.

11. Carnegie and Other Sultans of Steel

The Industrial Revolution during the Gilded Age created rivalries between business tycoons, including Andrew Carnegie and J.P. Morgan.

11.1 — Andrew Carnegie, the Steelmaster

  • Andrew Carnegie, a charismatic Scotsman, was a prominent figure among steel magnates.
  • He arrived in America at the age of thirteen with his impoverished parents in 1848 and started as a bobbin boy earning $1.20 a week.
  • Carnegie’s rapid ascent to success was characterized by his strong work ethic, willingness to take on additional responsibilities, and adept networking with influential individuals.

11.2 — Carnegie’s Entry into the Steel Business

  • After accumulating some capital, Carnegie ventured into the steel industry in the Pittsburgh region.
  • He demonstrated his organizational and administrative skills by selecting high-quality associates and cutting out intermediaries.
  • While Carnegie could be tough in business, he did not support monopolistic trusts.

11.3 — Carnegie’s Remarkable Organization

  • Carnegie’s organization was a partnership that involved around 40 “Pittsburgh Millionaires” at its peak.
  • By 1900, his company produced a quarter of the nation’s Bessemer steel, generating annual profits of $40 million.
  • In the era before income taxes, Carnegie himself received a substantial annual income of $25 million. Profits during this time represented take-home pay for millionaires.

11.4 — J. Pierpont Morgan, the Financial Giant

  • J. Pierpont Morgan, known as “Jupiter” Morgan, was the financial giant of the era.
  • He had built a legendary reputation by financing the reorganization of various entities, including railroads, insurance companies, and banks.
  • Morgan was a commanding figure, known for his massive shoulders, shaggy brows, piercing eyes, and prominent, acne-marked red nose. He had a reputation for integrity and believed that the power of money was only dangerous in the wrong hands, which he did not consider his own to be.
JP Morgan, Titan of Business, Gilded Age, Portrait
JP Morgan (1903), during the Gilded Age. Image Source: Wikimedia.

11.5 — Clash Between Morgan and Carnegie

  • By 1900, Andrew Carnegie was ready to sell his steel holdings, and J. Pierpont Morgan, who had invested heavily in steel pipe tubing, found himself in competition with Carnegie.
  • Carnegie threatened to enter the same business and ruin Morgan if his asking price was not met.
  • After eight hours of negotiations, Morgan agreed to buy out Carnegie for over $400 million.
  • Carnegie, fearing disgrace from holding such wealth, dedicated the rest of his life to philanthropy, giving away about $350 million.

11.6 — Expansion of Morgan’s Industrial Empire

  • Morgan wasted no time in expanding his new industrial empire.
  • He acquired Carnegie’s holdings, added more, increased the stock’s value (“watered” the stock), and in 1901 launched the United States Steel Corporation, capitalized at $1.4 billion.
  • This marked the birth of America’s first billion-dollar corporation, a sum larger than the estimated total wealth of the nation in 1800, signaling the full realization of the Industrial Revolution.

12. Rockefeller Grows an American Beauty Rose

The Industrial Revolution of the Gilded Age helped make John D. Rockefeller a titan of industry and contributed to the establishment of trusts.

12.1 — Emergence of the Oil Industry

  • The oil industry’s rapid emergence was a notable development during and after the Civil War.
  • While traces of oil had been found earlier and used for patent medicines, it was not until 1859 that the first oil well in Pennsylvania, known as “Drake’s Folly,” started producing significant quantities of “black gold.”
  • This birthed an industry that would extract more valuable resources from the earth than the gold rush of the forty-niners and their successors. Kerosene, derived from petroleum, was the initial major product, replacing whale oil for lighting.

12.2 — Rise of the Oil Business

  • Kerosene, used in glass chimney lamps with cotton wicks, offered a brighter flame than whale oil and became America’s fourth most valuable export by the 1870s.
  • The whaling industry, on the other hand, which had been the backbone of New England’s economy, started to rapidly decline.

12.3 — Technological Changes

  • Technological advancements brought both opportunities and challenges. Edison’s electric light bulbs began to replace kerosene lamps, rendering kerosene obsolete.
  • However, the invention of the gasoline-burning internal combustion engine by 1900 marked the ascendancy of the oil industry once again.
  • Gasoline engines surpassed steam and electric options as the preferred means of automobile propulsion, giving the oil industry a new and immensely profitable lease on life.

12.4 — John D. Rockefeller, the Dominant Figure

  • John D. Rockefeller, characterized as lanky, shrewd, ambitious, and abstemious (not drinking, smoking, or swearing), came to exert dominance over the oil industry.
  • Despite being born into a family with uncertain income, he achieved business success at the young age of 19.
  • In 1870, he organized the Standard Oil Company of Ohio, which would later become the core of the major trust formed in 1882.
  • Rockefeller located his refineries in Cleveland intending to eliminate middlemen and drive out competitors.

12.5 — Rockefeller’s Business Practices

  • During an era of unrestricted free enterprise, Rockefeller, known for his piety and frugality, operated in a business environment where unethical practices were common.
  • He pursued a “rule or ruin” policy and ordered his local agents to “sell all the oil that is sold in your district.”
  • By 1877, Rockefeller had gained control over 95% of all oil refineries in the United States.

12.6 — Ruthless Competition in Big Business

  • Rockefeller’s approach was ruthless, reflecting the harsh competition prevailing in the world of big business.
  • In this jungle-like environment, he believed that only the fittest would survive, and he spared no mercy.
  • He used spies, obtained secret rebates from railroads, and even forced railroads to pay him rebates on the freight bills of his competitors, demonstrating his unrelenting tactics.

12.7 — Rockefeller’s Belief in Consolidation

  • Rockefeller believed he was following natural law, and he later reflected that the time was right for aggressive consolidation.
  • He saw consolidation as a necessity to escape wasteful conditions and believed that the era of individualism had passed, never to return.

12.8 — Efficiency of the Trusts

  • Despite its controversies, Rockefeller’s oil monopoly produced a superior product at a reasonable price.
  • The large-scale methods of production and distribution used by trusts, including Standard Oil, led to significant cost efficiencies and made consolidation more profitable than engaging in destructive price wars.

12.9 — Proliferation of Trusts

  • Other trusts emerged alongside the oil industry, including the sugar trust, tobacco trust, leather trust, and harvester trust, which brought together numerous competitors.
  • The meat industry also prospered, with figures like Gustavus F. Swift and Philip Armour becoming prominent. Wealth was increasingly dominating the nation.

12.10 — The New Rich

  • These trusts and their leaders represented a new and influential class, eclipsing the older American aristocracy of successful merchants and professionals.
  • The rise of this “new rich” class was displacing the patrician families in the race for power and prestige.
  • Interestingly, many advocates against the trusts were led by genteel old-family individuals who were not radicals but conservative defenders of their diminishing influence.

13. The Gospel of Wealth

The Industrial Revolution of the Gilded Age also created a backlash against the wealthy, who tried to justify their business practices.

13.1 — Justification and Divine Right

  • Similar to monarchs in the past, America’s industrial plutocrats invoked the divine right to justify their wealth.
  • Some openly attributed their success to divine assistance, with quotes from figures like the Episcopal bishop of Massachusetts and John D. Rockefeller emphasizing the connection between godliness and wealth.
  • Andrew Carnegie advocated a “Gospel of Wealth,” asserting that the wealthy had a moral responsibility.
  • Many proponents of capitalism, however, relied heavily on Charles Darwin’s survival-of-the-fittest theories, with Yale Professor William Graham Sumner suggesting that millionaires were products of natural selection.
  • Despite deepening class divisions, the captains of industry were credited with providing material progress.

13.2 — Contempt for the Poor

  • Self-justification among the wealthy often involved looking down on the poor.
  • Some wealthy individuals believed that their success came from their own hard work and initiative, leading them to conclude that those who remained poor were lazy and lacked enterprise.
  • Reverend Russell Conwell of Philadelphia delivered a lecture titled “Acres of Diamonds,” in which he charged that poverty was the result of individuals’ shortcomings.
  • Such attitudes posed significant obstacles to social reform efforts.

13.3 — Plutocracy and the Constitution

  • Plutocracy, like the previous slavocracy, found support in the Constitution.
  • The clause granting Congress sole jurisdiction over interstate commerce benefited monopolists, who used it to resist state legislature controls.
  • Trusts also sought protection under the Fourteenth Amendment, arguing that corporations were legal “persons” entitled to due process of law.
  • Some evidence suggests that corporation lawyers intentionally inserted this loophole during the crafting of the Fourteenth Amendment in 1866.

13.4 — Incorporation in “Easy States”

  • Industrialists favored incorporating their businesses in states with lenient regulations, such as New Jersey, where restrictions on big business were minimal or nonexistent.
  • For instance, the Southern Pacific Railroad, operating primarily in California, was incorporated in Kentucky to benefit from the favorable business climate.

14. Government Tackles the Trust Evil

The Federal Government took action against the tycoons of the Industrial Revolution by enacting legislation during the Gilded Age.

14.1 — Mobilization Against Monopoly

  • The masses of people began to organize against monopolies, initially attempting to control trusts through state legislation, similar to their earlier efforts against railroads.
  • When state-level attempts failed, they turned to Congress for help.
  • After a period of debate and negotiation, the Sherman Anti-Trust Act of 1890 was finally enacted into law.

14.2 — The Sherman Anti-Trust Act’s Provisions

  • The Sherman Act explicitly prohibited combinations that restrained trade, making no distinction between “good” and “bad” trusts — the sin was bigness, not badness.
  • However, the law proved ineffective due to its limited enforcement powers and legal loopholes.
  • Surprisingly, the act was used to restrain labor unions or combinations that were perceived to be restraining trade.

14.3 — Early Prosecutions and Challenges

  • Initial prosecutions of trusts under the Sherman Act by the Justice Department were not vigorous or successful.
  • Many new trusts emerged during the administration of President William McKinley in the 1890s.
  • It wasn’t until 1914 that the Sherman Act gained more effective enforcement capabilities.
  • During this period, there was uncertainty about whether the government would control the trusts or vice versa.
William McKinley, 1897, Portrait, Benziger
William McKinley. Image Source: National Portrait Gallery.

14.4 — A Shift in the Legal Landscape

  • The Sherman Anti-Trust Act of 1890 and the Interstate Commerce Act of 1887 introduced a revolutionary principle into the legal landscape: private greed had to be subordinated to public need.
  • These laws marked a shift toward greater government regulation and oversight of corporate power.

15. The South in the Age of Industry

The Industrial Revolution spread to the South during the Gilded Age, leading to a philosophy known as the “New South.”

15.1 — Limited Industrialization in the South

  • The post-Civil War industrial surge in the North had only minimal impact on the South.
  • Even by 1900, the South produced a smaller percentage of the nation’s manufactured goods than it had before the Civil War.
  • The plantation system had deteriorated, giving way to absentee landownership, and sharecroppers, both white and black, worked the land for a share of the crop or became tenants under landlord control.

15.2 — Tobacco and James Buchanan Duke

  • Southern agriculture received a boost in the 1880s when machine-made cigarettes gained popularity.
  • James Buchanan Duke capitalized on this trend by mass-producing cigarettes and consolidating his competitors into the American Tobacco Company in 1890.
  • Duke’s philanthropy toward Trinity College in North Carolina led to its renaming as Duke University.

15.3 — Challenges to Southern Industrialization

  • Industrialists attempted to shift the South from agriculture to industry, but their success was limited, and the region remained primarily rural.
  • Henry W. Grady, editor of the Atlanta Constitution, promoted the idea of a “New South” that could compete with the North in commerce and industry.

15.4 — Obstacles to Southern Industrialization

  • Several obstacles hindered southern industrialization.
  • One significant barrier was the regional rate-setting systems imposed by northern-dominated railroad interests, which favored the transportation of manufactured goods from the North to the South.
  • This system prevented the South from developing a substantial industrial base.
  • The “Pittsburgh Plus” pricing system in the steel industry is cited as an example of economic discrimination against the South. 
  • Steel manufactured in Birmingham, Alabama, was charged a fictional fee, as if it had been shipped from Pittsburgh, despite having a competitive advantage due to local resources. 
  • This practice hampered the growth of the Birmingham steel industry.

15.5 — Cotton Textile Manufacturing in the South

  • In cotton textile manufacturing, the South had more success, driven by a desire to bring mills closer to the source of cotton rather than shipping it to New England.
  • Starting around 1880, northern businesses started building cotton mills in the South, attracted by tax benefits and the prospect of cheap, non-unionized labor.

15.6 — Impact of Textile Mills on the South

  • While the arrival of textile mills introduced industrialization to the South, it came at a significant human cost.
  • The primary attraction for potential investors was the availability of cheap labor, and southern industrialists prioritized keeping labor costs low.
  • The mills primarily settled in the economically challenged Piedmont Region of southern Appalachia and came to exert complete control over the communities where they were located.

15.7 — Labor in the Southern Mills

  • Rural southerners, mainly whites, left their homes in the hills and hollows to find work in the newly established company mill towns.
  • Blacks were limited to menial jobs in the mills.
  • These families, often labeled as “hillbillies” or “lint-heads,” worked long hours amidst the noise of spinning machines.
  • They received wages at half the rate of their northern counterparts and were often paid in the form of credit at a company store, leading to persistent debt.
  • Despite challenging working conditions and low pay, many Southerners viewed mill employment as an opportunity, providing them with steady jobs and wages they had never experienced before.
  • For some destitute families, jobs working in mills offered the only chance to stay together, as many mills sought to employ women and children as well.

16. The Impact of the New Industrial Revolution on America

The Industrial Revolution changed how business was done in the United States, and allowed American businessmen to do business on a worldwide scale during the Gilded Age.

16.1 — Economic Prosperity Post-Civil War

  • The decades following the Civil War witnessed economic miracles that significantly increased the wealth of the United States.
  • The standard of living experienced a notable rise, and American workers enjoyed greater physical comforts than those in any other industrial nation.
  • Urban centers experienced rapid growth as factories demanded more labor, and immigrants flocked to the country in search of employment opportunities.

16.2 — Changing Ideals and Economic Shifts

  • Early Jeffersonian ideals were fading in the face of industrialization.
  • The decline of agriculture in comparison to manufacturing meant that the vision of America as a nation of small freehold farms was no longer attainable.
  • The notion of free enterprise, untouched by government intervention as advocated by Jefferson, was being challenged.
  • Tariffs had already provided government support, and federal authority was now committed to regulating corporations and breaking up trusts.

16.3 — Transformation of Daily Life

  • The rise of industrialization transformed the concept of time and daily life.
  • Rural American migrants and European peasant immigrants, accustomed to the natural rhythms of life, had to adapt to factory schedules dictated by the factory whistle.
  • The strict discipline of industrial labor was often a challenging adjustment and sometimes had to be taught to immigrant workers, as exemplified by one corporation that instructed Polish immigrants in both the English language and factory work schedules.

16.4 — Impact of the Industrial Age on Women

  • Women were profoundly affected by the new industrial age, driven into the workforce by inventions like the typewriter and telephone switchboard.
  • Millions of stenographers and telephone operators found new economic and social opportunities.
  • The “Gibson Girl,” portrayed as an independent and athletic “new woman,” became the romantic ideal of the era.
  • Middle-class women often pursued careers, which sometimes led to delayed marriages and smaller families.
  • However, for most women workers, employment was a matter of economic necessity. They faced long hours, dangerous working conditions, and lower wages compared to men.

16.5 — Class Division and Criticism

  • The industrial age exacerbated class division as industrial tycoons accumulated enormous wealth.
  • Their extravagant lifestyles, including lavish displays of wealth by their spouses, drew sharp criticism.
  • Some of the criticism was rooted in envy, but a vocal group of socialists and radicals, many of whom were recent European immigrants, also expressed dissatisfaction.
  • The existence of an oligarchy of money was evident, with approximately one-tenth of the population owning nine-tenths of the nation’s wealth.

16.6 — Shift from Self-Employment to Wage Dependence

  • The nation was transitioning from a society of farmers and independent producers to one of wage earners.
  • In 1860, half of all workers were self-employed, but by the end of the century, two-thirds relied on wages.
  • Real wages were on the rise, benefiting workers who were employed. However, wage dependence made workers vulnerable to economic fluctuations and employer decisions.
  • The fear of unemployment was a constant concern, as a breadwinner’s illness could have dire consequences for the entire family.
  • Reformers worked to introduce measures of job and wage protection, as well as provisions for temporary unemployment, to improve the conditions of the working class.

16.7 — Pressures for Foreign Trade

  • Strong pressures for foreign trade emerged as the industrial machine began to saturate the domestic market.
  • American products, including the five-gallon kerosene can produced by the Standard Oil Company, were distributed worldwide.
  • The expansion of American trade began to lead to territorial acquisitions and the emergence of an American empire.

17. In Unions There Is Strength

The Industrial Revolution changed the relationship between employers and laborers during the Gilded Age.

17.1 — Wage Workers and Benefits of Industrialization

  • The labor of wage workers played a crucial role in powering the new industrial machine.
  • However, despite their essential contributions, wage workers did not proportionately share in the benefits of the emerging era of big business.

17.2 — Transformation of Workers

  • Workers were increasingly seen as lever-pullers in a giant industrial mechanism, with their individuality and creativity stifled.
  • There was a diminished emphasis on the value of manual skills compared to the pre-Civil War era.
  • In the past, workers might have worked in small plants where the owner knew them by their first name and cared about their families.
  • In contrast, workers were now employed by depersonalized, soulless corporations, and company directors had no personal connection with the workers.
  • Corporations were primarily focused on serving their stockholders, not engaging in large-scale private philanthropy.

17.3 — Impact of New Machines and Labor Market

  • The introduction of new machines led to the displacement of some employees, particularly in the short run.
  • While in the long run, more jobs were created, the immediate effect was often difficult for manual workers.
  • A surplus of laborers in the market allowed employers to capitalize on the situation by bringing in unemployed workers from various regions through the extensive railroad network.
  • This influx of unskilled workers from Europe, numbering in the hundreds of thousands during the 1880s and 1890s, created a labor market favorable to employers, ultimately suppressing wage levels.

17.4 — Power Imbalance Between Workers and Corporations

  • Individual workers were powerless when facing the might of giant industrial corporations.
  • Workers were compelled to organize and advocate for their basic rights due to the overwhelming challenges they faced.
  • The balance of power heavily favored corporations over individual workers. Corporations could easily replace an individual worker, while the worker could not replace the corporation.
  • Employers had numerous advantages, such as pooling vast wealth through stockholders, retaining high-priced lawyers, controlling local press, and exerting political pressure.
  • They could also employ strikebreakers — referred to as “scabs” — and use violence against labor organizers.
  • Jay Gould, a prominent figure of the era, was rumored to have claimed he could hire one group of workers to harm another.

17.5 — Corporate Weapons Against Labor

  • Corporations possessed various weapons in their arsenal to suppress labor actions.
  • They could seek injunctions from federal courts with conservative judges ordering strikers to cease their actions.
  • The company could request state and federal authorities to deploy troops in the event of defiance or disorders.
  • Employers could implement lockouts, starving workers into submission.
  • Workers could be coerced into signing “ironclad oaths” or “yellow-dog contracts,” which forbade them from joining labor unions.
  • A “black list” of agitators could be circulated among employers.
  • Some corporations owned company towns with high-priced stores and credit systems that left workers in perpetual debt, resembling a form of serfdom.
  • Miners often lived, shopped, and were buried under the control of the company, perpetually indebted.

17.6 — Middle-Class Attitudes and Deafness to Worker Concerns

  • The middle-class public grew increasingly unsympathetic to labor strikes, finding them annoying and disruptive.
  • American wages were considered among the highest globally, even though contemporary perspectives would view a dollar-a-day wage for manual labor as inadequate.
  • Many believed that individuals like Carnegie and Rockefeller had succeeded through determination and hard work, leading to the perception that workers could do the same.
  • Strikes were often seen as foreign and socialistic imports and thus unpatriotic.
  • While big businesses could form trusts to raise prices, workers were discouraged from forming unions to raise wages.
  • Unemployment was often perceived as a natural occurrence that would be resolved by some divine intervention.

18. Labor Limps Along

The Industrial Revolution contributed to the formation of unions during the Gilded Age.

18.1 — Rise of Labor Unions After the Civil War

  • Labor unions, which were limited and poorly organized in 1861, experienced significant growth during the Civil War.
  • The intense demand for labor during the war and rising living costs provided strong incentives for workers to organize.
  • By 1872, the number of organized workers had grown substantially, with 32 national unions representing various crafts such as bricklayers, typesetters, and shoemakers.

18.2 — The National Labor Union

  • The National Labor Union, established in 1866, marked a significant step forward for labor. It existed for six years and attracted approximately 600,000 members.
  • The union represented a diverse membership, including skilled and unskilled workers, as well as farmers. However, it excluded Chinese workers and made limited efforts to include women and Black individuals.
  • Black workers formed their own Colored National Labor Union, but racial tensions and white unionists’ racism hindered cooperation between the two groups.
  • The National Labor Union advocated for arbitration of industrial disputes and successfully achieved the eight-hour workday for government employees.
  • The severe depression of the 1870s dealt a significant blow to the union, causing labor setbacks. Strikes erupted in 1877 due to wage reductions in the railroad industry, requiring the intervention of federal troops to restore order.

18.3 — Emergence of the Knights of Labor

  • In the wake of the National Labor Union’s decline, a new organization, the Knights of Labor, emerged to carry on the labor movement.
  • Officially called The Noble and Holy Order of the Knights of Labor, it started in 1869 as a secret society with rituals, passwords, and a special handshake to protect its members from potential employer reprisals.
  • The organization maintained its secrecy until 1881 as a precautionary measure against employer backlash.

18.4 — The Knights of Labor’s Inclusive Approach

  • Similar to the National Labor Union, the Knights of Labor aimed to unite all workers under the banner of “one big union.”
  • Their guiding principle was “An injury to one is the concern of all,” emphasizing solidarity among workers.
  • The Knights of Labor had an inclusive membership policy, welcoming skilled and unskilled workers, men and women, as well as both white and underprivileged black workers. Approximately ninety thousand Black individuals joined the organization.
  • However, the Knights excluded certain categories of individuals they deemed “nonproducers,” including liquor dealers, professional gamblers, lawyers, bankers, and stockbrokers.

18.5 — The Knights of Labor’s Goals and Approach

  • The Knights of Labor focused on broad economic and social reforms rather than direct involvement in politics.
  • Their agenda included advocating for producers’ cooperatives and the establishment of safety and health codes in workplaces.
  • They emphasized the idea that labor was the primary creator of values and capital, discouraging industrial conflict and promoting industrial arbitration.
  • During this period, the standard workday was often ten hours or more, and the Knights vigorously campaigned for the adoption of an eight-hour workday.

18.6 — Leadership and Success Under Terence V. Powderly

  • Terence V. Powderly, an Irish-American known for his quick wit and eloquent speaking abilities, led the Knights of Labor.
  • Under Powderly’s leadership, the Knights achieved several successful strikes in their pursuit of the eight-hour workday.
  • Notably, a strike against Jay Gould’s Wabash Railroad in 1885 resulted in a significant increase in membership, with approximately three-quarters of a million workers joining the organization.

19. Unhorsing the Knights of Labor

The Knights of Labor formed during the Industrial Revolution and contributed to strikes and violence during the Gilded Age.

19.1 — Knights of Labor and May Day Strikes

  • The Knights of Labor found themselves embroiled in a series of May Day strikes in 1886, with roughly half of these strikes meeting with failure.
  • The city of Chicago, where around eighty thousand Knights were based, played a central role in these events.
  • Chicago also housed a community of several hundred anarchists, many of whom were immigrants advocating for the violent overthrow of the American government.

19.2 — The Haymarket Square Riot

  • Tensions escalated dramatically, leading to the tragic incident known as the Haymarket Square Riot.
  • Labor-related disturbances had erupted, and on May 4, 1886, the Chicago police confronted a gathering organized to protest alleged police brutality.
  • During the confrontation, a dynamite bomb was thrown, resulting in the deaths or injuries of numerous individuals, including police officers.
  • Following the bombing, panic and fear swept through the city of Chicago.
  • Eight anarchists were apprehended, even though there was no direct evidence linking them to the bomb. However, because they had espoused inflammatory ideologies, they were charged with conspiracy.
  • Five of the anarchists were sentenced to death, one of whom later took their own life, while the remaining three received lengthy prison sentences.

19.3 — John P. Altgeld Parsons the Defendants

  • Efforts to secure clemency for the defendants gained momentum in the years following the incident. 
  • In 1892, six years after the event, John P. Altgeld, a German-born Democrat known for his liberal views, was elected as the Governor of Illinois.
  • Governor Altgeld conducted an exhaustive review of the Haymarket case and ultimately decided to pardon the three surviving defendants. This decision drew vehement criticism from conservatives but earned praise from those who believed in the men’s innocence.
  • Despite his courageous stance, Altgeld was defeated in his bid for re-election and later faded into relative obscurity.

19.4 — The Impact of the Haymarket Affair on the Knights of Labor

  • The Haymarket Square bombing had a detrimental impact on the Knights of Labor. Public perception wrongly associated them with the anarchists involved in the incident.
  • The broader labor movement advocating for an eight-hour workday also suffered as a result, and subsequent strikes organized by the Knights had limited success.

19.5 — The Challenge of Uniting Skilled and Unskilled Workers

  • One of the Knights of Labor’s significant challenges was the inclusion of both skilled and unskilled laborers in the same organization.
  • Unskilled labor could be easily replaced by strikebreakers, while skilled craft unionists held a stronger position due to their unique skills. Eventually, the craft unionists grew weary of sacrificing their advantages for the sake of solidarity with unskilled workers.
  • Seeking to preserve their favorable bargaining position, skilled craft unionists formed the American Federation of Labor, exclusively for skilled craft unions. This move dealt a significant blow to the Knights of Labor.
  • By the 1890s, the Knights’ membership had dwindled to 100,000 members, and these members gradually merged with other protest groups of the era.

20. The AF of L to the Fore

The American Federation of Labor was formed during the Industrial Revolution and helped organize workers during the Gilded Age.

20.1 — Birth of the American Federation of Labor (AF of L)

  • The American Federation of Labor (AF of L), established in 1886, was primarily the brainchild of Samuel Gompers, a Jewish cigar maker with a distinctive background.
  • Gompers, originally from a London tenement, was brought to America at the age of 13. 
  • Known for his strong voice, he began his labor involvement by reading informative literature to fellow cigar makers in New York.
  • Rising rapidly through the labor ranks, Gompers held the position of president of the American Federation of Labor for most of the years between 1886 and 1924.

20.2 — The Nature of the American Federation of Labor

  • The American Federation of Labor operated as a true federation, consisting of a collection of self-governing national unions, each maintaining its independence. 
  • The AF of L served to coordinate the overall labor strategy.
  • Unlike some other labor organizations, individual workers could not directly join the central organization.

20.3 — Samuel Gompers’ Labor Philosophy

  • Gompers held a distinct perspective on labor and politics, emphasizing economic strategies over political reform. 
  • He strongly opposed socialism and preferred pursuing economic goals.
  • While Gompers did not challenge the capitalist system itself, he sought fairer treatment and improved conditions for labor. 
  • His primary goal was to secure “more” for workers.
  • Gompers championed what he called “pure and simple” unionism, focusing on better wages, working hours, and conditions in the present rather than utopian visions.
  • One of Gompers’ major objectives was to establish trade agreements authorizing the “closed shop,” where all labor was unionized. 
  • He employed tactics such as strikes, boycotts, and “We don’t patronize” signs to achieve these aims.
  • The stronger craft unions within the federation pooled their resources to create a substantial war chest, allowing them to withstand extended strikes effectively.

20.4 — The Labor Trust

  • The American Federation of Labor (AF of L) established itself on a strong but limited basis. While it aimed to represent all workers, it primarily consisted of skilled craftsmen, such as carpenters and bricklayers, and did not actively support unskilled laborers, including women and blacks.
  • Despite being hard-pressed by large industries, the federation remained largely non-political. However, it did encourage its members to support political allies and oppose opponents at the polls.
  • By the year 1900, the AF of L had weathered the economic panic of 1893 reasonably well and could claim a membership of 500,000. Critics sometimes referred to it as “the labor trust,” though this label may not have been entirely accurate.

20.5 — Labor Disputes in the Late 19th Century

  • Labor disputes remained a significant issue in the late 19th century, with over 23,000 strikes occurring between 1881 and 1900. These strikes involved 6,610,000 workers and resulted in a total loss of $450 million for both employers and employees.
  • Strikers achieved victory or compromise in approximately half of the strikes, while the other half failed.
  • Organized labor continued to represent only a small minority of the workforce, about 3% by 1900.

20.6 — Changing Attitudes Toward Labor

  • By 1900, attitudes toward labor had begun to shift. The public was increasingly acknowledging the right of workers to organize, engage in collective bargaining, and go on strike.
  • In a sign of changing times, Labor Day was officially recognized as a legal holiday by an act of Congress in 1894.
  • Some enlightened industrialists had come to realize the benefits of avoiding costly conflicts with unions by negotiating and signing agreements. However, the majority of employers continued to resist organized labor.
  • Labor made its gains through persistent strikes and repeated setbacks, with no concessions given easily. Management still held the upper hand, and it would take several challenging decades for labor to achieve a more equal footing with capital. While the era of big business had arrived, the age of big labor was still on the distant horizon.

Gilded Age Industrial Revolution APUSH Resources

This outline is based on the 16th edition of The American Pageant and connects to Unit 5: 1844–1877 and Unit 6: 1865–1898 of the AP US History curriculum. We are working on guides for each of these APUSH Units. When they are completed, the links will be added here.

APUSH Chapter Notes and Outlines

Citation Information

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  • Article Title The Industrial Revolution and the Gilded Age
  • Date 1865–1900
  • Author
  • Keywords Gilded Age, Industrial Revolution, Transcontinental Railroad, Cornelius Vanderbilt, Andrew Carnegie, J.P. Morgan, John D. Rockefeller, Robber Barons, Gospel of Wealth, New South, Knights of Labor, American Federation of Labor, Samuel Gompers
  • Website Name American History Central
  • Access Date April 18, 2024
  • Publisher R.Squared Communications, LLC
  • Original Published Date
  • Date of Last Update February 28, 2024