Rise of industrial capitalism
Gilded Age
Writing in the early 1870s, Mark Twain and Charles Dudley Warner provided an enduring nickname for the growth of industrial capitalism, the enormous fortunes generated for high-profile entrepreneurs and monopolists from that industrial growth, and the conspicuous consumption in which these same entrepreneurs and monopolists often engaged - the gilded age. Twain and Dudley critiqued the veneer of prosperity that at first glance obscured the rot that they saw beneath the surface, the vastly unequal developments for these wealthy entrepreneurs and the economic stagnation and even deprivation experienced by many of their workers.
Captains of industry or robber barons?
Throughout the gilded age, news and culture was often dominated by the seemingly larger than life figures driving much of this new industrial growth. Commodore Cornelius Vanderbilt, Andrew Carnegie, James Pierpont Morgan**, Jay Gould, and John D. Rockefeller were some of the most well-known industrial titans of the era, earning the title of captains of industry from those who admired and wished to emulate their tactics and successes and the sobriquet robber barons from their critics.
Cornelius Vanderbilt, testimony before the New York state assembly, January 18, 1867
Trusts and trustworthiness
During the last third of the 19th century, increasing concentration of capital and industrial power led to the formation of powerful, and often infamous, trusts, monopolies and oligopolies that dominated their respective industries. These powerful trusts used tactics such as horizontal and vertical integration to eliminate competition and to capture the greater value added through the ownership and control of all phases of production, respectively. The entrepreneurs owning and managing the trusts also frequently sought to influence political developments and legislation at the state and federal levels through financial contributions and lobbying.
Given that many economists and legislators subscribed to laissez-faire economic theories, regulation of industry was often minimal. Furthermore, social Darwinist ideas about economics and society decreased the likelihood of effective regulation. The influence of industrial capitalists frequently extended to the courts, too, as many judges, including Supreme Court justices, were former corporate lawyers. Even when Congress passed laws such as the Interstate Commerce Act(1887) and the Sherman Antitrust Act(1890), the interpretation and enforcement of these laws favored the interest of capital, not labor.
:::Image 017/Bosses of the senate:::
John D. Rockefeller’s Standard Oil, frequently portrayed as a malevolent octopus, emerged as the most notorious of the trusts by the late 19th century; you will see in the next chapter that Standard Oil continued to engender strong reactions from reformers and citizens during the Progressive Era. Standard Oil dominated the new oil refining industry, using both vertical and horizontal integration, to create a monopoly that controlled approximately 90% of all American oil refining by 1880.
Legal persons
An enduring legal development from the 1880s is that the US Supreme Court determined that corporations are legal persons meaning that they are entitled to constitutional rights and protections, including from the Reconstruction-era 14th Amendment which was originally designed to ensure that formerly enslaved persons were afforded the same rights as other American citizens. This finding from the 1886 decision in Santa Clara County v. Southern Pacific Railroad would be supplemented by further legal decisions in favor of corporations and their rights, including the 2010 decision in Citizens United v. Federal Elections Commission where the Supreme Court ruled that campaign contributions to political action committees and related political actors are speech by corporations and unions are vital free speech rights protected by the 1st Amendment.
Expanding markets
While the growth of the US domestic market was critical for the continued growth of industrial capitalism, American entrepreneurs also looked abroad for not only sources of key resources but as promising export markets. In Europe, the later years of the 19th century were sometimes referred to as the golden age of imperialism, a period when European countries acquired more colonies and sought to increase their exports. American entrepreneurs sought a similar expansion of US export markets in the later years of the 19th century, including seeking greater access to growing markets in China and Japan.
At the same time, though, many American businesses sought to limit foreign competition, ultimately succeeding with the passage of a series of tariff bills in the 1890s, including one that provided critical support for the presidential ambitions of then Representative William McKinley, an Ohio** Republican**. In the immediate term, Republicans lost nearly 100 seats in the House of Representatives as farmers and workers blamed Republicans for higher prices and for favoring wealthy industrialists at their expense.
Industrial capitalism expanded dramatically during the last third of the 19th century.
The combination of new technologies, the growth of financial capitalism, including an expanded stock market, a supportive legal and political environment, and new industrial processes and market strategies generated enormous, but highly concentrated, national wealth.
The rise of industrial capitalism would be increasingly challenged by the growth of the American labor movement.