years following the Civil War took to calling their era the Gilded Age—glittering with showy wealth but corrupt to the core. The railroads boomed, transporting the raw ores of the West to the industrial machines of the East. With hundreds of thousands of discharged veterans flooding the job market, labor was dirt cheap, and the government was—well—pliant. Andrew Johnson, having narrowly escaped removal from office, was succeeded in the White House by Ulysses Simpson Grant in 1869. Grant had proven to be one of the nation’s greatest generals, but in two terms as president, he presided over the most thoroughly corrupt administration in American history. He was personally above reproach, but, naively, he surrounded himself with scoundrels who administrated, legislated, and operated hand in hand with the interests of big business—and (in the infamous phrase of railroad magnate William H. Vanderbilt) “The public be damned!”
Gould and Gold
Jay Gould was born in Roxbury, New York, on May 27, 1836, the son of a poor farmer. By 21, Gould had saved up $5,000, which he invested in the leather business and railroad stocks. Within a decade, Gould was a director of the Erie Railroad and, by means of illegal stock and bribery, clawed his way to a controlling interest in a number of railroads. With fellow tycoon James Fisk (1834-72), Gould hatched a scheme to corner the U.S. gold market. He persuaded President Grant to suspend government gold sales, thereby driving up the price of gold— which Gould and Fisk held in great quantity. Rousing momentarily from naive stupor, Grant realized what was going on and ordered the Treasury to release $4 million of its own gold to checkmate Gould. The result was Black Friday, September 24, 1869, which precipitated a major financial panic followed by severe economic depression as the inflated price of gold tumbled.
Many of the nation’s railroads, already reeling from cutthroat competition, now tottered on the verge of bankruptcy. John Pierpont Morgan (1837-1913), who had multiplied his family’s already mighty fortune by loaning money to France during the Franco-Prussian War of 1.871, now rushed in to pick up the pieces. By 1900, Morgan had acquired half the rail trackage in the nation. Most of the rest of the railroads were owned by Morgan’s friends, and together, they fixed freight prices at exorbitant levels. There was little shippers could do but pay.
Rockefeller and Oil
The years immediately following the Civil War ran on rails and were fueled by gold. People who controlled either or both interests drove the nation, regardless of who was in the White House, the Congress, or the courts.
There was gold, and then there was black gold. In 1859, oil was struck in western Pennsylvania. This event gave a thin-lipped, ascetic-looking young Ohioan an idea. John Davison Rockefeller (1839-1937) decided that oil would become a big business and that his hometown of Cleveland was ideally situated to refine and distribute it to the nation.
Rockefeller built a refinery there in 1862, then put together the Standard Oil Trust, an amalgam of companies by which he came to control all phases of the oil industry, from extraction, through refining, through distribution. Standard Oil was the first of many almighty trusts formed in various industries during the post-Civil War period.
The Gospel of Wealth
The Gilded Age was an epoch of naked greed. Those few capitalists who bothered to defend their motives turned to the science of the day. In 1859, the great British naturalist Charles Darwin (1809-82) published On the Origin of Species by Means of Natural Selection. This book set forth the theory of evolution, arguing that in nature, only the fittest—the strongest, the most cunning, the ablest—creatures ultimately survive to reproduce their kind. Capitalists translated nature into economics, arguing that the state should not interfere in economic life because people at the top of the socioeconomic heap were there because they were the fittest, having survived the battles of the marketplace. This concept was Social Darwinism.
Yet the era was not entirely heedless or heartless. Andrew Carnegie (1835-1919) came to the United States with his impoverished family from Scotland in 1848. As a youth, Carnegie worked in a cotton factory, then in a telegraph office, and finally for the Pennsylvania Railroad, rising quickly through the executive ranks until he became head of the western division in 1859. Carnegie resigned from the railroad in 1865 to form the Keystone Bridge Company, the first in a series of iron and steel concerns he owned. He consolidated his holdings in 1899 as the Carnegie Steel Company, then sold it to J.P. Morgan’s United States Steel Company in 1901 for $492 million- roughly the equivalent of five billion of today’s dollars. (And income tax didn’t exist in 1901!)
Carnegie was as ruthless as any of his fellow robber barons, wielding his steel company like a club, knocking out all competition and (for a time) knocking out the American industrial union movement as well. But in 1889, Carnegie delivered a speech titled “The Gospel of Wealth,” in which he reeled out the Social Darwinist line that wealth was essential for civilization and that the natural law of competition dictated that only a few would achieve wealth. Yet Carnegie added a unique twist. The rich, he proclaimed, had a responsibility to use their money for the clear benefit of society.
From 1901 until his death, Carnegie dedicated himself to philanthropy, donating more than $350 million to a wide spectrum of causes. He founded more than 2,500 public libraries throughout the United States; he established the Carnegie Institute of Pittsburgh, the Carnegie Institution at Washington, the Carnegie Foundation for the Advancement of Teaching, the Carnegie Endowment for International Peace, and the Carnegie Corporation of New York. The truly remarkable thing is that many other robber barons took the Gospel of Wealth to heart. Rail magnate Leland Stanford founded and endowed Stanford University. Rockefeller endowed the University of Chicago, created the Rockefeller Institute of Medical Research, established the Rockefeller Foundation, and bought vast tracts of land that became national parks. Many other wealthy individuals did similar deeds and continue to do so today.
An Age of Invention
If, blooming among the uncut weeds of wild greed, the Gospel of Wealth seemed miraculous, so did the incredible series of inventions that burst forth during what otherwise might have been a dull, hard Age of the Machine. Americans of the post-Civil War era were extraordinarily industrious and inventive.
“Mr. Watson, Come Here…”
Alexander Graham Bell was born in 1847 in Scotland and grew up in England. His grandfather and father earned famed as teachers of the deaf, and Alexander likewise followed this career, continuing in it after the family immigrated to Canada in 1870. In 1872, Alexander Graham Bell became a professor of vocal physiology at Boston University. His profound interest in the nature of speech and sound was combined with a knack for things mechanical, and he began working on a device to record sound waves graphically in order to show his deaf students what they could not hear. Simultaneously, Bell was also trying to develop what he called the harmonic telegraph, a device capable of transmitting multiple telegraph messages simultaneously over a single line.
About 1874, the two inventions suddenly merged in his mind. Bell wrote in his notebook that if he could
