What was the Gilded Age? | US History | Khan Academy

So what was the Gilded Age and why did it happen? Ah, the Gilded Age is this fascinating period from about 1870 to 1900. You can change the dates a little bit, but that's... so we're talking post-Civil War America, which becomes an industrial powerhouse. The cities rise.

In 1850, fewer people live in the cities than in the rural part of the country. By 1900, more people live in the cities. Basically, you have the birth of the railroads. The railroads get connected in 1869, going all the way—continental railroad—going all the way across the country. You have the rise of oil, as in John Rockefeller, and basically this period—think of Rockefeller and Vanderbilt, and Carnegie, and J.P. Morgan as powerful figures, the way we think of presidents.

Presidents during this period kind of were on the descent, but the magnates of industry—railroad, oil, steel, banking—those were the superheroes in America. They led to this amazing growth in industrialization, but then also huge disparities. There were no labor laws that we would be familiar with today. So you had this industrialization with people working in the industries who had no protections—child labor, working 22 hours a day, horrible health conditions.

So, this gurgling, booming America, but where there’s great disparities between who’s doing well and who’s not. It was called "gilded" because those who were doing well were living very well, right? Gilded as in a gilded frame covered with gold. This came from a novel by Mark Twain.

That's right, it takes on the cast of this extraordinary wealth. Rockefeller was the first billionaire in America. Vanderbilt built the biggest house, still the biggest house in America during this period. So, the wealth was... people would make eight to ten dollars in a week, while some of these tycoons were making eight to ten dollars in a minute.

And so that kind of vast wealth, because you could only make so much wealth before this is just mountains of wealth, and then also again this great disparity. It seems like it came from really technology. Technology allowed all of this productivity: the railroads, steel, et cetera, et cetera. And then, of course, finance was able to get in there and help move capital more efficiently.

What parallels do you see with our current age, where technology seems to be doing something similar—where we have all of these new industries and new wealth, but some fear that it might be causing some inequality?

You have, yes, you have a couple of things. You have innovation in these various different industries—both innovation and the creation of things. But then, also innovations in the structures of business—buying up small businesses, creating big conglomerates, then using that leverage and power to crowd out competitors, for sure.

But then also to raise prices because you’re the only game in town. You also have business practices that are not the sort of the laissez-faire economic belief that said essentially that in the economy, it was like in the American system, which was let it operate, don’t get in the way, don’t mess with it. Because when it operates, it runs the most efficiently for America.

In the end, markets can be messy, but they’re gonna have the best outcome. That’s right, that’s what’s the argument behind laissez-faire. That’s exactly right. And it got this wonderful assist from Charles Darwin, who said we can explain the growth of, or we can explain species and we can explain our natural world with this theory about the competition among the species—and this term "survival of the fittest," social Darwinism.

So, survival of the fittest, which some—and I certainly thought might have come from Darwin—didn’t. It came from Herbert Spencer, who basically had an economic theory of survival of the citizen. And it went this way: some people have more talent than others, and when they exercise their talent, they do very well, and that's the best thing for society.

It believed that society was ever-increasing. It didn’t mean that every single person was increasing, but that if you followed survival of the fittest, and the best people did the best, then ultimately society would always be on an evolutionary plane of moving upward. So, that was the theory behind get out of the way of these big companies and these big tycoons, and they will do the best for America.

And so the reason that was important was a) it kept government out of the way; b) it kept religious... it created a religion that was a secular religion, of course, but it created a theory that said, "Wow, that looks like what you’re doing is totally self-interested, but there’s this theory behind it, and everybody will improve."

So, okay, go ahead. Yeah, that was the beginning of Gordon Gekko's famous "greed is good." Right? Right, yes. Yeah, greed is good. So the comparison to our current moment is you have huge disparity and technologies that are, to use a cliché of the day, disruptive. Those are completely changing the way everybody does business, changing—the way in which Americans behave. That rapid sense of change—it’s changing culture rapidly and it’s making big winners and losers, and those big disparities exist as well.

How did the Gilded Age play out? Were some of these forces moderated eventually, maybe around 1900? And do you think similar things might happen for us?

There were two big moderations in response to the Gilded Age. You had government come back—come awake again—and you had labor movements that came into formation basically to slow down the growth and the rapacious demands of the Gilded Age.

Politics during the Gilded Age kind of became an offshoot of the titans of industry. If you look at the presidency between 1876 and 1892, they’re all one-term presidents and none of them get more than 50 percent of the vote. Basically, what the president spent their time doing is using the spoil system, which is essentially putting people in jobs to pay off the local bosses who helped them get elected. So getting elected became a job of staying elected, and that meant doling out patronage—basically giving people jobs who were your friends so that they would go and vote for you, because these elections are all very close, and that’s not getting a lot of work done for the people.

Some of them—Rutherford B. Hayes—tried these little efforts at civil service reform, which was essentially meant putting people in jobs who could monitor the factories, make sure that people weren’t getting abused, or that health wasn’t declining, or that anything that a government might do that we think of today—but his political patrons didn’t want that, so that was all very hard to do.

What happened on the workers' end is they realized, and the most famous moment was in 1911: the Triangle Shirtwaist Fire, where a number of women working in a garment factory—there's a fire and the bosses lock the doors, and I think 40-some odd women die, mostly women. And it highlighted the labor issues, but labor unions start to organize, and there are huge clashes, strikes, and consumer boycotts.

Those start to put some pressure on business to change their practices, at least in terms of worker hours and the kinds of things that we now would certainly take for granted.

Oh wow. Fascinating! It’s an incredible period.