ôô

The Yawning Financial Gap of the Gilded Age

In part one of our miniseries on The Edge of Anarchy, author Jack Kelly describes America's love affair with capitalism in the Gilded Age. 

By
Jack Kelly
4-minute read
Episode #65
image of old time railroad

Did the wealthy deserve their riches? They thought they did. A lot of them did make their money through ingenuity and daring. Marshall Field was an innovator in retail. John D. Rockefeller developed the petroleum industry. Andrew Carnegie bankrolled better methods of making steel.

Many subscribed to a pseudo-scientific doctrine known as Social Darwinism. Economic struggle, they thought, was a way of sorting the weak from the strong. The fittest survived. A famous clergyman of the day, Henry Ward Beecher, said of the poor that they simply “reap the misfortunes of inferiority.”

But the playing field was far from level. Large corporations and trusts routinely crushed competitors and consolidated industries with predatory pricing and other hardball tactics. The goal was to establish a monopoly that then allowed them to maximize their profits.

All this was possible because the Gilded Age was a time when the American government had fallen in love with capitalists. Grover Cleveland, who served two terms during the Gilded Age, proclaimed: “No harm shall come to any business interest  . . . so long as I am president.”

We can’t overlook the great strides the country made during the period in spite of rampant inequality.

Many of the laws and regulations that we take for granted today—about truth in advertising, child labor, workplace hours and safety—did not exist in the Gilded age. The cost of running the government in this era fell mainly on the poor. Property taxes hit farmers, consumers paid indirectly when high tariffs raised the price of nearly everything, and the rich got off scot-free.

When Congress had the nerve to pass a 2% income tax in 1894, the Supreme Court promptly ruled on a technicality that it wasn’t allowed. It wasn’t until 1913, after a constitutional amendment, that the rich were forced to contribute a small portion of their income for the public good.

In 1893, a panic on Wall Street brought on the worst economic depression in the country’s history—it was called the Great Depression until an even worse one hit in the 1930s. The rich still frolicked in their Newport mansions, but the devastating unemployment and hardship, which went on for almost five years, took the wind out of the era.

There had already been calls for reform. After the turn of the century, the country moved into the period we know of as the Progressive Era. The Gilded Age was dead—at least for the time being.

Pages