Sure, we’ve benefited tremendously from the lessons of the Gilded Age, and we’ve gained integral legislature because of those lessons. But shouldn’t the middle class be doing better than they were when they were working the steel mills?
Three events inspired this article. First, I was recently sucked into the marvelous world of The History Channel’s "The Men Who Built America." Second, I dusted off a box of photos from my formative years. And third, I came across this video highlighting America’s skewed perception of the nation’s wealth disparity.
I’m ashamed to say it, but four episodes of "The Men Who Built America" taught me more American history lessons than my four years of high school. The series focuses on the tycoons who fueled America’s Gilded Age, Cornelius Vanderbilt , John D. Rockefeller, Andrew Carnegie and J.P. Morgan. They “were the engine of capitalism as they transformed everything they touched in building the oil, rail, steel, automobile and finance industries.”
Their extreme business strategies also eliminated the chief ingredient in American capitalism: competition.
Vanderbilt established a steamboat monopoly, was guilty of stock-watering and was accused of paying off public officials. When Rockefeller was building Standard Oil, he used horizontal integration to effectively buy out his competition. Carnegie used vertical integration to jettison the middleman companies when creating his steel empire, which would later be purchased by J.P. Morgan and become the monopoly known as U.S. Steel.
Most of their tactics would be highly illegal today, and when you factor in how much of the economy they were controlling, it is clear to see why. In 1910, Rockefeller’s net worth was equal to 2.5 percent of the entire nation’s economy — that’s the equivalent of $250 billion today, which is double Bill Gates’s net worth. At the peak of their careers, Rockefeller, Carnegie and Morgan were worth over $1 trillion in today’s money. That’s more than the net worth of the 40 richest people alive today… combined.
These lords of capitalism and their business ventures exploited the American working class, further widening the gap between the rich and the poor. As the History Channel notes, the disparity in income was as big as it had ever been. As companies were bought out and consolidated, thousands of workers were laid off, and the ones who remained were compensated with even smaller wages.
Advertising mogul Danny Deutch notes that “one of the things of an evolving society is the wealth distribution. It’s the core of all politics: Is it better with wealth in the hands of the few versus distributed among the many, whether from a moral or an economic point of view?”
In the 1890s, over 90 percent of Americans were struggling to make ends meet on less than $100 per month. The average worker was earning a dollar a day — significantly below the poverty line. Working conditions were unbearable, and a large number of Americans were desperate and vengeful. When Democrat William Jennings Bryan campaigned for the U.S. presidency in 1896, he appealed to the working class by vowing to take down big trusts. Carnegie, Rockefeller and J.P. Morgan wouldn’t have that, though. They conspired and bribed politicians to get their preferred president, McKinley — who would look the other way as they continued their business practices — into the White House, instead of Bryan. Each of them spent the equivalent of more than $20 million to do so. And in 1900, the tycoons planned to silence Theodore Roosevelt, who campaigned to represent the oppressed majority, by tacking him onto McKinley’s ticket as vice president. When McKinley was assassinated during his second term, however, Roosevelt took office and finally prosecuted many of the major trusts.
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