The Wealthy of the Gilded Age (College Board AP® US History): Study Guide

Summary

The Gilded Age was a transformative time for the United States and was characterized by the rise of capitalism, an economic system where individuals own and control the production of prices of goods and wealth. This economic system saw the use of new technologies lead to large corporations and trusts. Some saw the capitalist business leaders as Captains of Industry while others saw them as Robber Barons.

Captain of Industry v Robber Baron

Captains of Industry 

• Captains of Industry were business leaders who helped build the American economy and shape modern industries while creating large fortunes for themselves 

  • They were seen as philanthropists: giving back to society by promoting and supporting charitable organizations

  • They donated portions of their wealth to promote education, culture, and public welfare such as:

    • libraries

    • universities

    • art collections

Key “Captains of Industry”

• John D. Rockefeller 

  • Rockefeller was the founder of Standard Oil

  • He dominated the oil refining industry

  • He controlled approximately 90% of US oil production

  • Many people consider Rockefeller a pioneer of horizontal integration by taking control of oil refining

    • This was a critical step in the oil industry

    • It forced competitors out of business

  • Rockefeller was able to set prices, control quality, and dominate the market

• Andrew Carnegie 

  • Carnegie dominated the steel industry

  • He revolutionized the steel industry by using vertical integration to control every step in the process

  • This meant he did not have to rely on suppliers, which reduced the cost of production

Robber Barons

• Robber Barons were business leaders who were accused of achieving wealth through unethical means

  • They exploited workers by paying low wages to employees

  • They drove their competition out of business through unseemly practices, such as:

    • setting intentionally lower prices below cost to drive smaller companies out of business, then once the competition was eliminated they would raise prices

    • manipulating stock markets by spreading false information 

    • bribing politicians to secure contracts or avoid regulation

  • They used political influence to avoid regulation