The Gilded Age, Then and Now

Disclaimer: These words are the author’s personal views and do not reflect the Labor Guild’s opinion.

I think you have realized that my previous writings are pre-requisites and dovetails for future writings. If one of these writings seems confusing to you, it may be helpful to go back and read the previous one.

The 1800’s brought with it entrance to the Gilded Age. The post- Civil War period into the 1900’s we enter what was called the “Gilded Age”.

• The term “robber baron” came out of this period, meaning businessmen making fortunes by questionable and or criminal means. However, Merriam -Webster says this definition meant:

• 1. To overlay with a thin covering of gold.
• 2. a. To give money too.
• b. To give an attractive but often deceptive appearance too.
• c. Archaic: to make bloody.
• During this period all of this was true.

To me, it seemed more like painting a thin layer of gold over a piece of rotten wood. Although its appearance looked attractively stable and strong, the inside was fragile and deteriorating.
Especially, beginning around 1850, with the invention of Robert Fulton’s steam engine, provided power to move commerce via water and rail and with it a maze of train tracks began to criss-cross the country like an interstate highway system.

It was roughly between the 1850’s and the 1930’s that the Gilded Age was most prevalent. The proliferation of the railroad, and industrial expansion and most of all the development of the “Holding Company” propelled industry into enormous expansion.

The Holding Company was really the catalyst that provided the vehicle that enabled industrialists like Vanderbilt, J.P. Morgan, Andrew Carnegie, and John D. Rockefeller, to create huge amounts of wealth. It provided Rockefeller the ability to create Eastern Standard Oil, and J.P. Morgan to consolidate many of the steel plants (even Carnegie’s) into United States Steel. Morgan also consolidated his electrical power interests, purchasing George Westinghouse’s electric generation technology of Nickola Tesla’s patterns of AC current, into the industrial giant, General Electric.

You can still see their treasured homes that are now like featured museums of a past era. Their opulence was perverse, especially in a nation whose people had barely enough to survive. Industrialists simply purchased stock in competitive companies until they owned a controlling interest and put their own people in charge. This caused monopolies to flourish to the point where they were looking more like the East India Company. It was common for them to purchase their own militia to keep the unions at bay. Interestingly, it only took about 40 years for this monster to get to the point where the government had to intervene and pass legislation to break up these monopolies with the Sherman Anti-Trust Act. The influence of these corporations had incredible reach. They had the power to call in a competitor’s debt in order to get them to sell. They controlled public opinion by supporting the media that supported their political goals and left the others to strive for advertising dollars. As Yogi Berra said, “déjà vu” all over again.

Unfortunately, unions too got caught up in this law. In the Supreme Court case Duplex Printing v. Deering. The Court held that the union’s boycott and the use of secondary boycotts of the owners suppliers of Duplex was similar to that of a monopoly, in that, if the Company did not give in to union demands, they could not move their product, nor could they do business with their vendors and would be forced to shut down, if they did not adhere to forming a union. In the eyes of the Supreme Court, the union was acting much like a corporation in bullying a business into bankruptcy if they did not accept union demands. Not only did Duplex win the case; they received treble (triple) damages. You see there was no limited liability for union officials unlike corporate officers who because of limited liability protection did not see guilt or jail time. Thus, it was not unusual to see leaders like Gompers and the union officials pay the fines, and or do jail time.

Thus, the picture was a country with an immigrant population that outgrew its infrastructure, a huge workforce that because of supply and demand, worked for next to nothing. Perverse wealth flaunted to be seen by all, especially in the cities, where their wealth was in full display; with a corporate culture that had no qualms of massacre of their opposition (like the Ludlow Massacre, Homestead, Pullman and Matewan) as described in my other writings and classes.

As stated by Mussolini, “fascism should more properly be called corporatism, because it is a merger of State and Corporate power.” Under Fascism the State controls the means of production. There is no vision beyond the State, everything is national in their eyes and focused on growing the nation and think only on a national level. No human value exists beyond the State, it demands a strong sense of militarism, dictatorship, and social intervention.

During the 1930’s the Axis Powers of Germany and Italy controlled the corporations. Today we must at least begin to think we are or have turned the corner where the corporations are controlling the government and our very democracy. Corporations of today are pretty much writing their own regulations and complain about when they are caught in their own non-compliance.

Like today and during the Gilded Age, oligopolies where groups of corporations would organize into a holding company and then own and control the means of production and entire industries. Many years ago in my micro-economics class, I had a teacher that taught me something that stuck in my mind that I cannot come to grips with, even today. A couple of the basic theories of neo-classical economic theory is that the system prides itself in a few things. Two things in particular caught my interest that I did not forget. First, there was competition. Though the theory was welcomed, it and the neo-conservative economic theory, going back to Adam Smith, believed that those that ran the business well would be more efficient and do well, and those that did not, or could not compete failed. However, look at the capitalist model today. What went awry with the East India and the Holding Companies just as examples. There really is no competition between them. In fact, they organize the market so that only the entrepreneurial core of the major industries controls the competition. Who they let in and who they choke out. As with East India, there was no competition. They and they alone owned the rights to those trading routes which were granted to them by the Parliament.

One of the other theories is that there should not be any barriers to entry into a new market. Yet, try to open a business and enter a market like a refinery or oil company or automobile company. I think the big players in these industries would not be so inviting to new players to the competitive world and allow you a piece of their market share. Elon Musk not too long ago began the Tesla car company. How much capital did he need just to enter that arena? The barrier to entry is not free. The theory is theory but in reality, it is flawed.

I am showing you how we got to where we are now and how the same strategies have worked over and over again. As the saying goes, “Those who do not heed the lessons of history are destined to repeat them.” As we have done so many times before.

Well by now you should have a pretty good understanding of where unions and corporations came from and how they grew. An understanding of why people as well as corporations organize. And to begin to understand the difference between what a product costs to produce and what it is sold for, provides profits. How that profit is distributed between workers and business has been the center of our controversy since its inception. Remember, job one for any business is to achieve a profit. Job two is to maximize that profit. By now you think we could have developed a more equitable solution. However, the capitalist model is just too lucrative to forfeit. Keep in mind, there is nothing wrong with Capitalism that a strong dose of regulation cannot cure, because they have proven they are incapable of regulating themselves.