Gilded Age Cheat Sheet (1865-1901) updated 12/17/09 The Currency (or Monetary) Debate

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The AP US History Gilded Age Cheat Sheet (1865-1901)

updated 12/17/09

1. The Currency (or Monetary) Debate (1861-1900)

  • the Gold Standard (prior to the CW)

  • the “greenback dollar” and coinage of silver (during CW) = steep inflation

  • US Treasury halts purchase of silver (the “Crime of 1873”) = deflation

  • Resumption Act of 1875 = sharp deflation or contraction

  • Sherman Silver Purchase Act (1890) = limited inflation

  • “endless chain” operations (1890-1893) and the gold crisis

  • repeal of Sherman Silver Purchase Act (1893) = deflation

  • J.P. Morgan loans gold to Treasury to stabilize currency (“backstairs deal,” 1894)

  • “gold bugs” win Election of 1896, “bimetallism” (or coinage of silver & gold) rejected

  • Gold Standard Act of 1900 = deflation



creditors (those who lent $)

debtors (those who owed $)

business owners and investors

farmers or producers

the “holders of capital” (wealth)

factory workers and wage earners


If US Currency is backed up by a set value of gold (say 1 oz. = $50) then that currency is very sound and stable, people have faith that it is “as good as gold” and it holds its value over an extended period of time. However, the amount of gold held by the US Treasury is limited and finite, which means that the value of all currency in circulation is limited and finite. But when the US economy grows (which it did rapidly in the 19th century), then the total amount of currency in circulation grows relatively smaller, harder to get, and therefore it grows in value and depresses prices for goods and services – this is called deflation (when too little money is chasing an abundant supply of goods and services). Think of it also in terms of simple supply and demand – the more money there is in circulation relative to the size of the economy, the greater the supply and the less the demand or value; the less money there is in circulation relative to the size of the economy, the greater the demand for, and value of, that currency.

2. Scandal and Corruption in the Gilded Age (1860s-1890s)

  • Boss Tweed (Tammany Hall): bribery, graft, kickbacks, embezzlement in NYC

  • Jim Fisk’s scheme to corner the gold market (1869, Grant): a Wall Street scam

  • Credit Mobilier Scandal (1872, Grant): a RR stock scam and public land swipe

  • Whiskey Ring (1874, Grant): embezzlement the federal excise tax collector

  • Patronage abuse: giving federal jobs to unqualified political cronies

    • This tradition goes back to the Jacksonian “spoils system” but was especially abused in the Gilded Age.

Figure 1. US Currency and the Economy

The squares represent the total value of the US economy (all goods and services) at different points in time. The circles represent the total amount of currency circulating in those economies. Dark circles represent currency based on gold, gray circles currency based on silver, and white circles represent “greenbacks” or currency not backed up by any metallic standard, but rather by the “full faith and credit of the US government.”

3. The Tariff Debate (1861-1897)

{A tariff is a tax on goods imported into the US from abroad.}

  • Ante-bellum tariff disputed between the North and South

    • “Protective tariffs” are intended to protect US industries and manufactured goods from European imports or competition. When the US raised protective tariffs, Europe raised “retaliatory tariffs” against US imports like cotton, wheat, corn.

  • Morrill Tariff Act (1862) = increased tariff rates

  • McKinley Tariff (1890) = increased tariff rates dramatically

    • Tariffs were the #1 source of federal revenue in the Gilded Age… so the tax burden was mostly on the working class! This was before the income tax.

  • Wilson-Gorman Tariff (1894) = increased tariff rates (oops!)

    • Cleveland tried lower tariff rates (but was out-maneuvered by Congress) and include a 2% income tax on the rich (but the Supreme Court struck this down).

  • Dingley Tariff (1897) = increased tariff rates dramatically

    • As tariff rates rise, farmers and urban dwellers are forced to pay more for everything they consume. Tariffs also keep out competition from foreign goods and make it easier for big business to monopolize US markets.



Big Businesses and their owners

urban dwellers

the US Treasury (revenue)

farmers and other exporters

the wealthy (who avoid direct taxes)

consumers (who pay more)

4. The Regulation (of railroads) Debate (1870s-1890s)

  • The Granger Laws (Illinois, 1870s): states can regulate the RRs!

  • Munn v. Illinois (1876): Supreme Court upheld these laws!

  • Wabash v. Illinois (1886): overturns Munn, states can’t regulate RRs

  • Interstate Commerce Act (1887): the federal government will regulate RRs (review and set rates, stop corrupt practices, etc.)

  • Interstate Commerce Commission (established by the Interstate Commerce Act) is dominated by the RRs themselves and it does not meaningfully regulate or control their activities.



Big Business (RRs in particular)

farmers and RR customers

the laissez faire notion of government

political reformers

private business owners

the states and US Constitution

idea that wealth owes nothing to public

idea that public interest is supreme

5. Gilded Age Presidents and Cut-throat Partisan Competition

Ulysses S. Grant (R-Illinois), 1869-1877

Liberal Republican Party (reform): Horace Greeley

Greenback Labor Party (soft money, anti-gold standard)

Rutherford B. Hayes (R-Ohio), 1877-1881

Disputed Election of 1877: Hayes (R) v. Samuel Tilden (D)

James Garfield (R-Ohio), 1881 (assassinated)

“Mugwamp” (or reformers or Half-Breed) Republicans: James Blaine, Garfield

Stalwart Republicans (anti-reform): Roscoe Conkling and Arthur

Chester Arthur (R-New York), 1881-1885

Grover Cleveland (D-New York), 1885-1889

Benjamin Harrison (R-Ohio), 1889-1893

Grover Cleveland (D-New York), 1893-1897

William McKinley (R-Ohio), 1897-1901 (assassinated)

6. The “Robber-Barons” (who they were and how they did it)

  • Andrew Carnegie: US Steel (vertical), wealthy and generous philanthropist (Gospel of Wealth)

  • John D. Rockefeller: Standard Oil (horizontal, monopoly)

  • William Vanderbilt: canals and railroads (horizontal, pools and trusts), “the public be damned”

  • J.P. Morgan: banking and corporate financing, the “banker’s banker” (horizontal and trusts)

  • Vertical Integration: to control an entire process of production under one ownership; for example, Carnegie owned an iron ore mine, a coal mine, rail and ship lines to transport both, and the steel mills that produced the final product. The goal was economy-of-scale and maximum efficiency (cut out the middle-man) in order to generate great profits.

  • Horizontal Integration: to control an entire industry at a particular point in the process of production in order to exercise total (or monopolistic) control over that product; for example, Rockefeller owned all of the oil refineries, which gave him the power to control the supply of refined product, and therefore to set prices.

  • Pools, Trusts and Monopolies: due to cutthroat competition between firms, and a desire for greater profits, business owners within the same industry would make agreements to set prices and wages across the industry to preclude “wasteful competition” between them. They first emerged as pools or informal agreements, and later became “trusts” where the same people sat on the various boards of directors, or where a “holding company” owned a controlling share of stock in each company – which was functionally the same as a monopoly.

7. Anemic Gilded Age Reforms

  • Chinese Exclusion Act (1882): limited immigration restriction (based upon race)

  • Pendleton Act (1883): created civil service system, supposed to end spoil system

  • Interstate Commerce Act (1887): supposed to regulate railroads

  • Sherman Silver Purchase Act (1890): supposed to increase the money supply

  • Sherman Anti-Trust Act (1890): supposed to stop big business monopolies

8. Organized Labor or Unions (1866-1890s)

  • National Labor Union: early union (1830s), very nativistic, only skilled trades

  • Knights of Labor (Terrence Powderley): utopian, radical and included all workers

  • American Federation of Labor (Samuel Gompers): moderate, skilled trades only

  • For each of these strikes below, know the major players, issues and outcomes:

    • Great Railroad Strike (1877)

    • Haymarket Square Riot (1886)

    • Homestead Strike (1892)

    • Pullman Strike (1894)

    • Why didn’t strikes work in the GA? (find 3 reasons)

9. The Populist Party (The Omaha Platform, 1892): predecessor and contributing organizations include the Grange, the Farmers’ Alliance and the Colored Farmers’ Alliance. In 1892, the Populists nominated James Weaver for President and made a respectable third-party showing. By 1896, most of the Populist Platform was absorbed by the Democratic Party, which nominated strident populist William Jennings Bryan for President that year. The Populist Platform included the following important parts:

  • free or unlimited coinage of silver (as opposed to the gold standard)

  • graduated income tax (as opposed to the tariff or land taxes)

  • direct election of US Senators (as opposed to appointment by states)

  • one-term limit for President (as opposed to unlimited)

  • government ownership of railroads and telegraph

  • government regulation of private business

  • initiative and referendum (to by-pass the corrupt political process)

  • 40-hour week and a 8-hour day (as opposed to no limit)

  • immigration restrictions

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