Events

  • 1869

    Transcontinental Railroad is completed

  • 1870

    Standard Oil Company forms

  • 1886

    Supreme Court issues verdict in Wabash case

  • 1887

    Congress passes Interstate Commerce Act

  • 1890

    Congress passes Sherman Anti-Trust Act

  • 1901

    U.S. Steel Corporation forms

      • Key People

    • Andrew Carnegie

      Scottish-American business tycoon and owner of the Carnegie Steel Company in Pittsburgh; used vertical integration to maintain market dominance

    • John D. Rockefeller

      Founder of the Standard Oil Company; used horizontal integration to effectively buy out his competition

    • Cornelius Vanderbilt

      Steamboat and railroad tycoon; laid thousands of miles of railroad track and established standard gauge for railroads

    Transcontinental Railroads

    Gilded Age industrialization had its roots in the Civil War, which spurred Congress and the northern states to build more railroads and increased demand for a variety of manufactured goods. The forward-looking Congress of 1862 authorized construction of the first transcontinental railroad, connecting the Pacific and Atlantic lines. Originally, because railroading was such an expensive enterprise at the time, the federal government provided subsidies by the mile to railroad companies in exchange for discounted rates. Congress also provided federal land grants to railroad companies so that they could lay down more track.

    With this free land and tens of thousands of dollars per mile in subsidies, railroading became a highly profitable business venture. The Union Pacific Railroad company began construction on the transcontinental line in Nebraska during the Civil War and pushed westward, while Leland Stanford’s Central Pacific Railroad pushed eastward from Sacramento. Tens of thousands of Irish and Chinese laborers laid the track, and the two lines finally met near Promontory, Utah, in 1869.

    Captains of Industry

    Big businessmen, not politicians, controlled the new industrialized America of the Gilded Age. Whereas past generations sent their best men into public service, in the last decades of the 1800s, young men were enticed by the private sector, where with a little persistence, hard work, and ruthlessness, one could reap enormous profits. These so-called “captains of industry” were not regulated by the government and did whatever they could to make as much money as possible. These industrialists’ business practices were sometimes so unscrupulous that they were given the name “robber barons.”

    Vanderbilt and the Railroads

    As the railroad boom accelerated, railroads began to crisscross the West. Some of the major companies included the Southern Pacific Railroad, the Santa Fe Railroad, and the North Pacific Railroad. Federal subsidies and land grants made railroading such a profitable business that a class of “new money” millionaires emerged.

    Cornelius Vanderbilt and his son William were perhaps the most famous railroad tycoons. During the era, they bought out and consolidated many of the rail companies in the East, enabling them to cut operations costs. The Vanderbilts also established a standard track gauge and were among the first railroaders to replace iron rails with lighter, more durable steel. The Vanderbilt fortune swelled to more than $100 million during these boom years.

    Railroad Corruption

    As the railroad industry grew, it became filled with corrupt practices. Unhindered by government regulation, railroaders could turn enormous profits using any method to get results, however unethical. Union Pacific officials, for example, formed the dummy Crédit Mobilier construction company and hired themselves out as contractors at enormous rates for huge profits. Several U.S. congressmen were implicated in the scandal after an investigation uncovered that the company bribed them to keep quiet about the corruption. Railroads also inflated the prices of their stocks and gave out noncompetitive rebates to favored companies.

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