The Gilded Age refers to the late 19th century in America, a period in which economic booms and busts followed each other with such regularity that they seemed the natural pattern of capitalism. The extravagance of plutocrats provided the gilding that defined the era; the busts revealed the rot of poverty, disease and inequity beneath the shining surface.
Americans had expected something different from the eradication of slavery and the triumph of free labour after the civil war. They anticipated a world where all men willing to work—farmers, craftsmen and small-business owners—could attain a "competency", a now-vanished term denoting a sum sufficient to support a family, launch children into the world and provide for a comfortable old age. Embedded in this ideology was the conviction that the central purpose of the economy was to sustain the republic by producing economically independent citizens who could not be dictated to or corrupted by the rich and powerful. Instead, the era produced a nation of wage labourers dependent on those who employed them.
Economic growth soared, driven by the seizure of a continent rich in resources and the ample labour provided by mass immigration. The turn to coal and later oil fuelled new technologies dependent on iron and steel. The government subsidised new industries through land grants, loans, bond guarantees and tariffs. Political lobbies arose to secure such policies and the tax system protected the uneven accumulation of wealth. New financial markets allocated the capital needed for growth and became sources of wealth themselves. Corruption, both of markets and politics, was rampant. By the 1890s the United States had overtaken Britain as the world's leading industrial power.
Railways both drove and symbolised this economy. Their expansion spurred the booms and produced the busts. There were too many railroads, spanning too many miles, with too little traffic. The busts came when railroads, built on borrowed capital, missed their bond payments and fell into receivership. The railway industry was the first to be dominated by corporations, and they were monopolies in the 19th-century sense: their routes, rates and conditions determined the outcomes of individual citizens, workers, farmers and small businesses, who usually had no other means of travelling or shipping goods.
Those who profited from the Gilded Age offered a different measure of economic success: the maximum production of wealth. Individualism, once identified with economic independence, became synonymous with the ability to acquire riches. The most successful entrepreneurs, like John Rockefeller and Andrew Carnegie, became vilified as "robber barons" for crushing competitors, distributors, suppliers and workers with underhand and ruthless tactics. They built anti-competitive empires, accumulated staggering fortunes and erected gaudy mansions alongside tenement squalor in cities such as New York.
American workers rejected the idea that free markets alone could sustain liberty. They toiled long hours for low pay in unsafe conditions. Railroad men led the first nationwide strike in 1877; in several states governors sent in armed militia to put it down, killing dozens of strikers. A turning point came in 1886, when hundreds of thousands of workers struck for an eight-hour workday. At Chicago's Haymarket Square a bomb was thrown at police, who opened fire; seven officers and at least four civilians died. In the short term the affair set off anti-labour and anti-immigrant hysteria. Several anarchists were convicted in a controversial trial and four were executed. Eventually Haymarket became a symbol of labour's struggle and May Day acquired global meaning.
During the civil war Congress opened America's doors wide to immigrants. The Homestead Act granted land on the frontier to citizens and immigrants alike, and the Act to Encourage Immigration allowed employers to recruit workers from abroad. By 1910 nearly one in seven Americans was born abroad. But every economic shock inspired backlashes. Nativists accused Irish and German Catholics of being culturally inferior to Anglo-Saxon Protestants. In 1882 Congress passed the Chinese Exclusion Act. In 1891 the Office of the Superintendent of Immigration was formed. By 1924 Congress had virtually barred migrants from outside the Americas.
Gilded Age politics became a battle between anti-monopolists and their opponents. Anti-monopoly's early vision of a nation of independent producers failed. Its later iteration, which accepted some monopolies as inevitable, demanded regulation by the government. This became the consensus of the Progressive Era that followed, and then of Franklin Roosevelt's New Deal.
For years progressives had argued that the state—guided by science and expertise—should be used to improve social conditions, promote equality and curb the worst excesses of the Gilded Age. In Theodore Roosevelt, they found a champion. New regulatory bodies took shape; reforms such as child-labour restrictions and workplace-safety measures gained ground. The civil service expanded and became more professional. The Progressive Era had its blind spots: many reformers were elitists who supported literacy tests for voters, immigration restrictions and a proposed constitutional amendment banning alcohol. Segregation became more deeply entrenched, including in the civil service under Woodrow Wilson.
In the late 19th century concerns over the effect of inequality and the extreme fluctuations of the economy brought the Gilded Age to an end. The economy did not produce the change. Politics did. For much of the 20th century the Gilded Age seemed unique, traumatic and regrettable. The regulatory state proved successful; the plutocrats had gone the way of the dinosaurs.
Richard White, a professor of American history at Stanford University, has argued that the worst traits of the Gilded Age have reappeared. The digital economy serves as an equivalent of the railways, with its tendency to overbuild and its booms and busts. Government tax policies allow wealth to flow to the top. The missing piece in the comparison is that there is no modern equivalent of 19th-century anti-monopoly politics. The belief that the economy should produce independent republican citizens has been flipped: the success of the republic is now measured by low prices and a high GDP.
Delusions are often functional. A mother's opinions about her children's beauty, intelligence, goodness, et cetera ad nauseam, keep her from drowning them at birth.