Old West Group

The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. By 1890, the USA leaped ahead of Britain for first place in manufacturing output.

An explosion of new discoveries and inventions took place, a process called the "Second Industrial Revolution." Railroads greatly expanded the mileage and built stronger tracks and bridges that handled heavier cars and locomotives, carrying far more goods and people at lower rates. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. By the dawn of the 20th century, cars had begun to replace horse-drawn carriages.

Parallel to these achievements was the development of the nation's industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Oil was discovered in western Pennsylvania; it was mainly used for lubricants and for kerosene for lamps. Large iron ore mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these coal and iron ore could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.

The "Gilded Age" of the second half of the 19th century was the epoch of tycoons. Many Americans came to idealize these businessmen who amassed vast financial empires. Often their success lay in seeing the long-range potential for a new service or product, as John D. Rockefeller did with oil. They were fierce competitors, single-minded in their pursuit of financial success and power. Other giants in addition to Rockefeller and Ford included Jay Gould, who made his money in railroads; J. Pierpont Morgan, banking; and Andrew Carnegie, steel. Some tycoons were honest according to business standards of their day; others, however, used force, bribery, and guile to achieve their wealth and power. For better or worse, business interests acquired significant influence over government. Morgan operated on a grand scale in both his private and business life. He and his companions gambled, sailed yachts, gave lavish parties, and built palatial homes; Morgan was also a lay leader of the Episcopal Church and one of the world's leading art collectors. In contrast, men such as Rockefeller and Ford exhibited puritanical qualities. They retained small-town values and lifestyles. As church-goers, they felt a sense of responsibility to others. They believed that personal virtues could bring success; theirs was the gospel of work and thrift. Later their heirs would establish the largest philanthropic foundations in America. While upper-class European intellectuals generally looked on commerce with disdain, most Americans—living in a society with a more fluid class structure—enthusiastically embraced the idea of moneymaking. They enjoyed the risk and excitement of business enterprise, as well as the higher living standards and potential rewards of power and acclaim that business success brought.

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled. Economist Milton Friedman states that for the 1880s:

The highest decadal rate [of growth of real reproducible, tangible wealth per head from 1805 to 1950] for periods of about ten years was apparently reached in the eighties with approximately 3.8 percent. "

However, Raymond W. Goldsmith, who originated the figures Friedman gives in this statement, had reservations about the data, stating that "a few of these are too much influenced by the cyclical position of the benchmark years or by possible errors in the estimates for the initial or terminal year to constitute measures of long-term trend." Goldsmith specifically compared his figures for the 1880s and 1890s, stating "that while 1880 and 1890 were years of prosperity, 1900 marked a cyclical trough, and that measures of economic activity eliminating trend are considerably higher for the 'eighties than for the 'nineties."

Austrian Economist and scholar Murray Rothbard stated that for the 1880s:

Gross domestic product almost doubled from the decade before, a far larger percentage jump decade-on-decade than any time since.

Capital investment also increased tremendously during the 1880s, increasing nearly 500%, while capital formation doubled during the decade. Rothbard states that:

This massive 500-percent decade-on-decade increase has never since been even closely rivaled. It stands in particular contrast to the virtual stagnation witnessed by the 1970s.

Long-term interest rates also declined to 3 to 3.5% for the first time, reaching the same level as Britain and 17th century Holland.

The American labor movement began with the first significant labor union, the Knights of Labor in 1869. The Knights collapsed in the 1880s and were displaced by strong international unions that banded together as the American Federation of Labor under Samuel Gompers. Rejecting socialism, the AFL unions negotiated with owners for higher wages and better working conditions. Union growth was slow until 1900, then grew to a peak during World War I.

To modernize traditional agriculture reformers founded the Grange movement, in 1867. Federal land grants helped each state create an agricultural college and a network of extension agents who demonstrated modern techniques to farmers. Wheat and cotton farmers in the 1890s supported the Populist movement, but failed in their demands for free silver and inflation. Instead the 1896 election committed the nation to the gold standard and a program of sustained industrialization.

During the period, a series of recessions happened. Panic of 1873 had New York Stock Exchange closed for ten days, of the country's 364 railroads, 89 went bankrupt, a total of 18,000 businesses failed between 1873 and 1875, unemployment reached 14% by 1876, during a time which became known as the Long Depression. The end of the Gilded Age coincided with the Panic of 1893, a deep depression that lasted until 1897 and marked a major political recenterment in the election of 1896.