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April 3, 2022


What caused the end of the Gilded Age?

Many people are watching Julian Fellowes’ new series “The Gilded Age” on HBO. The show follows three prominent (think the social circles that included Rockefeller, Astor, and Vanderbilt) families through events of the 1880s in New York. The show is categorized as an “American historical drama” that takes place during perhaps the greatest boom in wealth that savvy American businessmen have ever experienced.

The show is a feast for the eyes with the dapper cut of the men’s tuxes, the satin drape of the women’s lavish dresses, the extraordinary hats and fascinators, and the gorgeous, expansive, palatial architecture. Many of the successful men of the Gilded Age made their money at the end of the Civil War. They were involved in railroads, lumber, fur trading, and industry. Everything was moving forward until something happened in the 1880s to curtail the expanse of the “robber baron” era. What was it?

The downfall of great wealth

Several events precipitated the end of the Gilded Age— a moniker coined by Mark Twain and Charles Dudley Warner. These events include the Panic of 1893, the 1896 political realignment to progressivism, and a shift in oversight by the government.

One of the more well-known shifts by the government is the Sherman Anti-trust Act of 1890. Named for Senator John Sherman of Ohio, the act confirmed the power of Congress to regulate interstate commerce.

Business owners in the 1800s were able to amass significant control of an industry by creating trusts. Trusts that dominated industries were formed throughout the late 19th century. A trust essentially allowed a business to create a monopoly: Standard Oil, the American Tobacco Company, to some extent sugar and steel, and the Vanderbilt railroads are examples of some monopolies that had incredible power during the Gilded Age.

What the Sherman Anti-trust Act did

The Sherman Anti-trust Act of 1890 was the first act in a series of acts (including the Clayton Act and the Federal Trade Commission Act) that worked to create an environment of “economic liberty” to promote free and unfettered competition; namely to prohibit trusts, monopolies, and cartels. Public sentiment was strongly critical of the new super-rich. One of the complaints was that while the heads of these businesses were amassed heretofore unimaginable wealth, over 40% of those who worked for the businesses lived in poverty.

A progressive mindset

Government, therefore, became increasingly invested in the oversight of business during the administrations of Grover Cleveland (1885-1889, 1893-1897), Benjamin Harrison (1889-1893), and William McKinley (1897-1901).

After President McKinley’s assassination in 1901, Theodore Roosevelt took up the helm and became known as America’s “trust buster.” The progressive mindset continued into successive administrations.

What was different about the Sherman Act

What gave the Sherman Act teeth was the criminal element. Violating the Sherman Act is a criminal offense. Those charged are prosecuted by the Department of Justice. Today’s penalties are not mild: Fines of up to $100 million for a corporation and $1 million for an individual and 10 years in prison. There are potential increases to twice that amount under some circumstances.

In addition to the federal statute, most of our states, including Texas, have similar anti-trust laws that are enforced by either the state attorney general or in civil cases by private plaintiffs.