Making a return to the gilded age

Hey there, time traveller!
This article was published 06/03/2025 (249 days ago), so information in it may no longer be current.

In 1873, Mark Twain (Samuel Clemens) and his friend, American essayist Charles Dudley Warner, together wrote the novel, The Gilded Age: A Tale of Today. The popular book was a mocking social commentary about wealth, power and corruption in the Reconstruction Era that commenced at the end of the U.S. Civil War.

While the novel is mainly about greed and land speculation schemes, rather than the industrialization and monopolies, which was to define the immediate decades that followed, its title, “The Gilded Age” was used to encapsulate the period in American history from the 1870s to the early 1900s.

During a time when there was no income tax and few government regulations, tycoons such as Andrew Carnegie, J.P. Morgan, Cornelius Vanderbilt and John D. Rockefeller became multi-millionaires controlling nearly every major sector of the U.S. economy — in particular, banking, railways, steel, coal and oil and gasoline. They generally paid their workers, many of whom lived in congested city slums, as little as possible and disdained unions, which they regarded as a radical threat to their businesses and the country.

To their many critics, these “robber barons” of the Gilded Age stood for “immorality, dishonesty, and graft,” as American writer Jackie Craven states. However, as so-called “captains of industry” some such as Carnegie and the Rockefeller family were benevolent philanthropists. (Carnegie funded the construction of more than 2,500 libraries, including Winnipeg’s first public library on William Avenue.)

These men were also devoted to protective tariffs and a currency backed by the gold standard, and thus financed presidential candidates and politicians who were in line with their commercial interests.

In the late 1880s and 1890s, that meant the Republican Party and its leaders Benjamin Harrison, who was president from 1889 to 1893; and William McKinley, who as a congressman in 1890 sponsored a tariff act (known as the “McKinley Tariff”) that levied about 50 per cent duties on many imported goods. Then, as the party’s presidential candidate in the 1896 election, McKinley favoured high tariffs and a dollar backed by gold.

Just as Elon Musk donated $250 million to U.S. President Donald Trump’s campaign in 2024, Morgan and Rockefeller provided McKinley with $500,000 (about $18.6 million today) for his campaign that helped him defeat his Democratic Party opponent, William Jennings Bryan. Unlike Musk, however, who has been given free reign by Trump to dismantle much of the federal government, Morgan and Rockefeller were content to remain behind the scenes.

During the last presidential campaign, Donald Trump effusively praised McKinley, his economic policies, and the Gilded Age. McKinley, he declared during his recent inauguration speech, “made our country very rich through tariffs and through talent.” No doubt, he is also impressed by McKinley involving the U.S. in a war with Spain in which the U.S. acquired Puerto Rico and promoting the U.S. annexation of Hawaii.

Trump is hardly a student of history, however, and his claim does not stand up to historical analysis. As the U.S. experienced a rapid period of industrialization during the latter part of the nineteenth century, building railroads and admitting millions of immigrants, the country’s economy grew exponentially. Yet, “tariffs probably didn’t make a huge amount of difference one way or another,” said Douglas Irwin, a professor of economics at Dartmouth College in a recent interview with CNN.

Most everyone back then also understood what Trump does not or stubbornly refuses to acknowledge: that tariffs imposed by the U.S. government were paid for by American consumers not, as Trump repeatedly insists, foreign companies which sold goods to the U.S.

And as a consequence, the prices on those goods rose.

In the 1890s, “the government was pretty small,” Irwin added. “We didn’t have a huge military. We didn’t have a welfare state. We were running big fiscal surplus.” For example, at that time expenditures by the federal government amounted to approximately three per cent of the country’s gross national product; today, the U.S. government spends close to $7 trillion that represents 23 per cent of the GDP.

Global trade, too, is now interconnected and interdependent in a way that was not conceivable 130 years ago. As University of Oxford economist Eric Beinhocker succinctly puts it: “No country in the world alone can make an iPhone.”

After McKinley was elected to a second term in the 1900 presidential election, he began to rethink tariffs, another fact of history that Trump ignores. On September 5, 1901, a day before he was assassinated in Buffalo (he died on September 14) by anarchist Leon Czolgosz, McKinley explained his more liberal economic philosophy in a memorable speech:

“Reciprocity is the natural outgrowth of our wonderful industrial development under the domestic policy now firmly established. What we produce beyond our domestic consumption must have a vent abroad. The excess must be relieved through a foreign outlet and we should sell everywhere we can, and buy wherever the buying will enlarge our sales and productions, and thereby make a greater demand for home labor… Reciprocity treaties are in harmony with the spirit of the times, measures of retaliation are not.”

These are wise words that Trump will never understand. Instead, he has opted for an ill-conceived, economically destructive and pointless tariff policy.

Now & Then is a column in which historian Allan Levine puts the events of today in a historical context.