Why was the period from 1865 to 1900 called "the gilded age of business," yet was followed by a period of reform and more thorough regulation of business practices?
Actually, the term "Gilded Age" was meant as a satirical comment on an age in which politics and business were largely unprincipled and self serving. The very term "gilded" implied "gold plated," hence not real. In his history of American politics, future president Woodrow Wilson said the Gilded Age was a time of
no leaders, no principles, no parties.
The time was marked by weak presidents, a bitterly divided Congress which accomplished little, and unprecedented government corruption. At the same time, so called "captains of industry" (called "robber barons" by some operated huge businesses and accrued tremendous fortunes often by unscrupulous means. The period also marked a time of declining agricultural prices and the resulting revolt of farmers.
It is a reach to say that the abuses of the Gilded Age led to the Progressive Era; however it did lead to a grassroots response in the form of the People's Party (commonly known as the Populist party) and the rise of William Jennings Bryan, a three time candidate for President.
We should not be surprised by this sequence of events. It is in fact very common for one era to be followed by another in which laws and social values and such contradict those of the earlier period. This sort of backlash is understandable.
During the "Gilded Age," business was able to do more or less as it wanted. This led to excesses on the part of businesses. They acted in ways that really bothered many people. As this happened, more and more people came to desire change. They wanted the government to crack down on the businesses and keep them from harming workers and consumers. This led to the regulations of the Progressive Era.