Trusts, Monopolies, and Corporate America
Jadam Liu
Research Question: To what extent did government policies support the emergence of monopolies, and what were the effects of monopolies on the economic climate of America in the Gilded Age?
Congress in the Gilded Age: characterized as the "do-nothing Congress" as Congress only passed 5 bills over 25 years
Monopolies: a company that has no other competitors in the market, allowing them to effectively control the market and set prices with no restrictions
John D. Rockefeller's Standard Oil effectively controlled the oil market from production to delivery to customers. Rockefeller achieved such success through vertical integration, a practice common-place during the Gilded Age
The federal government supported large corporations by enforcing high tariffs, breaking up labor strikes, and supporting lax immigration policies
Andrew Carnegie's Homestead Factory which was part of his large monopoly known as the Carnegie Steel Company
Laissez-faire Capitilism: a policy charaterized by the federal government leaving the economy unregulated so as to have the economy take full advantage of free enterprise
Production of Crude and Refined Oil (20th Century)
Vertical Integration: a process in which a company controls a market by controlling all the various aspects of a product or service
Horizontal Integration: a process in which a company controls one aspect of the production process
Market Share of Crude and Refined Oil (20th Century)
"By 1904, about 300 of these companies had absorbed more than 5,000 once-independent businesses" (ABC-CLIO)
Answer: government policies, notably an adoption of laissez-faire capitalism and lack of regulations, helped created the monopolies of the Gilded Age. Furthermore, attempts to regulate monopolies such as the Sherman Anti-Trust Act of 1890—the first federal law—can be interpreted as doing as much harm than good. For example, the law failed to regulate monopolies that are defined as "innocent" or succeeding based on merit, a definition that is difficult to enforce; additionally, the act regulated labor unions, thus, allowing employers to continue exploiting the labor of their own employees. Similarly, political corruption was extremely prominent at the time with the notable Crédit Mobilier scandal illustrating the corruption present at the highest levels of government, Congress. In regards to the economic climate, the Gilded Age was marked by the tremendous growth of the American economy as it was industrialized. But, many sectors of the economy became controlled by "robber barons" or "captains of industry" who practiced innovative and sometimes aggressive tactics in order to grow and dominate markets with their corporations. As a result, many of these large corporations could effectively become monopolies setting prices and even driving/buying out other businesses, thus, eliminating much of the competition. Therefore, the economic climate of the Gilded Age was marked by a highly unstable economy but unprecedented growth and increasing economic inequality as well.
The Panic of 1893 illustrated the economic inequalities present in the Gilded Age as Industrialists came to control the economy, living lavish lifestyles and artificially raising prices on products.
Politicans were given bribes in order to allow the Union Pacific Rairoad to inflate construction costs and profit $44 million
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Transcript
Trusts, Monopolies, and Corporate America
Jadam Liu
Research Question: To what extent did government policies support the emergence of monopolies, and what were the effects of monopolies on the economic climate of America in the Gilded Age?
Congress in the Gilded Age: characterized as the "do-nothing Congress" as Congress only passed 5 bills over 25 years
Monopolies: a company that has no other competitors in the market, allowing them to effectively control the market and set prices with no restrictions
John D. Rockefeller's Standard Oil effectively controlled the oil market from production to delivery to customers. Rockefeller achieved such success through vertical integration, a practice common-place during the Gilded Age
The federal government supported large corporations by enforcing high tariffs, breaking up labor strikes, and supporting lax immigration policies
Andrew Carnegie's Homestead Factory which was part of his large monopoly known as the Carnegie Steel Company
Laissez-faire Capitilism: a policy charaterized by the federal government leaving the economy unregulated so as to have the economy take full advantage of free enterprise
Production of Crude and Refined Oil (20th Century)
Vertical Integration: a process in which a company controls a market by controlling all the various aspects of a product or service
Horizontal Integration: a process in which a company controls one aspect of the production process
Market Share of Crude and Refined Oil (20th Century)
"By 1904, about 300 of these companies had absorbed more than 5,000 once-independent businesses" (ABC-CLIO)
Answer: government policies, notably an adoption of laissez-faire capitalism and lack of regulations, helped created the monopolies of the Gilded Age. Furthermore, attempts to regulate monopolies such as the Sherman Anti-Trust Act of 1890—the first federal law—can be interpreted as doing as much harm than good. For example, the law failed to regulate monopolies that are defined as "innocent" or succeeding based on merit, a definition that is difficult to enforce; additionally, the act regulated labor unions, thus, allowing employers to continue exploiting the labor of their own employees. Similarly, political corruption was extremely prominent at the time with the notable Crédit Mobilier scandal illustrating the corruption present at the highest levels of government, Congress. In regards to the economic climate, the Gilded Age was marked by the tremendous growth of the American economy as it was industrialized. But, many sectors of the economy became controlled by "robber barons" or "captains of industry" who practiced innovative and sometimes aggressive tactics in order to grow and dominate markets with their corporations. As a result, many of these large corporations could effectively become monopolies setting prices and even driving/buying out other businesses, thus, eliminating much of the competition. Therefore, the economic climate of the Gilded Age was marked by a highly unstable economy but unprecedented growth and increasing economic inequality as well.
The Panic of 1893 illustrated the economic inequalities present in the Gilded Age as Industrialists came to control the economy, living lavish lifestyles and artificially raising prices on products.
Politicans were given bribes in order to allow the Union Pacific Rairoad to inflate construction costs and profit $44 million