Business Consolidation And Monopolies

Beginning with the tariff, Wilson personally addressed Congress concerning the tariff and the Underwood Tariff Act was established and passed by 1913, which lowered the tariff and graduated an income tax. Following with the bank, Woodrow implemented the Federal Reserve Act, which established a new Federal Reserve and created twelve central banks in twelve banking districts and also, gave them the power to produce currency or “federal reserve notes.” The Federal Trade Commission Act went after the trusts and created a board to investigate trusts and stop unfair trade practices such as, unlawful competition, bribery, false advertising, mislabeling, and adulteration. Finally, in 1914, there was the Clayton Antitrust Act, which made monopolies unlawful and exempted labor unions from being labelled as trusts and legalized striking and peaceful picketing (Document

As shown in Document A, reformers sought to break up large companies that controlled their area of competition, such as the Standard Oil monopoly on oil fields. However, the way at which they were picked was to organize them into good or bad trusts. The way this was done was at the control of the government, thus creating no set standards as to what company trusts to break up to create competition and which ones to keep. Despite the indecision, this was somewhat successful. As the Clayton Antitrust Act states (Document E), “... it shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly to discriminate in price between different purchasers of commodities which commodities are sold for use, consumption, or resale in the United States…”, meaning that women, and other minorities could buy the same items for the same price of others at any store in

This can be blantely obvious through the ever growing rift between the rich and poor classes. Henry George, a journalist-author who advocated for social reform through the imposition of a single, universal tax, stated “the gulf between the employed and the employer is growing wider” in his 1879 published work Progress and Poverty (Document A). The industrialization of this era was dominated by John D. Rockefeller’s horizontal integration of the oil industry and Andrew Carnegie's vertical integration of the steel industry. Horizontal integration was the technique of taking over and monopolizing an industry though consolidating smaller competitors while vertical integration aimed to own all phases of manufacturing from mining to market for efficiency and quality control. However, through this strive for the domination of industry came trusts. Trusts were created between companies who agreed upon what a beneficial asset was. James B. Weaver, the presidential candidate of the Populist party in 1892, stated “The main weapons of the trust are threats, intimidation, bribery, fraud, wreck and pillage” in his A Call to Action speech regarding trusts (Document E). Prior to this speech, it was perspectives, such as this, that led to the Sherman Anti-Trust Act of 1892. The captains of industry were so self interested that they also had little regard for the skill level and residency of workers as they simply sought to have cheap labor. This came in the form of wage cuts or the employment of immigrants. A wage cut of ten percent was laid upon the railroad workers of Baltimore and Ohio in 1877 and it resulted in strikes spreading nationwide across the railroad line. Later on in 1894, the Pullman strike occurred also due to wage cuts. As for immigration, many of these new immigrants came from eastern and southern europe

Finally is the allowance of these monopolies to rise in the first place. Since there were no regulatory agencies back in the second industrial revolution, big businessmen with the idea of trimming fat in their companies could conquer any competitor by using hardball tactics of purposely

During the building of the Transcontinental Railroad, the railroads themselves created a large market for the steel and iron industries.4 The steel and oil industries were booming and corruption was rampant. Andrew Carnegie had cornered the market in the steel industry and John D. Rockefeller had cornered the oil market. Rockefeller bought up his competition after essentially putting them out of business by flooding the market with refined oil bringing down prices and profits. He was determined to pay no one a profit because he wanted it all for himself. He created a plan called vertical integration which consolidated his businesses into one by creating The Standard Oil Trust.5 These two men became known as barons and got rich beyond belief. In 1890, the Government enacted the Sherman Anti-Trust Act to prevent large firms from controlling one single industry and finally put a stop to these monopolies and trusts, 6 but it was not rigorously enforced until the 1900’s. This act was designed to restore competition and

With reference to your own research and the item above, do you think that takeovers and mergers inevitably improve the performance of the businesses involved?

There are different types of businesses, for example, some use monopolies, trust and pools, while other eliminate competition for higher prices. As stated in “Progressive reformers regarded regulation as a cure for all sorts of socioeconomic and political problems” , “The Sherman Act of 1890 attempted to outlaw the restriction of competition by large companies that co-operated with rivals to fix outputs, prices, and market shares, initially through pools and later through trusts” , meaning, competition is the

The Clayton Anti-Trust Act targeted business monopolies that could easily control the whole economy. Wilson being the arrogant president that he was, created a few minor laws that would not greatly improve the economy. It would be the next successor of the president that would be left with all these problems.

Rockefeller's infamous horizontal integration, and Andrew Carnegie's vertical integration. Both methods were an effective way of eliminating competition for trusts, and in the years 1900-1930, there were many progressive laws put into place to prevent the extortion and manipulation of the common people by trusts. (doc lines 1-2) Monopolies were able to charge extortionate or large prices, because there was no competition due to. This meant that trusts like the railroad trust, were able to force higher payment, such as the "short-haul" in which people pay more for a shorter trip than a long one. This hurt the common people, especially farmers in the west who were already being hurt by the bank. This gave rise to the Mann-Elkins Act (1910) by William Howard Taft, which was passed in order to "regulate destructive competition and unfair trade practices". It put a price ceiling on railroad prices. And let railroads to make traffic agreements, which preserved competition. Trusts could also "buy their way into the senate", in order to stop this the 17th amendment (1913) which put the election of senators into the hands of the people. This strengthened the bond between the public and the federal

The government also enacted the Hepburn Act, which made shipping internationally difficult on the railroad. Despite the fact that government grants led to incompetent railroads, the Interstate Commerce Commission and Hepburn Act were put into place, which made it so Hill “could not offer rate discounts on exports traveling on the Great Northern en route to the Orient” which was helping improve the economy with increased trade. Hill and other market entrepreneurs were not corrupt or unfair when choosing to not have subsides, but rather the political entrepreneurs were corrupt and insolvent. Also, Folsom argues that John D. Rockefeller was negatively impacted by government intervention. The Sherman Act was intended “to prevent monopolies and those companies ‘in restraint of trade’. Yet Standard Oil had no monopoly and certainly was not restraining trade” . Rockefeller’s goal was not to create a monopoly but in order to keep his business succeeding he needed directors in each state. By enacting the Sherman Act, Rockefeller’s company struggled, due to competition rising. These laws essentially stopped the growth of successful businesses, such as Hill and Rockefeller, who became so successful due to no government intervention.

For that reason the muckrakers decided to go against the railroads, the primary industry that exercised power over the government (Brinkley 478). This was known as the trust-buster regulation, where monopolies were seeing as unfair and corrupt business. Even though corruption was reduced, the muckrakers also sought to take out power from the bosses, who

Antitrust law in the United States is a collection of federal and state government laws regulating the conduct and organization of business corporations with the intent to promote fair competition in an open-market economy for the benefit of the public. Congress passed the first antitrust statute, the Sherman Antitrust Act, in 1890 in response to the public outrage toward big business. In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act and the Clayton Act. (The Antitrust Laws. Web.)

At the time there was no law preventing the creation of trusts and Roosevelt knew through past experiences of facing new industrial conditions, that if he were to rashly create legislation out of fear of businesses growing too powerful it would be unwise and ineffective3. Therefore, Roosevelt decided that the best course of action was to have the federal government closely monitor the corporations that engaged in interstate commerce. Roosevelt stated that, “The first requisite is knowledge, full and complete—knowledge which may be made public to the world4.” Considering the amount of unknown information regarding the new industrial conditions, Roosevelt’s plan was to strictly monitor the actions of the businesses and to be on the lookout for things that could harm the American population such as large monopolies, but for the time being, no laws or regulations were to be passed restricting business operations for these large corporations. Roosevelt was very wary of the potential wealth to be gained through monopolies. Whether a monopoly was established through running their competitors out of business by utilizing vertical integration as a way to decrease prices to an amount at which the competitors would have to consistently take a loss in order to stay in business, or through horizontal integration by buying out all of the competing business, monopolies gave

The Sherman Anti-Trust Act of 1890 was passed to prohibit trusts, this was the first law passed by U.S. Congress to enforce this. This act was named after Senator John Sherman. Before this act was put into place, many other states had enforced laws very similar to the Sherman Anti-Trust Act. These laws were not perfect though, the large corporations had the majority of the economic power. Congress was not pleased with this, thus making the Sherman Anti-Trust Act. This act allowed Congress to regulate interstate commerce, outlawing monopolistic practices. If a person were to violate this act, he or she could be imprisoned for a year and fined five-thousand dollars. This law was successfully used to help Theodore Roosevelt during his campaign, “trust-busting”. Also, President Taft used the law to back himself up against the Standard Oil Trust and American Tobacco Company. The Standard Oil trust was when a board of nine trustees was set up to make all of the company decisions , allowing the company to run as a monopoly. The Sherman Anti-Trust Act allowed both presidents to dissolve the trusts that were creating problems. On the other hand, the Sherman Anti-Trust Act had many holes, it did not have exact wording, therefore allowing companies to still control the majority of the producing and still get away with it. The Sherman Anti-Trust Act had substantial success, but was put to rest and replaced with the Clayton Anti-Trust

The amendments to the Small Business Act of 2010 was intended to mitigate the effects of bundling and consolidation on small businesses, moreover agencies were to provide explanations when using bundled or consolidated contracts. Precisely, procuring activities were banned from carrying out an acquisition policy that involved consolidation of contract obligations valued in excess of $2M unless (1) conducted market research; (2) identified any alternative contracting approaches that would involve a lesser degree of consolidation; (3) made a written determination that consolidation was necessary and justified; (4) identified any negative impact that the acquisition policy would have on small businesses; and (5) certified that steps would be