Transcript Monopolies : Trusts of the 1800s

Monopolies: Trusts of the 1800s
United States History & Geography
Mr. Smith
Eliminate Competition
• As business expanded natural predatory
instincts took over as companies sought to
eliminate competition.
– This was a time when the government did not
regulate business
• laissez faire
• social Darwinism
• rugged individualism
End of Competition
•
Clearly the natural conclusion of laissez
faire capitalism, or pure competition, is
the end of competition itself.
– Natural goals of any business
1. Make as much profit as it can
2. To eliminate its competition.
•
When a corporation eliminates its
competition it becomes a "monopoly.“
•
Monopolies took several organization forms
including what were known as trusts.
Forming a Trust
1. Stockholders of several competing
corporations turn over their stock to
trustees.
2. In exchange for a trust certificate entitling
them to a dividend, the stockholders give
up their rights as the owners of the
competing companies.
3. The trustees run the companies as if
they were one company setting price.
This political cartoon published The Verdict on July 10, 1899
by C. Gordon Moffat shows an America controlled by the trusts.
Impact of Trusts on America
• Trusts became huge economic and political
forces.
• They were able to manipulate price and quality
without regard for the laws of supply and
demand.
• Basic economic principles no longer applied.
• They also had great political power.
• Trusts were extremely influential in Congress
and in the Senate.
• Some even accused the trusts of "buying" votes.
Robber Baron or Captain of Industry
• Although many Americans still regarded men like
John D. Rockefeller as "Captains of Industry," more
and more people began to publicly question the
tactics of the "Robber Barons."
• As trusts grew ever more powerful and wealth
became concentrated in fewer and fewer hands,
animosity towards the new businessmen and the
new methods of doing business increased
tremendously.
• Congress finally responded passing the Sherman
Anti-trust Act in 1890 to combat the influence trusts
were having.
• President Theodore Roosevelt and Taft often took
the trusts to court to encourage fair business.