Period 2

The Problem(s)

  • Huge companies took over, and small companies were no longer needed.
  • Business “combinations” got so much power that they could get rid of the small companies.
  • Most of the wealth in the country is in the hands of only a few very wealthy people.
  • Pools agreed to divide the market to fix prices, and they were formed a lot during this time period.
  • Trusts were formed by combining smaller companies into larger ones.
  • Monopolies on industries such as oil, steel, railroads, sugar refining, meatpacking, and chemicals were developed.
  • Water, gas, and electricity were called natural monopolies and needed to be monopolies in order to function.
  • The huge monopolies that were being formed had so much power that they could influence the government officials to pass laws that were in their interest.
  • The Standard Oil Company, created by John D. Rockefeller and Samuel Andrews is an example of a monopoly that got rid of the smaller businesses underneath it.

The Solution(s)

  • During the 1870s, the public began asking for help. A group called the Progressives was formed, which started the Progressive Movement which lasted from 1900 to 1920.
  • The Progressives worked for better workplaces, fair prices for goods, and for trusts to end.
  • In short the Progressives worked for the government to regulate the market, and make monopolies illegal.
  • In 1890, the Sherman Antitrust Act was passed, making it illegal for big companies and trusts to limit competition.
  • In 1901, Theodore Roosevelt became president, and he was against trusts that limited competition. He became known as the “trust buster”.
  • William Taft became president in 1909. He wanted to control the trusts better. Woodrow Wilson, the next president, also wanted stronger antitrust laws.
  • In 1914, Congress passed the Federal Trade Commission Act and the Clayton Antitrust Act. The Federal Trade Commission Act set up the Federal Trade Commission which made sure that antitrust laws were followed. The Clayton Antitrust Act supported the Sherman Antitrust Act. This Act stopped businesses from creating monopolies. It made price-fixing illegal.
  • **Ida Tarbell** was a muckracker, or a journalist who wrote articles contributing to the reform movement. When her publisher came up with the idea of exposing corporate trusts, Mrs. Tarbell began a lengthy research of John Rockefeller's business history. Her work, titled, The History of the Standard Oil Company, led the journalism movement known as muckracking. These muckrackers did much to expose the illegal trusts and monopolies in the economy.

The Images

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A political cartoon by C.J. Taylor entitled "King of the World" depicts John D. Rockefeller and the monopoly held by Standard Oil. A monopoly is a company that is the only firm supplying a product or service to a market. Monopolies have no competitors, allowing them to set prices and terms without any constraints.
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Ida Tarbell's condemnation of the Standard Oil monopoly at the beginning of the 20th century placed her among the leading American muckrakers and brought her international fame as a journalist.

The Primary Sources

"In the unanimous decision in Standard Oil Co. of New Jersey v. United States, the Supreme Court affirmed, with slight qualifications, a lower court's ruling that Standard Oil violated the Sherman|Antitrust Act and required dissolution. However, the Court's decision limited the antitrust legislation by ruling that restraints of trade and monopolies should be broken up only when they were "unreasonable" by a law standard. This rule of reason confused the issue, which led to new legislation; the rule of reason remained a judicial standard, though, in antitrust suits." - The Supreme Court's Verdict in the case Standard Oil Co. Of New Jersy v. United States

"The mechanism of modern business is so delicate that extreme care must be taken not to interfere with it in a spirit of rashness or ignorance. Many of those who have made it their vocation to denounce the great industrial combinations which are popularly, although with technical inaccuracy, known as "trusts" appeal especially to hatred and fear. These are precisely the two emotions, particularly when combined with ignorance, which unfit men for the exercise of cool and steady judgment. In facing new industrial conditions, the whole history of the world shows that legislation will generally be both unwise and ineffective unless undertaken after calm inquiry and with sober self-restraint. Much of the legislation directed at the trusts would have been exceedingly mischievous had it not also been entirely ineffective. In accordance with a well-known sociological law, the ignorant or reckless agitator has been the really effective friend of the evils which he has been nominally opposing.
In dealing with business interests, for the government to undertake, by crude and ill-considered legislation, to do what may turn out to be bad would be to incur the risk of such far-reaching national disaster that it would be preferable to undertake nothing at all. The men who demand the impossible or the undesirable serve as the allies of the forces with which they are nominally at war, for they hamper those who would endeavor to find out in rational fashion what the wrongs really are and to what extent and in what manner it is practicable to apply remedies." - Theodore Roosevelt, In his controlling the Trusts speech

The Citations

Brexel, Bernadette. Prosecuting Trusts. New York: The Rosen Publishing Group Inc., 2006.

"Monopolies and Trusts in the Progressive Era" American History. ABC-CLIO Schools Subscription Web Sites. February 21, 2007.