Period 3

The Problem(s)

- During the growth of industry in the late 1800s wealthy business men started to form trusts and monopolies
- In a monopoly one business owns all or nearly all its competition, and therefore can raise the prices as high as it wants
- In a trust a group of people combine their companies to form a bigger one
- They also used pools, where a group of people who run the different companies in a industry get together and agree to raise prices
- By 1900, the wealthiest 2% of Americans controlled over one third of the nation’s wealth
- As the rich got richer, the poor got poorer
- The trusts and monopolies had complete control over the industry
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The Solution(s)

- At first the government was slow to regulate the monopolies and trusts
- Antitrust laws made at the turn of the 20th century
- Originally antitrust laws focused on railroad and oil industries
- In the past few years the antitrust laws have been focused more towards computer and communication companies
- The Sherman Trust Act (1890) was the federal government’s first effort in stopping monopolies and trusts
- Congress passed this law almost unanimously
- Many court cases such as; United States vs. E. C. Knight Co (1895), and Standard Oil vs. United States helped the government gain more power against the monopolies and trusts organizations
- When Wilson gained presidency he was very much disturbed by these controlling companies
- He wanted to strengthen and clarify the Sherman Trust Act
- Congress then passed both the Federal Trade Commission Act and the Clayton Antitrust Act (1914)
The mission of the Federal Trade Commission (FTC) is to ensure the freedom and fairness of competition. The Federal Trade Commission was founded by the Federal Trade Commission Act in 1914 whose mission was later clarified in the Clayton Act passed on October 15, 1914. The Clayton Antitrust Act strengthened the Sherman Antitrust Act (1890). Some of the powers of the FTC include the power to restrict price-fixing, boycotts, and illegal combinations of competitors. The FTC also protects the public against false advertisements such as in foods, drugs, cosmetics, therapeutics, or labeling and packaging. It regulates associations of domestic exporters, monitors the lending practices of consumer creditors, ensures the accuracy of credit reporting agencies, and gathers data on business and economic conditions. The commission is a deliberative body composed of five members who are appointed by the president, with the consent of the Senate, for seven years. No more than three commission members may belong to the same political party. The president designates one of the members as chairperson.
In the unanimous decision in Standard Oil Co. of New Jersey v. United States, the U.S. 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 common law standard.
- Ida Tarbell was inspired by the publisher's enthusiasm to expose corporate trusts; she began with John D. Rockefeller's oil interests. Her work, titled "The History of the Standard Oil Company," ran many articles in McClure's (magazine), appearing at the same time as Lincoln Steffens' "The Shame of Minneapolis" and Ray Stannard Baker's "The Right to Work." These articles made what is now known as muckraking (a term coined by Theodore Roosevelt and taken from John Bunyan's Pilgrim's Progress). The muckrakers exposed corruption and abuses in areas of public life and contributed to the Progressive Movement.

The Images

Squeezingtrust.jpgThis shows the squeezing of all the money out of the trusts, as Teddy Roosevelt looks on.

This cartoon is saying that if the government doesn't stop the trusts, America will be in ruin.

The Primary Sources

"I believe the power to make money is a gift of God. . . . I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man according to the dictates of my conscience."
“The old laws and the old customs, which had almost the binding force of law, were once quite sufficient to regulate the accumulation and distribution of wealth. Since the industrial changes which have so enormously increased the productive power of mankind, they are no longer sufficient.”
- Theodore Roosevelt when proposing our legislative board to deal with corporate trusts.

”The creation of these great corporate fortunes has not been due to the tariff nor to any other governmental action but to natural causes in the business world, operating in other countries as they operate in our own.”
-Theodore Roosevelt

“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.”
-Theodore Roosevelt

“It should be as much the aim of those who seek for social betterment to rid the business world of crimes of cunning as to rid the entire body politic of crimes of violence. Great corporations exist only because they are created and safeguarded by our institutions; and it is therefore our right and our duty to see that they work in harmony with these institutions.
-Theodore Roosevelt

“The first essential in determining how to deal with the great industrial combinations is knowledge of the facts—publicity.”
-Theodore Roosevelt
Samuel Gompers referred to the Clayton Trust Act as the " Magna Carta of American labor."
- Samuel Gompers

The Citations

Progresive Era handout
ABC Clio