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Thieves or Great Leaders?

With the incredible success of large corporations and trust, several crafty businessmen became unbelievably wealthy.  These ultra-rich capitalists gave the time period its name, the Gilded Age, because of their extravagant lifestyles. 

 

Some citizens thought they were the "Captains of Industry" because the men helped create the modern economy based on business and industry.  Critics called them "Robber Barons" because of the ruthless way these corporate executives tried to destroy all competition and keep wages low.  After the depression of 1873, many large manufacturers began to drive smaller companies out of business and take over those companies.  Sometimes corporations would join together, instead, forming a trust, completely controlling the production and sale of a product.  Gaining complete control of a market is known as having a monopoly.

 

To illustrate this, consider that Andrew Carnegie emigrated to America with almost nothing. He ended up one of the richest men ever, controlling most of American steel production in the early 1900s. John D. Rockefeller controlled almost 90% of oil-related business in the nation.  He was so powerful, he was able to force even the huge railroad companies to give him special rates.  John Pierpont "J.P." Morgan, an investment banker worked with Rockefeller to accomplish such amazing exploits.  As an example of their success, Morgan and Rockefeller, together in 1912, controlled over 100 corporations worth over $22 billion .  They would be worth over $400 billion in 2003 money.

 

 

The Government's Reaction 
The Federal Government generally allowed business to operate freely.  Some of the abuses of big business, though, soon called for government intervention.  At first, states tried to regulate the railroads.  Then the Supreme Court ruled in Wabash v. Illinois (1886) that only the federal government has the authority to regulate railroads. 

 

A year later, Congress passed the Interstate Commerce Act (1887).  It established the first federal regulatory agency, and tried to stop railroad abuses and discrimination.  Change continued, and in 1890 Congress passed the Sherman Anti-Trust Act.  It allowed federal prosecution against any "combination in the form of trusts or otherwise, or conspiracy, in restraint of trade." Ironically, this law was used more against unions in its early days, than against "big business."  

 

It wasn't until the administration of Teddy Roosevelt that the federal government was successful in combating the growing power of trusts. Roosevelt argued that "trust-busting" would protect the farmers, workers and consumers being taken advantage of by huge mega-corporations.  He hoped that by regulating the offending companies, the economy of the entire country would benefit.