Big Business

Railroad Industry During Reconstruction and the Gilded

Age the number of railroads increased rapidly in the US

In an effort to beat out the competition, railroads offered special deals

Rebates- a discounted price for shipping goods, usually granted to corporations that shipped greater quantities or more regularly.

Rebate Disadvantages individuals and small businesses

couldn’t qualify (paid more for carrier THEN had to charge more for product)

Small railroads couldn’t compete and were run out of business = monopolies

Some RR continued to undercut each other (rates) until one was out of business = monopoly

Farmers Try to compete by creating POOLS Small farmers pool (combine) their

crops until they have a large shipment that can qualify for a rebate

Crops stored in a local warehouse/silo Cooperative method

Railroad Regulation State

• Attempts to set RR rates to make shipping fair for all (Munn v. Illinois)

• Overturned – only Congress has the right to regulate interstate commerce (Wabash case)

Federal• Interstate Commerce Act (1887)- prohibited

rate discrimination (difficult to prove)• Elkins Act (1903)- prohibited charging a rate

different from the printed rate- fine charged• Hepburn Act (1906)- added imprisonment to

the above punishment

Robber Barons?

OR Captains of Industry? John D. Rockefeller Andrew Carnegie J.P. Morgan Cornelius Vanderbilt Jay Gould Jim Fisk Cyrus Field Philip Armour And others….

Vertical Integration Owning all

businesses from the ground up• Mines,

transportation, factories, retail

Cutting out the “middle man”

All profits to the owner

Carnegie Steel

Raw Materials

Manufacturing & Assembly

Distribution

Horizontal Integration Buying up “like-minded” business Avoid competition = monopoly Rockefeller- Standard Oil Railroads

“The Central Bank: Why should Uncle Sam establish one, when Uncle Piermont is already on the job?”

Sherman Anti-Trust Act Passed by Congress (1890) Made trusts illegal because they

restricted trade Weak law (too many loopholes) Hurt labor unions for their restraint of

trade instead

Social Darwinism Darwin’s theory of survival is applied

to society Those who can find jobs, make

money and thrive will survive Those who can’t survive on their own

will die Leaving behind the fittest, best,

brightest and most worthy citizens Rich get richer, poor get poorer

“Gospel of Wealth” Written in 1889 by Andrew Carnegie Outlines his beliefs regarding the

social responsibilities of the wealthy

Read the excerpt provided and respond to BOTH questions in complete sentences.