Questions and Answers
What is a monopoly?
A business that controls (or monopolizes) an entire industry.
What is bad about monopolies?
As the only provider, they control the quality and price of products.
What is good about monopolies?
They can produce products more cheaply through mass production.
During the 1870s and early 1880s, what was the U.S. government's approach toward monopolies?
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In what 3 ways did monopoly owners justify their tremendous wealth?
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What problems did railroad monopolies create?
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What were Grange Laws and how did they attempt to control the rates railroads charged?
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Why did the U.S. Supreme Court declare Grange laws unconstitutional in the case Wabash v. Illinois?
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What did farmers do after the Grange Laws were struck down?
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Were there any attempts to break up monopolies during the Gilded Age?
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Were the Interstate Commerce Act and Sherman Antitrust Act effective?
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Study Notes
Monopoly Overview
- A monopoly is a business that has complete control over an entire industry, particularly seen with oil, steel, railroads, and sugar during the late 1800s.
- Monopolies are often referred to as "trusts."
Negative Aspects of Monopolies
- Monopolies can dictate product quality and pricing due to their control as sole providers in the market.
Positive Aspects of Monopolies
- Monopolies can reduce production costs through mass production and waste elimination.
- Example: Andrew Carnegie's Bessemer Process led to an 80% decrease in steel prices.
Government Approach to Monopolies
- The U.S. government adopted a laissez-faire attitude (hands-off) toward monopolies in the 1870s and early 1880s.
Justifications for Wealth of Monopoly Owners
- Social Darwinism: Survival of the fittest philosophy applied to business success.
- Gospel of Wealth: Wealthy individuals donate to charity to assist the less fortunate.
- Mass production helps reduce costs leading to greater profits.
Impact of Railroad Monopolies
- Railroad monopolies charged exorbitant rates to farmers, especially for short distances, exploiting their necessity to transport goods.
Grange Laws
- Grange laws were state-level regulations aimed to control railroad rates and protect farmers from exploitation.
Wabash v. Illinois Case
- The U.S. Supreme Court ruled Grange laws unconstitutional, stating that only the federal government has the authority to regulate interstate commerce.
Farmers' Response Post-Grange Laws
- Farmers lobbied Congress to pass the Interstate Commerce Act, establishing that railroad rates must be "reasonable and just."
Attempts to Break Up Monopolies
- The Sherman Antitrust Act of 1890 made it illegal for companies to restrict commerce, with potential criminal charges and fines for violations.
Effectiveness of Antitrust Laws
- The Interstate Commerce Act and Sherman Antitrust Act were seen as vague and weak, leading to few prosecutions and limited success, though they represented progress in regulatory efforts.
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Test your knowledge of monopolies during the Gilded Age with these flashcards. Explore key concepts such as the definition of monopolies and their impact on industries like oil, steel, and railroads. Perfect for anyone studying American history or economics.
