Late 1800s Business Practices

Questions and Answers

What was the main concern of the government as the power of giant corporations grew?

High wages being paid to workers

Increase in charitable contributions from wealthy business owners

A lack of free competition in the marketplace (correct)

Lack of investment in the agricultural sector

What did the Sherman Antitrust Act of 1890 aim to achieve?

Increase charitable contributions by wealthy individuals

Promote free competition and prevent monopolies (correct)

Illegally form trusts and maintain monopolies

Encourage the formation of monopolies

Why was the Sherman Antitrust Act difficult to enforce?

Most cases were won in favor of the trusts

It required large corporations to form multiple trusts

The definitions of trusts and monopolies were unclear (correct)

The support for large corporations was overwhelming

What change did large companies make to avoid prosecution under the Sherman Antitrust Act?

They reorganized into a single corporation Signup and view all the answers

What was a significant difference in economic conditions between the North and South during the industrial growth period?

The South had little money for investment and remained mainly agricultural Signup and view all the answers

What economic philosophy was favored by business leaders in the late 1800s to maintain their independence?

Laissez-faire Capitalism Signup and view all the answers

Which theory supported the ideas of competition and hard work among business leaders in the late 1800s?

Social Darwinism Signup and view all the answers

How did Andrew Carnegie primarily aim to control the steel industry?

Through vertical and horizontal integration Signup and view all the answers

What was J.P. Morgan's strategy to gain control over various industries?

Merging and taking over other businesses Signup and view all the answers

What was the primary purpose of John D. Rockefeller's trusts?

To consolidate control over competing businesses Signup and view all the answers

What economic outcome resulted from the monopolies created by Carnegie, Morgan, and Rockefeller?

Reduced competition and higher prices Signup and view all the answers

What was one of the major criticisms against the business practices of late 1800s entrepreneurs?

Their ruthless methods that stifled competition Signup and view all the answers

What effect did monopolies have on the choices available to consumers during the late 1800s?

A reduction in available consumer choices Signup and view all the answers

Study Notes

Economic Landscape of the Late 1800s

The late 1800s fostered an environment ideal for business expansion and wealth accumulation.
Free enterprise allowed individuals and private businesses to control most industries without government intervention.
Business leaders embraced laissez-faire capitalism, prioritizing independence and profit maximization over governmental regulation.

Ideological Influences

Social Darwinism emerged, promoting the idea that "natural selection" favored the economically successful and justified competition and hard work.
While the wealthy supported this theory, it faced criticism from others who saw it as exploitative.

Entrepreneurial Control Techniques

Entrepreneurs sought to eliminate competition through aggressive strategies.
Andrew Carnegie utilized vertical integration by acquiring suppliers of raw materials and logistic companies.
Carnegie also employed horizontal integration by merging with or buying out other steel companies.
J.P. Morgan focused on consolidating businesses, forming new companies that bought stock to gain control over various industries including steel and railroads.
John D. Rockefeller created trusts, allowing competing companies to be managed under a single group of trustees to control the oil industry.

Monopolies and Market Consequences

Carnegie, Morgan, and Rockefeller each established monopolies, exerting complete control over production and pricing in their respective industries.
The rise of monopolies limited consumer choices and forced workers into acceptably lower wages with few job alternatives.
The actions of wealthy industrialists sparked public debate, with some viewing them as "robber barons" for their exploitative practices despite philanthropic efforts.

Regulatory Responses and Challenges

Growing corporate power led to governmental concern over the decline of free competition.
In 1890, the Sherman Antitrust Act aimed to restrict the formation of trusts and monopolies, promoting competitive markets.
Enforcement issues arose due to unclear definitions of trusts and monopolies, and court rulings often favored large corporations, hindering the act's effectiveness.

Regional Economic Disparities

While the North experienced industrial prosperity, the South struggled to recover post-Civil War, remaining largely agricultural with limited investment opportunities.

Description

This quiz explores the business landscape of the late 1800s, focusing on free enterprise and laissez-faire capitalism. It examines how business leaders operated under these principles and the influence of Social Darwinism on their practices. Test your knowledge of this transformative era in American economic history.