Monopolies Dbq

After the Civil war, large businesses ruled America. Prior to the industrial revolution, the government upheld a hands-off approach towards business. Under the laissez-faire principle, free, unregulated markets led to competition, yet this system suffered under the wrath of growing corporations. The impact of big business on the economy and politics was immense during 1870 to 1899. Corporations were growing significantly in number and size, which had a domineering affect on American economy and defined American life.

From 1865 to 1900 the federal government ignored a lot of economic affairs (also known as Laissez-faire) simply because they could and it made running the government much easier. This became a big issue when: railroad land grants, control of interstate commerce, and antitrust activities began to become very competitive in the market place. You may wonder what laissez-faire is; the dictionary definition is the theory or system of government that upholds the autonomous character of the economic order, believing that government should intervene as little as possible in the direction of economic affairs. This is the reason why larger companies could buy out smaller companies and raise the price of the product because they owned everything so to a large extent the government play a large part in the violation of laissez-faire.

During the depression of the 1870s, farmers protested against railroaders who ran the farmers into bankruptcy. Many Midwestern legislatures tried to regulate the railroad monopoly. In 1887, Congress passed the Interstate Commerce Act. It prohibited rebates and pools, required the railroads to publish their rates openly, forbade unfair discrimination against shippers, and outlawed charging more for a short trip than for a long trip over the same line. It also created the Interstate Commerce Commission (ICC) to administer and enforce the new legislation. The new laws provided a forum where competing businesses could resolve their conflicts in peaceful ways (instead of engaging in price wars). Congress passed the Sherman Anti-Trust Act of

The government also enacted the Hepburn Act, which made shipping internationally difficult on the railroad. Despite the fact that government grants led to incompetent railroads, the Interstate Commerce Commission and Hepburn Act were put into place, which made it so Hill “could not offer rate discounts on exports traveling on the Great Northern en route to the Orient” which was helping improve the economy with increased trade. Hill and other market entrepreneurs were not corrupt or unfair when choosing to not have subsides, but rather the political entrepreneurs were corrupt and insolvent. Also, Folsom argues that John D. Rockefeller was negatively impacted by government intervention. The Sherman Act was intended “to prevent monopolies and those companies ‘in restraint of trade’. Yet Standard Oil had no monopoly and certainly was not restraining trade” . Rockefeller’s goal was not to create a monopoly but in order to keep his business succeeding he needed directors in each state. By enacting the Sherman Act, Rockefeller’s company struggled, due to competition rising. These laws essentially stopped the growth of successful businesses, such as Hill and Rockefeller, who became so successful due to no government intervention.

The Sherman Antitrust Act was enacted on July 2nd, 1890 which prohibits activities that restrict interstate commerce and competition in the marketplace.

Along with promoting industry comes regulation. With railroads becoming more and more prevalent, problems were sure to ensue. Congress enacted laws to protect farmers and small business owners from the activities of railroads. Many people were frustrated with the big businesses taking advantage of workers and consumers. The laws that Congress passed were ones that ensured safety and fair prices in the economy. The Granger Movement would be a case in point. The farmers that were involved in this movement wanted the federal government to take action and regulate the railroad companies from charging unfair rates and carrying out their monopolistic powers in transportation. As a result, the Interstate Commerce Act was passed by Congress and the ICC was formed to regulate the railroads and their prices.

In the years following the Civil War, railroads had become the primary form of transportation for both people and goods. They were privately owned and entirely unregulated which gave them a natural monopoly in the areas that only they serviced. Monopolies are normally viewed harmful as they obstruct the free competition that determines the price and quality of products and services offered. The railroad monopolies had the power to set prices, exclude competitors, and control the market in several geographic areas. There was competition among railroads for long-haul routes but there was none for the short haul runs. This allowed the railroads to discriminate in the prices by charging a higher price per mile for short hauls than long hauls. They also discriminated in the prices they charged to passengers and shippers in different localities by providing rebates to large shippers or buyers. These practices caused problems to the American farmers who lacked the shipment volume necessary to obtain more favorable rates. The prices charged and the practices adopted by the railroad services greatly influenced individuals and businesses. Railroads also banded

This law forced the railroads to report to the federal government before making important decisions like how much to charge customers. The railroad companies were outraged and used the defense that their monopolies were almost automatically formed, but there was nothing they could do since the law was federal. (Moritz 19-24, 28)

Laissez Faire, a French phrase that translates to "allow to do", is a policy in which the government should not interfere with any economic affairs. Moreso, it is a type of economic environment in which transactions between private parties are free from government restrictions, tariffs, and subsidies.In the 1920's, this was the economic philosophy in the U.S. It was strictly applied and enforced under the presidency of both Warren G. Harding and Calvin Coolidge.

The Sherman Anti-Trust Act of 1890 was passed to prohibit trusts, this was the first law passed by U.S. Congress to enforce this. This act was named after Senator John Sherman. Before this act was put into place, many other states had enforced laws very similar to the Sherman Anti-Trust Act. These laws were not perfect though, the large corporations had the majority of the economic power. Congress was not pleased with this, thus making the Sherman Anti-Trust Act. This act allowed Congress to regulate interstate commerce, outlawing monopolistic practices. If a person were to violate this act, he or she could be imprisoned for a year and fined five-thousand dollars. This law was successfully used to help Theodore Roosevelt during his campaign, “trust-busting”. Also, President Taft used the law to back himself up against the Standard Oil Trust and American Tobacco Company. The Standard Oil trust was when a board of nine trustees was set up to make all of the company decisions , allowing the company to run as a monopoly. The Sherman Anti-Trust Act allowed both presidents to dissolve the trusts that were creating problems. On the other hand, the Sherman Anti-Trust Act had many holes, it did not have exact wording, therefore allowing companies to still control the majority of the producing and still get away with it. The Sherman Anti-Trust Act had substantial success, but was put to rest and replaced with the Clayton Anti-Trust

This established the idea that people would become “self-reliant”. Individual success was encouraged and government intervention was to be kept minimal. People aspired to achieve these objectives, for example, earning respect, conquering individual goals and measuring success by gaining material status. Laissez Faire was a philosophy used by previous conservative US Presidents, which also promoted minimal government involvement. As America became more industrialised the system faced many problems. The lack of government participation in both of these theories is what led to the American government only coming to the realisation of an economic crisis when it was too

Despite its good intentions, the Act didn't hit all its targets. The Act emerged as a somewhat tenuous plan to break up the "big business" monopolies. The weaknesses of the Act are described by Chief Justice Stone: "The prohibitions of the Sherman Act were not stated in terms of precision or of crystal clarity and the Act itself does not define them. In consequence of the vagueness of its language, perhaps not uncalculated, the courts have been left to give content to the statute, and in the performance of that function it is inappropriate that courts should interpret its words in the light of its legislative history and of the particular evils at which the legislation was aimed." Ultimately, "there [was] no question that nearly everyone wanted to

One of the examples of a monopoly that I will discuss is satellite radio. Sirius and XM radio combine making them the only provider of satellite radio in North America. Even though the FCC is in charge of regulating condition set by the satellite radio provided to the consumer. Since the two provider have combine, they have exclusion rights to the satellite streams here in North America. However, it could have been a lot worse. The FCC regulations made it possible for other radio company to build radio for Sirius/XM radio. Just imagine if you not only had to pay for satellite radio but buy the unit that was only provided by Sirius/XM. It would be a monopoly not only on the stream but also on the physical radio

Quality and product variety in a monopolistic screening model with nearly rational consumers is an article written by Suren Basov of The Department of Economics. This article is about monopolistic, where the author assumed that the producer is a monopoly. In this article, the author’s main focus is on the case when the irrationality parameter is small in comparison with the characteristic utility differentials but large in the comparison with flavor proliferation costs.

The concept of monopoly relates to a situation where a large part of the market if not all, is controlled by one company or group of companies. Monopoly identifies with the market share ownership where one organization supplies a given product to the market in the absence of alternative or substitute suppliers (Trageks, 2010). The case scenario in this study presents a monopolistic market situation. The fact that Futures Unlimited Corporation is the single license owner approved to distribute and control plutonium presents a monopolistic situation. Monopolistic markets post different results on organizations depending on the company 's management decisions. Although many monopolies employ the single price strategy in ensuring the maximization of profits, the effectiveness of this model posits a question of fact. A single priced monopoly indicates that elasticity in demand affects a single price monopoly in such a way that increased prices lead to decreased consumption of the commodities. In this scenario, the monopolistic situation leads to the reduction of revenue as well as profits. A monopolistic organization will only make profits in the situation where marginal revenues exceed marginal costs. In the event a monopolistic market increases production where revenue equals costs, the company experiences decreased revenues as well as profitability. A single priced monopoly likely has a reducing effect on the company 's profitability with an extra output. However, the