Age of Railroads

1. What problems did employees of the railroad companies face?
Employees of the railroad companies faced many problems.  Many of the Irish workers faced disease and Native American attacks while the Chinese workers have climate issues.   One of these types of issues was the snow and cold temperatures that surrounded the camps and workplaces of the workers.  Another problem was that the Chinese workers had to supply their own food.  Also, there were often long hours for railroad workers, such as from dawn to dusk.

2. What was it like to live as a Pullman employee in the town of Pullman?
Living in the town of Pullman as a Pullman employee was a little like living a city.  The apartment buildings were made of brick and the fact that each one contained many windows made them very nice apartments for the time.  No one was allowed to drink alcohol or hang around on the front steps of buildings.  Those were just two examples of the control over the town.  The rent was also set by Pullman.  This town also consisted of shops, doctors' offices, and a field for athletics.

3. Who was involved in Crédit Mobilier, and what was the purpose of this company?
The Republican Party, mainly representatives in Congress around 1867, Vice-President Schuyler Colfax and James Garfield, were involved in Crédit Mobilier, as well as Crédit Mobilier and its stockholders.  Garfield was a congressman at the time, but would later become president.  The purpose of Crédit Mobilier was to have the stockholder that were part of the Union Pacific Railroad make a contract with Crédit Mobilier to have railroad tracks produced for much more than they actually cost.  Then the stocks were given out as bribes to members of congress and other parts of the government.  The company was mainly created to create large profits and bribe the government while doing very little and getting away with it.

4. In what ways did the railroad companies use their power to hurt farmers?
Railroad companies used their power to hurt farmers.  They would not sell the government land grants to settlers, although this was what the government had wanted.  Instead, they would sell to businesses.  Also, railroads tried to make prices hard on farmers so they would stay in debt.  Tied into this is the fact that they would charge less for long hauls than short hauls because there was not other choice for short hauls. That was how the railroad companies used their power.

5. Why didn’t the decision in the Munn v. Illinois case succeed in checking the power of the railroads?
The Munn v. Illinois case did not succeed because the federal government still had control over business between states.  So if the railroad was going between states, the states could not regulate the railroad and decrease the amount of discrimination.  Since many of the trips were between states, the case did not really succeed in checking the power, which would mean making prices fair, of the railroads.

6. Why didn’t the Interstate Commerce Act immediately limit the power of the railroads?
The Interstate Commerce Act did not limit the power of the railroad immediately.  This is because there were many legal procedures that had to be completed before they could limit the power.  Also, the railroads were resisting the government limiting their power and many almost went bankrupt in the 1890s.  Then, in 1897, it was decided by the Supreme Court that a maximun fair for railroads could not be set.  All of these events contributed to the ICC not truly being effective until 1906.

Big Business and Labor

Read pages 447 – 450 (this is the first half of the chapter section, "Big Business & Labor - 14-3") and then answer the questions below about government’s attempts to regulate big business.

1. What is it?                    

B.  How did it help businesses such as the Carnegie Company and tycoons like Andrew Carnegie?

1. Vertical integration

A. 

Vertical integration is when the raw resources, transportation of supplies and manufacturing are all own by one company.  One obtains the raw materials and transportation system by buying the suppliers.

B. 

Vertical integration helped Andrew Carnegie and Carnegie Company control the steel industry by completely controlling the steel from iron ore to train track.  This control of the suppliers would lead to total control of the industry, which was what was desired in order to have the largest profit.

2. Horizontal integration

A. 

Horizontal integration is when one tries to buy out the other producers of the product.

B. 

Horizontal integration allowed Carnegie to control the prices of steel.  By buying the competitors, the price of the steel was completely up to Carnegie, which was another example of a large amount of control and profit that was gained.

3. Social Darwinism

A. 

Social Darwinism was the belief that those who were wealthy were being blessed by God and the poor were just inferior or did not try hard enough.  Therefore, both groups deserved to be where they were in life.

B. 

Social Darwinism helped Andrew Carnegie because, since he was rich, others believed that he was a good man.  According to Social Darwinism, he had to be because God blessed him and the sign of that was his wealth.

4. Monopoly

A. 

A monopoly was when one company had total control over an industry and the production of a product.  They then were able to control prices, production, and wages.  A monopoly is one person with total control.

B. 

The fact that monopolies could exist helped Carnegie.  When Carnegie had total control they were able to make a large profit.  The large profit clearly helped Carnegie.  Another company that benefitted from monopolies was Standard Oil Company.  John D. Rockefeller had a lucrative monopoly over the oil industry.  Also, J. P. Morgan's United States Steel had a monopoly over the steel industry after Carnegie.

5. Holding company

A. 

A corporation that just buys out other companies in order  to establish a monopoly.  Once the largest company is bought, what was a holding company had a monopoly.

B. 

A holding company, United States Steel, would one day buy out Carnegie, making it difficult to explain how holding companies helped Carnegie.  Andrew Carnegie's company was not a holding company because it functioned as a company that did more than just buy out other companies, but one could say that the company used some of the same ideas as a holding company.   It also could be assumed that if other companies were just being bought by one holding company and nothing was doen with them, that perhaps they gave Carnegie less companies to buy  up and more control.  Yet United States Steel greatly benefited from holding companies.

6. Trust

A. 

A trust is when the stock of two competing companies is given to a board of trustees.  These trustees are responsible for running the two companies, although they were separate, as one company.  John D. Rockefeller implemented this idea with the Standard Oil Company, but it was not a legal merger.

B. 

As mentioned above, businesses and tycoons clearly benefitted from trusts.  These boards and stock exchanges helped Standard Oil merge and take over other companies until they obtained the monopoly that was desired.  This monopoly would then bring them a large profit, clearly helping them.

7. The perception of tycoons as “robber barons”

A. A "robber baron" is basically one who steals from others in order to obtain their fortune.

C. How did it harm businesses such as Standard Oil and tycoons like John D. Rockefeller?

The perception harmed Standard Oil and John D. Rockefeller because the term "robber barons" was negative and just displayed Rockefeller as a power-hungry, greedy man.  This would not make people want to buy from Standard Oil, which would harm Rockefeller.

8. Sherman Antitrust Act

A. The Sherman Antitrust Act was put into place in 1890 in an attempt to keep competition alive.  The technical reason for the act was to make trusts illegal.

C. How did it harm businesses such as Standard Oil and tycoons like John D. Rockefeller?

The Sherman Antitrust Act made trusts illegal because the government was worried that large companies would kill the competition of the economy.  This hurt Standard Oil and Rockefeller for two reasons.  The first was that Rockefeller had often used trusts in the past to gain control and he could not longer do that.  The second was that Rockefeller was on the large companies that the government was worried about, which may have put Standard Oil int he wrong spotlight.