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of America
Unit 6 Part 1
Cont.
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Cont.
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Jay Gould will enter the market by purchasing and then selling off
assets from railroad companies.
To stay competitive other companies will begin offering kickbacks
and rebates to preferred customers, which will raise prices for small
shippers - mostly farmers.
Cont.
Cont.
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Farmers will band together into a group called the Grange. They will
push state legislators to pass laws that prevent pricing abuse.
These laws will be tested in court and in a landmark decision,
Wabash v. Illinois, the Supreme Court will rule that the states cannot
regulate the railroads because they are interstate commerce.
- Who controls interstate commerce? What case decided that?
Congress will attempt to intervene with Interstate Commerce Act
- It prohibited kickbacks, rebates and required that railroads
must publish their rates.
- However, it lacks enforcement and is ineffective.
Industrial
Empires
Steel production had been a part of the US economy for years, however it was time consuming and
expensive.
This changes with the invention of the Bessemer Process. By blasting air through liquid steel
impurities could be removed.
- Allows for the cheap production of high quality steel.
- The Great Lakes region has abundant iron ore and coal and becomes the center of US steel
production.
Cont.
- Andrew Carnegie - born in Scotland, he arrived in the US penniless. He will work
his way up to the superintendent of railroads in Pennsylvania.
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Cont.
- Andrew Rockefeller
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Cont.
- These major trusts will face opposition from reformers and legislators.
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Middle class workers feared their influence and the old wealth of America resented the newly
wealthy.
Congress will respond by passing the Sherman Antitrust Act, however it was vague and difficult to
enforce.
United States v. E.C. Knight Co.will further weaken it after the incredibly pro business Supreme Court
rules that the Act applied only to interstate commerce and manufacturing was intrAstate.
Economic
Theory of the
SIR
Businesses would compete with each other, therefore lowering prices and increasing the variety and
quality of products.
This belief in non-regulation is undercut by the growing power of the trusts and monopolies, who
are by nature anti-competitive.
- Gospel of Wealth
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- These beliefs will lead to a number of social programs to aid the poor but will be
used as justification by the rich to get richer.