Chapter 27 Living with Leviathan: Big Business and Great Wealth

Regulating Railroads and Trusts Gap growing between very rich and very poor Aristocracy’s money and power threaten American dream Railroad problems Railroads defile countryside Railroads dangerous in cities Most people welcome railroads Railroads link farmers to markets Americans distrust railroaders’ tactics

Regulating Railroads and Trusts Regulating Railroads and Trusts (cont.’d) Farmers’ grievances with railroads Railroads charge unfair rates Railroads charge to store crops Railroads eat up farmers’ profits Attempts at regulation Patrons of Husbandry (Grange): farmers organize Grangers pass state laws regulating railroads Munn v. Illinois upholds laws (1877) Wabash case weakens laws (1886)

Regulating Railroads and Trusts Regulating Railroads and Trusts (cont.’d) Interstate Commerce Commission Congress passes Interstate Commerce Act Sets up ICC to regulate railroads ICC calms anti-railroad protests ICC ineffective at regulating railroads Consolidation 1890s: trunk lines consolidate into five systems 1890: two New York bankers control trunk lines Bankers provide badly needed capital Bankers improve railroads through consolidation

Regulating Railroads and Trusts Regulating Railroads and Trusts (cont.’d) J.P. Morgan Investment banker Controls many railroads Organizes trusts Extremely rich and powerful Sherman Antitrust Act Rules any restraint of trade illegal Has very vague wording Does not hold up well in court Does little to break up trusts

Social Critics Henry George Writes Progress and Poverty Sees rich as parasites Wants to tax “unearned increment” Wants a Single Tax to fund government Edward Bellamy Writes utopian novel, Looking Backward Has socialist vision for America Views reflect American ideals Calls plan Nationalism

Social Critics (cont.’d) Socialists and anarchists Some immigrants opt for Marxist solutions Revisionist Marxists want democracy Social Democratic Party in Wisconsin Anarchists call for violence to hasten revolution Haymarket Square Riot Police use violence against Chicago strikers Rally in Haymarket Square to protest Bomb thrown, riot breaks out Anarchists convicted on little evidence

Defenders of the Faith Social Darwinism Herbert Spencer applies Darwinism to society Believes that society is jungle; need to fight for survival Justifies actions of businessmen and others Too ruthless to appeal to many Americans William Graham Sumner

Defenders of the Faith Defenders of the Faith (cont.’d) Success Gospel Very influential with capitalists Says wealth is a virtue and all should strive to be rich Russell B. Cornwell: lack of riches a man’s own fault Horatio Alger and Ragged Dick Supports the Success Gospel Writes “rags-to-riches” stories for boys Heroes always righteous, hard working Extremely popular books Philanthropy Many rich are not virtuous in business Rich turn to philanthropy to justify fortunes Carnegie says a rich man should not die rich

How the Very Rich Lived Conspicuous consumption Marry daughters to European nobility Women little more than décor Others resent and envy rich Plays and publications ridiculed the wealthy

Discussion Questions What was the Grange Movement? Where did it have its origins? What impact did it have on American society? Examine the Sherman Anti-Trust Act. How effective was in regulating the trusts? What was the Haymarket Square Riot and how does it indicate the problems facing labor in the late 1800s? What is Social Darwinism? Why was its concepts popular amongst certain groups in the 1800s? Is it accurate?