Railroad Companies These companies had a monopoly on the railways and controlled the price of shipping. Fixed prices: Farmers were charged a set fixed rate to ship crops. This ended up keeping farmers in debt to the railroad companies.
Railroad Companies Railroad companies began to consolidate, and monopolize. Interstate Commerce Act: Law passed by Populists that let the government set “reasonable and just” railroad rates This is an example of government regulation, or of the government passing laws (regulations) saying what businesses can or can’t do
The Grange Was an organization of farmers Started off as a way to educate farmers, and transformed more into a political group. Was very influential in rural western and southern America. Gave rise to the Farmers’ Alliance, and eventually the populist movement.
The Populist Party A party’s platform is what they stand for. The Populist Party’s platform included things that appealed to farmers and other common people: – Rise in farm prices – More taxes on the rich – Loans for people from the federal government – Secret ballot – Eight-hour work day – Restrictions on immigration
The Populist Party Populist Party was an alternative to Democrats or Republicans. The Populist Party won 10% of the total presidential election in 1892, which was a lot for a third party. Later on, the Democrats copied a lot of the Populist platform.
Farmers in Debt For farmers, production cost (to buy seeds, equipment, etc.) + railroad cost (to ship the crops) were more expensive then product price (what people paid them for their crops) – So they actually LOST money by farming Plus, crops were bad in the 1880s (bad weather) The panic of 1893 caused prices to fall, and the farmers fell further into debt.
Gold vs. Silver Farmers and the populist movement supported the idea of bimetallism, where money was backed up by silver as well as gold.
Gold vs. Silver Gold standard (gold only): less money in circulation, prices fall, value of money increases. Bimetallism (silver + gold): meant more money in circulation, prices rise, value of money decreases.
Big Business What is the point of the game Monopoly? How do you win? When businesses are consolidated, that is, when they join together, they can control the prices of things. This is called monopoly.
Monopolists A monopolist is someone who owns an entire industry (like the oil industry, or the railroad industry) or who owns a large, large amount of that industry. Because there is not much competition from other owners, the monopolist can charge the people whatever he likes. Example: railroad shipping rates versus how cheap cell phones are.
Lobbyists Monopolists could afford to pay workers called lobbyists to spend a lot of time talking to Congress people and trying to convince them to pass laws in their favor. They even sometimes outright gave Congress people money to vote in their favor.
Monopolists and the Senate
Big Business Vertical monopoly, or vertical integration, is when a business owner owns the natural resources, the manufacturing and the distribution process. They buy out all of the other suppliers in a particular industry. – Current example: The oil industry – U.S. History example: Ford’s assembly line
Big Business Horizontal monopoly, or horizontal integration, is when a business owner owns the vast majority of the an entire product or industry. – Current example: Old Navy – GAP – Banana Republic – U.S. History example: Carnegie owns more than the majority of steel.
Mergers Most integration was done by mergers. This is when the businesses consolidate. “If you can’t beat ‘em, join ‘em” mentality. Also, competitors forced each other out by selling below value until the competitor went bankrupt. Then they hiked prices higher than before now that the competitors were gone.