Anti Trust Laws Essay

1519 words - 6 pages

Anti-Trust Laws

The anti-trust movement in America during the late 1800s and early 1900s is a prime example of the conflict in society between autonomy and responsibility. Trust-related issues tested the extent to which the government could allow businesses to maintain their autonomy and at the same time fulfill its responsibility to protect the right of the common worker. America was founded on the principles of free enterprise. Throughout its history, the United States government maintained a "laissez-faire" or "hands off" policy in regard to regulation of business. However, in the late 1800s public demand for the government to regulate big business in order to protect the rights of farmers and smaller business owners became overwhelming. The time had come for America's government to decide the extent to which it was responsible to protect smaller industry from big business. Owners of big businesses had to be forced to take social responsibility for the underhanded and cutthroat methods they were using to eliminate the competition. As a result, congress made several attempts to manage the corporate giants. A series of laws passed around the turn of the century brought the U.S. government closer to successful regulation of business.

In order to understand the legislation Congress passed to curb the autonomy of big business, it is first necessary to understand the methods such businesses used to control the market. One of the first industries to use such business practices was the railroad industry. The first method it used to eliminate competition was known as the "pool." A pool was an agreement between companies in a particular industry to maintain a certain price or to divide the market.1 This eliminated competition and allowed the railroads to charge whatever rates they wanted. Conditions were such that a farmer would have to spend his entire earnings just to send his crops to market. Also, railroads would charge more for transporting goods a short distance than they would for a long one. The reason for this was that over a long distance they needed to cut rates to keep up with the competition from other railroad lines. When only traveling a short distance, there was most likely only one line that traveled the route and farmers were forced to pay whatever rate that particular railroad was charging. In order to get more business, railroads would also refund money to big business owners who used their lines. Such refunds were known as rebates. Since these businesses paid less to transport their goods, they could sell them at a cheaper rate than small business owners thus driving the small business owners out of business.2 Other practices used by big business included vertical integration, horizontal integration, trusts, interlocking directorates, and holding companies. Vertical integration occurred when one business controlled all industries involved in making a product from the raw materials to the finished consumer version. In a...

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