Competition

Political cartoon, 1904

Political cartoon, 1904

In the late 1890s the public became increasingly concerned about corporate abuse and dangerous monopolies destroying the American tradition of independent entrepreneurs.

Courtesy of Library of Congress

The rise of big business created cutthroat competition for national markets. Faced with high fixed costs, businesses followed many strategies to prevent ruinous price battles. They created trusts and corporations. They merged with rival businesses and formed monopolies. They absorbed their suppliers or distributors. Kickbacks, bribery, price fixing, and secret deals were widespread. Americans debated the virtues and detriments of free enterprise.

Sketch of Theodore Roosevelt

“We draw the line against misconduct, not against wealth.”

Theodore Roosevelt, State of the Union Address, 1902

 

Monopoly board game, 1940s

Monopoly board game, 1940s

Business games often celebrated cutthroat competition and bred an ethos of “Business First.” Although not the first such game, Parker Brothers’ Monopoly became iconic.

Pit card game, about 1912

Developed by Parker Brothers in 1904, Pit is a fast-paced card game simulating the “open outcry” bidding system of a commodity exchange.

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Thomas Edison printing telegraph patent model, 1873

As businesses grew, many started selling stock traded on public exchanges. Stock tickers, which received stock prices via telegraph, kept investors informed of prices.

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AT&T

American Telephone and Telegraph (AT&T) used its patents to protect itself from competition. After these expired, the company argued that a monopoly would provide the country “One Policy, One System, and Universal Service.” The federal government agreed that this “natural monopoly” benefitted the common good.

 

AT&T advertisement, 1921

AT&T advertisement, 1921

Carnegie Steel

Andrew Carnegie squashed competition by controlling the steel-making process from mines to finished goods. He relied on careful accounting, invested in new technology, expanded his market share, undersold competitors, brutalized labor, and kept wages and salaries low. Reinvesting profits, he made Carnegie Steel one of the nation’s biggest companies.

Edgar Thomson Steel Works, North Braddock, Pennsylvania, about 1875

Edgar Thomson Steel Works, North Braddock, Pennsylvania, about 1875

Section of rail, about 1910

Section of rail, about 1910

Standard Oil

John D. Rockefeller brought financial order to the chaos of competition in the oil market. He was ruthless, but legal. He bought out many competitors, eliminated excess capacity, and closed inefficient operations. He created the Standard Oil Corporation, which by 1878 controlled more than 90 percent of the refinery capacity of the United States.

Standard Oil refinery, Cleveland, Ohio, 1890

Standard Oil refinery, Cleveland, Ohio, 1890

In 1902 Ida Tarbell wrote an exposé claiming that Standard Oil was destroying independent oil refiners. Her dramatic prose helped pass anti-trust legislation.

American Petroleum Institute Photograph and Film Collection

Spencer kerosene lamp patent model, 1878

Standard Oil kerosene advertisement, 1899

Standard Oil kerosene advertisement, 1899

John Rockefeller and son, 1921

John Rockefeller and son, 1921

John D. Rockefeller led Standard Oil, aggressively acquiring competitors and investing heavily in new technology in an effort to cool price-cutting and bring financial order to a highly competitive market.

Courtesy of Rockefeller Archive Center
 

Corporate Mergers, 1890s

Corporate Mergers, 1890s

Reacting to high fixed costs and the depression of 1893, business turned to mergers to stop price wars with competitors. About 1,800 American firms disappeared.