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.
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.
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.
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.