The First National Trust
In 1882, Standard Oil organized the first of the nation’s trusts. A trust oversaw virtually all of an industry’s operations, from production to price-setting to distribution and sales. It was supposedly run not by a single company, but by trustees. A trust issued certificates to stockholders in the industry’s companies and paid dividends. Virtual monopolies like Standard Oil could then argue that they didn’t control an industry; the trust did.
Monopolies weren’t all bad. Because of the economies of doing business on a large scale, costs could be kept down and prices lowered. The price of kerosene, for example, dropped a fair amount after Standard Oil dominated the market.
Of course with no competition, prices were at the mercy of the monopolies and could — and often did — swing up again. In addition, the sheer size and power of the monopolies were worrisome to some Americans.
Carnegie and other giants of capitalism immodestly preached the “Gospel of Wealth,” arguing that it was natural for a few people to have most of the wealth, a sort of economic “survival of the fittest.” As long as they used their fortunes to benefit society, they contended there was nothing wrong with it.
But opening libraries and donating church organs didn’t put bread on the table of the average working guy. Labor unions began to try to do that after the Civil War by organizing on a large scale. Most notable were groups called the Knights of Labor and the American Federation of Labor (AFL).
In 1877, America faced its first national labor strike when railroad workers walked off the job after wages were cut. State and federal troops were called in, hundreds of strikers were killed or wounded, and service was restored at the point of a gun.
In May 1886, an AFL strike for an eight-hour day for workers led to a clash at Chicago’s Haymarket Square between police and strikers. A bomb killed 7 cops and injured 67 others. The police, who had killed four strikers the day before, fired into the crowd and killed four more. Seven strike leaders were eventually convicted and four were hanged.
The incident was condemned by anti-union forces as an example of how the labor movement was controlled by “anarchists” and “radicals.”
In 1894, a strike against the Pullman railroad car company spread over 27 states and paralyzed the country’s railroads. Federal troops were called out, and a court order ended the strike. The Haymarket Square riot and Pullman strike dealt severe blows to the chances of things getting better for the average working stiff through labor unions. America was progressing, but not all of its citizens were.