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How and why did American business seek to eliminate competition.

As business expanded natural predatory instincts took over as companies sought to eliminate competition. It was survival of the fittest in an economy which did not regulate business - laissez faire, social Darwinism, rugged individualism where the themes of the day.

Clearly the natural conclusion of laissez faire capitalism, or pure competition, is the end of competition itself. It is the natural goal of any business to make as much profit as it can and to eliminate its competition. When a corporation eliminates its competition it becomes what is known as a "monopoly."

Monopolies took several organization forms which are outlined below:

Holding Company:

Sells stock in itself and then buys competitors.



Two or more corporations united to form a single unit. Usually one corporation Would buy the others stock.



Stockholders of several competing corporations turn in their stock to trustees in exchange for a trust certificate entitling them to a dividend. Trustees ran the companies as if they were one.

Interlocking directorates

Directors of one firm serving on the boards of other similar firms.

To the public all monopolies were known simply as "trusts." These trusts has an enormous impact on the American economy. They became huge economic and political forces. They were able to manipulate price and quality without regard for the laws of supply and demand. Basic economic principles no longer applied They also wielded great political power. Trusts were extremely influential in Congress and in the Senate.

This political cartoon published The Verdict on July 10, 1899 by C. Gordon Moffat shows an America controlled by the trusts.


Some even accused the trusts of "buying" votes. Although many Americans still regarded men like John D. Rockefeller as "Captains of Industry," more and more people began to publicly question the tactics of the "Robber Barons." As trusts grew ever more powerful and wealth became concentrated in fewer and fewer hands, animosity towards the new businessmen and the new methods of doing business increased tremendously.

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