The Growing Economic Crisis of the Late Nineteenth Century Essay Sample

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1. What did John D. Rockefeller believe was the key to stabilizing the oil industry? He believed that centralizing the administration, hard-working people that applied themselves and work together, and a monopoly – owning as much as they can – would stabilize the oil industry.

2. What were the weaknesses of each of the following methods of stabilizing the industry? a. Agreement: agreement was when each competitor agreed to certain standard prices and policies, but it was easily and quickly broken because people did not keep their promises ad people saw the chance to undersell the rival. b. Pool: the pool was broken when a member saw the chance to grab off a large order or preempt a certain field, people only thought about themselves. c. Interlocking directorate: interlocking directorate was cumbersome, but was the most successful of threats, and is still sometimes used today. But it was to complex. 3. Why did Rockefeller perceive a trust to be a solution to the weakness of less formal attempts at business organization? Rockefeller believed that if the industrial system in America was good, that other things would fall into place and be helpful to America. A written agreement was harder to break. Part B.

4. Explain why economists use the phrase “business cycle” to describe the economic activity show in Document D. The system of the business cycle shows how business does during certain periods of time and also how it repeats itself. The cycle is not stable, is ever changing, and endless.

5. Explain how daily wages in 1873 and 1897 relate to points on the graph of the business cycle. In the graph it shows the year 1873 as a industrial overexpansion boom and 1879 as the midpoint of secondary postwar expansion and the gold-resumption boom. The chart is the recording of the nonfarm employees and as the businesses made less money, the wages went lower as well, and vice versa. The graph shows the decline in daily wages and the chart shows the information

6. Explain how prices of coal, steel rails, and copper in 1871, 1876, and 1879 relate to points on the graph of the business cycle. The graph shows in 1871 there was an industrial overexpansion boom that resulted in the production of railroads; this called for more materials and caused the increase in price for the steel rails in the Document F chart. In 1876 there was there was the secondary post war depression causing things to go under causing the price of items to decline, causing the lower copper and steel rail prices in the chart. And in 1879 there was the gold resumption boom caused the prices to go down. All in all the prices of coal went down because of the over expansion, which led to less money being made to pay the employees, causing the rates to go up and down. 7. From the documents, what inferences can you make about the “disastrous effects of the business cycle” for each group below: d. Corporations: when the price of products went down, the more of the product that was made. But the cycle got better during the “War Boom”, but went down during the “post war depression.” e. Workers: the workers were given less money when the prices of the goods decreased. Part C.

8. In what way do the above documents on labor union membership and the Knights of Labor philosophy reflect concerns of J.P. Morgan? The chart shows the rising number of workers, but an unstable number of union members, so the growth of the union membership was best in the 1920’s but then a major turn for the worst occurred in the 1930’s. Workers became more reliant on the government and became more socialist. Part D.

9. Even though Congress passed antitrust legislation, why did corporate leaders try to retain the concept of the trust? The corporate leaders though that the system of antitrust was beneficial to them because it gave them lots of money and power.

10. How did corporate leaders hope to maintain the essence of trusts? Corporate leaders came from political backgrounds were they were familiar with the systems; they bought stock together, and had many political concerns because of precious jobs.

11. How does the relationship of Board of Trustees to a trust (Document K) differ from the relationship of a Board of Directors to a holding company (Document L)? The Board of Trustees had a house that did own any stock, but was in control and companies vote or have stock. While the Board of Directors had one major company, and let two lower companies that each own two other companies.

12. Research why the Fourteenth Amendment was used to protect a holding company but not a trust. The Fourteenth Amendment protected against holding companies more directly with citizens, it had trust for large companies, and business was treated as a person with rights and views. Part E.

13. In what respect has the government adopted a broader perspective of economic problems than did J.P. Morgan? The government saw that need for jobs so they wanted more workers and was concerned with the public. While J.P. Morgan thought less workers would help the economy and was concerned with businesses.

14. How much economic freedom should society give to an individual to seek his or her own ends to the detriment of others? There should be lots of economic freedom so that we can make our own choices and mistakes, chose what is best for ourselves, and others around us. But not too much freedom because it could be taken to an extreme.

15. In what respect do the actions of the government in the twentieth century reflect the failure of J. P. Morgan’s philosophy of holding companies? The twentieth century had a lot of job opportunities, union, government treaties, and helped the unemployed as much as they could. It kept high wages and the government regulated more.

16. To conclude this lesson, write a thesis statement that explains why Morgan’s approach to organizing the economy has not been accepted in the twentieth century? Morgan’s ideas ultimately hurt the economy; they included believing that less competition would lead to problems and help the “business cycle.”

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