The Growing Economic Crisis of the Late Nineteenth Century
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.
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... [continues]
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