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. 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...