The Federal Government for many years did nothing to stop or help the creation of monopolies, which was a new factor in the American Economy, and not till things got extremely bad with wealth being strung extremely thin in the lower and middle classes did they decide to change things around. It took time to both change the laws and get the trust of the American people back.
For example, “In the thirty years leading up to the Civil War, the law was increasingly interpreted in the courts to suit the capitalist development of the country. Mill owners were given the legal right to destroy other people’s property by flood to carry on their business. The law of ‘eminent domain’ was used to take farmers’ land and give it to canal companies or railroad companies as subsidies.” (Zinn, 175) Corporations were thus seen as getting special privileges to what they wanted above anyone else’s needs small business or single citizen. “By the middle of the nineteenth century the legal system had been reshaped to the advantage of men of commerce and industry at the expense of farmers, workers, consumers, and other less powerful groups within the society…. It actively promoted a legal redistribution of wealth against the weakest groups in the society.” (Zinn , 175) Corporations, with the government backing them, were running rampant on the American people with the nothing they could do.
Thus “Many Americans distrusted corporate charters as a form of government-granted special privileges. But the courts upheld their validity, while opposing efforts by established firms to limit competition from newcomers.” (Foner, 322) An example of the courts favoring the corporations, one can find it in the court case of Dartmouth College v. Woodward, where the supreme court defined corporate charters issued by state legislature as contracts, which future lawmakers could not alter of rescind. However, 5 years later, in the court case Gibbons v. Ogden, the court struck down a monopoly the New York Legislature had granted for steamboat navigation even though corporate charters were viewed as contracts that future lawmakers could not alter via the 5 year previous court case. This just goes to show that corporations were a very confusing subject in the legislature because they had so much pull on what was passed while lawmakers had to attempt to appease both the corporations and the people. This attempt at appeasement, however, did not work for a majority of the time because the pressure that was put on the government by the corporation to keep the economy growing even if it meant people were suffering. The corporation ‘owners’ pockets were getting deeper and deeper as they gained more and more money and left much of the rest of the country homeless and without food. Zinn describes this best, “In 1873, another economic crisis devastated the nation. The crisis was built into a system that was chaotic in its nature, in which only the very rich were secure. It was a system of periodic crisis… that wiped out small businesses and brought cold, hunger, and death to working people while the fortunes of the Astors, Vanderbilts, Rockefellers, Morgans, kept growing through war and peace, crisis and recovery. During the 1873 crisis, Andrew Carnegie was capturing the steel market, John D. Rockefeller was wiping out his competitors in oil.”(Zinn, 177) Not until the passing of the Sherman Anti-trust Act did these kind of corporate monopolies end.
In the end with how the corporations conducted themselves with the governments help they only passed laws to control monopolization of a certain economy, however, corporations still exist and still have much of the government help in what they do. One could possibly say that corporations make most of the economic decisions passed in the legislature today to help themselves and the money they make besides monetary policy. “A corporate firm enjoys special privileges and powers granted in a charter from the government, among them that investors and directors are not personally liable for the company’s debts. Unlike companies owned by an individual, family, or limited partnership, in other words, a corporation can fail without ruining its directors and stockholders. Corporations were therefore able to raise far more capital than these traditional forms of enterprise.” (Foner, 322)
Sources Cited:
1. Zinn, Howard. A People's History of the United States: 1492 - Present. New York, NY: HarperCollins, 2008. Print.
2. Foner, Eric. Give Me Liberty!: an American History. New York: W.W. Norton &, 2009. Print.
