Chapter 17 Quiz Answers
Railroads created a national market, which in turn allowed businesses to expand
from local interests to a nationwide scale. Also, the need for better rails to carry
freight helped speed the transition from iron to steel.
Gould made money by purchasing enough stock in vulnerable, failing railroad
companies to take control of them, and then threatening to undercut his
competitors, forcing them to buy him out at a high profit. Not only did he not
provide much in the way of freight or passenger service, the railroads he bought
often went bankrupt.
Congress gave away vast amounts of public land to railroad companies to promote
building. Companies got both rights-of-way and liberal sections of land on
alternating sides of the track to do with as they liked. Over the years, the federal
government granted 180 million acres of land to railroad builders.
Rockefeller used the trust, a form of horizontal integration, to give his monopoly a
more secure legal standing. Under this system, several trustees would hold stock
in refineries for Standard Oil's stockholders. The union was thus one of
stockholders, not corporations, and could act together without technically
violating the monopoly laws.
By the late nineteenth century, banks and financiers became major business
investors. They reshaped business as well, consolidating several major industries
to increase efficiency and minimize competition.
Morgan issued new stock to keep old investors happy and guarantee profits, while
acquiring large blocks of stock himself. This created overcapitalization, which
harmed railroads by saddling them with enormous debts. In addition, because the
directors Morgan appointed were bankers rather than railroad men, their
accounting viewpoint discouraged technological innovation.
Sumner was a professor of political economy at Yale University. Like other strict
social Darwinists, Sumner insisted that the government should not meddle in the
economy in any way whatsoever. This meant that the government should refuse to
help the poor but also that it should not protect the rich by means of things like
protective tariffs. This angered wealthy Yale alumni and other businessmen, who
benefited from such practices.
The Fourteenth Amendment was intended to protect freed slaves by declaring that
states could not "deprive any person of life, liberty, or property, without due
process of law." By defining corporations as persons, the court struck down
regulatory laws and income taxes and defined labor unions as conspiracies.
Patronage secured both high voter participation and party loyalty by providing