THE RISE OF BIG BUSINESS: VANDERBILT AND THE RAILROADSAPUSH – SPICONARDI

THE COMMODORE

Cornelius Vanderbilt• Railroad tycoon known as the

Commodore• Purchased massive amounts of

stock in Railroad companies to take them over• Controlled all the railroad lines

into Manhattan • New York Central and Hudson,

Harlem, New Haven lines

• Known as a ruthless business man

• Wound up buying most of the rail lines between Buffalo and Chicago

GRAND CENTRAL DEPOT

THE RAILROAD BUSINESS MODEL

Rebates a special discount given to a railroad company’s best customers

• If a shipper promised to exclusively use a railroad company, they would be granted the special low freight rate• This allowed a shipper to undercut their competitors

• Smaller railroad companies and shipping companies would go out of business due to rebates

Pools Railroad companies in the same market would agree to divide up business to avoid competition

• This led to price fixing• Price fixing Railroad companies would conspire to charge the

same high shipping rates to customers

THE GRANGE MOVEMENT

National Grange of the Patrons of Husbandry

• Organization formed in 1867 to support western farmers

• Provided opportunities for leisure and social activities to end isolation

• Established banks and insurance companies to assist farmers

• Lobbied federal government for laws to protect farmers’ interests from big business• Wanted fair freight rates

and warehouse storage fees

• Led to the development of Greenback Party, Farmer’s Alliance, and Populist movement

MUNN V. ILLINOIS (1877)• The Supreme Court ruled that states could regulate

businesses “clothed in the public interest”

• Examples: Railroads and grain elevators• Some justices feared to many regulations would impede

business and hurt the marketplace

WABASH, ST. LOUIS & PACIFIC UNION RAILROAD V. ILLINOIS (1886)• The Supreme Court reverses the Munn v. Illinois decision.

• Only the federal government could regulate railroads engaged in interstate trade

• Applied the Fourteenth Amendment towards corporations• No state can “deprive any person of life, liberty, or property

without due process of the law”• Yet, the court wouldn’t use this amendment to protect the

rights of blacks

INTERSTATE COMMERCE ACT OF 1887• In response to Wabash v. Illinois, the

federal government passed the Interstate Commerce Act

• The Act

• The federal government could oversee railroad activities

• Required the railroads to publicize their rates and file them with the federal government

• Rates must be “reasonable and just”

• The Interstate Commerce Act had no real power until Theodore Roosevelt