The Roots Of Monopoly

If Bill Gates had been alive and doing his thing at the dawn of the 20th Century instead of at the end of it, he still would have been the target of the anti-monopoly zealots in Washington. The big difference, however, is that in those days he would have had plenty of super-rich companions with whom he could have shared his irritation.

In the early years of the republic, monopoly and big business and similar buzzwords were not part of the American vocabulary. That's because the United States was then largely an agrarian nation made up of farms and small towns. Even its cities were of moderate size with moderate resources.

The Industrial Revolution that swept across Northern Europe in the first half of the 19th Century did not move into high gear on this side of the Atlantic until after the Civil War. But once it caught fire on American soil, it transformed the country with stunning force.

Mark Twain called it The Gilded Age (the title of one of his early satires, published in 1873) and the term perfectly described that era of rapacious business tycoons who amassed great fortunes in an incredibly short time.

They were the founding fathers of unrestrained capitalism in America, and their names are enshrined in the Hall of Fame of Big Business: John D. Rockefeller (oil), Andrew Carnegie (steel), J.P. Morgan (banking), Henry Clay Frick (coal and steel), Meyer Guggenheim (mining), E.H. Harriman (railroads), and Leland Stanford (also railroads).

These and other financial giants of the Gilded Age would later come to be known — at least to their critics — as the Robber Barons.

Their conflict with the federal government came when some of the barons began to form trusts or monopolies. Their goal, of course, was to choke off competition and assure themselves of even greater profits.

The bold steps they took to tighten their control of entire industries aroused the wrath of farmers and small businessmen and consumers in general, and they clamored for the federal government to take corrective action.

Responding to the pressure, Congress passed the Sherman Antitrust Act in 1890. But even after the measure was signed into law, there was, at first, little effort to enforce it. The three Presidents who reigned in the 1890s — Benjamin Harrison, Grover Cleveland, and William McKinley — were not especially eager to offend the most powerful titans of American business.

As a result, the monopoly kings continued to have their own way until 1901 when that dynamic firebrand Theodore Roosevelt moved into the White House. That's when they met their Waterloo.

It was Teddy Roosevelt who said the Presidency should be a "bully pulpit." So, with that serving as his forum and the Sherman Antitrust Act as his weapon, he declared war on the monopolies.

His first major target was the powerful railroad trust that had been formed by Rockefeller, J.P. Morgan, and E.H. Harriman. A lawsuit was filed, anthe case went all the way to the Supreme Court, which supported Roosevelt's contention that the railroad combine violated the Antitrust Act.

The Court ordered the company to dissolve, and spurred by that victory, Roosevelt went on the attack against other unpopular trusts — the beef trust, the oil trust, and the tobacco trust.

Roosevelt's antitrust crusade was so decisive that ever since then, the words monopoly and trust have generally been regarded as pejorative terms, even though a few have been allowed to exist from time to time.

So that's the history that Microsoft is up against in its fight with the federal government. And Bill Gates can thank his lucky megabytes that he doesn't have to square off against Teddy Roosevelt and his bully pulpit.

Written by Gary Paul Gates.
Associate Producer Adam S. Gaynor.
Design by Jerry Donnelly