Laissez-Faire The American Civil War fades away.
It now appears that a new social unrest has taken root in America. But the debate was to be fought in the economic world. The question was, how should the government interact with business? The issue splits into two main views, that of Laissez-faire, and that of General Welfare. Laissez-faire is a rather straight-forward philosophy. It can be best described by saying that the government should have absolutely no interaction within the business world. These thinkers trust that the governments sole purpose is to protect life and property, and that the role of government should end there.The tree of Laissez-faire has many branches, two of which are classical economics and Social Darwinism. Believers in classical economics base most of their philosophy on mercantilism and its effects.
They have no doubt that government interaction with the business world is inept, and can only hurt economic growth. Social Darwinism was a popular belief. It grew from studies of Charles Darwin, and his publication, The Origin of Species. Charles Darwin argued that species had not been created, but had evolved. But most importantly to the philosophy of Social Darwinism, Darwin theorized that evolution takes place by survival of the fittest.It was that idea in s! urvival of the fittest that became the backbone for Social Darwinists.
The Social Darwinists believed that the involvement of government in business interfered with the natural selection of those that were best suited to survive.(Lesson14 74) On the other side of the issue was the general welfare state. The philosophy of the general welfare state, called the Social Gospel, was advocated in part by Christians in the United States. They believed that individuality had gone too far and that it was necessary for government involvement. Increased urbanization and industrialization also led to the belief in the general welfare state.
It was the opinion of these thinkers that laissez-faire was not the answer to the problems of economics.(Lesson14 74) Laissez-faire may have been a significant step in the evolution of economics to many people, but there were also many silent threats that it carried. Without government protection, big business can exploit the many people that make it work.
Such exploitation could be brought about in low wages and poor working conditions, long working hours, and many others. Many believed that government protection was needed to insure fair competition and high standards of morality. In the 1860s oil became more and more essential as an everyday item.Its demand grew dramatically. The main use at that time for oil was kerosene. Kerosene was used in several ways, although its most popular use was in lamps.
Crude oil needs to be refined to produce products such as Kerosene. Pennsylvania was the main location that oil refining was done in the 1860s, but times were changing. The Lake Shore Railroad helped Cleveland become one of the new centers for oil refining.
It was obvious that the railroads were invaluable to the oil business.In the new refining city of Cleveland, Ohio, a new refining company was created. This company was the Standard Oil Company, owned primarily by John D. Rockefeller.(Lesson16 95) John D.
Rockefeller is a legend of the business world. He started a relatively small oil refinery in Cleveland, Ohio in 1870. In just two years, it grew into an enormous monopoly, producing ninety percent of the nations refined oil (Chapter4 15).His business ethics have been hotly debated because of many apparent rebates and other schemes.
The Standard Oil Companys success can be attributed to Rockefellers business aptitude. Aside from his great business qualities, the Standard Oil Companys success in the oil industry is because of the secret illegal rebates by the railroads. A rebate in the railroad business is a reduction in shipping fares in exchange for promised use of the railroads services.
These rebates were brought about through the South Improvement Company, which was set up in 1872 (Lesson16 96).The South Improvement Company was designed with one mission, to destroy all competition to the Standard Oil Company, and other companies that were part of the South Improvement Company. It was started by several large corporations, including the Standard Oil Company. Rockefeller is reported to have met with other oil businesses and tell them that if they do not join the South Improvement Company, they will be wiped out of business due to the lower shipping rates given to the South Improvement Company (Lesson16 96).
Eventually the public gained knowledge of this conspiracy through . After nonstop opposition, the railroads eventually gave in and stooped giving the rebates. The South Improvement Company collapsed in April of 1872, and the Congressional Committee on Commerce denounced it as one of the most gigantic and dangerous conspiracies ever committed (Lesson16 97).After the failure of the South Improvement Company, the Standard Oil Company also tried secret pacts and bribing. Rockefellers objective was to keep the price of crude oil down. If he could buy oil at cheap prices, transport it at low rates, and could sell the refined oil at high prices, he could make enormous profits. Through his deceiving ways, Rockefeller turned the Standard Oil Company to one of the most famous monopolies of all time. He had turned the oil refining industry away from free market competition and towards monopolization.
Ida Tarbell, lady journalist and famous muckraker, became John D. Rockefellers greatest nemesis.As a journalist for the popular McClures Magazine, Ida Tarbell was hired by S.S. McClure at the age of thirty-seven. She became an immediate sensation with readers. By 1900 McClures was reaching 350,000 homes thanks to her.
She became known for her biography on Napoleon, and then her series on Abraham Lincoln, which took her four years of research.But she earned her place in the history books for her pursuit of the Standard Oil Company, and the Famous Tycoon that ran it, John D. Rockefeller. In the October, 1902 issue of McClures Magazine Ida announced that she had finished her research on the most perfectly developed trust in existence (The Gentlewomen and the Robber Barron 185). For two years and in eighteen installments, Ida Tarbell revealed the scandalous nature of the Standard Oil Company and its primary owner, John Rockefeller.
She gained her knowledge of the monopoly, through interviews with business people with first-hand knowledge o …