Monopoly

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Sherman, John (01).jpg
Carte de visite portrait of John Sherman, 1862. He served in the United States House of Representatives from 1855 - 1861. He was elected United States Senator from Ohio in 1861 to fill the Senate seat left vacant by Salmon P. Chase.

During the late nineteenth and early twentieth centuries, businesses aspired to form monopolies. To have a monopoly, a business would be the sole manufacturer of a product or be able to dominate a particular industry because it could produce so much more of a product than its competitors.

Businesses sought to create monopolies for numerous reasons. First, a monopoly limited or prevented competition. Businesses would not have to compete with other firms for consumers. Second, if a business had a monopoly and faced no competition, it could fix prices for its product. Consumers would not have an alternative source for the product and, thus, would have to buy from the monopoly. Third, labor costs generally decline within a monopoly. Workers skilled in a trade that had become monopolized were forced to work for whatever wages the monopoly was willing to pay.

During the late 1800s, numerous monopolies existed in the United States. One of the most powerful monopolies was that of the Standard Oil Company, founded by John D. Rockefeller and based in Cleveland, Ohio. While Rockefeller faced some competition from other firms, he was able to dictate prices due to the size of his firm. The Standard Oil Company dominated the oil industry throughout the late nineteenth and early twentieth centuries.

American citizens and some government leaders commonly opposed monopolies. This held true for Ohioans as well. United States Senator John Sherman, an Ohioan, attained the passage of the Sherman Anti-Trust Act in 1890. This legislation authorized the federal government to break up any businesses that prohibited competition. The federal government utilized this legislation throughout the late 1800s and the 1900s to break up monopolies, including that of the Standard Oil Company in 1911. Ohio government officials also battled against monopolies. In 1892, Ohio's attorney general filed suit against Rockefeller and his company. While Ohio won the case, Standard Oil appealed the decision and continued to have a virtual monopoly over the oil industry until 1911.

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