Ivan Eland says that at the beginning of the 20th century 65% of the American economy functioned as trusts - steel, oil, railroads, banks, etc...
Do you know why this trust arrangement became so popular at that time?
Sure, companies could band together under these agreements modeled after the trusts created by Standard Oil. And these trusts were profitable as the larger business entities could more effectively lobby the government for favors. This behavior was particularly acute in the actions of the US Government in the "Bananna Republics" where it was effectively an agent for several large fruit interests.
The problem with the trusts was that the Progressives grabbed the historical narrative and through a series of power plays turned the media against the business trusts the largest of which was Standard Oil. The issue was not that they could band together to run up prices because every bit of evidence shows that the trusts lowered prices. As competition entered the marketplace the trust managers could not charge what they wanted and had to cut prices. There is no better example of this than Standard Oil where its 95% market share was down to 60% when the US Government broke it up in a power play by the Rothchilds, Morgan and their henchman Teddy Rosevelt made a power play for financial domination.
in a power play by the Rothchilds, Morgan
in a power play by the Rothchilds, Morgan
Now, this, I had not heard! Evidence?
My own pet project is considering the possibility that Rockefeller himself masterminded the breakup - after all, the companies doubled in value after breaking up - why?
Why weren't trusts popular before that? Any idea?
Prior to government power grab of the un-Civil War for Southern Independence, The US Federal Government was not in a position to hand out the favors. Of course after the un-Civil War the government had plenty of goodies to give out in terms of railroad land grants, pollution exemptions, tariffs, etc. In fact the un-Civil War began when the southerners go so mad over tariffs that they attacked non-Ft Sumpter.
Wheylous I don't know of anything written, but this is indeed the thesis that Rothbard adopts in his lecture series: The American Economy and the Death of Laissez-Faire. If you haven't listened to the whole thing, I strongly recommend you do.
The Anarch is to the Anarchist what the Monarch is to the Monarchist.
Jargon, I don't typically like listening to lectures, as I find reading to be much faster (and I can go over what I just read more easily), but I will have to give them a look.
In my research I have found the Rockefeller of Standard Oil to be quite upstanding. Then again, we know that he also contributed to the formation of the Fed, so his early free-market days might have been soured by the repeated threat of government against him. I hope we may someday find out.
Keep in mind that S.O. was in bed with the Kuhn Loeb banking house (germans) and Harriman family, who were struggling with the Morgans (british) for economic clout in the states. Harriman's offered rebates to S.O., and much of the Harriman and Kuhn Loeb Railroad empire was born of land and credit extravaganzas from the public purse. Though S.O. was overwhelmingly a force for good in crushing down the price of refined oil, don't assume that they weren't trying their damnedest to succeed by political means. As JD Rockefeller is famously known for saying: "Competition is a sin." And don't forget the tariffs on oil, mostly set up by McKinley.
Yes, I mention the tariffs and patents here:
but I didn't know of the other things you mentioned. Where did you learn them?
Rothbard lectures and various internet learnings.
According to Reisman, the reason for the popularity of the trusts at this time was that:
1° The corporations were just made easier to create (no longer any need of special authorization by the legislature), while mergers were still very complex to realize ;
2° With the developpment of steam machines, transports become more efficient, so a lot of previously unattainable scale economies became available.
Moreover, a related issue, namely the "Great Merger Wave" of the years 1898-1902, which is usually viewed as the reason for the Clayton antimergers Act (previoulsy, only "collusions" were prohibited), is said to have been caused by... the antitrust policy. Indeed, juste before the beginning of the Wave, the Suprem Court held that mergers were not concerned by the Sherman Act. So, a lot of trusts were replaced by mergers. See "Did Antitrust Policy Cause the Great Merger Wave?", by George Bittlingmayer.
Thanks Raoul, very interesting.