Of the wartime and postwar Congress, shorn of Southern statesmen, author Richard Hofstadter wrote: “Before business learned to buy statesmen at wholesale, it had to buy privileges at retail.” Railroad promoters actively lobbied for land grants and other subsidies at every level of government, while choruses of Northern manufacturers demanded tariff protection from foreign competitors. The American Third Republic ended with war in 1861, waged against a new Southern agrarian republic seeking peace and prosperity for its people. With its war of independence lost, the South became a poor economic colony within a foreign political arrangement dominated by corporate interests allied with an all-powerful central government.
Dark Forces Unleashed by War
“After the Civil War several transcontinental railroads, all but the Great Northern the beneficiaries of federal land grants, were completed. Chastened by scandals connected with the government’s subsidization of these enterprises, Congress made no new land grants after 1871, but in the nostrils of many people the odor of something rotten – corruption and special, unwarranted privilege at the expense of the general public – lingered about the land-grant railroads for decades.
After the 1870s, growing numbers of huge manufacturing corporations, including such still-familiar firms as Standard Oil, Bethlehem, American Tobacco, and Armour, achieved prominence. People accustomed to dealing with small locally-owned firms had difficulty in reconciling themselves to an economy in which such corporate behemoths did much of the nation’s business.
The great corporations, known to contemporaries as “trusts” though only a few were every trusts in the strict legal sense, raised the specter of monopoly power in the market. American public opinion and legal tradition had long been hostile toward monopolies. Conspiracies in restraint of trade were unquestionably illegal under the common law.
Unsuccessful competitors complained bitterly that the “monopolists” were driving them to the wall. Customers frequently objected to real or imagined price discrimination. More than anything else, rate discrimination provoked the outrage of Midwestern shippers against the railroads. Often the criticism of a big corporation’s alleged monopoly power could be deflected by showing that the firm produced better products or services in growing volumes at ever lower prices.
But this defense, even if appropriate, did nothing to allay the charge that the great corporations subverted the democratic political process. “Corruption,” charged the Populists in the preamble to their platform of 1892, “dominates the ballot-box, the Legislatures, the Congress, and touches even the ermine of the bench.” Henry B. Brown, an associate justice of the US Supreme Court, told the Yale law students in 1895 that “[b]ribery and corruption are as universal as to threaten the very structure of society.”
(Crisis and Leviathan: Critical Episodes in the Growth of American Government, Robert Higgs, Oxford University Press, 1987, excerpts pp. 80-81)