THE RISE OF BIG
BUSINESS:
VANDERBILT AND
THE RAILROADS
APUSH – SPICONARDI
THE COMMODORE
Cornelius Vanderbilt
• Railroad tycoon known as the
Commodore
• Purchased massive amounts of
stock in Railroad companies to
take them over
• Controlled all the railroad lines
into Manhattan
• New York Central and
Hudson, Harlem, New Haven
lines
• Known as a ruthless business
man
• Wound up buying most of
the rail lines between
Buffalo and Chicago
GRAND CENTRAL
DEPOT
THE RAILROAD
BUSINESS MODEL
Rebates  a special discount given to a railroad company’s best
customers
• If a shipper promised to exclusively use a railroad company, they
would be granted the special low freight rate
• This allowed a shipper to undercut their competitors
• Smaller railroad companies and shipping companies would go
out of business due to rebates
Pools  Railroad companies in the same market would agree to
divide up business to avoid competition
• This led to price fixing
• Price fixing  Railroad companies would conspire to charge the
same high shipping rates to customers
THE GRANGE
MOVEMENT
National Grange of the Patrons of
Husbandry
• Organization formed in 1867 to
support western farmers
• Provided opportunities for
leisure and social activities to
end isolation
• Established banks and
insurance companies to assist
farmers
• Lobbied federal government
for laws to protect farmers’
interests from big business
• Wanted fair freight rates
and warehouse storage
fees
• Led to the development of
Greenback Party, Farmer’s
Alliance, and Populist movement
MUNN V. ILLINOIS
(1877)
• The Supreme Court ruled that states could regulate
businesses “clothed in the public interest”
• Examples: Railroads and grain elevators
• Some justices feared to many regulations would impede
business and hurt the marketplace
WABASH, ST. LOUIS & PACIFIC
UNION RAILROAD V. ILLINOIS (1886)
• The Supreme Court reverses the Munn v. Illinois decision.
• Only the federal government could regulate railroads
engaged in interstate trade
• Applied the Fourteenth Amendment towards corporations
•
•
No state can “deprive any person of life, liberty, or property
without due process of the law”
Yet, the court wouldn’t use this amendment to protect the
rights of blacks
INTERSTATE COMMERCE ACT
OF 1887
•
In response to Wabash v. Illinois, the
federal government passed the
Interstate Commerce Act
•
The Act
The federal government could
oversee railroad activities
• Required the railroads to publicize
their rates and file them with the
federal government
• Rates must be “reasonable and
just”
The Interstate Commerce Act had no
real power until Theodore Roosevelt
•
•