The Market Revolution, Industrialization, and New Technologies

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What was one of the problems faced by farmers in the late 1800s regarding railroads?

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Railroads were a chief focus of complaint by farmers in the late nineteenth century. One of the first famers's cooperative groups formed after the Civil War, called The Grange or Patrons of Husbandry, was founded specifically to address farmers's problems with the railroads.

In a nutshell, farmers were upset with the high charges the railroads imposed on them to ship farm goods to market. They argued that since a single railroad often had a monopoly over certain lines, the lack of competition lead to price gouging. As the farmers had no choice but to ship their products using the railway that might be available, the railroad company could charge whatever it wanted. (Today, we have similar fears over our equivalent of railway lines—the internet—and the outsized power of companies like Google and Amazon to set high prices for access.) This price gouging, the farmers said, was unfair. They petitioned for the government to nationalize (take over and run) the railroads and charge fair prices.

The complaints of the organized farm societies against the railroads had a lasting impact on the United States. Rather than socialize the railroads, the government regulated private capital. In 1887, for instance, Congress passed the landmark Interstate Commerce Act, which took regulatory power from the railways out of the hands of states and put the federal government in charge of regulating long distance rail shipping. Another significant piece of legislation was the Sherman Antitrust Act of 1890, which ended the legal right of a business to operate as a monopoly and led to the breakup of existing monopolies. The antitrust act also forbade companies to collude or work together to fix prices.

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Farmers had problems with the railroads in the late 1800s. The farmers believed they weren’t being treated fairly or equally by the railroad companies. Farmers were unhappy that the railroad companies wouldn’t give them rebates for shipping their products on the trains. The farmers knew that other businesses were given rebates by the railroad companies.

Frustrated by this perceived unfair treatment, farmers turned to groups such as the Populist Party to try to address their concerns. The farmers wanted the government to take over the operation of the railroad companies so they could get better treatment. The farmers were in a tough situation since they really needed to ship their products by train. The railroad companies understood this and saw no reason to give the farmers a discount or rebate for shipping their products on the trains. The railroad companies were more concerned with losing the shipping of industrial products than they were with losing the shipping of agricultural products. Thus, the railroad companies were more willing to cut deals with big businesses.

While the farmers blamed railroad companies and banks for their problems, there were other issues, such as overproduction, that also hurt the farmers and their overall financial picture.

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One way to complete this sentence would be to say “had monopolies in the markets for hauling crops.” Farmers felt this was a major problem for them.

During the late 1800s, farmers had serious economic problems. Most of their problems were actually caused by the fact that they were becoming too productive. They were producing too much, which cause prices to go down.  The farmers did not really want to admit this, however. Instead, they blamed the railroads, among other factors.

The farmers felt the railroads had monopoly power over them. The farmers essentially had no choice but to send their crops to market on trains. There was not much, if any, competition on most short-line tracks that went through farm areas. Therefore, most farmers had to simply accept whatever price railroads charged to transport crops. Farmers felt the railroads could gouge them by charging high prices and that they, the farmers, had no recourse when this happened. They blamed much of their trouble on this monopoly power.

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