The period following Reconstruction until the 1920s was a time of economic instability. Business owners feared the ups and downs of capitalism, and, to prevent these kinds of economic shocks, they formed monopolies, or corporations that controlled an entire industry. Businesses created monopolies through vertical integration, or controlling each step in the process of creating a finished good (such as the mines from which coal was extracted, the ships on which coal was carried, etc.) and horizontal integration, which refers to controlling an entire industry.

On the other hand, labor struggled with low wages, instability in employment, and dangerous working conditions. As a measure to find some stability, workers started unions. The first was the Knights of Labor, followed later by the American Federation of Labor (AFL). Farmers also struggled with droughts, debt, and instability in the prices of their crops. To remedy this type of instability, farmers founded the Populist party, also called the People's Party. Their goal was to band together to prevent middlemen from taking too much of their profits and to prevent railroads from charging exorbitant rates. During Teddy Roosevelt's presidency, many of the changes requested by labor and farmers, such as regulating railroads and curbing monopolies, began to be carried out by the federal government.