“… a circular marked “Private and Confidential” was issued by the three banking houses of Drexel, Morgan & Company, Brown Brothers & Company, and Kidder, Peabody & Company. The most painstaking care was exercised that this document should not find its way into the press or otherwise become public…. Why this fear? Because the circular was an invitation … to the great railroad magnates to assemble at Morgan’s house, No. 219 Madison Avenue, there to form, in the phrase of the day, an iron-clad combination. … a compact which would efface competition among certain railroads, and unite those interests in an agreement by which the people of the United States would be bled even more effectively than before.” (Zinn,256)
At this time, the emergence of oligopolies was considered a feat of financial ingenuity, as well as the bane of consumers and workers. For so long companies had been competing to get the most customers and to reap the highest profits. Eventually, they discovered the path to success, while counterintuitive, was to collude so they could focus on manipulating their consumers and workers for higher profits. Zinn believed that the railroad magnates coming together sealed the fate of Americans: the tycoons and their corporations would go uncontested while the working class would inevitably suffer through cruel conditions. The title of the era as “The Gilded Age” is fitting as a select few reached unparalleled heights of success while underneath, most Americans lived through the harshest conditions. Saying the working class “would be bled even more effectively than before” was not just a metaphor. In 1889 alone, over 22,000 railroad workers were killed or injured. Because the companies were working together, workers could not seek better wages or working conditions at a different company. Such became the case with most labor jobs. On top of paying meager wages, these companies would charge exorbitant prices thereby effectively putting these wages back in their own bank accounts. As a result, these companies owned and controlled Americans.
Soon companies gained control of Americans not just on an individual level but on a federal level. The United States government stood by and allowed the greedy corporations to operate while infringing upon the rights and well-being of Americans. Zinn compares the government at this time to a Marxist definition of a capitalist state, “pretending neutrality to maintain order but serving the interests of the rich.” (Zinn,258) Under Grover Clevelend, the Federal bank had ran out of gold reserves. The large private banks working together saw this economic vulnerability as an opportunity for growth and took control over millions in government bonds. The government’s dependence on big banks became clear as it served to protect the interest of these banks as opposed to its constituents. Thus these industries were able to operate with little to no accountability and regulations. By working together, the heads of the banking, oil, steel and railroad industries earned a lasting influence on America.