In the game of Monopoly, a player that buys all properties of a same color and then starts building houses and hotels on those properties can become quite wealthy. Why? Because other players have to pay the owner every time they land on one of those properties. Getting a monopoly in the game is a lot of fun, but monopolies in life are not so much fun.

The Growth of Monopolies

Competition between businesses occurs when several companies offer a similar service or product. When there are a number of companies competing, the companies keep the cost of that service or product low to attract customers. When several companies come together and are managed by the same board of directors, a trust is formed. Trusts can create monopolies in which a single producer of a good or service has total control of that industry. No competition occurs in a monopoly because there is no other company to force prices lower. The monopoly can then set higher prices than it would if there were competing companies.

The rapid growth of railroads resulted in the rise of both trusts and monopolies in the United States during the late 1800s. The demand for steel railroad track, for example, made Andrew Carnegie wealthy because he owned the mines supplying the raw materials and the factories producing the steel.

Business deals resulted in the exclusive use of a few railroads by sugar trusts, oil trusts, and other trusts. These trusts, in turn, paid lower rates for shipping their products. As a result, competition decreased, and a few railroad companies profited handsomely, as did many trusts.