Final answer:
Trusts and monopolies greatly affected the American economy by enabling large corporations to control entire industries and accumulate vast wealth, which led to the rich becoming richer and small businesses struggling to compete. Public concerns about these monopolies prompted government intervention through legislation like the Sherman Anti-Trust Act, aimed at dissolving trusts and promoting fair competition.
Step-by-step explanation:
The effect of trusts and monopolies on the American economy was multifaceted. First, big businesses grew to a size where they not only controlled all aspects of an industry, such as raw materials and production, but also wielded significant influence within the government. These businesses, through their wealth, could suppress or buy out competition, leading to a landscape where small, local businesses had a hard time thriving. Consequently, this consolidation of power led to the rise of rich businessmen, often referred to as tycoons or barons, who amassed wealth on an unprecedented scale. However, these monopolistic activities also caused concern about their impact on markets and politics, eventually prompting government intervention. The Sherman Anti-Trust Act of 1890 was a legislative response aimed at curbing these trusts and ensuring a freer market. Government interventions did not stop there. As the Progressive Era took shape, new regulations and laws were established to break up monopolies and control how key industries operated. These actions were largely in response to public demand for checks on the growing power of corporate interests, aiming to maintain a balance and prevent oligarchical control.