It was because of statist intervention in the market through the creations of various barriers to entry which allowed the monopolies and oligopolies to form.
I think that monopoly and oligopoly will form regardless if there isn't proper oversight and regulation. Can it occur with government help? Hell yes it can. Very easily. We currently have a very similar form of capitalism now, corporate capitalism which is in fact supported and proliferated through the State. I am not saying that it can't happen, that the government can't act improperly or that the government cannot encourage monopoly. I'm saying that monopoly doesn't necessarily need government to form.
They didn't just fund it they gave them 175 million acres of free land. Even if the competitors could afford to build competitive rail roads without governmental investment they would need to get the Feds to seed to them the public lands in the Western Territories which of course the state would not do as the government did not want competition because then they would have more trouble getting the bonds paid back by Southern Pacific. In a free market that unused public land would have been homesteaded the second someone invested labor into building a rail road track on them and there would have been much more competition between many different firms because no single firm could afford to produce the transcontinental railroad on their own without federal investment.
I mean, we can sit here and point out improper government action till the cows come home. I don't necessarily disagree with what you are saying. I am disagreeing with the assertion that monopoly/oligopoly cannot form without government. Government certainly has helped their buddies in high places a lot at the cost of actual competition. They have certainly acted improperly in the past, present, and future. I cannot and will not deny that. But people are saying monopoly takes the State, I don't see how that's true.
Once again J&L Steel was a regional competitor to Carnegie.
They existed, yes. They "competed" against Carnegie. But not on large scale, and they did not own as much of the supply and processing power that Carnegie held. They simply couldn't fully compete against Carnegie. They can establish a little niche, yes. And even with monopoly or even oligopoly, there is nothing which says a niche cannot be developed.
Monopolies simply can not form without governmental intervention, markets are simply to competitive to allow for sustained monopolies, that is without statist imposed barriers to entry.
Here's an interesting article on the subject:
http://mises.org/etexts/armentanomonopoly.pdf
I remain unconvinced. You've basically told me that monopoly cannot form without government intervention because of magic. I don't buy it. Why? What is they dynamic? What prevents a company from taking too much, what prevents them from using smear tactics, from using deceptive marketing, from using predatory pricing? Right now, rules and regulations prevent that. But without that, how do you prevent this? Saying "oh blah blah blah, competition" doesn't cut it. I need to see the actual servo which will prevent humans from acting like humans and that which can sustain actual free market capitalism. What we currently use to try to stop humans from being human is government force. We have fines, we have courts, we have regulations to ensure worker safety and proper wages. But lazzie-faire...none of that exists. So how do you exert that force? People aren't going to stop being people. And if you unbridled business to do whatever they want whenever they want it, they will act only in one way; increase profit. And they'll do whatever they can to do so. They'll have no choice. Now that you've removed all the outside force which can control that, how is it that in your ideal environment these things are controlled?
It's just like what happened in the banking sector before the collapse. Between Clinton and Bush, all proper regulation of loans and leveraging were removed. Some people knew the system was unsustainable; headed for a crash. But they could do nothing about it. Not when their competitors were out making money hand over fist. They too had to go make money hand over fist by any means possible. And they did, and they rode the wave to the breaking point. And now we're in a fine little mess.
No government regulation/oversight is just as bad as too much government regulation and oversight; maybe even more so.