What happened to the Pinkerton Detective Agency? When, Why, and How did they lose power?

From the beginning, the Pinkertons were hired by companies to track down fugitives and to infiltrate organizations that were deemed dangerous, especially labor unions. They started in the 1850's, primarily working for private companies. They got their big break in 1861, when they alerted President Lincoln to assassination threats and stepped in to protect him. (There is doubt about whether there was ever an actual threat.) This led to lucrative government contracts for a company increasingly known for getting the job done. They also worked as private guards and investigators, such as for banks and railroads, in hunting down bandits. In 1871, the Pinkertons were hired by the newly-formed Department of Justice, tasked with "the detection and prosecution of those guilty of violating federal law."

At the same time, the Pinkertons developed a reputation for using any means necessary to get what they wanted, including using violence to gain confessions, lynching, faking evidence, and "false flag" incidents. The government became increasingly wary of their association with Pinkerton's, considering the negative press they were generating.

There was a series of brutal clashes between Pinkertons and strikers, coming to a head in the violence during the Homestead Strike of 1892. After the violence, public opinion went heavily against the Pinkertons. Seen as hired guns killing civilians, they were compared to the Hessian mercenaries during the Revolutionary War. The backlash led to the Anti-Pinkerton Act of 1893, which banned government use of anyone employed by "detective agencies" and specifically named the Pinkerton Detective Agency. Though this banned the government calling in Pinkerton's, the companies opposing the labor unions continued to hire them. The Pinkertons increasingly relied on strike breaking for work. "By 1936, 30 percent of the firm's business was made up of its industrial services, aside from providing uniformed guards and criminal investigation."

Then, from 1936-1941, the La Follett Civil Liberties Committee investigated the activity of the top detective agencies (including Pinkerton's) in anti-union practices. This brought a lot of negative light to the agency, and their work for the unions diminished. They mostly continued in private security work, consultation, and private investigation.

I think you would be interested in this article, which provides an excellent overview of the history of the company "From the Pinkertons to the PATRIOT Act: The Trajectory of Political Policing in the United States, 1870 to the Present": http://web.archive.org/web/20090729182154/http://geocities.com/travbailey/index.html

(If I'm off with any of my information, I welcome corrections.)