Why were baseball players paid so little before 1900?

Answer 1

Other than the obvious, that the dollar could buy more in 1900 than it can today, the main reason was something called the 'reserve clause'.

The reserve clause was a standard paragraph in every player's contract that stated when the contract had expired the team 'reserved' the rights to the player. This meant that, although the player was not under contract with the team, they could not negotiate with other teams because their rights had been reserved by the team they played for. Since the players were not able to negotiate freely, they had no leverage when it came to negotiating contracts because the only team they could negotiate with was the team that held their previous contract. The only way a player could go to another team was by being traded or being released (cut) by the team that held their contract or reserved their rights. This kept salaries at a minimum.

The reserve clause was struck down in arbitration after the 1975 season and the era of free agency began.