In the years following the Civil War, the United States underwent a profound Industrial Revolution. This revolution forever changed the face of America and forced all aspects of society to adapt to the sweeping changes that were taking place. During this period of unprecedented economic growth, both business and labor in the U.S. had to deal with the consequences that accompanied the emergence of radically new technologies and the reluctance of the government to exert any sort of control on our booming industries.
To begin with, it may be helpful to examine the factors that led up to the Industrial Revolution in America and catalyzed the rapid growth of the U.S. economy. First of all, America was laden with precious natural resources necessary for industrial growth. These resources included coal, iron ore, copper, lead, oil, and timber (1,3). The presence of these vital resources in such large amounts gave us an inherent advantage over countries that had to import most of their raw materials (i.e. Great Britain, Japan, etc.). Secondly, the United States was blessed with an abundance of cheap labor, mainly immigrants (1,3). Thirdly, the development of new technologies allowed for more work to be done in less time and by fewer people. Fourthly, foreign investment was plentiful because of the influx of money from wealthy Europeans who sought to make a profit off of America’s industrial success (1,3). And lastly, American businesses profited smartly from the government’s industry-friendly policies such as subsidizing railroads with land grants and loans and supporting American made goods through the presence of protective tariffs (1,3).
All of the above factors combined to have a profound effect on businesses in the United States. Increased business leadership, markets, labor, capital, and government support led to the development of big businesses (2). The first of the nation’s big businesses were the railroads (1,2,3). By laying tracks all across the country, railroad companies were able to link together once-isolated markets and, in turn, make handsome profits. Enterprising capitalists such as Cornelius Vanderbilt managed to gain the upper hand on the competition by using uniform gauged tracks and selling stock in their companies to investors (1,2). In this newly competitive American marketplace, businesses soon found that it was no longer feasible to just peacefully coexist with one another. In a free market economy, they found that it was necessary to kill or be killed. In order to ensure prosperity and eliminate competition, many railroad companies resorted to devious and unlawful tactics. Such underhanded schemes included pooling, in which several companies teamed up to shut out competitors, and offering rebates and kickbacks to favored shippers, while charging farmers and other small customers exorbitant rates (2,3). Methods such as these came to characterize big business in an era of uncontrolled capitalism, where the government did little to intervene and for the most part let American industry turn into a free-for-all.
Other highly influential strategies for amassing wealth and eliminating competition were perfected by the juggernauts of the steel and oil industries, Andrew Carnegie and John D. Rockerfeller, respectively. Carnegie was able to dominate the steel industry through the use of a business strategy known as vertical integration (2). Vertical integration entailed the controlling of every aspect of the industrial process. Carnegie Steel would therefore be in charge of every step necessary to steel making, from the mining of raw materials to the shipping of the finished product (2,3). Rockerfeller’s company, Standard Oil, employed the use of a somewhat different method known as horizontal integration (1,2). This tactic consisted of the mother company acquiring all its competitors and bringing them all under one corporate umbrella. They would then be managed by a board of trustees that Rockerfeller and Standard Oil controlled. Although horizontal and vertical integration were based on slightly different methodologies, they both had the same end result- a virtual stranglehold on that company’s particular market.
After examining all the foul play that was going on and the anti-competitive nature of business during the Industrial Revolution, one would probably wonder why the government did nothing to reform big business. There are several answers to this question. First of all, it was the prevailing mindset of the time that business should not be regulated by the government, but by the law of supply and demand (1,3). According to