The Rise of Big Business in America

2197 WordsMay 6, 20129 Pages
The Rise of Big Business in America Danny Weiss FS American Economic History Before the rise of modern corporations, business owners predominantly personally managed most private economic operations. These small-scale operations had little influence outside their regional realm. Eventually, American capitalism evolved from a proprietary-competitive stage to a corporate-administered stage as a result of numerous factors. Economies of scale became more applicable with innovations in transportation, communication, production, management, distribution, and marketing. As a result, America transformed into a global economic power. From 1870 to 1913, the United States’ distribution of the world’s industrial production rose from 23…show more content…
A series of antitrust prosecutions was filed against Standard Oil from 1904-1906 accusing the company of violating the Sherman Act. After months of testimony, Standard Oil was found guilty of violating the act. Standard Oil lost the appeal it filed and was finally dissolved in 1911. The company was then split up into multiple separate entities, two of which ended up becoming Exxon and Mobil. The case highlights one of the fundamental issues related to business: industrial efficiency through consolidation as opposed to regulated competition through federal intervention. Aftermath In oil, like many other industries, the processors not the producers of raw materials have larger potential in exploiting economies of scale. Rockefeller was one of the first businessmen to exploit economies of scale by understanding the potential of investing in production, marketing, and management. The enterprises that achieved market dominance did so by horizontal combination and/or vertical integration. Such expansion created huge cost advantages for companies, such as Standard Oil, and resulted in market dominance. Besides revolutionizing business practice, Standard Oil influenced many alterations in the political environment. During what is known as the Gilded Age (late 1860’s-late 1890’s), economic, technological, social, and political transformations were rapidly occurring. With the expansion of corporate power, a simultaneous expansion of federal power
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