|The Rise of Big Business
|Digital History ID 3165|
Between 1869 and 1910, the value of American manufacturing rose from $3 billion to $13 billion. The steel industry produced just 68,000 tons in 1870, but 4.2 million tons in 1890. The central vehicle of this surge in economic productivity was the modern corporation.
In recent years, Americans have often been told that we have
entered a "new economy." The older industrial economy,
it is said, is giving way to a new global economy based on computers,
the Internet, telecommunications, and entertainment. This is not
the first new economy in American history. Following the Civil
War, a new economy emerged in the United States resting on steam-powered
manufacturing, the railroad, the electric motor, the internal
combustion engine, and the practical application of chemistry.
Unlike the pre-Civil War economy, this new one was dependent on
raw materials from around the world and it sold goods in global
The transformations that took place in American business following
the Civil War involved far more than a change in industrial techniques
or productivity. Business organization expanded in size and scale.
There was an unparalleled increase in factory production and mechanization.
By the beginning of the 20th century, the major sectors of
the nation's economy--banking, manufacturing, meat packing, oil
refining, railroads, and steel--were dominated by a small number
of giant corporations.
The rise of big business was accompanied by the emergence of
a new class of millionaires. At the beginning of the Civil War,
there were only 400 millionaires in the United States. By 1892,
the number had risen to 4,047.
The emergence of the modern corporation was accompanied by many
positive developments. Through mechanization, standardization,
and economies of scale, economic productivity soared. Between
1890 and 1929, the average urban worker put in one less day of
work a week and brought home three times as much in pay. The proportion
of families confined to the drudgery of farm life declined by
half. Families enjoyed comforts and conveniences that were unimaginable
before 1890. By 1929, nine out of ten Americans had electricity
and indoor plumbing; four-fifths had automobiles; two-thirds had
radios; and nearly half refrigerators and phonographs. At the
same time, infant mortality fell by two-thirds, and life expectancy
increased by 20 years. In 1888, Charles E. Perkins, the president of the Chicago, Burlington, and Quincy Railroad asked:
Have not the great merchants, great manufacturers, great inventors,
done more for the world than preachers and philanthropists? Can
there be any doubt that cheapening the cost of necessaries and
conveniences of life is the most powerful agent of civilization
Yet the rise of big business also produced many anxieties.
Corporations were accused of abusing workers, corrupting the political
process, and producing shoddy, unsafe products. Many feared that
corporate power allowed companies to fix prices and influence
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