Industrialization and the Rise of Big Business
The rise of corporations, such as Carnegie Steel, J. P. Morgan, and Standard In the late sass's, was able to dramatically shape the country politically, socially, and economically and even continues to do so today through new modern finance and monopolies. Industrial growth was mainly fueled by a surplus in resources, immigration and therefore cheap labor, and major technological advances that expanded the capabilities of various industries. As technological advances transformed production and distribution, a wave of inventions, including the typewriter, light bulb, and automobile led into new
Industries. Through this boom In business, leaders learned how to operate many different and the modern corporation was "born" into one of the most important roles in the future of business. These corporations seemed "new" for many people in the country, but corporations actually date back to the 16th and 17th centuries, where they were used by royalty governments to organize exploration and possible colonization. Many businessmen politicians had been suspicious of the corporation from the time it first emerged in the late 16th century.
Unlike the partnership form of business, which dealt with a small mount of people on a personal level, the corporation separated ownership from management. In Adam Smith's The Wealth of Nations, he warns that because managers could not be trusted to steward "other people's money", "negligence and profusion" would eventually result when businesses organized as corporations. In 1811, New York became the first state that passed legislation concerning protocol and procedure for becoming a corporation, and other states eventually adapted this as well.
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Corporations were well suited to meet the demands of the Industrial Revolution, which generated ant increase in business opportunities which, in hand, required massive amounts money but "over the last 150 years the corporation has risen from relative obscurity to "The genius of the corporation as a business form, and the reason for its remarkable rise over the last three centuries, was-and is-its capacity to combine the capital, and thus the economic power, of unlimited numbers of people" (Bake 9). As corporations become more powerful and fuel development of large-scale industry, they affect politics.
The men dollied by some and vilified by other, America's 19th century Robber Barons were the true creators of the modern corporate era. The railroad was first major monopoly in the United States. Since these railroads were massive undertakings, they required millions of dollars in capital investment. This was more than could be provided by relatively small group of wealthy men who invested in corporations at the turn of the century and the majority of the money was raised through the sales stocks and bonds.
With greed and corruption heavily present throughout the construction of the railroads, beginning in the asses, the corporation underwent a major ramification. The states of New Jersey and Delaware sought to attract valuable incorporation business to their Jurisdictions by Jettisoning unpopular restrictions from their corporate laws. In addition, they also repealed the rules that required businesses to incorporate only for defined purposes, to exist only for limited durations, and to only operate in certain they abolished the rule that one company could not own stock in another.
Soon the rest of the country, not wanting to lose out in the competition for the incorporation business, soon allowed their examples with revisions to their own laws. With flexible freedoms and powers now available, there was a large amount of incorporation by businesses. However, with all the constraints on mergers and acquisitions gone, it was only a matter of time before companies bought each other out. "1,800 corporations were consolidated into 157 between 1898 and 1904. In less than a decade the U. S. Economy had been from one in which individually owned enterprises competed freely among themselves into one dominated by a relatively few huge corporations, each owned by many shareholders" (Bake 14). The era of corporate capitalism had begun with all those consolidations and mergers. With the economy dominated by a few huge corporations, we find ourselves looking at the development of monopolies, development the states started by limiting set laws. With the growing capitalism pressuring politicians, a bizarre law was passed by the Supreme Court in 1886. The courts had fully transformed the corporation into a "person", complete with its own identity, separate from the actual people who were acquire assets, employ workers, pay taxes, and go to court. The logic of this law conceived if reparations were considered free individuals, or "persons", corporations should be protected by the Fourteenth Amendment's right to due process of law and equal protection of the laws, rights originally added to the constitution to protect freed slaves" (Hobbies 208).
Trusts were becoming a problem after several years of abuse by major corporations. By the end of the 19th century, trusts used to crush competition and create monopolies throughout different industries had gotten to a point where the public demanded that there be something done. Congress ended up passing the Sherman Antitrust Act in 1890. This Act has two main provisions which apply to most of the corporations of the time.
Every contract or agreement, in the form of a trust or not, or conspiracy to restraint trade in commerce is illegal and second, it would be illegal for anyone to monopolize, try to monopolize, or conspire to monopolize commerce. The Sherman Act was Just the first of a series of laws aimed at controlling attempts by business firms to conspire and establish monopoly power in industry and commerce. Other acts followed when it became apparent that the Sherman Act had loopholes. Teddy Roosevelt was known as the "trust buster" because of his anti-monopoly views.
Many large corporations had complete control of an entire industry and Roosevelt went in to these companies and helped to stop this type of monopoly, even managing child protection laws, which were used to prevent children to work in factories and set up workman compensation, which is a payment that employers had to pay employees who get injured on the Job. After the Great Depression occurred sometime around 1929 until the early asses, Roosevelt stepped in and called for Congress to help him pass his "New Deal".
The "New Deal" was a package of regulatory reforms designed to restore economic health by, among other things, crushing the powers and freedoms of corporations" (Bake 20). On March 9 Congress passed the Emergency Banking Act, which allowed the federal banks to be inspected. They also passed the Glass-Steal Act, which had stringent rules banks and provided insurance for depositors through the newly created Federal Deposit Insurance Corporation (FIDE). Two more acts in 1933 and 1934, mandated specific regulations for the securities market, enforced by the new Securities and Exchange
Commission (SEC). Several bills provided mortgage relief for farmers and homeowners and offered loans for home purchasers through. Also, the National Labor Relations Act of 1935 gave federal protection in the bargaining process for workers and established a set of fair employment standards. The National Labor Relations Act guaranteed workers 1938, the last major program launched by Roosevelt specified maximum hours and minimum wages for most categories of workers.
A monopoly is considered an economic situation in which only a single seller or reducer supplies a commodity or a service. Economic monopolies have existed throughout most of history and in modern times we still deal with their continued threat. We usually encounter monopolies when giant business firms began to emerge and dominate the economy. Usually more than one firm in the same industry grows and dominates the market resulting in oligopoly, in which the market is dominated by a few firms.
A modern example is Microsoft, which was founded in 1975 by Bill Gates and Paul Allen. In 1985, Microsoft released the Windows SO, an SO with the same features of DOS Just with a graphical user interface added for ease of use. Windows 2. 0, released in 1987, improved performance and offered a new visual appearance. In 1990 Microsoft released a more powerful version, Windows 3. 0. These versions, which came preinstall on most new personal computers, becoming the most widely used operating systems in the industry at the time.
In 1993 Apple lost a copyright-infringement lawsuit against Microsoft that claimed Windows illegally copied the design of the Macintosh's operating system. In May 1998, the Justice Department and 20 states filed broad anti-trust suits Microsoft with engaging in "monopolistic" conduct. They wanted to force Microsoft to offer Windows without Internet Explorer or to include Navigator, a competing browser made by Netscape. In November 2001 Microsoft announced a settlement with the Justice Department and nine of the states.
Key provisions included requiring Microsoft to reveal technical information about the Windows operating system to competitors so that software applications could be compatible with Windows, while also enabling personal computer manufacturers to hide icons for activating Microsoft software applications. Imputer manufacturer could therefore remove access to Internet Explorer and enable another Internet browser to be displayed on the desktop. Corporations transformed the U. S. Economy through breakthroughs in technology as well as new business practices and strategies. The early Industrial Revolution not only changed manufacturing technically but also introduced a new organization of industry. These innovations followed from the new machinery but had advantages of their own. Together, these changes constitute its economic impact" (Stearns). Americans created giant enterprises. Businesses such as Standard Oil and Carnegie Steel brought together huge stocks of natural resources and unprecedented quantities of modern machinery to mass-produce goods for domestic and international markets.
In meeting these demands, American entrepreneurs pioneered the of modern business with its large-scale production and widespread markets, first by developing the railroad industry and then by creating industrial corporations. These railroads were massive undertakings, they required millions of dollars in capital investment. This was more than could be provided by relatively small group lately men who invested in corporations at the turn of the century and the majority the money was raised through the sales of stocks and bonds. "Everything the stock market is, and was, rooted in the basic idea of capitalism.
Without that idea, stocks bonds would never have come to be. Capitalism is an "economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market" (Hobnail 48). In the steel industry, Carnegie developed a system known as vertical integration. Carnegie bought his own iron and coal mines because using independent companies cost too much and was inefficient. Through this method he was able to charge less than any of his competitors.
Unlike Andrew Carnegie, John D. Rockefeller integrated his oil business into horizontal. He followed one product through all its stages. Although, Carnegie inclined to be tough-fisted in business, he was not a monopolist and disliked monopolistic trusts. John D. Rockefeller came to dominate the oil industry. He created associated with his to turn over their common stock to nine trustees in exchange for trust artifices. However, in 1911, the Supreme Court found that unlawful monopoly power existed in company ordered him to dissolve it into smaller, competing companies.
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