The Features of the Big Business, How It Influenced the Infrastructure - Essay Example

? Rise of Big Business History 271 Fall SH 120 Large corporations did not exist before the Civil War, but by the end of the Gilded Age they dominated American society. In your essay describe the distinctive features of big business including their scale and scope and the new methods of organization they pioneered. Then explain how large corporations grew both vertically and horizontally. Finally discuss the social fears created by big business and the new efficient, material culture large corporations produced Introduction Also known as the corporate revolution that occurred in America after the American Civil war, America experienced a period of great economic growth that made its way to become what it is today. After 1860, many changes occurred that were linked to development which ultimately gave rise to the Big Businesses which even though face a lot of stringent controls from governments, but still have a lot of power if they are huge firms. The rapidity of growth can be attributed to several factors like improvements in transportation by introducing and expansion of railroads, the usage of more mechanized products and tools in agriculture, the emergence of financial institutions like banks and the increasing role of stock exchanges. The essay would revolve around the features of the big business and as to how it influenced the infrastructure. Features of Big Businesses Following the American Civil War, big businesses found many opportunities to expand and become bigger. There were banks like JP Morgan who were ready to give loans to companies. After the companies earned enough profits, they repaid their loans and had their money in banks which was directly beneficial for banks. Moreover, companies grew by converting their competition into cooperation. They understood that cooperation was more beneficial for companies as it lead to greater power and creation of monopolies which meant more power. Many companies like Rockefeller, Morgan and Carnegie which were trusts of oil, banking and steel respectively, which were the emerging industries of that time, that had been involved in horizontal integration (merging with and acquiring companies in the same industry).Some of the big emerging corporate giants that were created at that time grew by vertical integration (expansion in the forward or backward processes of the industry) such American Tobacco and AT & T. The general change in the society led to many improvements which ultimately led to the emergence of these big corporations. These include the eradication of slavery, reduction of social and economic tension, increased usage of technology and financial growth. The end of the 19th century is famous for the merger movement in which companies merged with each other, either vertically or horizontally to become more powerful and led to trusts and cartels. Trusts were factually monopolies that were created to become more influential than smaller companies. Trusts were official agreements within firms from the same industry who were competing with each other, to come to terms with each other together and follow cooperation instead of competition in terms of dividing markets, price levels, quotas and other agreements done voluntarily, in order to achieve benefit. Furthermore, rival firms would list their stocks to a single board of trustees in order to attain non-voting certificates for a small amount of interest after which it was the trustees’ responsibility to make relevant policies for the companies. However, the disadvantages of these trusts such as Rockefeller’s Standard Oil Company were that they controlled trade and became more powerful than the government hence creating problems which led to the Sherman Antitrust Act to break the power of monopolies and ensure free trade and competition. Previously, small businesses had many weaknesses to overcome which, these large corporations replaced them. First, these small businesses had less finances and lesser resources and operated on a small scale, produced fewer products, had lower margins and higher costs and they had to charge higher prices because there was so much competition amongst small firms. Another problem was the unavailability of financial resources to help firms expand. Once the huge corporations were in place, they did not let small firms survive because the small firms were at a disadvantage in terms of a lot of factors. Large corporations had the advantage of economies of scale, lower prices, lower costs and greater market shares while small firms had none of these to compete with the larger firms. Yet, small firms had the advantage of a large customer base on a geographical basis before the revolution occurred. After the corporate revolution however, owing to the better transport and communication facilities, better technology and better means to progress, problems were created for smaller firms to rely on geographical sales. The corporate revolution era bought with it a storm of innovation and advent of new products and services such as AT & T which made communication quicker and much better integration possible than ever before. In other words these big businesses put a step down on the small businesses as they took over the whole market through mass production of products. These small firms eventually had to merge or dissolve because of these big businesses. These big businesses can be considered to be a turning point in the history of United States as they bought many pros and cons with it. The technological advancement can be said to be the most beneficial of all the other pros. The government run facilities were later on targeted by these big businesses as they were able to influence them through the wealth that they brought in the country. Social fears created by big business and the new efficient, material culture large corporations produced With the advent of big corporation, many good and bad things came along. The pros were that it was now possible to provide more variety to consumers. They did not have to rely solely on locally and geographically available material but now things were improving in availability for consumers. Moreover, per unit costs were lower for large corporation due to large scale production hence the prices were lower for the customers as well. They could afford better production machinery and products and also had the option to borrow money. All in all, the era of big corporation led to development. However, there are several criticisms attached to it as well. The greatest negative was that there was greater margin for customer exploitation because of the fact that monopolies had more power to eliminate competition and rule the industry for a certain product by wither acquiring/merging with competitors or creating problems for ne entrants. Their advent has also led to consumerism and materialism. It provoked people to spend much more than ever before on a lot of items. Ultimately, just like nothing else I entirely good or bad, the rise of big corporations also has its pros and cons both attached to it, and whatever the circumstances, it is an inevitable process that continues till today but with very strong regulations and guidelines. Conclusion Big business has always been a prominent feature of the American economy as it has given a way to the monopolists to emerge as a strong market holder. The large firms formed through big business helped to increase the powers of the government. Many put forward that these big businesses led to a path through which the monopolistic powers increased along with the exploitation of workers. However on the other hand many put forward that it helped to increase competition and the wealth of the country. The growth of these big businesses helped in improving the over all infrastructure of the country by introducing products that were never before seen in the United States of America. Read More