An Overview of American Business History
By Steven L. Rosen
Part I. The Rise of the Corporation in the 19th Century
The railroad industry was the key to economic growth in the 19th century.
Before the Civil War, most businesses in America were small, independently owned enterprises. Transportation and telecommunication technology was still in its beginning stages. All this changed, however, after the Civil War. In a short time, the country was covered with railroad lines and telegraph cables, and this growth of better transportation and communication technologies helped the industrial revolution in America. Other important technologies, for example, electricity and the internal combustion engine, were also developing in this period. The result was that America had the fastest economic growth in the world in this period.
Because railroads could quickly distribute more goods to more people, there were reductions in price. This is what is called “economies of scale” in economics--- the bigger your company is, the more you can sell, and the more you sell, the more you can reduce the price. Lower prices will mean even more people will buy your product, resulting in even more economic growth.
This is what happened during the industrial revolution—economies of scale. Manufacturing (factory production) increased very rapidly during the late 19th century, with high production outputs. A number of companies in this period grew so fast and big they easily took over and controlled certain markets (e.g., food, steel, railroads, and oil).
The other big change in the business world in the late 19th century was a new type of business form which completed changed American economy and society: the limited liability corporation.
The 19th century was the time of the rise of “Big Business.” Companies would merge together to form a “trust” or monopoly. In 1888, New Jersey allowed corporations which were set up or...