Big Business, Big Systems
Changes in the late 19th century:
Changes in the early 20th century:
First an example of the impact of the American
System
of Manufacture and of advertising:
the
high wheeler
- High wheel bicycles came from England to
America in the 1870s--very much a macho sport, limited appeal
1896
Ladies Bicycle
- Safety
bicycle introduced in 1887--bicycling became a major fad.
- Business expanded wildly--in the mid-1890s
the
industry produced 1.2 million machines annually (an important source of
demand for good roads, which made the automobile practical, and of the
idea
of independent travel).
- many gun and sewing machine manufacturers
went into the bicycle production business. The fad for bicycling
ended in 1897, bringing the industry to an abrupt end.
- An example of new products and the
interlocking of industries in the American System of Manufacture:
- Pope
Manufacturing Company started bicycle manufacture in a sewing
machine factory owned by the Weed Sewing Machine Company, which before
it had its own factory had contracted the production of its sewing
machines to the Sharps Rifle Manufacturing Company (in fact the sewing
machine company eventually bought the rifle company's factory).
Pope was successful by advertising, particularly through posters and a
magazine he owned, and by buying patents until he had a near monopoly
that lasted until 1886.
- But the need for another step in mass
production was becoming clear.
- the Western Wheel Works pioneered the
stamping
of metal parts instead of drop forging and machining.
- New England manufacturers were scornful of
the lower quality product, but it did the job. That was even more
of a mass
production mentality than the American System.
- Already a bottleneck in production was
visible in the assembly process
National Markets:
- Regional railroad
connections
were pretty good
by 1850, national ones by 1880. This meant that a factory in
Chicago
could sell goods all over the nation
- suddenly local companies had a lot more
competition.
- canning
(popularized in the civil war) and refrigerated
railway cars (introduced in the 1870s) meant that this affected
food processing, not just manufactured goods
- alternatives to price competition
Big Business (this
is based mostly on the writings of Alfred D. Chandler, Jr.)
- before 1850 most American businesses were
directed by at most two or three people--they were owned by a single
person or a partnership, and where employed agents on commission
- railroads were the first large, spread-out
companies, and they developed new management techniques based partly on
a military
model.
- development of modern management systems
such
as line and staff, departments
- new laws in many states made it much easier
to incorporate (form a corporation )
- incorporation gives limited liability ( Lloyds
of London is still an unlimited liability company)
- 1889 New Jersey law (copied by other states)
allowed one company to hold stock in another, leading to the rapid
growth of trusts and holding companies.
- Standard Oil (John D. Rockefeller)
controlled
90% of the petroleum industry before it was broken up in 1892
- Sherman Antitrust Act 1890
- of the 278 largest industrials in 1917 only
14 had gone out of business in 1967
Standard
Oil Trust Company
Urbanization:
- in 1870 53% of Americans were farmers or
farm laborers, in 1910 just 33%
- business empires rather than owning large
tracts of land became the measure of status
- cities grew rapidly, and struggled to
provide
the necessary infrastructure (streets, sewers, water supply,
etc.).
By 1880 1/3 of urban households had flush toilets.
- the steel-framed building was invented in
the
1880s and made possible the skyscraper (along with the invention of the
elevator) (image: New
York World Building, 1889-90 )
- horsedrawn omnibuses and then the electric
streetcar (trolley) starting in 1887 in Richmond VA provided public
transportation as
the city grew beyond walking size
- steam power and then electricity powered
factories newly locating in large cities to be near railroad hubs
- very high rate of immigration started after
the Civil War--these immigrants were much more likely to stay in the
cities and work in factories
Chicago
apartment building
this page written and copyright Pamela E. Mack
last updated 10/5/2005