Rise of Big Business Essay Example | Topics and Well Written Essays - 1250 words

Rise of Big Business - Essay Example 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 m ovement 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 proble ms 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,