Corporate Consolidation in the Late 1800s
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General Information
Source:
NBC News
Resource Type:
Creator:
N/A
Copyright:
Event Date:
Air/Publish Date:
1870 - 1900
05/15/2008
Copyright Date:
Clip Length
Video MiniDocumentary
NBCUniversal Media,
LLC.
2008
00:02:18
Description
In the 1870s and 1880s, most companies were organized under the principles of vertical or horizontal
integration. Vertical integration means the company controls all phases of production. Horizontal
integration often resulted in monopolies because of the cooperation between companies which produced
the same product.
Keywords
Industrial America, Monopoly, Horizontal Integration, Vertical Integration, Technological Development,
Standard Oil, John D. Rockefeller, Business Magnates, Tycoons, Steel, Railroads, Oil, Economy, Finance
, Goodyear, Nabisco, General Electric, Captains of Industry, Pittsburgh, New York Stock Exchange
Transcript
© 2008-2016 NBCUniversal Media, LLC. All Rights Reserved.
Page 1 of 2
Corporate Consolidation in the Late 1800s
NARRATOR:
Many of today’s corporate giants were born in the 1870s and 80s. The nation’s economy at the time, that
had been built from local, family-owned businesses, became dominated by large, nationwide companies.
JOHN STEELE GORDON, author:
There was no single industrial corporation listed in the New York Stock Exchange at the end of the Civil
War – not one. By 1900, there were dozens of them. And they employed 30, 40, 50,000 people. They
were enormously important in all kinds of industries.
NARRATOR: These big businesses used two methods called vertical and horizontal integration to grow
and command new markets. Vertical integration is when companies become powerful enough to dominate
every step of the production process from beginning to end.
Mr. GORDON: What it basically is, is a chain from the raw material – the iron ore sitting in Minnesota –
to the ships that carry the ore in the Great Lakes, to Pittsburgh, to the foundry that turns the ore into steel,
into the factory that turns the raw steel into finished I-beams and railroad ties and what have you. If that
all comes under one corporate ownership, that’s called “vertical integration.” We still have a lot of vertical
integration; although less than we used to.
NARRATOR: Vertical integration allowed companies to produce goods more cheaply and more quickly
than their competitors could. Other companies relied on horizontal integration to grow profits
Mr. GORDON: Horizontal integration is when this steel manufacturer hooks up with this steel
manufacturer, in this deal, and this deal, and this deal. And so, what you end up with is a monopoly – or a
trust, as they were called in those days. The first real trust was Standard Oil.
NARRATOR: John D. Rockefeller bought up stock from oil production companies across the nation and
used this stock to establish the Standard Oil Trust. By 1882, the trust controlled more than 90% of the
nation’s oil refining industry.
By the turn of the century, these kinds of corporate strongholds controlled American markets and politics.
Admirers called the men who owned them “captains of industry.” Critics called them “robber barons.”
Later, the federal government would begin to regulate industry more closely to prevent monopolies.
© 2008-2016 NBCUniversal Media, LLC. All Rights Reserved.
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