BY JOHN MORENO AND JASON JONES

INDUSTRIAL EXPANSION AND CONCENTRATION

STRUCTURAL CHANGE AND INDUSTRY COMPOSITION

1869 1899Agriculture

Manufactures

53

33

33

53

Agriculture Manufactures

STRUCTURAL CHANGE AND INDUSTRY COMPOSITION

1860 Value 1910 Value

Cotton goods $55 Machinery $690

Lumber $54 Lumber $650

Boots and shoes $49 Printing $540

Flour and meal $40 Iron and steel $330

Men's clothing $37 Malt liquors $280

Iron $36 Men's clothing $270

Machinery $33 Cotton goods $260

Woolen goods $25 Tobacco manufactures $240

Carriages and wagons $24 Railroad cars $210

Leather $23 Boots and shoes $180

Combined $815 Combined $8,529

NEW TECHNOLOGIES

• Roller Mill• Refrigerated Cars• Can Sealing• Long distance pipe lines• Steel Tank Cars• Advances in Bessemer and open-hearth

processes• Cash Register• Typewriter

STEEL INDUSTRY INNOVATIONS

1870 1880 1890 1900 1910

55

86 87

66

36

29 12

33

63

Bessemer Open-Hearth

NEW FORMS AND SOURCES OF ENERGY

• In 1850 most of the energy came from animal and man power

• During the 1870s, steam surpassed water as a source of power.

• In 1890 coal was the source of 90% of the energy furnished to manufacturing

• By World War I, one-third of the nation’s industrial power was provided by electricity

• Coal remained the main energy source until 1920

MASS PRODUCTION

EARLY BUSINESS COMBINATIONS

• Pooling became common after 1875

• Gentlemen’s agreements were usually used for setting and maintaining prices

• Gentlemen’s agreements and Pooling were not very durable

TWO PHASES OF THE CONCENTRATION MOVEMENT • Phase 1: Horizontal

Mergers• the combining of

firms that produce identical products.

An example would be the Standard Oil Company of Ohio

TWO PHASES OF THE CONCENTRATION MOVEMENT • Phase 2: Vertical

Mergers• firms managed by

different departments within one firm.

Andrew Carnegie forms the US Steel Corporation in 1901 with Morgan and Moore

LEGISLATION AND LEGAL ACTIONS

• Passage of legislation to control monopoly power becomes critical in the Concentration Movement.

• The Sherman Act of 1890 made it illegal for people to monopolize any part of the trade or commerce.

THE FEDERAL TRADE COMMISSION

• 1914 - congress passes the Clayton Act, which was intended to remove ambiguities in existing antitrust law by making certain specific practices illegal.

• Price discrimination among buyers was forbidden, as well as exclusive selling and tying contracts if their effect was to lessen competition.