|The late nineteenth century saw the rise of "big business" in important areas of economic activity. ("Big" is never defined precisely, but the quantitative term is popularly used to connote something important.) Big business firms were institutions that used management to control economic activity. Big business firms broke themselves into different functions, or "departments," and used managers to coordinate the work of departments, and "middle managers" to coordinate work among departments.|
|Railroads were the first "big businesses" in the United States. After railroad companies began to operate on tracks that stretched for fifty and more miles, their owners soon realized that they had to divide responsibilities among different managers, with coordination of the various functions of the company--from soliciting business, to operating trains, to maintaining facilities, to financing everything. By the 1850s railroad executives were perfecting systems of managerial control over their ever more complex firms.|
|After the railroads pioneered the formation of "big business," big businesses appeared in manufacturing and distribution.|
Thus when Americans shopped in 1912, they were likely to encounter a "big business." In their stores, moreover, they were likely to find products manufactured by "big businesses."
The "big business" form of organization spread rapidly in manufacturing industries after about 1870.
|By the end of the nineteenth century, Standard Oil, led by John D. Rockefeller, dominated the refining and distribution of petroleum products in the United States, and extended its reach well beyond the nation's borders.|
|When an entrepreneur like Carnegie was successful in building an efficient organization to control manufacturing processes, he drove competitors out of business. A steel maker either had to compete by mimicking Carnegie's managerial techniques, or go into a niche, or specialized, market that the big steel companies did not enter. In the case of meatpacking, by 1900 thousands of local butchers found themselves squeezed, because they were less efficient than the Chicago packers. Small shopkeepers sometimes faced ruin from large department store competitors. These businesses following older, more traditional practices sometimes fueled popular sentiment to "bust" the trusts.|