Corporate Development During the Industrial Revolution
The Standard Oil Company founded by John D. Rockefeller and the U.S. Steel
Company founded by Andrew Carnegie. The Standard Oil Company and U.S. Steel
Company were made successful in different ways due to the actions of their
different owners. The companies differed in their labor relations, market
control, and structural organization.
In the steel industry, Carnegie developed a system known as vertical integration.
This means that he cut out the middle man. Carnegie bought his own iron and
coal mines because using independent companies cost too much and were
inefficient. By doing this he was able to undersell his competetors because
they had to pay the competitors they went through to get the raw materials.
Unlike Andrew Carnegie, John D. Rockefeller integrated his oil business from
top to bottom, his distinctive innovation in movement of American industry was
horizontal. This meant he followed one product through all its stages. For
example, rockrfeller controlled the oil when it was drilled, through the
refining stage, and he maintained control over the refining process turning it
into gasoline. Although these two powerful men used two different methods of
management their businesses were still very successful (Conlin, 425-426).
Tycoons like Andrew Carnegie, "the steel king," and John D. Rockefeller, "the
oil baron," exercised their genius in devising ways to circument competition.
Although, Carnegie inclined to be tough-fisted in business, he was not a
monopolist and disliked monopolistic trusts. John D. Rockefeller came to
dominate the oil industry. With one upward stride after another he organized
the Standard Oil Company, which was the nucleus of the great trust that was
formed. Rockefeller showed little mercy. He believed primitive savagery
prevailed in the jungle world of business, where only the fittest survived. He
persued the policy of "ruin or rule." Rockefeller's oil monopoly did turn out
a superior product at a relatively cheap price. Rockefeller belived in
ruthless business, Carnegie didn't, yet they both had the most successful
companies in their industries. (The American Pageant, pages 515-518)
Rockefeller treated his customers in the same manner that Andrew Carnegie
treated his workers: cruel and harsh. The Standard Oil Company desperately
wanted every possible company to buy their products. Standard Oil used
ruthless tactics when Rockefeller threatenedto start his own chain of grocery
stores and put local merchants out of business if they did not buy oil from
Standard Oil Company. Carnegie dealt with his workers with the same cold lack
of diplomacy and consideration. Carnegie would encourage an unfriendly
competition between two of his workers and he goaded them into outdoing one
another. Some of his employees found working under Carnegie unbearable.
These rivalries became so important to the employees that somedidn't talk to
each other for years (McCloskkey, page 145). Although both Carnegie and
Rockefeller created extermely successsful companies, they both used
unscrupulous methods in some aspect of their corporation building to get to
The success of the Standard Oil Company and U.S. Steel company was credited to
the fact that their owners ran them with great authority. In this very
competetive time period, many new businesses were being formed and it took
talented businessmen to get ahead and keep the companies running and make the
fortunes that were made during this period.
Conlin, Joseph R. History of the U.S.: Our Land, Our Time. pp. 425-426. 1985.
Bailey, Thomas A. and David M. Kennedy: The American Pageant. pp. 515-518.
Latham, Earl: John D. Rockefeller; Robber Baron Or Industrial Statesman?
(Problems in American Civilization Series). pg. 39. 1949.
McCloskey, Robert Green: American Conservatism In The Age Of Enterprise 1865-
-1910. pg. 145. 1951.