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Corporate development during the industrial revolution

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 top.

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.

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