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.
Bibliography
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. 1987.
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.
