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,
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. 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.