Big business

For other uses of the name Big Business, see Big Business (disambiguation).

Big Business or big business is all about huge transactions and doing big things. The term first came into use in a symbolic sense subsequent to the American Civil War, particularly after 1880, in connection with the combination movement that began in American business at that time. Organizations that fall into the category of "big business" include ExxonMobil, Wal-Mart, De Beers, Microsoft and Citigroup.

Definition of terms

Although the term has become common, there has never been general agreement as to what constituted a "big business."

Delineation by size

The large consolidated railroad and public utility systems have commonly been considered "big" because of the size of their fixed investments and their gross incomes. Industrial companies have been considered "big" both because of the absolute size of their assets and because of the size of their assets relative to the assets of other firms, especially competitors. The term has also been used in connection with the volume of sales of a particular business, especially when the sales of one concern were a substantial portion of the industry's sales.

Delineation by extent of influence

In a more sophisticated sense "bigness" has had reference to the extent to which an individual company, either by virtue of its size or for other reasons, was able to influence substantially the ruling prices in the trade. Certain banking houses have generally been acknowledged to be "big" not so much because of the size of their resources as because of the influence their members could exert on many companies and in many fields of activity.

History, Pre World Wars

In the USA, widespread industrialization did not take hold until after the Civil War.

The America of Civil War days was a country without transcontinental railroads, without telephones, without European cables, or wireless stations, or automobiles, or electric lights, or sky-scrapers, or million-dollar hotels, or trolley cars, or a thousand other contrivances that today supply the conveniences and comforts of what we call our American civilization.

The gilded age (1870-1893) saw the rise of powerful industrials including the New York Central and Hudson River Railroad (Cornelius Vanderbilt), Standard Oil (John D. Rockefeller), Carnegie Steel Company (Andrew Carnegie, Henry Clay Frick and Charles M. Schwab).

This was part of a worldwide Second_Industrial_Revolution (1865–1900) which was driven by chemical, electrical, petroleum, steel and mass production.

Steel

Carnegie Steel Company merged into United States Steel (J. P. Morgan and John Warne Gates)

Electrical

Electrical industries of the time included: Siemens (Werner von Siemens, Wilhelm von Siemens, Carl Wilhelm Siemens), General Electric (Thomas Edison), American Telephone and Telegraph Company (Alexander Graham Bell), Westinghouse Electric Corporation (George Westinghouse), Thomson SA (Elihu Thomson and Edwin Houston).

Manufacturing

Automotive manufacturing was a new industry with new businesses being founded: Daimler Motoren Gesellschaft (Gottlieb Daimler and Wilhelm Maybach), Deutz AG (Nikolaus Otto), Benz & Cie (Karl Benz), Ford Motor Company (Henry Ford), Rolls-Royce Limited (Frederick Henry Royce and Charles Stewart Rolls), Bently Motors (Walter Owen Bentley).

Energy

As fossil fuel became the main source of energy in industry, business founded on oil, coal and gas included: Royal Dutch Shell, British Petroleum.

History, Post World Wars

The relatively stable period of rebuilding after World War II led to new technologies (some of which were spin-offs from the war years) and new businesses.

Electronics

Minaturization and integrated circuits, together with an expansion of radio and television technologies provided fertile ground for business development. Electronics businesses include: JVC, Sony (Masaru Ibuka and Akio Morita), Texas Instruments (Cecil H. Green, J. Erik Jonsson, Eugene McDermott, and Patrick E. Haggerty).

Computers

The new technology of computers spread worldwide in the post war years. Businesses built around computer technology include: IBM, Microsoft (Bill Gates).

Criticism of big business

The social consequences of the concentration of economic power in the hands of those persons controlling "Big Business" has been a constant concern both of economists and of politicians since the end of the 19th century. Various attempts have been made to investigate the effects of "bigness" upon labor, consumers and investors, as well as upon prices and competition. "Big Business" has been accused of a wide variety of misdeeds that range from the exploitation of the working class to the corruption of politicians and the fomenting of war.

Influence over government

Corporate concentration can lead to excessive influence over government in areas such as tax policy, trade policy, environmental policy, and labour policy. In 2005 the majority of Americans believed that big business had "too much power in Washington".

Whatever goes on behind closed doors between the CEOs and the senators can't be good or the doors would not be closed.

Human rights and working conditions

German industry collaborated with their Nazi government during the Third Reich, thus exploiting the working class in the interest of productivity and efficiency.

Hitler's order offered German capitalists, badly hit by the great recession, the prospects of huge profits. German workers did, admittedly, enjoy full employment, but, as William Schirer has said, this was at the cost of being reduced to serfdom and poverty wages. It was not long before these conditions became the lot of the whole of occupied Europe.

Benefits of big business

It has been generally admitted that much of the technological progress since 1850 has been dependent on and fostered by the growth in size and the increase in financial strength of individual business units.

During the rise of big business in the late nineteeth century, long run factors contributing the consolidation of businesses included technological changes and reductions in transportation costs. Cheaper transport costs made it feasible to produce in one location and then ship the product to market, instead of producing where the market was located. Technological changes made plant sizes more efficient in regards to capital-intensive assembly lines.

The rise of railroads contributed to decrease transportation costs during the 1800s. To expand, the railroad companies required large pools of capital to finance infrastructure development and daily operations. However, the government did not have the budget to provide financing, due to the depression in the 1830s and 1840s. As a result, the railroad firms turned to private investors and investment banks to raise capital.

See also

• Arms industry
• Big Oil
• Big government
• Big labor
• Price gouging
• Small Business

References

This article is originally based on material from Dictionary of American History by James Truslow Adams, New York: Charles Scribner's Sons, 1940