Big business

Definition

Big business refers to large-scale corporate enterprises that dominate a specific industry or sector, often characterized by significant financial resources, a large workforce, and the ability to influence market conditions. This term is closely linked to the industrialization era in the United States, where technological advancements and changes in production methods led to the emergence of powerful companies that could achieve economies of scale and reduce competition.

5 Must Know Facts For Your Next Test

1. During the late 19th century, big businesses emerged as key players in the U.S. economy, fueled by the industrial revolution and technological innovations like the telegraph and railroads.
2. The rise of big business led to significant social and economic changes, including urbanization as people moved to cities for factory jobs and shifts in labor practices.
3. Prominent figures like John D. Rockefeller in oil and Andrew Carnegie in steel exemplified big business leaders who utilized vertical and horizontal integration strategies to dominate their industries.
4. The government response to big business included antitrust laws such as the Sherman Antitrust Act of 1890, aimed at curbing monopolistic practices and promoting fair competition.
5. Big business played a crucial role in shaping American capitalism, contributing to both economic growth and social inequalities, as wealth became concentrated among a few industrialists.

Review Questions

• How did big business contribute to economic growth in the United States during the late 19th century?
  • Big business significantly contributed to economic growth by creating jobs, increasing production capacity, and driving innovation. As industries expanded, companies like Carnegie Steel and Standard Oil established vast operations that not only fueled economic development but also improved infrastructure through investments in railroads and factories. The efficiencies gained from large-scale production allowed these businesses to lower prices for consumers while maximizing profits.
• What were some of the social consequences of the rise of big business during industrialization?
  • The rise of big business led to profound social changes, including urbanization as people flocked to cities for employment in factories. This shift resulted in the growth of a new working class but also brought challenges such as poor working conditions, low wages, and overcrowded living situations. The stark contrast between the wealthy industrialists and the working poor highlighted social inequalities that would later fuel labor movements advocating for workers' rights.
• Evaluate the impact of government regulations on big business practices during the late 19th and early 20th centuries.
  • Government regulations aimed at curbing the excesses of big business had a lasting impact on corporate practices. Laws like the Sherman Antitrust Act sought to dismantle monopolies and promote competition, reflecting growing public concern over corporate power. While initial enforcement was weak, over time these regulations laid the groundwork for more robust antitrust policies in the 20th century that would reshape how businesses operate, promoting fairness and accountability in American capitalism.

Related terms

monopoly: A market structure where a single firm dominates the market, leading to reduced competition and higher prices for consumers.

trust: A combination of firms or corporations formed to reduce competition and control prices within an industry, often seen as a precursor to modern corporations.

corporation: A legal entity that is separate from its owners, allowing for the raising of capital through stock sales and providing limited liability protection to shareholders.