Law and Organizational Society

Abstract

Abstract Between the Civil War and World War I, three related developments transformed the American economy. First, the scale of economic organizations increased dramatically. Many private corporations grew to sizes that during the antebellum period would have been unimaginable. By 1904, 2000 firms (approximately 1 percent of the total number of businesses in the United States) produced annually 40 percent of the nation’s industrial goods. The national markets for several products (for example, oil, tobacco, and sugar) were almost completely controlled by one or by a few corporations. Agriculture was undergoing a similar transformation. Mechanized “bonanza” farms, encompassing as much as 10,000 acres of land, were multiplying. And growing numbers of farmers were joining huge economic and political associations, like the Northern and Southern alliances, that promised to defend their interests. To some extent, the growth of these organizations was attributable to the same forces that powered the industrial revolution in the United States. Improved transportation and communications systems (especially the establishment of a national railroad and telegraph system) and the rapid growth of the cities (fueled partly by immigration) increased sharply the number of consumers a firm could reach. Urbanization also produced convenient concentrations of skilled and unskilled labor. Technological innovations (like the Bessemer process and mechanical harvesters) necessitated or placed a premium on large factories and farms. Finally, a vastly expanded pool of capital reated by a high domestic savings rate reinforced by increased foreign investment and managed by a host of new financial intermediaries-made the formation of large enterprises feasible.