Civil War Economy

Following the Civil War corporations began to develop at a steady pace. The needed fast transportation and abundance of materials during the Civil War fueled the correct conditions to give rise to the large-scale enterprises and financial capitalism in the United States after the Civil War. Resources such as natural resources and a growing population, paired with large corporation and the government, were the conditions that gave rise to the large-scale enterprise and financial capitalism in the United States following the Civil War. Though there were many benefits from these conditions there were multiple problems that resulted. Natural resources such as coal, iron, copper, lead, gold, lumber, oil, and petroleum were heavily cultivated after
the Civil War. With the growing expansion from the Homestead Act, more women, men, and Exodusters were moving out into the West and discovering new natural resources. With more resources found, more industries were built, adding to the need for a new labor force. The influx of a new labor force after the Civil War also influenced the cultivation of natural resources and movement west. As the industry advanced into a factory system, more products were needed and manufactured requiring a heavy labor force. After the Civil War there were three waves of immigration because of the availability of land and work in the United States. With more immigrants the population began to grow at a massive rate and because the Southern labor force was now free there became a new type of labor force. With more people, came more opportunities to cultivate the natural resources and to develop large corporations. With the new sources of power, inventiveness, and new forms of transportation and communication, large-scale enterprises began to develop. With the discovering of the natural resource, coal, industries were not required to be by a river and therefore were able to develop in rural and urban areas all across the United States. Mail order, a national market, commercial banks, and the new financial institution were forms of inventions that assisted in the growth of the financial capitalist system and the large-scale enterprises. As standardization became the new model for factories, more products were produced at a faster rate because each person was adding only a piece to the larger project making people more like machines. With standardization and an increase in goods more factories and industries expanded. Corporations, such as Rockefeller oil began to develop based off of a system of horizontal integration. This meant that Rockefeller would cut his prices so low, that his competitors could not keep up and therefore, he was able to buy them out. Eventually, Rockefeller owned over ninety-percent of the oil industry creating a trust. A trust was when a company combined under one management with a majority of the same business. This placed all stock in the hands of the trustees who were to take over and control in exchange for the stock certificate. Prices were also fixed and the market products were fixed. Rockefeller oil resulted in legal challenges because the trust and horizontal system illegally regulated trade and charters because of the control over the market products and prices.
Other corporations developed much in the same way except for Carnegie Steel who used vertical integration, meaning he bought up all the levels of production for the product of steel.
By owning all of the modes of production, Carnegie was able to sell and make his product for a low price. However, as corporations began to rise other forms of business combination were created. A pool or cartel was an agreement between competitors to divide the market and fix the price. This type of business combination was mostly done to railroads and the telephone because there was a fixed production quota and it assisted any firm in agreement as long as the economy was functioning well. A merger was a legal consolidation of two companies into a single company, an acquisition was when one company took over another company and established a new owner. These two types of business combinations only worked together when a company became an acquisition and then became a merger. Interlocking directorates were separate businesses with a link between corporations because one person would sit in on all of the separate businesses boards. All of the different forms of business combinations influenced the rise of large-scale enterprises and the financial capitalism because men like Carnegie, Rockefeller, and Morgan, were able to control a majority of the market and thus, controlled the system of wealth to the classes establishing an unequal distribution of corporate power and a gap in the class
system.
As corporations rose the government took a policy of laissez-faire. This meant that the government was hands-off to the economy to promote economic growth. Republicans supported the growth of corporations because those corporations supported the Republican Party. Those in the government were not interested in regulation at the time because it was seen as an overstep of power. The government saw the economy as functioning properly because prices fell, stock grew, and the people were happy. Though the laissez-faire policy worked for the time problems developed because there was no regulation on the business and their practices in terms of their workers.
When Rockefeller developed the oil company into a trust he created a monopoly on oil.
This meant that he was the main controller of the oil industry and therefore controlled the consumer and producer aspects of the business. At the time the government was not stepping in to regulate monopolies allowing men like Rockefeller to continue to grow their business and take over more industries creating zero competition. This became a problem because there were few large corporations who controlled a majority of the market. With a concentration of wealth those in control of the companies controlled a major portion of the total wealth of the United States. This created a gap between the different levels of society and there was no regulation by the government to control the gap establishing economic problems in the long run. An abuse of workers was not uncommon during the rise of large-scale enterprises. There was an idea of caveat emptor meaning the producer and consumer assumed all of the risks associated with making or using a product. Workers also worked twelve hour days, six days a week, and children of the age of five were employed making child labor an issue. These were not the only problems formed during the time of large-scale enterprises and financial capitalism, but they were some of the most impacting resulting in a needed change by the
government.
Natural resources, large population, corporations, and the government all influenced the conditions that gave rise to the large-scale enterprises and the financial capitalist in the United States following the Civil War. Big businesses grew, more people were employed, new industries were developed, and the economic system was functioning well during the time after the Civil War. With the hands-off policy towards the economy from the government, multiple problems developed that eventually led to the people organizing into labor organization and the government stepping in. Those condition that influenced large enterprises and the financial system would alter Americans idea of industry and wealth for many years after the Civil War.