The United States of America, during the last years of the Nineteenth Century, witnessed a rash of corporate mergers. The Industrial Revolution had taken firm hold, and the nation was changing rapidly. Millions of Americans who had once been independent farmers or tradesmen now found themselves in the position of what some termed "wage slaves." At the mercy of their corporate employers, they worked long hours at low pay, and often under appalling conditions. The reasons for the merger mania of this period are many and complex, as are its effects upon the population as a whole. In breaking down the traditional vocational environment, the gigantic new conglomerates also transformed the entire social landscape. Work was no longer a family business shared by all generations. Communities no longer clung together for mutual protection and aid. Suddenly, the citizen of this new world was out on his own. He did what he was told and hoped for the best, though what was deemed the best often fell far short of what was desirable. The corporate juggernaut spawned its own adversaries, corporate greed feeding the new union movement as exploited workers fought for basic rights. More than any other time, the late Nineteenth Century was a time in which the modern world and all its social safety nets was formed. The seemingly unstoppable growth of the trusts and the conglomerates caused many to rethink the basic responsibilities of employers and government.
To begin with, the new conglomerates acted in much the same way as traditional employers. Like the old masters and farmers, they did not attempt to provide any special welfare services for their workers. Employers expanded their enterprises as they were able to do so. In this sense, the corporate merger represented a natural process of growth. Successful companies bought up other companies in order to expand into new markets and eliminate competition. As with the old, traditional-style family business, the new corporations could be a source of pride and social prestige. Yet Americans demonstrated an extraordinary willingness to sell out when the price was right. Unlike their counterparts in certain other countries, Germany for example, the original owners of a business saw nothing wrong with selling out and depriving their heirs of the opportunity to control what had been a family-run enterprise.
Though Germany's hospitable legal environment for collusive arrangements can be cited to account for the absence of a U.S.-style merger wave, it is imprudent to leave matters at this. Instead, other variables merit consideration. For instance, attitudes toward control perhaps had an impact. Allegedly, as compared with their counterparts in the U.S., industrialists in Germany were more reluctant to relinquish their independence and lose the identity of the firms they had founded. This was because they tended to have deeply -rooted historical ties to the firms providing their income and believed that having a family business provided the basis for their social status.
Given that the owners of the new corporations were increasingly inclined to view their enterprises, not as family business, but almost solely as money-making entities, it is no surprise that workers were increasingly perceived as parts of the manufacturing process rather than as human beings. Many industries relied increasingly on elaborate chemical processes and the employment of huge amounts of energy, usually steam:
The application of heat and involved chemical rather than mechanical methods, improved technology, a more intensified use of energy, and improved organization greatly expanded the speed of throughput and reduced the number of workers needed to produce a unit of output. Enlarged stills, superheated steam, and cracking techniques all brought high volume, large-batch, or continuous process production of products made from petroleum, sugar, animal and vegetable fats, and some chemicals, and in the distilling of alcohol and spirits and in the brewing of malt liquors. In the furnace industries better furnaces, converters, and rolling and finishing equipment, all of which required a more intensive use of energy, did much the same thing.
The typical industrial worker became subordinated to the means of production. Inherently unhealthy processes and conditions led to increased hardship. The factory worker in this period was exposed to hazard after hazard, and risked life and limb almost every day he went to work. The larger the corporation, the more likely it was, as well, that the factory owner would have little knowledge of the actual conditions under which his employees labored. To these owners, they would quickly become little more than figures on a balance sheet. Indeed this situation was exacerbated by the various economic criteria that created the "merger mania."
Low earnings, however, were also a function of the intense competition that occurred during the 1890s in industries that experienced consolidations ... profit rates on capital were on the average lower in consolidating industries than in the rest of the manufacturing sector in 1899
Sadly, these conditions were hardly confined to just a few companies. The companies that participated so readily in the "merger mania" were, in reality, quite dominant in their respective industries.
Brief as the merger movement was, it threatened to make radical changes in the competitive structure of American industry. All told, more than 1,800 firms disappeared into consolidations, many of which acquired substantial shares of the markets in which they operated. [In the case of] ninety-three [of these] consolidations ... seventy-two controlled at least forty percent of their industries and forty-two at least seventy percent. Even assuming that none of the remaining mergers achieved significant market power, this still means that more than half of the consolidations absorbed more than 40% of their industries, and nearly a third absorbed in excess of 70%.
As a result, few workers escaped the consequences -- good or bad -- of the merger movement. Where formerly, a variety of different owners fairly widely dispersed geographically had run their enterprise according to their own ideas of what constituted "good business practice," a small number of "business plans" now dominated. The new conglomerates could easily make decisions that affected tens of thousands of workers. Scholars of the period were well aware of the potential for abuse of workers' rights, and for the condemning of workers to labor under horrible and human conditions.
The apparent callousness towards the worker was a natural outgrowth of the entire merger movement. The aim of the merger was, as business decisions usually are, to save money. It is the view of Naomi Lamoreaux that the Merger Mania was set off by the unparalleled price wars that erupted in the late Nineteenth Century.
Hard-pressed to make their products as cheaply as possible, corporations sought all sorts of ways to keep these costs down. The merger movement represented an attempt to control an industry, much as a political and geographical empire might seek to assume large-scale control of markets, resources, and territories. The corporate bosses thought that, if they expanded horizontally i.e. If they controlled as much of their own industry as possible, they would then be able to fix the terms and conditions of production. The more capital-intensive the industry, the more likely it would fall prey to the merger mania. The following table reveals the formulae used to represent growth vs. capital investment:
Capital Investment vs. Output
As companies expanded enormously in size, concern with costs became greater than ever before. Workers were under intense pressure to be as productive as possible. As "means of production" a company's employees had their abilities measured in terms of their cost to the corporation vs. their productive output. To the extent that technology itself could only do so much, workers were forced to put in long hours, in an attempt to "beat the clock" thereby keeping costs low and productivity correspondingly high.
Each motion of work was now measured in microscopic units and thus the relationship between labor and the physical environment was severed in consciousness. Instead workers were apparently dominated, not only by the machine, but also by the clock that suddenly appeared as an autonomous force of production. Internal time consciousness became a function of the industrial system, and punctuality in appearing for work was a requirement that, in highly "integrated and rationalized manufacturing processes, became even more fundamental than the possession of manual skills.
The gigantic monopolies became thus huge leveling agents. Working conditions were held to the lowest possible common denominator.
The transition from the small, family-owned and staffed, business, to the corporate giant spanning the better part of a given industry, led to significant organizational changes. In order to successfully integrate so many workers into the manufacturing process and in order to ensure that production was carried out as efficiently, and as cost-effectively as possible, a new organizational paradigm was required.
In iron and steel, as well as in industries not delayed by struggles with craft workers, the new model was of an army. A hierarchical structure was instituted, with foremen and supervisors to watch over other employees, and the entire enterprise assumed the shape…