Critical review approaches and frameworks

¶ … Merger Wave

There are many factors that contribute to today's economic global status. Economic evolution did not happen over night and one can look to history to analyze trends and practices as proof. It is unfair of historians to try to pinpoint one deciding moment in history that influences today's business world. One should see today's market as a reflection of past trends and business practices, a build up of many moments of time full of mistakes and successes. It is fair to say that much of where we are today has much to do with what has been learned already but also what has yet to be learned. It is the notion of possibility that makes the present economy rich and multifaceted. It is the ability to think outside what is already known and break down barriers that makes the future of business very exciting. This type of attitude is warranted, as the world becomes a much smaller place in which to live and work.

This paper will review the article "Factory Size, Economies of Scale, and the Great Merger Wave of 1898-1902" and look at the author's point-of-view concerning the economic history of the time. This paper will discuss many factors that contributed to factory size. Many historians would like to think the reason behind the explosion in factory employees had much to do with the Great Merger Wave but in actuality that could not be further from the truth. There are two factors that played a significant role in factory size and our current historical perceptions of factory size. They are as follows: (1) new technologies and innovations and (2) data collection and census. This paper will explore these two factors.

Review

It seems Anthony Patrick O'Brien is challenged by modern business and looks to the past for new ideas. He brings many interesting points to light in his article, however, what is troubling about his stance is the fact he does not make a commitment to an argument. He paints a vivid picture of both sides of the fence but remains suspended and elusive in his overall opinion. Maybe he is fascinated by how intricate the relationships between the economy and technology were for the time. He juxtaposes two elements of business at the time: (1) the merger wave and (2) structure change. The first element does not take into account the economies of size and how this factor was changing due to the Industrial Revolution. In fact, O'Brien believes the factory size resulting for the great mergers does not compare with "increases in average plant or factory size should been greater during the 1870s and 1880s that during the period of the merger wave" (640). These are reasons he has come to this conclusion: (1) technology and (2) data collection. Still he argues the importance of technology predates the great merger wave's impact as "industries such as food processing, chemicals, petroleum, primary metals, machinery and transportation equipment" (641) were already in place during the 1880s. I believe he is correct that the innovations of the Industrial Revolution are more important than mergers and acquisitions. The reasoning behind this opinion is grounded in historical data collection practices. Historians like Robert Puth and Albert Niemi can argue "the average production unit in American manufacturing tripled between 1900 and 1920" or "quadrupled during the same period" (642) but one must understand how those numbers come about. How were the data collected and what segment of factory population was used? The truth of matter is that criteria changed from year to year in gathering this data and so did the demographics. This practice is evident with the following quote:

The census collected data on establishments not factories. In all censuses during the period, data on two or more factories owned by the same firm and located in the same county were reported as a single establishment. A census in 1904 included only factory production excluding neighborhood industries (factories taking place in field). Establishments producing output valued at $500 or more were included. (O'Brien 644)

This inconsistency continued throughout this time period and also did not account for mergers between two different companies. The numbers do not represent what could have actually happened. The numbers are also skewed due to the fact many mergers failed in those years. Those populations are also not included in the census.

Finally O'Brien attributes the explosion of factory worker population to the technological innovations that "allowed for the initial development of large firms in these industries that appeared during the 1870s and 1880s" (647 & 648). It is this development that provided the foundation for modern business today.