A History: Plantation to Giant Business

Prior to the American Civil War (1861-65), the American States were purely agrarian in their economy. There was an extensive cultivation of the lands of the Southern States that raised tobacco and rubber. The economy was that of a feudal system, and the estate owners controlled everything. To work at the core level, they had indented colored laborers brought from the African continent through the Dutch middlemen and other European slave traders. These laborers, in course of time, became the major force, as the American-Indians refused to cooperate with the estate holders of the Northern states of America. The Civil War, according t o Charles Beard (7) was “the Second American Revolution”, which had brought about several fundamental changes in the social structure, as well as in the lifestyle. Some of the agricultural operations were subjected to a phased mechanization. Also, the mischievous policy of the Northerners went concurrently with the American Civil War without any economic motive of a conflict between races. It created a crack and a clean-cut fracture at the basal level of the social pyramid.

Before the emancipation of the laborer, there existed no concept of either a conflict or a competition. Especially the whites and blacks had no confrontation at all. Those works set apart for the blacks could not be done by the whites and they never attempted to do the others’. The significance of mechanization in agriculture was more important than the effect of the Civil War. In certain segments of white laborers, there developed a tendency in them forming into unions, conditioned by segregation. This drove the Negro worker to th every bottom of the occupational ladder. An artificial conflict was created by deploying the white laborer force into the Negro-occupied areas.

Territories were claimed by clearing the areas and some Negro communities began to live in them. All farmers of varying sizes from bigness to smallness, tenant-farmers, farm-hands and the immigrant laborers began to live. There existed no class distinction and they had taken every opportunity to talk of all small matters. There grew up a small village with a bank, a post office, a small general store, and a linking main street through them all. A hotel also grew up in an area of wilderness. The distance between each village or clearance was so high that there grew railways. A railway station, a small cabin came into existence, in the midst of a dense forest. These villages had grown into small towns with businessmen, the small manufacturers growing in each small town. Each village or town was a self-contained unit with a built-in economy of its own. Consequent on the division of labor, there developed class-consciousness.

But then, it was the aristocrat, the rich farmer who came to dominate the society. Parallel to this small town society, there existed the bigger towns of the East, like New York and Boston. There, the rich merchants expanded their business as to develop a constant link with the small towns extending up to the dividing line of America, viz.m the Mississippi-Missouri rivers, the latest annexed state being the Luisiana State, acquired from France beyond which there stretched the unwieldy and the unclaimed land called the Great American Desert. It was the American Middle West, extending up to the Rockies in the West and to Canada in the North, where agriculture was the mainstay as a business. The excess in farm laborers had to migrate to nearby farms of other towns, or to the distant bigger towns of the East, in search of a job. There was a regular inflow of products as well as the know-how, into the small towns from the remote big cities.

The small businessman of the small towns had made a good profit, and he became rich. The agriculturist alone was in doldrums with poverty reigning supreme. The small businessman of the small town had spread and developed his own world of business. It became a religion with him. He was a blinded racehorse speeding towards his cherished goal of dollar-chasing. There was no other culture and refinement besides this. He had grown indifferent to education and consequent moralistic attitudes in life. Success, the long cherished dream of America came to mean one’s inevitable transformation into a mechanistic efficient man, never losing any opportunity of becoming richer than ever. This newer ideal, within the reach of a common man, was a practical substitute to the older democracy and its ideals of Liberty, Equality, and Fraternity, the base upon which the Great American Republic came to be founded in 1776.

The greatest need of the time was their expression, the need to express their aims and aspirations in life. Furthermore, the Americans never attempted to give an appearance oof their actual state, in their over anxiousness to appear big and respectable. Through the process of deflation and denigration, the Europeans world against the newly founded democratic state. This attempt can be caught in a single phrase “boosterism” and propaganda. Every year parades were arranged in almost all the towns of the U.S.A. which consisted of colorful exhibitionistic features of their town, their population, their education, their dynamic efficiency and the utility of everything. Their population weas ranging between three hundred thousand and five hundred thousand. Their schools were magnified into colleges and further on into universities. Up to the end of the Second World War, the universities were locked up in their conservative conventional goals of transforming into a humane, thoughtful, sensitive and a wholesome individual. Since business and its management was in the hands of a practical man, the average man had to be imparted a business oriented and professional managerial education.

The roaring Twenties of the 20th Century did not keep the residents in euphoria for long the prosperity of the United States, a myth, was carried into the period of the Great Depression, 1929-1933, while the rest of the world had wilted under its effect. Added to this was the growth of the scandalous public administration. The Presidents, at least some of them, Harding and Coolidge could not keep their hands clean. Their nepotism, grab and immortality had got the approval of the electorate. Women and immigrants did not get their adult franchise. The businessman was apathetic to public affairs. Whoever came to power, he remained immune. He was apolitical too.

That the U.S.A, the latest offshoot of the business prosperity was becoming inextricably entangled in a fast-pervading poverty - a harsh fact of actuality, could not be kept secret. The government, realizing this, wanted to save their nation from the tentacles of depression. Lord Keynes was made the Economic Advisor to the then American Government. The Keynesian solution to the American economy ensuring full production and full employment had laid the basis for a large-scale expenditure by the government to stimulate and sustain the total economy. The governmental expenditure in turn, had become a major source of income for the individual firms. Controlling the flow of funds to more or less favored contractors, was an independent political consequence. This was an extra Keynesian impact. The states’ subsidy to the entrepreneur resulted in thus lending a staunch support to the party in power. The Republican Party had big interests in the country. As a step towards corporate collectivism, business did not undergo any organizational change in structure. By 1870, merger between firms on vertical as well as on horizontal planes for control of the industrial “sectors” of the economy went hand in hand with the powerful fiscal intervention through Eastern banking of Boston and New York enabling the business concerns to enhance their size. It had led to the formation of giant business enterprises. By the Sixties of the present century, these firms had a total income, which was just short of that of the New York state. The extent of Capital concentration and pyramidization in industry and banking had gone far beyond the imagination of even New Deal’s Temporary Economic Committee’s Reports on the industrial concentration of the Thirties.

Small business enterprise did continue within the framework of a giant based on the principle of specialization in manufacture and also on the high costs of absorption for a giant firm. Moreover, since the Civil War, the emphasis was laid on Giantism in business, high overhead costs of a giant firm was an inhibition to enter the fray of production. Smallness of fixed costs, specialized technical know-how and workmanship, rather than capital were basic in the optimal operation of the smaller business units. This was typical of the U.S. Motor Industry.

In the diary industry,trends indicated the elimination of the small producer from the field. Automatized industrial procedures in agriculture had made rapid inroads resulting in large-scale corporate firms, in place of the small agricultural business, through corporate acquisition, smaller efficient, giant concerns were taken care of. This was yet another way of elimination of the smaller business unit. The older capital intensification and the improved technological efficiency were replaced.

Whatever mechanization was not possible as in the case of handicrafts, the marketing was taken over by the retailing Giant. The intra relationships as well as the inter relationships within and without, between people, between business and other institutions in the country became the concentration of giant class of business.

(7) Charles Beard, P.322 - quoted in The U.S.A. - A History, by Henry Bamford Parkes