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Papers >> Business & Economics >> Corporate Development During the Industrial Revolution

The Standard Oil Company founded by
John D. Rockefeller and the U.S. Steel Company
founded by Andrew Carnegie. The Standard Oil
Company and U.S. Steel Company were made
successful in different ways due to the actions
of their different owners. The companies differed
in their labor relations, market control, and
structural organization.

In the steel industry, Carnegie developed a system
known as vertical integration. This means that
he cut out the middle man. Carnegie bought his
own iron and coal mines because using independent
companies cost too much and were inefficient.
By doing this he was able to undersell his
competetors because they had to pay the competitors
they went through to get the raw materials. Unlike
Andrew Carnegie, John D. Rockefeller integrated
his oil business from top to bottom, his
distinctive innovation in movement of American
industry was horizontal. This meant he followed
one product through all its stages. For example,
rockrfeller controlled the oil when it was
drilled, through the refining stage,
and he maintained control over the refining process
turning it into gasoline. Although
these two powerful men used two different methods
of management their businesses were still very
successful (Conlin, 425-426).

Tycoons like Andrew Carnegie, “the steel king,”
and John D. Rockefeller, “the oil baron,” exercised
their genius in devising ways to circument
competition. Although, Carnegie inclined to be
tough-fisted in business, he was not a monopolist and
disliked monopolistic trusts. John D.
Rockefeller came to dominate the oil industry. With
one upward stride after another he organized
the Standard Oil Company, which was the nucleus
of the great trust that was formed.
Rockefeller showed little mercy.
He believed primitive savagery prevailed in
the jungle world of business, where only
the fittest survived. He persued the policy
of “ruin or rule.” Rockefeller’s oil monopoly
did turn out a superior product at a
relatively cheap price. Rockefeller belived in ruthless
business, Carnegie didn’t, yet they both had
the most successful companies in their industries.
(The American Pageant, pages 515-518)

Rockefeller treated his customers
in the same manner that Andrew Carnegie
treated his workers: cruel and harsh. The
Standard Oil Company desperately wanted every
possible company to buy their products. Standard
Oil used ruthless tactics when Rockefeller
threatenedto start his own chain of grocery
stores and put local merchants out of business
if they did not buy oil from Standard Oil Company.
Carnegie dealt with his workers with the same cold
lack of diplomacy and consideration.
Carnegie would encourage an unfriendly
competition between two of his workers and he goaded
them into outdoing one another. Some of his
employees found working under Carnegie unbearable.
These rivalries became so important to the
employees that somedidn’t talk to each other
for years (McCloskkey, page 145). Although
both Carnegie and Rockefeller created extermely
successsful companies, they both used unscrupulous
methods in some aspect of their corporation
building to get to the top.

The success of the Standard Oil Company and U.S. Steel
company was credited to the fact that their owners
ran them with great authority. In this very
competetive time period, many new businesses
were being formed and it took talented businessmen
to get ahead and keep the companies running and make
the fortunes that were made during this period.


Conlin, Joseph R. History of the U.S.: Our Land,
Our Time. pp. 425-426. 1985.

Bailey, Thomas A. and David M. Kennedy: The
American Pageant. pp. 515-518. 1987.

Latham, Earl: John D. Rockefeller; Robber Baron Or
Industrial Statesman? (Problems in American
Civilization Series). pg. 39. 1949.

McCloskey, Robert Green: American Conservatism In
The Age Of Enterprise 1865-1910. pg. 145. 1951.

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