Big Business
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- For other uses of the name Big Business, see Big Business (disambiguation).
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Big business is usually used as a pejorative reference to the significant economic and political power which large and powerful corporations (especially multinational corporations), are capable of wielding. The term "Big Business" first came into use in a symbolic sense subsequent to the American Civil War, particularly after 1880, in connection with the combination movement that began in American business at that time. Organizations that fall into the category of "big business" include ExxonMobil, Wal-Mart, De Beers, Microsoft and Citigroup.
Although the term has become common, there has never been general agreement as to what constituted "bigness." The large consolidated railroad and public utility systems have commonly been considered "big" because of the size of their fixed investments and their gross incomes. Industrial companies have been considered "big" both because of the absolute size of their assets and because of the size of their assets relative to the assets of other firms, especially competitors. The term has also been used in connection with the volume of sales of a particular business, especially when the sales of one concern were a substantial portion of the industry's sales.
In a more sophisticated sense "bigness" has had reference to the extent to which an individual company, either by virtue of its size or for other reasons, was able to influence substantially the ruling prices in the trade. Certain banking houses have generally been acknowledged to be "big" not so much because of the size of their resources as because of the influence their members could exert on many companies and in many fields of activity. The social consequences of the concentration of economic power in the hands of those persons controlling "Big Business" has been a constant concern both of economists and of politicians since the end of the 19th century.
Various attempts have been made to investigate the effects of "bigness" upon labor, consumers and investors, as well as upon prices and competition. "Big Business" has been accused of a wide variety of misdeeds that range from the exploitation of the working class to the corruption of politicians and the fomenting of war. At the same time it has been generally admitted that much of the technological progress since 1850 has been dependent on and fostered by the growth in size and the increase in financial strength of individual business units.
During the rise of big business in the late nineteeth century, long run factors contributing the consolidation of businesses included technological changes and reductions in transportation costs. Cheaper transport costs made it feasible to produce in one location and then ship the product to market, instead of producing where the market was located. Technological changes made plant sizes more efficient in regards to capital-intensive assembly lines.
The rise of railroads contributed to decrease transportation costs during the 1800s. To expand, the railroad companies required large pools of capital to finance infrastructure development and daily operations. However, the government did not have the budget to provide financing, due to the depression in the 1830s and 1840s. As a result, the railroad firms turned to private investors and investment banks to raise capital.
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This article is originally based on material from Dictionary of American History by James Truslow chmn Adams, New York: Charles Scribner's Sons, 1940
