CORPORATIONS AND CITIES
The United States Steel Corpora- tion, which resulted from this merg- er in 1901, illustrated a process under way for 30 years: the combination of independent industrial enterprises
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into federated or centralized compa- nies . Started during the Civil War, the trend gathered momentum after the 1870s, as businessmen began to fear that overproduction would lead to declining prices and falling prof- its . They realized that if they could control both production and mar- kets, they could bring competing firms into a single organization . The “corporation” and the “trust” were developed to achieve these ends .
Corporations, making available a deep reservoir of capital and giving business enterprises permanent life and continuity of control, attracted investors both by their anticipated profits and by their limited liability in case of business failure . The trusts were in effect combinations of cor- porations whereby the stockholders of each placed stocks in the hands of trustees . (The “trust” as a method of corporate consolidation soon gave way to the holding company, but the term stuck .) Trusts made possible large-scale combinations, central- ized control and administration, and the pooling of patents . Their larger capital resources provided power to expand, to compete with foreign business organizations, and to drive hard bargains with labor, which was beginning to organize effective- ly . They could also exact favorable terms from railroads and exercise influence in politics .
The Standard Oil Company, founded by John D . Rockefeller, was one of the earliest and stron- gest corporations, and was followed rapidly by other combinations — in
cottonseed oil, lead, sugar, tobacco, and rubber . Soon aggressive indi- vidual businessmen began to mark out industrial domains for them- selves . Four great meat packers, chief among them Philip Armour and Gustavus Swift, established a beef trust . Cyrus McCormick achieved preeminence in the reaper business . A 1904 survey showed that more than 5,000 previously independent concerns had been consolidated into some 300 industrial trusts .
The trend toward amalgamation extended to other fields, particular- ly transportation and communica- tions . Western Union, dominant in telegraphy, was followed by the Bell Telephone System and eventually by the American Telephone and Tele- graph Company . In the 1860s, Cor- nelius Vanderbilt had consolidated 13 separate railroads into a single 800-kilometer line connecting New York City and Buffalo . During the next decade he acquired lines to Chi- cago, Illinois, and Detroit, Michigan, establishing the New York Central Railroad . Soon the major railroads of the nation were organized into trunk lines and systems directed by a handful of men .
In this new industrial order, the city was the nerve center, bringing to a focus all the nation’s dynamic economic forces: vast accumulations of capital, business, and financial in- stitutions, spreading railroad yards, smoky factories, armies of manual and clerical workers . Villages, at- tracting people from the countryside and from lands across the sea, grew