| Selling to the Nation |
The expansion
of manufacturing in the 1880s produced an acceleration of
earlier trends toward a larger array of new and affordable consumer
goods of many kinds, from household utensils to ready-made clothing and
processed foodstuffs. Large, vertically-integrated manufacturers
of consumer products often produced items that differed little from
each other and that cost virtually the same to produce. Often,
such companies came to compete not only on the basis of price, but
instead by advertising
to
differentiate their products. Accompanying advertising came new ways of selling goods to consumers. Before this time, most people expected to purchase whatever they needed directly from artisans who made goods on order (shoes, clothes, furniture) or from door-to-door peddlers (pots and pans), or in small specialty stores (hardware, dry goods) or general stores. In urban areas during this period, the first American department stores appeared and flourished, offering a wide array of choices in ready-made products--clothing, household furnishings, shoes, and much more. Department stores' products, unlike the wares in previous outlets, not only had clearly marked prices but also could be exchanged or returned if the customer was not satisfied. Such stores relied heavily on newspaper advertising to attract large numbers of middle- and upper-class customers, especially women, from throughout the city and its suburbs. The variety presented by department stores paled, however, when compared with the vast array of goods available through the new mail-order catalogs. Led by Montgomery Ward (which issued its first catalog in 1872) and Sears, Roebuck and Co. (whose first catalogs appeared in the late 1880s--both based in Chicago--mail-order houses aimed at rural America. They offered a wider array of choices than most rural-dwellers had ever before seen--everything from handkerchiefs to harnesses. Department stores and mail-order houses became feasible because manufacturers had begun to produce many types of consumer goods in huge volumes. Mail-order houses also depended on railroads to deliver consumer goods from distant factories. Together, advertising, mail-order catalogs (in rural areas), and the department stores for consumer goods (in urban areas) began to change not only Americans' buying habits, but also their thinking about what they expected to buy ready-made.
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| Economic
Concentration in
Consumer-Goods Industries |
Carnegie,
Rockefeller, Morgan, and others helped to redefine
the expectations of other businessmen and provided models for their
activities. In a number of industries, massive, complex
companies--vertically integrated, sometimes horizontally integrated,
often employing extensive advertising--appeared relatively suddenly in
the 1880s. At first they were concentrated in consumer industries. The American Sugar Refining Company, created in 1887, imitated Rockefeller's organizatrion to control three-quarters of the nation's sugar-refining capacity by the early 1890s. In the 1880s, James B. Duke used efficient machinery, extensive advertising, and vertical integration to become the largest manufacturer of cigarettes. In 1890 he merged with his four largest competitors to create the American Tobacco Company, which dominated the cigarette industry. Gustavus Swift in the early 1880s began to ship fresh meat from his slaughterhouse in Chicago to markets in the East, using his own refrigerated railcars. He eventually added refrigerated storage plants in each city. Othe meatpacking companies followed Swift's lead. By 1890, half a dozen firms, all vertically integrated, dominated meat-packing. Such a market, in which a small number of firms dominate an industry, is called an oligopoly. Oligopolies were (and are) more typical than monopolies. Some of the new manufacturing companies did not sell stock or use investment bankers to raise capital. Standard Oil, like Carnegie Steel, never "went public"--that is, they never sold stock on a stock exchange to raise capital. Rockefeller expanded through mergers or by making purchases capitalized by the profits of the business itself. Rockefeller, like Carnegie, concentrated ownership and control in his own hands. So did many others among the new manufacturing industries. As late as 1896, for example, the New York Stock Exchange sold stock in only twenty manufacturing concerns. Gradually, however, with the passing of the first generation of industrial empire builders, ownership grew apart from management. Many new business executives were professional managers. Ownership rested with the hundreds of thousands of stockholders, all of whom wanted a reliable return on their investment, even though the vast majority remained uninvolved with business operations. The huge size of the new companies also meant that most managers rarely saw or talked with most of their employees. Careful cost analysis, the desire for efficiency, and the need to pay shareholders regular divvidends,led many companies to treat most of their employees as expenses to be increased or cut as necessary, with little regard to the effect on individuals. |
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| Sources |
Excerpted, with minor omissions and additions, from: Chapter 18, "Becoming an Urban Industrial Society, 1880-1890," in Berkin, et al., Making America: A History of the United States, Vol. II from 1865, 3rd edition (Boston and New York, 2003). | |
| © Kahne Parsons, 2007-08 |