During the period 1890 to 1914 the American economy grew considerably due to the growth of its capacity to produce, rapid industrialisation and increased domestic consumption. This was, to a large extent, driven by big business.
Oil was more readily available which made the transport of goods easier and encouraged development of machinery and industry. Through the dominance of Rockefeller and large oil companies, oil was exploited to the benefit of everyone and especially the embryonic car industry. In 1913, Henry Ford, adopted the moving assembly line, which meant that cars could be produced quickly which made them more affordable and increased sales boosting the economy.
Through the work of the steel magnate Carnegie, steel became more readily available due to mass production which supported the development of heavy engineering and production which provided employment. JP Morgan had a leading role in reorganising American railroads which made transport of goods easier and cheaper.
Due to ruthless big business culture, smaller companies which were less profitable could not survive, but the economy benefited from streamlined monopolies due to economy of scale. This meant that prices of goods went down and this spurred on the domestic market to buy more. By strictly controlling costs and increasing efficiency, big business moguls such as Vanderbilt, Rockefeller and Carnegie were particularly influential in this respect.
In support of the economy banking became more stabilized due to financiers such as JP Morgan who directed the banking coalition that stopped the panic of 1907. This financial crisis almost crippled the American economy due to mass bank closures and major New York banks were on the verge of bankruptcy. The consequence of the intervention of JP Morgan was that banks were then able to provide credit to finance businesses and industry which boosted the American economy.
Big business had considerable political influence and exerted pressure on the government and states consequently passed laws to help big business. The government even extended protection through the Supreme Court such as keeping trade unions weak via super injunctions and the 14th amendment. This enshrined the rights and privileges of the individual, which allowed the development of a laissez-faire business culture.
There were however a number of factors which supported the economy which were not directly related to big business. The development of agriculture across the Plains resulted in the cultivation of more land.
Technological innovations such as barbed wire helped in this respect because land could be better protected. Innovations such as higher-yielding hybrid wheat made farming much more productive and profitable; this resulted in America becoming a ‘bread basket’ with surplus wheat for export. Likewise the development of technology such as refrigeration was important to farming and the economy. The development of the refrigerated rail car allowed perishable produce to be transported all across America.
However, undoubtedly big business helped to fund and channel innovation into even greater profitability. Cheap labour, resulting from immigration, was particularly important to developing the economy and also brought additional skills to the country. As productivity increased trade with Asia created additional markets and demands for products.
Indirectly advertising was another area that helped the American economy. Full page adverts in newspapers both in the USA and the rest of the world made people want products and therefore boosted sales and profits. Also the door-to-door salesman developed in this period as new products arrived fuelled demand.
In conclusion big business was clearly extremely important in developing the American economy from 1890 to 1914 but many factors interrelate and arguably the government creating a capitalist free market economy through the political influence of big business was a major factor in helping businesses and the economy to grow.