1	History of American Business
2	Objectives & Preview Learning Objectives To trace the roots of American business to European mercantilism To identify and describe major eras in the development of American business Preview Mercantilism in the Colonial Period The impact of the American Revolution on trade and manufacturing The Industrial Revolution & Entrepreneurship The Gilded Age & Captains of Industry (video) The Production, Marketing, & Global Eras of American Business
3	The Roots of American Business Structure The Colonial Period: 1620-1776 The French enterprise under Jean Baptiste Colbert—the embodiment/creator of mercantile capitalism Mother country provides capital & manufactured goods Colonies provide raw materials and markets for finished products North America: sugar, tobacco, grain, furs Africa: slave labor Formation of Joint-stock companies Primary motive: Demand for quick returns è speculation and many business failures
4	The British Mercantilists 1629: the Massachusetts Bay Company, a religious enterprise, established a Puritan Commonwealth in America Joint-stock enterprise, with the colonists as the only stockholders Success correlated with the Puritan ideology that God required hard work, thrift, and faith. Rise of the independent colonial merchant Trading consortiums or partnerships with British merchants Exports: timber, furs, wood products, tobacco, indigo Imports: manufactured goods from Britain and Ireland (mainly iron products, textiles, coffee, tea, paper, sugar molasses, wine, glass, earthenware)
5	Dramatic changes in the American colonies in the 1700s Plenty resources but no labor è importation of indentured servants and slaves Labor-intensive tobacco and cotton plantations in southern colonies (VA, Carolinas) Cultivation of indigo as dye for British textile industry
6	Impact of the American Revolution on trade Fought for economic reasons Britain’s demand for exclusive trading rights with American colonies Cheap raw materials è England High-priced finished goods è colonies Effects on business Removal of major obstacles to economic expansion (British regulations and taxes) High costs: Loss of money, lives, commercial alliances, banking/credit associations, and the protection of British law and naval power
7	Early American Manufacturing Post-revolutionary shift from foreign trade to domestic industries Growth of domestic household manufacturing Inception of a distinctive American system of manufacturing British and European vs. American manufacturing Skilled, plentiful, cheap labor vs. semi-skilled labor, lack of capital, efficiencies, technology Finishing processes vs. volume production of standardized products, interchangeable machine parts, multiple inventions/processes 1776: Adam Smith (“the father of capitalism”), The Wealth of Nations & the “invisible hand” è principles of Laissez-faire
8	Business History in the United States
9	The Industrial Revolution in the U.S. Establishment of the cotton textile industry in New England 1813 Samuel Slater’s water-powered mill: first mechanical weaving process in America 1813 Francis Cabot Lowell’s Manufacturing Company in Waltham, MA: standardized product, first cost-accounting system, specialization of labor, departmental (functional) organization. By 1839 ten new cotton and woolen mills in Lowell, MA
10	The Age of the Entrepreneur – 1800s Innovators and entrepreneurs --Large numbers of inventions revolutionized business Eli Whitney: the cotton gin (1793); the concept of interchangeable parts Robert Fulton (1806): demonstrates commercial feasibility of steamboats Samuel Colt: the revolver (1836) Cyrus McCormick: the reaper (1831)
11	The Age of the Entrepreneur – 1800s Innovators & entrepreneurs as catalysts for a new system of manufacturing Expansion of iron and transport industry (rail, steamboat) -- dramatic increases in mechanization and major impact on business Enormous demand for coal, iron, steel -- Heavy capital investment Creation of domestic, inland markets for industrial goods Increase in American exports, savings, and capital investment Shift from an agrarian to an urban environment
12	Changes resulting from the Industrial Revolution Factories: places of concentration of workers Machines replacing labor: increased production, semi-skilled/unskilled labor, standardized production Mass production: lower cost of production with increased volume (economies of scale) Scientific management: Frederick W. Taylor Specialization of labor: increased efficiency, alienation Major catalysts of change: the railroads and the banking industry
13	The Production Era: 1860-1925 Inventions, increased production, and WWI â increased demand (D > S) Continued specialization â standardization â mass production 1909: Henry Ford’s Model T; 1913 the moving assembly line The rise of modern management: Henri Fayol â Focus: the production process (engineering) and increasing efficiency
14	The Marketing Era (Sales & the Consumer): 1925-1980 Intensive production of production era â excess supply â increased marketing (promotional efforts to move goods = advertising) â increased competition Post WWII boom period â increase in discretionary income â Shift in focus: the customer; satisfying customers with differentiated products Beginnings of market research and integrated marketing (4 P’s--product, price, placement, promotion)
15	The Global Era The global economy International trade Global competition Global communication Increased efficiencies in financing, production, distribution, and marketing
16	The Captains of Industry (Robber Barons) -- late 1800s Video: The Industrial Giants, Trusts, and Anti-Trust Legislation (1887-1920) Take notes on the following questions; then discuss in groups of 4: Who are the Industrial Giants and what industries did they control? What characterized these Industrial Giants? What effect did the trusts of the Industrial Giants have on farmers, miners, and ordinary people? What was the change in government attitude toward business under Presidents McKinley and Theodore Roosevelt? What business conditions were exposed once the Industrial Giants were challenged by the government? Characterize this period of time.
17	The Captains of Industry (Robber Barons) -- late 1800s (the Gilded Age) The capitalist system: laissez-faire Banking as big business to finance the expansion of the railroads Establishment of large investment banks: J. P. Morgan First billion dollar corporation: Carnegie Steel (Andrew Carnegie) Andrew Mellon: ALCOA (Aluminum Company of America) J. D. Rockefeller: Standard Oil Company
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19	The Colonial Period: 1620-1776 The colonies: supplier of raw materials The economic system: mercantilism England: supplier of capital, trade Labor: skilled workers (craftsmen), indentured servants, slaves Crops: cotton, tobacco, indigo
20	"Paul Revere" Paul Revere: established rolling mill for sheet copper John Winthrop: established America’s first iron works John Hancock: import-export business with England, the West Indies, and Holland William Boyd / William Fitzhugh: tobacco planters / merchants Jonathan Lucas: perfected the rice milling process; sold rice mills in South Carolina
21	The Industrial Revolution: 1750-1800 1775-83: The Revolutionary War: economic reasons Results of independence: loss of trading partner, source of manufactured items Beginnings of entrepreneurship in the US Beginnings of the Industrial Revolution: multiple inventions
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