The Rise of Big Business in Japan, Great Britain, and the U.S.

Krian Braft & Stic Nevens

BIG BUSINESS

Along with industrialization came the eventual rise of big business. As industrialization increased the market’s capacity to produce massive amounts of goods, single corporations emerged that controlled entire fields of manufacturing. Big business is defined by legal corporations, multimillion dollar companies, and integrated business attempts. Today big businesses control the markets of first world countries all over the globe. How did it get to that point? In fact, big business evolved at different times and in different ways in different countries. Three countries of particular interest are the United States, Great Britain, and Japan.

All three of these countries developed big business along with industrialization. One similarity that holds true for all three of these nations is that most big businesses started with a technological advancement that gave them an edge over competition. For an example in the U.S. Buck Duke bought the rights to James Bonsack’s automated cigarette rolling machine. This allowed Duke and the American Tobacco Company to produce more cigarettes per day for a lower cost. Soon they took over the business; similar advancements filliped businesses in Japan and Britain into bigness.

For the most part, big business evolved differently in these different nations. In the U.S. big business began early and by the turn of the 20th century big business dominated the U.S.’s economy. It was not until after WWI that big business took Britain’s market and it was not until after WWII for Japan. This is due mostly to the respective size of the markets of the countries. The U.S. had the largest market and so big business had more goods to take advantage of. In Japan and Britain the market was smaller. Also, Britain’s culture viewed cutthroat business tactics as ungentlemanly while the Americans simply wanted more products. Britain and Japan both maintained a family-owned businesses core well into the 1900’s while the U.S. had bureaucratic business hierarchies by the centuries turn.

Big business in Japan, the U.S., and Great Britain all used different tactics to capitalize income. In the U.S. businesses would use incorporation, vertical integration, and horizontal integration. Incorporation was the mass assimilation of different companies in the same field into one company. This reduced competition and capitalized income. Vertical integration was the ownership by one company of every step in the process of creating a product. This method stabilized prices. Lastly, horizontal integration was the ownership of an entire field, what is now called monopoly. Japan also used incorporation but Britain did not due to legal restrictions. Britain’s sole tactic in business was the use of cartels. Cartels were similar to corporations except companies were not legally bound. Cartels would control prices and restrict supply to maximize profit. Although Japan also had corporations, it had a very unique tactic. The businesses developed in Japan were called zaibatsu. Zaibatsu were diversified companies that spanned many different fields of manufacturing. Instead of horizontally integrating like the U.S., Japanese corporations would be compiled of single companies from different fields so as to stabilize income by spanning different markets. For an example, Mitsubishi –a zaibatsu – did everything from shipping to mining to manufacturing to banking.

The development of big business differed from nation to nation but the end result was the same: a national market dominated by corporations and multimillion dollar companies.

Technological Advances Mother Big Business

Machinery and the development of technology allowed business to explode across these three nations. The American Tobacco Company bought the rights to the Bonsack Cigarette rolling machine, pictured above. This gave them an edge over competition and allowed them to buy out competition and maximize production.

‘Merica’s Massive Market

These are size comparisons by area of America to Japan and America to Britain. The area of these countries is comparable to the size of their market. At the time the population of the US was about 76 million, in Japan there was about 44 million people and in Britain it was about 38 million. These two factors contributed to the large market of the US which gave way to the spawn of big business. Japan and Britain had smaller markets and corollary smaller businesses.

American Big Business: Bureaucracy

This is a photo of a Carnegie Steel Mill in the U.S. Many companies in the U.S. including Carnegie Steel were run by a bureaucratic hierarchy of business men. There were almost no family owned companies in the U.S. while both Britain and Japan had primarily family-run companies.

Horizontal Integration

This is an image of John D. Rockefeller. His oil company, Standard Oil, is a perfect example of horizontal integration –something that American big business used. Horizontal integration is when one company owns every company in one business. Standard Oil was refining 90% of America’s oil by 1880. This was accomplished by buying out all of the other oil refineries in the states.

Vertical Integration

Another strictly American business practice was vertical integration. It was more common than horizontal integration and was more beneficial to a company. Vertical integration is when one company owns every step in the process of making a product. Pictured above is a Carnegie Steel train cart. This shows how Carnegie steel owned not only steel mills but trains, mines, and other steps in the steel making process.

Government Aid & Interference

One key difference between Britain and other nations was the role of government in the evolution of big business. British legistlature set out a few laws and then left big business to grow while Japan and America had constant government aid or interference. The governments aided them by allowing corporations to form but interfered by establishing things like the FDA and commerce laws. Pictured above are moguls like J.P. Morgan watching Teddy Roosevelt bob arbitrarily in the middle of the table.

Japanese Big Business: Zaibatsu

Japanese businesses like the one pictured above were unique to Japan. Called zaibatsu these corporations were extremely diverse in their manufacturing. The factory above which might produce cloth is owned by a larger corporation that also produces coal, ships, and other goods.

Family Ties

Big business in Japan and Britain was different from American big business because families maintained power over the companies. Above are Yataro and Koyata Iwasaki. They were father and son and they both ran Mitsubishi. Most British companies maintained a family based core until after WWI and most Japanese companies did until after WWII.

Big Business bullies small business

The Imperial Tobacco Company of Britain was formed from more than 10 other tobacco companies. When the American Tobacco Company became the top business in the U.S., the company spread to England. The Imperial Tobacco Company formed from smaller companies like J & F Bell (pictured above) to stop the Americans from stealing their business.

Society’s Reaction

This is a photograph of Herbert Spencer, a British social thinker. He felt that Britain’s smaller market, gentlemanly business, and family owned companies were superior to America’s voracious market and bureaucratic corporations. Many others felt the same way. They felt big business was destroying a way of life that once was and ushering an age of materialism.

Wealthy Business Men

This is an image of Andrew Carnegie’s house. This is his primary residence but he owned other houses. The business men produced by this boom were extremely wealthy. At one point, J.P. Morgan’s Steel Company could pay off the national debt 3 times. The same extreme wealth held true in both Japan and Britain once big business took over.

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