Thursday, March 1, 2012
Railroads: America's First Big Businesses
Railroads: America's First Big Businesses: According to business historian Alfred Chandler, railroads became America's first big businesses in the latter half of the 19th century. In general, there were four major socioeconomic outcomes that grew from the emerging American railroad industry, and they included eminent domain for corporations, massive organizational bureaucracies for data collection, the selling of a service instead of a product, and lastly, the standardization of time. Perhaps more than any other industry in the 19th century, railroads proved the most difficult to manage precisely because they required a vast amount of debt financing. With high fixed costs for servicing the debt, determining a fair price for customers became nearly impossible, at times. Railroad managers had to figure out ways to control the operations of a business which they could not always observe in action. Even though Samuel Morse's electric telegraph greatly enhanced communication between railroad employees, the need for large-scale data collection still remained. With hundreds of thousands of workers in the American railroad industry by the 19th century's end, a company like the Pennsylvania Railroad (PRR) had bigger budgets and more employees than the entire U.S. government.