The thought of the United States becoming the world’s richest and most powerful nation would have been unimaginable at the time of the country’s founding. In 1783, at the end of the American Revolution, the United States was a marginal commercial center, far from the powers of Europe and the riches of Asia. It was a farm-based, subsistence economy with a small export trade in grains, tobacco, and salted fish and limited manufacturing.
In 1800, the US census, which excluded Native Americans, counted the population at 5.3 million people, about 17 percent of whom were enslaved. The population was significantly smaller than that of Great Britain, which stood at about 10.5 million people, and that of France, with 26.8 million, let alone China, the most populous nation, with 300 million.
In the nineteenth century, the United States, like several European countries, experienced unprecedented economic growth and a rise in per capita income. In terms of wealth, in 1820, the gross domestic product per capita of the United States was just below that of Italy and the Netherlands and about two-thirds that of Great Britain. Much of the rise in aggregate and per capita wealth in the United States, in the decades after independence until the Civil War, came from a growing manufacturing sector, especially in textiles; a rising international trade in commodities such as whale oil; and improvements in the enlistment of new energy sources, especially coal, and advancements in transportation in the form of canals and railroads. It rested, too, through the mid-1860s, on a cruel and brutal slave-based plantation system in the South producing raw cotton for the global economy.
In the late nineteenth century, the United States outpaced its European rivals in rate of population growth, industrial output, and agriculture. A major factor spurring this rise in wealth was the continued growth of business enterprise and the government policies that enabled its unprecedented scale and scope. Entrepreneurs and innovators improved methods of transportation, completing transcontinental railroads and transatlantic telegraph cables. Some built vast trading networks—warehousing, packaging, and distributing the country’s agricultural resources. Others created massive factories churning out oil, steel, chemicals, and complex machinery like reapers, cash registers, and electrical motors. Still others built vital financial enterprises, supplied credit, made investments, and floated securities. By 1913, the United States was the world’s largest producer of both manufactured goods and agricultural products. Moreover, the size of the country’s largest firms—which by then had as many as several thousand employees—meant that managerial and executive decision-making impacted not only the firm itself but also, in some instances, national economic achievements and trajectories.
Yet the growth of business in America was neither automatic nor predetermined. The idea that business would come to shape so much of American life, altering the very landscape and skyline of the country, would not have occurred to the nation’s founders. Nor would Adam Smith, who penned his classic economic treatise, The Wealth of Nations, in 1776, have predicted the rise of business in such a spectacular fashion. In Smith’s time, businesses shared none of the characteristics of modern enterprise—no separation of ownership and management, no professional managers, and no corporate bureaucracies. Smith could hardly have foreseen the development of a large, complex corporation like General Motors, which by 1955 had 624,000 employees around the world.
By the early twentieth century, the United States was frequently described as having a culture dominated by business. In 1929, Pulitzer Prize–winning historian James Truslow Adams published Our Business Civilization, which conveyed the extent to which business had permeated American society. In America, Adams wrote, “unlike Europe, the business man … finds himself the dominant power in the life of the nation and almost alone in his control over the direction of its entire life, economic, social, intellectual, religious, and political.” He added, “It is a situation that, so far as I know, is unique in history.”
More recently, the historian Sven Beckert likened iconic classical architecture to the extensive commercial and industrial infrastructure that spread across the United States during the nineteenth and twentieth centuries: “While Athens had its Parthenon and Rome its Colosseum, the United States had its River Rouge Factory in Detroit [and] the stockyards of Chicago.” In each case, these structures seemed to somehow capture the essence of these societies.
But how did business organizations gain such a central place in American society? What was it about the United States that made the country so alluring to entrepreneurs, both foreign and domestic? How did the United States come to have the largest business enterprises in the world by the early twentieth century? Moreover, what was the nature of a society in which businesspeople played such a leading role—not just in economic affairs, but also in politics and culture?
In answering these questions, this book emphasizes several overlapping themes: a capitalist orientation in policymaking that, while at times varying in the extent of government regulation and intervention in the economy, generally favored economic growth; a spirit of democratic entrepreneurship that encouraged people, both domestically and from around the world, to found businesses in the United States; an approach to management that embraced innovation and pursued operation at immense scale; and a financial system that, through investment banks, venture capital firms, and other institutions, enabled the commercialization of new technologies and ideas. All four themes, sometimes in concert with each other and other times in conflict, help explain the growth and trajectory of American enterprise to the present day.