Consolidation Trends

    The newly industrialized economy gave rise to such intense competition that businesses were driven to combination and pooling resources to survive; many didn’t and were driven to bankruptcy. Uniting, gave them a better chance of surviving this competition and limited the pool of competitors, further increasing their chance of survival. The consolidation trend was followed in two stages in the years after the Civil War.

   The first stage lasted from 1879 to 1893 and was marked by horizontal combinations, in which companies making similar products in the same stage of production combine. For example, a steel factory would combine with other steel factories, but not with iron ore mines, which supply the necessary raw materials for steel production.

    The second stage lasted until 1904, and was marked by vertical combinations. In a vertical combination, companies in various stages of production combine, such as steel factories with mines.

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