Here's a homework assignment to occupy your minds while I'm away.* In the winter/spring of 1901, J. P. Morgan and his minions assembled what became if not the first, then certainly one of the greatest, of industrial cartels. The venture made millionaires out of countless plodding managers who had surely never dreamt of wealth on anything like so grand a scale. During its first year of operation (per Wiki) it comprised something like 67 percent of the nation's steel production.
It would be fascinating to look inside the mind of Morgan as he orchestrated this great edifice. Money of course; Morgan clearly loved money. Yet even more than money, he seems to have loved power, and together with power, good order. Morgan clearly found competition anarchic and, worse, wasteful A part of him very likely believed that by creating US Steel, he had built an enterprise that would make a better life for it workers and its customers as well as its owners.
Perhaps he did. Yet it is clear that he also created a virtual showcase for the economic vices of the cartel: a company almost Ottoman in its sluggish complacency--a company which, in after the miracle of its creation, seems never to have done anything innovative or ground-breaking in industrial history ever again. You could see all this, if not before, then in the post-World-War-II period when the great behemoth painfully lurched towards irrelevance. As upstarts around the world began to devise new ways to do an old business, USS (and, yes, its unions) slowly choked on a virtual edema of excuses and evasions.
Now compare US Steel with ATT, "the telephone company," another and even more explicit monopoly/cartel, created just six years later. It's easy to forget in the mist of time that ATT did not begin life as the "natural monopoly" as so many people may age were long habituated to regard it. No: it took unction and guile and a lot of hard work to clothe the original telephone idea with the garment of universality that gaze the system its sanctity.
But here's the fascinating parallel. As I say, USS (would anybody argue with this?) never innovated anything. Meanwhile ATT in 1925, still just at the beginning of its ascent to dominance, spun off what may well be the most enduringly creative research institution in the history of the United States, maybe the world.
For valuable prizes, why did one company become USS and the other become ATT?
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*Oh, didn't I mention? We're off to Europe for some summertime opera. No, not Wagner, we don't do Wagner.
It would be fascinating to look inside the mind of Morgan as he orchestrated this great edifice. Money of course; Morgan clearly loved money. Yet even more than money, he seems to have loved power, and together with power, good order. Morgan clearly found competition anarchic and, worse, wasteful A part of him very likely believed that by creating US Steel, he had built an enterprise that would make a better life for it workers and its customers as well as its owners.
Perhaps he did. Yet it is clear that he also created a virtual showcase for the economic vices of the cartel: a company almost Ottoman in its sluggish complacency--a company which, in after the miracle of its creation, seems never to have done anything innovative or ground-breaking in industrial history ever again. You could see all this, if not before, then in the post-World-War-II period when the great behemoth painfully lurched towards irrelevance. As upstarts around the world began to devise new ways to do an old business, USS (and, yes, its unions) slowly choked on a virtual edema of excuses and evasions.
Now compare US Steel with ATT, "the telephone company," another and even more explicit monopoly/cartel, created just six years later. It's easy to forget in the mist of time that ATT did not begin life as the "natural monopoly" as so many people may age were long habituated to regard it. No: it took unction and guile and a lot of hard work to clothe the original telephone idea with the garment of universality that gaze the system its sanctity.
But here's the fascinating parallel. As I say, USS (would anybody argue with this?) never innovated anything. Meanwhile ATT in 1925, still just at the beginning of its ascent to dominance, spun off what may well be the most enduringly creative research institution in the history of the United States, maybe the world.
For valuable prizes, why did one company become USS and the other become ATT?
--
*Oh, didn't I mention? We're off to Europe for some summertime opera. No, not Wagner, we don't do Wagner.