• New Opportunities from the Integration of Production and Distribution: The expansion of the railroad network linked the far-flung regions of the United States into a national market, making it possible for firms in industries characterized by economies of scale to lower their unit costs by concentrating production in large facilities. In such industries the average size of the production unit rose over time and the number of firms declined. At the same time, the level of geographic specialization in the U.S. economy increased. The comparatively rapid speed at which railroads operated also created opportunities for entrepreneurs to found new kinds of business. Before the 1870s, for example, cattle were usually shipped live on railroad cars to eastern cities where they were slaughtered for local consumption. Gustavus Swift, an East
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Swift faced a lot of opposition to his plan—not only from butchers and wholesalers whose business he threatened, but also from the railroads, which already had extensive investments in cattle cars and feeding stations. As a result, he was forced to build his entire distribution system from scratch. His initial successes gave him the wherewithal to expand into sales. He quickly built a network of wholesale facilities with refrigerated storage space and a sales staff to market the meat to local stores. In addition, by buying rights to harvest ice from the Great Lakes and setting up ice houses along his routes, he protected himself against costly bottlenecks that could have damaged both his product and his business. As a consequence of his skill in system building, Swift‟s enterprise grew rapidly. Later, this became an ogilopolistic structure, but these problems were also sorted out.
• The Great Merger Movement: Most capital intensive industries in the late nineteenth-century were
Swift faced a lot of opposition to his plan—not only from butchers and wholesalers whose business he threatened, but also from the railroads, which already had extensive investments in cattle cars and feeding stations. As a result, he was forced to build his entire distribution system from scratch. His initial successes gave him the wherewithal to expand into sales. He quickly built a network of wholesale facilities with refrigerated storage space and a sales staff to market the meat to local stores. In addition, by buying rights to harvest ice from the Great Lakes and setting up ice houses along his routes, he protected himself against costly bottlenecks that could have damaged both his product and his business. As a consequence of his skill in system building, Swift‟s enterprise grew rapidly. Later, this became an ogilopolistic structure, but these problems were also sorted out.
• The Great Merger Movement: Most capital intensive industries in the late nineteenth-century were