January 2011

It has always struck me that the best business novels are interactive. In them, the world of commerce is driven by people whose reality is made palpable to us but whose values, attitudes, and biases often compel us to question our own: As a businessperson, how would I relate to the kind of complex, unpredictable circumstances in which all-too-real fictional characters commonly find themselves? The great business novels I know are salutary, not because they afford us an escape from our office routines but precisely because they turn us back on ourselves and promote the indispensable habit of self-scrutiny. I’ve grouped the following 10 novels according to the diverse characters they portray—from predators and visionaries to escape artists and eccentrics.

PREDATORS

The sudden rise of these vast, and vastly wealthy, industrial empires and Wall Street banks produced a sea change in American politics. At the dawn of the Republic, the country had been overwhelmingly agrarian. But as industry developed, more and more people began migrating to the cities to seek jobs in the cash economy. The flood of immigrants from Europe tended to gravitate to the cities as well. At the end of the eighteenth century, New York had had a population about equal to present-day Altoona, Pennsylvania. A hundred years later, it was one of the great cities of the world.

Corporations also swelled in size and power. Before the Industrial Revolution there had been no large corporations at all. In the early days of the new economy, only the railroads had had work forces of more than a few hundred employees. As late as the end of the Civil War, there was not a single industrial corporation listed on the New York Stock Exchange. By 1900 there were dozens, many of them employing tens of thousands of people.

When Thomas Edison invented the light bulb, in 1879, it could not stand alone. It needed outside support in the form of a reliable supply of electric current, which he provided for the first time with his Pearl Street generating station in lower Manhattan.

Its success helped lead Edison into large-scale manufacturing, which he began in upstate New York. In 1892 J. P. Morgan merged his Edison General Electric and another company to form a new firm, General Electric.

Edison had used directcurrent generators at Pearl Street, but his rival George Westinghouse was offering alternating current, which could be stepped up to high voltages for longdistance transmission, a huge advantage. Edison didn’t like AC because he hadn’t invented it, but in time he had to acknowledge its merits.

Power from the big new units the company then began offering could travel many miles. The electrification of America and of its industries sped forward.

—T.A.H.

As railroads unlocked the wealth of the West, they also promoted the rise of new industries, and meatpacking was among the most significant.

The classic life of the open Western range focused on a city. Cowboys drove their livestock to railroad towns like Abilene, there to ride cattle cars to Chicago’s meatpacking district, with its excellent rail connections with the East.

The Union Stockyards, incorporated in 1865, covered 345 acres. Steers, cows, and hogs were herded into the plants of Armour, Swift, and Morris, to be slaughtered and dressed.

This industry relied on large numbers of workers performing easily learned, highly specific tasks in a monotonous routine. In essence, they worked on a disassembly line, and the meatpacking houses foreshadowed in reverse the industrial assembly lines of the twentieth century.

After the Civil War, as railroads made the United States into a single vast market, farsighted capitalists looked to unprecedented economies of scale, to standardized products that they could sell to infinities of customers. John D. Rockefeller saw farther than any of them. He made oil his business, and monopoly his goal.

In 1870 Rockefeller set up the Standard Oil Company. He started in Cleveland, close to Pennsylvania’s petroleum fields, and gained control of that city’s refineries. This gave him a third of the nation’s oil-refining business, and he soon went after the rest.

He relied on able associates, made good use of bank credit, and showed uncommon confidence during the Panic of 1873. He also showed uncommon ruthlessness thereafter, and by 1878 Standard Oil controlled some 90 percent of the nation’s petroleum. In 1882 he organized his holdings as the Standard Oil Trust, introducing a corporate structure that maintained centralized control while operating across state lines.

With the war over, many of the new federal taxes were repealed or allowed to expire. The income tax disappeared in 1872, not to return permanently for nearly half a century. But the high tariff remained. The greatly expanded manufacturing sector, fearing European competition, fought hard to keep it and succeeded. As a result, the government had revenues far in excess of its expenses and would not run a deficit until the deep depression of the 1890s.

Protected by the tariff wall, manufacturing grew rapidly as the country developed at a furious pace. The railroad mileage that had stood at 30,626 miles in 1860 reached 166,703 in 1890. Only one thin strand of rails had connected the West Coast with the East in 1869. By 1900, four lines reached to the Pacific. And these roads, of course, also served the Midwest, allowing larger and larger grain harvests to be sent farther and farther away.

The transcontinental railroad was the greatest engineering epic in a century full of them.

The Civil War let the nation turn to another great struggle. While the Central Pacific fought through the high passes of the Sierra, the Union Pacific drove westward across the plains.

The job was done in 1869. Stephen E. Ambrose places its significance alongside that of the Civil War itself—a project that remade a wounded nation both symbolically and materially. The West ceased to be remote; travelers could go from New York to California in a week instead of months.

The UP was by far the largest corporation of its day and thus set the pace for even bigger ones to follow. Moreover, the pervasive federal presence in the project foreshadowed an involvement of government and industry that continues to this day.

—T.A.H.

By many measures—not least the total number of men killed and wounded—the Civil War was the greatest one that this nation has ever fought. So it is not surprising that while it transformed the country politically, it also transformed it financially and economically.

From the first, both sides confronted desperate financial problems. Because of the depression that had begun in 1857, the government in Washington had been operating in the red, borrowing mostly shortterm to make up the deficit. The national debt, only $28.7 million in 1857, had more than doubled to $64.8 million in 1860. In the last month of that year, as the states in the Deep South began to secede one by one, there was not even enough money in the Treasury to pay December’s congressional salaries.

THE INDUSTRIAL REVOLUTION began, in the 170Os, with the mechanization of the English textile industry, and gathered strength with the steam engine, the steamship, and the locomotive. It reached the farm with the reaper, which amounted to a large horsedrawn lawn mower that could cope with tall stands of wheat or grain, putting an end to the age-old practice of having a crowd of men advance across a field swinging sickles or scythes, followed by women and children who collected the cuttings.

McCormick was not the only inventor of a reaper, but his much-improved model qualified for a patent of its own, and in 1851, in Chicago, he built the world’s largest reaper factory and produced the machines for sale. He introduced innovations in selling, recruiting hundreds of local salesmen and placing them under the command of state agents, who received a commission on every reaper sold. He also pioneered in offering credit to farmers, who needed their new reapers in time for the harvest but could pay for them only after they had sold their crop.