The growth and expansion of economic activity in the United States over time was due, in large part, to businesses joining together or combining under single ownership or control. The two most common ways businesses combine were by consolidation and merger. Consolidation was the joining of two or more companies on relatively equal terms to form a new composite company. Frequently, company titles were maintained. For example, when Chase National Bank and Bank of Manhattan consolidated, the new organization became known as Chase Manhattan Bank. Conversely, a merger was the absorption of one company by another so that the absorbed company lost its identity. In both consolidations and mergers, shareholders agreed to exchange their stock holdings in the old company for shares in the new company, thereby combining capital to form a single new company.
Consolidations and mergers are horizontal combinations involving competitors who produce the same product or provide the same service. Vertical combinations take place when businesses performing different steps in an industrial process came together. A classic vertical example is the U.S. Steel Corporation, which combined with companies that mine, ship, and smelt ore, and fashion the resulting steel into various products. The terms consolidation and merger in practicality are used interchangeably. A third variation on the consolidation evolved in the mid-1960s: the conglomerate. A conglomerate is an organization of previously independent firms with dissimilar activities brought under the same management and control of a corporate holding company.
Four main waves of business consolidation have occurred in U.S. history. A consolidation wave rolled through U.S. industry between 1895 and 1904 producing giant twentieth century corporations, such as U.S. Steel, American Tobacco, DuPont, and Anaconda Copper. Likewise the 1920s, a high economic growth period with a relaxed government attitude toward mergers, experienced a sharp increase in consolidation of industrial power among large firms. In these first two periods of heavy merger activity, horizontal combinations predominated with a principle purpose of controlling output and prices to end cutthroat competition. During the 1960s conglomerates emerged as the chief form of consolidation. A prime conglomerate example was International Telephone and Telegraph (ITT) which owned such diverse firms as Wonder Bread, Sheraton Hotels, Hartford Insurance, and Burpee Lawn and Garden Products. In the 1980s, under a prevailing national laissez faire philosophy and driven by the increased need to compete in foreign markets, another wave of mergers occurred.
See also: Laissez Faire, Merger, Tobacco Trust
1. the state of the lung in which the alveoli (air sacs) are filled with fluid produced by inflamed tissue, as in pneumonia.
2. the stage of repair of a broken bone following callus formation, during which the callus is transformed by osteoblasts into mature bone.