ECONOMIC RELATIONS AND ASSOCIATIONS IN THE SECOND INDUSTRIAL REVOLUTION


Free competition eventually led to monopolism of certain groups of businessmen. Smaller groups of businessmen eventually gain entire production in certain industry sector. In aim to increase their income those groups suppressed every competition. Bigger producers joined and created different shapes of monopoly. Later increased the profitability of their business and in the same time excluded the left competition. Associated capital also increased the economic power of mentioned groups which divided the market among them selfs, fixed the lowest sale price and consensually invested into new innovations and technology.

Companies were associated:

- vertically (companies of the same sector)

- horizontally (multiple companies which supplemented the production process - mines, ironworks, metal industry, transport industry, trade)

Besides vertically and horizontally were companies associated also as cartels, trusts and concerns. Cartels is group of companies of the same industrial sector. Companies organized as cartel preserved their independence in production and inner organization. The owners of the companies organized as cartel consensually fixed the price of products in market, the extent of production of certain company and the division of the market. Trusts is group of former independent companies of the same industrial sector which usually became after joining with other companies into trust only part of major company. Companies organized as trust had common management and administration which took care of entire business of the trust: production, investments and sale. Owners of companies organized as trust received securities or stocks which gave them right to a share in annual profit. A shareholder became a member of joint stock company or even member of the supervisory committee of joint stock company which decided of business and development of trust.

Concern is group of trusts of different industrial sectors and was the highest form of monopolism. Concerns excluded all competition because it usually controlled all from the production of raw material production to fixing the price on the market.