John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, J. P. Morgan, and other tycoons engineered much of the first wave of mergers around the turn of the last century, aggressively trying to consolidate oil, steel, railroads, sugar, finance, and other industries. Corporate holding companies known as trusts permitted these men to gain control of vast amounts of capital. History is filled with colorful stories about their chicanery in trying to acquire the assets of competitors.

 

            The vast majority of mergers and acquisitions during this period were horizontal mergers---absorbing direct competitors can be a short cut in attaining market dominance. Such giants as U.S. Steel, General Electric, and Standard Oil were formed. Abuse of the resulting market power appeared routine. Perceived offenses by these major companies fomented a general outcry for restrictions on trusts, leading to the passage of the Sherman Antitrust Act in 1890, which attempted to forbid major horizontal mergers. Ironically, the courts continued to allow numerous horizontal mergers until loopholes were tightened by the Clayton Act of 1914.