Assignment 5 for eco1326 - Entrepreneurship in American History\" PDF

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Prepare a 750-1000 word summary of the attached article and submit it as a double-spaced Word document not later than Sunday, October 30 at 11:30 pm. - "Entrepreneurship in American History"...

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Alisher Akhatov Professor Joseph Giacalone ECO 1326 28 October 2016 John Gordon starts his article “Entrepreneurship in American History” by defining the word entrepreneur. “Entrepreneur”, is a French word

that translates to “undertaker”,

meaning the person who manages and takes the risk of a new business. This word started being used in the English language in middle of 19th century, which is considered to be the golden age of entrepreneurship. In America, everything started when in 1607, the Virginia Company sent three ships to the New World with the aim of creating a new enterprise-American plantations. The place where they landed became known as Jamestown, Virginia. Unfortunately, the new entrepreneurs were not successful in their business. Every move the management of the company undertook was wrong, and they ultimately ended up being bankrupt. The Virginia Company was at that time a new ownership type of business - joint-stock company. Creation of limited liability increased people’s confidence by reducing the risk of personally losing everything. As a result of laws passed in the beginning of the 19th century, people started investing into companies and the number of corporations increased to thousands. According to Gordon, some states in America were founded mostly for profit motives. For example, Pennsylvania and Maryland were founded for “refugees for religious dissenters” as well as monetary benefits. On the other hand, New York was founded by Dutch for one sole reason – to make a profit. This trend of profit-seeking in New York continued even when the colony was overtaken by British authorities.

New England’s industry direction was a little different than other states of that time. John Gordon states that the main resource for enterprises in New England was fish, the Atlantic cod. Although it was the main exporting good to Europe, cod-fish was not considered to be a “cash crop” of the state. Therefore, they diversified themselves, and created new industries such as shipbuilding, lumber, slaving and rum distilling to maintain their economy. Moreover, another important commodity that ran New England’s economy was iron. The first person who foresaw the demand for iron was a young John Winthrop. He raised capital in England, and started his company, the “Company of Undertakes” by investing money into Massachusetts State. The state authorities granted this new business a monopoly over iron production and the right to export the iron if “local demand was met”. Nonetheless, Saugus Iron Works, as it was called, ended up being a financial failure. However, the interesting fact that the author mentions is the increase of iron production in the United States after this failure. After a little over 100 years as a minor iron producer, the US became a main exporter and producer of iron, producing more than Germany and Britain combined. The leader of iron and steel manufacturing was a Scottish immigrant, who came here penniless, Andrew Carnegie. It is stated by John Gordon that Saugus Iron Works failed at very beginning of American entrepreneurship. The first patent was made by Joseph Jenks in 1646 for his new invention that improved the manufacturing process of edged tools. Throughout that first patent until now, humankind invented “bifocal glasses, steam engine, the airplane, Coca-Cola, the digital computer, Twitter” and much more. An interesting point Gordon indicates is how these multiple innovations have had an impact on each other.

The day America declared independence, Adam Smith’s The Wealth of Nations was published. One part of The Wealth of Nations which doesn’t do a good job representing America is “Men make their own history, but they do not make it as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered and transmitted from the past.”, in our case we had nearly no past, so we did make our own history. Another solid truth regarding entrepreneurship in the US is the freedom to fail, it gives way to people who may fail 2 or 3 times before making it big, without necessarily feeling hopeless along the way. Another interesting thing to watch as entrepreneurship grew was how it could change whole industries, for example, when the sewing machine was first created it reduced the time it took to make a single garment by over 12 hours. As you can imagine, many feared for their jobs, however, what actually happened was as the price for clothing dropped, the demand for it went up at a rate that positively transformed the industry, rather than destroy it. The next big thing to hit the US economy was the development of corporations; it took a while for the rules to catch up in such a way that these giant corporations with thousands of employees and shareholders benefitted everyone. There were many examples early on of bullying done by the corporations against small businesses, for example, Standard Oil forced many small competitors to sell out, or be ruined, Standard Oil had relationships with many railroads which allowed them to be cheaper than the smaller operators. Secondly, managers were not required to report to stockholders, and when they did, it was often fake numbers. One of the brightest facts about America is the opportunities for people with fresh ideas and a good work ethic, here there is all the means necessary to bring those ideas to life. The

future of entrepreneurship is even brighter than its booming past. It seems the one trick to making this all work is finding the appropriate balance between government intervention and overbearingness....