Bobby Caples - Industrial Revolution

8/12/2019 Bobby Caples - Industrial Revolution

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Week 3 Notes

The Industrial Revolution in theUnited States


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The Industrial Revolutionin the

United States British mercantilism kept the U.S. as a colony

which delayed economic development.

Great Britain prohibited the sale of manufacturingequipment and emigration of skilled labor to U.S.

Adam Smith influenced writing of the U.S.Constitution and economic system.

Textile Industry

Commonwealth vs. Hunt 1842

American System of Manufactures

Railroads


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Early Industrial Development

Textile Mills

Largest industry at thetime was textile.

Even though the textileindustry was the largestbusiness, factories werestill small.

Photo on the leftdepicts an early textilemill.


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Textile Mills

Samuel SlaterRhodeIsland System

First to use steam-drivenpower looms

Relied on soleproprietorship orpartnership form ofownership initially.

Relied on family for labor

with growth had to hireprofessional managers.

Vertically integratedoperations forward andbackward.

Samuel Slater


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Textile Mills

Francis LowellWaltham System Used water-power looms.

Hired non-family supervisors & managers

with corporate model.

Used integrated spinning and weaving tomanufacture goods in large quantities.

Relied on adult female labor. Praised by Charles Dickens for better

treatment of employees.


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Textile Mill at Pawtucket, Rhode

Island

Millpresent day

reconstructionDepiction of Mill


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Commonwealth v. Hunt (1842)

Worker combinations (unions) were no longerillegal unless their intent was criminal.

Seeking a closed shop and striking were no

longer illegal. Only applied to Massachusetts but

discouraged prosecution of workerorganizations elsewhere.


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The American System of Manufactures

Manufacture by interchangeable parts was not newpreviously confined to making muskets and revolvers.

The Springfield (MA) Armory was an early factoryprototype.

250 employeeslargest factory in the U.S. untilafter the Civil War.

Organized by Colonel Roswell Lee in 1815.

Used piece rate incentive payments and

accounting system. Labor was more specialized.

Uniform standards promoted interchangeability ofparts.


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The American System of Manufactures

Ideas spread to other areas of manufacturing.

Ex: The reaper by Cyrus McCormick

The American System received its name at theexposition of 1851 in London.

U.S. factories remained relatively small.

The McLane report of 1832 found the firms weremostly:

Family owned and managed

Few corporationsunlimited liability Little use of steam power

Similar to findings of Andrew Ure regardingEnglish firms


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The Railroads: Pioneering in U.S.

Management

First big business in the U.S. developed c. 1830.

Started the transportation revolution.

Facilitated U.S. industry move from local markets tonational markets.

Railroads had size and complexity.

Required a management system.

Courtesy of Association of American Railroads (AAR)


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Communication Revolution

Telegraph, patented bySamuel Morse in 1837,started concurrentrevolution in communication.

By 1860, about 50,000 miles

of wires extended over theeastern U.S.

Dramatic effect on businesscommunication.

Facilitated U.S. industry

move from local markets tonational markets.

Richard Sears used thetelegraph to see goldwatchesthe first electroniccommerce.Samuel Morse


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The Age of Rails:

Daniel McCallum (1815-1878)

Developed a system ofmanaging on the Erie Railroad:

Specific job descriptions

Accurate performancereports

Merit basis for pay andpromotion

Organizational chart toshow lines of authority,responsibility, andcommunication

Use of telegraph fordispatching trains andchecking on performance Daniel McCallum, Circa 1865


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Daniel McCallum

System of management relied on division of labor,personal responsibility, and organization.

Developed a formal organization chart.

Developed highest state of the art informationmanagement.

Lost his job when the locomotive engineers wouldnot follow his rules.

Workers were on strike for ten days in June 1854

then 6 months in 1857 in defiance of McCallumssystem.

Successful career building bridges and served asmaster of the Unions railroads in the Civil War.


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Erie Railroad Organizational Chart

This is perhaps the firstorganizational chartever made

McCallum created theorganizational chart toexplain the ErieRailroad Operation

Erie Railroad Organization Chart of 1855. Library of Congress, Haer, N.Y.


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Henry V. Poor (1812-1905)

A Broader Management View Editor of theAmerican

Railroad Journal

Became conscience offirst U.S. big business

Looked for broaderprinciples of railroadoperations (financing,regulation, and role of U.S.Railroad in life)

Developed three principlesbased on McCallumsideas: organization,information, andcommunication

Henry Varnum Poor


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Henry V. Poor

In later work, Poor feltthe answer to problemsof top management wasthrough better

leadership Unity in the

organization

Selecting leaders on

merit Developing better

information systemsCourtesy of Pics4Learning. http://pics.tech4learning.com


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Emerging Governance Issues

Early industries were partnerships or soleproprietorships.

Railroads, requiring large amounts of capital,

saw the growth of joint-stock companies. Without uniform, adequate laws in Great

Britain, management malfeasance occurred.

Henry Poor wrote about the need forgovernment regulation but not control.


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Summary

From independence to 1860, the U.S. grewand developed industry.

Period was critical to development of the

modern enterprise. Railroads and the telegraph allowed firms to

grow for economies of scale and scope.

Managers were required for large, complex

organizations. Quality of life for people was improving.


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Chapter Six

Industrial Growth andSystematic Management


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Industrial Growth and Systematic

Management

Growth of enterprise was facilitated bytransportation and communication revolutionsas well as manufacture by interchangeable

parts.Alfred D. Chandler Jr.

Andrew Carnegie

Systematic Management The Changing Environment


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Alfred D. Chandler, Jr.

Chandler wrote aboutthe evolution of U.S.Corporations in 1962book Strategy and

Structure. He developed his ideas

from the study of U.S.corporations during this

period.


Courtesy of Harvard Business School


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Described the late 19thcentury as theaccumulation of resources with growth occurringbecause of:

Horizontal combinations of firms in smaller fields

Vertical integrationforward and backward

Larger firms and the growth of hierarchy ofmanagers to coordinate and integrate operations

were the result. Key to success was good management, not size.


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Andrew Carnegie (1835-1919)

Steel Industry

Learned McCallumssystem of managementon the PennsylvaniaRailroad.

Used the new Bessemerfurnace technology tobegin vertically andhorizontally integratinghis firm in the steelindustry.

Used cost accounting toguide his pricing strategyand drive costs down.

Andrew Carnegie

Courtesy of The General Libraries, TheUniversity of Texas at Austin.


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Andrew Carnegie

Steel Industry

He increased thethroughput velocity to

gain economies of scaleand to fully utilize hisresources.

The result was a

declining price of steelfor the consumer.

Andrew Carnegies his first job was in a

textile mill like this.


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The Renaissance of Systematic

Management Mechanical engineers

(especially Henry R.Towne) became importantin improving factoryoperationsthey often

became the managers. Numerous others began to

take an interest inmanagement.

The idea that good

management was critical ina firm gained credencewith engineers andeconomists.


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The Renaissance of Systematic

Management

The Labor Question

Some Social Gospel proponents felt that

workers should join unions, share in profits,

and have arbitration instead of strikes. Engineers and others felt that better work

methods and systems were the answer,including pay for performance incentive

systems. In 1895 Frederick W.Taylor proposed a rate

setting and piece-rate system.


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Big Business and Its Changing

Environment Business & Society

Matthew Josephson characterized thebusiness leaders of this time as RobberBarons.

There is evidence that business leaders didengage in some corrupt practices: wateringstock, bribery of government officials,manipulating stock, and conspiracy.

Their motivation was alleged to be survivalof the fittest and desire for monopoly.

Motivation was also drive for economies ofscale that led to lower prices.


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Environment

The social conscience ofthe 19thcenturyentrepreneur gave rise toindividual philanthropy:

Ezra Cornellhis moneyfounded CornellUniversity.

William Colgatecollege changed its

name to his as result ofhis generosity.

John Hopkins foundedJohn Hopkins University.

Cornelius Vanderbilt

founded VanderbiltUniversity.

Cornelius VanderbiltCourtesy of The General Libraries, The University of

Texas at Austin.


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Environment More Philanthropists

Joseph Whartongrant enabled first business school atUniversity of Pennsylvania.

Edward Tuckgift to Dartmouth started Amos TuckSchool of Admin. & Finance.

Leland Stanfordhonored his son with a university

John Stevensprovided for the Stevens Institute ofTechnology.

James B. DukeTrinity College (later renamed for the

family). Daniel Drewpromise of funds led to Drew University.

Moses Brownfounded Rhode Island College; becameBrown University in 1804.


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Environment

Famous Philanthropists

John D. Rockefeller

given half a billiondollars by the time ofhis death as well asestablishing the

RockefellerFoundation.

Rockefeller is picturedhere in 1907 beside abuilding.

John D. RockefellerChicago Daily News negatives collection, DN-0051595. Courtesy of the Chicago Historical

Society


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Environment Famous Philanthropists

Andrew Carnegiegave away $350million by the time of

his death in additionto his libraries,university, and theCarnegie Foundation.

Andrew CarnegieCourtesy of The General Libraries, The University of

Texas at Austin.


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Rockefeller and Carnegie

Despite generosity by both individuals, theCongressional Committee on IndustrialRelations in 1915 denounced both asmenaces to society.

Rockefeller Archive CenterAndrew Carnegie Free Library & Music

Hall


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Business and Labor

The Commonwealth v. Hunt decision (1842)broke the British tradition of unions asconspiracies in restraint of trade.

U.S. craft unions and brotherhoods of railroadworkers were successful in the late 19thcentury.

Efforts to organize other workers were generallyunsuccessful.

Labor violence in the late 1800s fueled publicfear of unions.


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Business and Labor

American Federation ofLabor organized in 1886under Samuel Gompers.

Without unions, and

despite growing numbersof immigrants, U.S.workers found theirwages and real(purchasing power)wages rising during theperiod.

Samuel Gompers,courtesy of Library of Congress


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Business and Government: The

Seeds of Reform

The elastic clause, thecommerce clause, of the U.S.Constitution expanded duringthis period with regulation of

railroads. The Interstate Commerce Act

and the Sherman Antitrust Actwere attempts to regulatebusiness but these laws weregenerally ineffectual.

Woodrow Wilson (then acollege professor) advocatedbetter management ofgovernment.

Woodrow Wilson, courtesy ofThe Constitution Society


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Summary of Part One

Examined management thought prior to thescientific management era in the U.S.

Early civilizations placed a low value on

economic activity. The technical and cultural changes of the

Industrial Revolution presented managerialproblems in : organizing, motivating people,and fusing people and processes.


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Figure 6-1 Synopsis of early management thought.


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Additional Internet Resources

Academy of ManagementManagement History Division Websitehttp://www.aomhistory.baker.edu/departments/leadership/mgthistory/links.html

List of Internet Resources compiled by Charles Boothhttp://www.jiscmail.ac.uk/files/MANAGEMENT-HISTORY/links.htm

Western Libraries Business Library Biographies of Gurus http://www.lib.uwo.ca/business/gurus.html Developments from Ancient History

http://www.accel-team.com/scientific/index.html Max Weber

http://www.faculty.rsu.edu/~felwell/Theorists/Weber/Whome.htm Nicolo MachiavelliMedieval Source Book The Prince 1513

http://www.fordham.edu/halsall/basis/machiavelli-prince.html John Locke Biography

http://www.blupete.com/Literature/Biographies/Philosophy/Locke.htm Adam Smith

http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/smith/ James Watt by Carnegie

http://www.history.rochester.edu/steam/carnegie/ Developments during the Industrial Revolution

http://www.accel-team.com/scientific/scientific_01.html
http://www.aomhistory.baker.edu/departments/leadership/mgthistory/links.htmlhttp://www.jiscmail.ac.uk/files/MANAGEMENT-HISTORY/links.htmhttp://www.lib.uwo.ca/business/gurus.htmlhttp://www.accel-team.com/scientific/index.htmlhttp://www.faculty.rsu.edu/~felwell/Theorists/Weber/Whome.htmhttp://www.faculty.rsu.edu/~felwell/Theorists/Weber/Whome.htmhttp://www.fordham.edu/halsall/basis/machiavelli-prince.htmlhttp://www.blupete.com/Literature/Biographies/Philosophy/Locke.htmhttp://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/smith/http://www.history.rochester.edu/steam/carnegie/http://www.accel-team.com/scientific/scientific_01.htmlhttp://www.accel-team.com/scientific/scientific_01.htmlhttp://www.accel-team.com/scientific/scientific_01.htmlhttp://www.accel-team.com/scientific/scientific_01.htmlhttp://www.history.rochester.edu/steam/carnegie/http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/smith/http://www.blupete.com/Literature/Biographies/Philosophy/Locke.htmhttp://www.fordham.edu/halsall/basis/machiavelli-prince.htmlhttp://www.fordham.edu/halsall/basis/machiavelli-prince.htmlhttp://www.fordham.edu/halsall/basis/machiavelli-prince.htmlhttp://www.faculty.rsu.edu/~felwell/Theorists/Weber/Whome.htmhttp://www.accel-team.com/scientific/index.htmlhttp://www.accel-team.com/scientific/index.htmlhttp://www.accel-team.com/scientific/index.htmlhttp://www.lib.uwo.ca/business/gurus.htmlhttp://www.jiscmail.ac.uk/files/MANAGEMENT-HISTORY/links.htmhttp://www.jiscmail.ac.uk/files/MANAGEMENT-HISTORY/links.htmhttp://www.jiscmail.ac.uk/files/MANAGEMENT-HISTORY/links.htmhttp://www.aomhistory.baker.edu/departments/leadership/mgthistory/links.html


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Additional Internet Resources

The Robert Owen Museumhttp://robert-owen.midwales.com/

Charles Babbage Institute

http://www.cbi.umn.edu/exhibits/cb.html Andrew Ure - The Philosophy of the Manufacturers 1835

http://www.fordham.edu/halsall/mod/1835ure.html Charles Dupin Biography

http://www-groups.dcs.st-and.ac.uk/~history/Mathematicians/Dupin.html Cyrus McCormick - Biography

http://www.vaes.vt.edu/steeles/mccormick/bio.html Samuel F.B. Morse

http://memory.loc.gov/ammem/atthtml/mrshome.html Henry R. TowneAddress delivered at Purdue University (1905)

http://www.cslib.org/stamford/towne1905.htm Andrew Carnegie

http://www.americaslibrary.gov/cgi-bin/page.cgi/aa/carnegie The RockefellersPBS Documentary

http://www.pbs.org/wgbh/amex/rockefellers/ The Samuel Gompers Papers

http://www.history.umd.edu/Gompers/index.html
http://robert-owen.midwales.com/http://www.cbi.umn.edu/exhibits/cb.htmlhttp://www.fordham.edu/halsall/mod/1835ure.htmlhttp://www-groups.dcs.st-and.ac.uk/~history/Mathematicians/Dupin.htmlhttp://www.vaes.vt.edu/steeles/mccormick/bio.htmlhttp://memory.loc.gov/ammem/atthtml/mrshome.htmlhttp://www.cslib.org/stamford/towne1905.htmhttp://www.pbs.org/wgbh/amex/rockefellers/http://www.history.umd.edu/Gompers/index.htmlhttp://www.history.umd.edu/Gompers/index.htmlhttp://www.pbs.org/wgbh/amex/rockefellers/http://www.cslib.org/stamford/towne1905.htmhttp://memory.loc.gov/ammem/atthtml/mrshome.htmlhttp://www.vaes.vt.edu/steeles/mccormick/bio.htmlhttp://www-groups.dcs.st-and.ac.uk/~history/Mathematicians/Dupin.htmlhttp://www-groups.dcs.st-and.ac.uk/~history/Mathematicians/Dupin.htmlhttp://www-groups.dcs.st-and.ac.uk/~history/Mathematicians/Dupin.htmlhttp://www-groups.dcs.st-and.ac.uk/~history/Mathematicians/Dupin.htmlhttp://www-groups.dcs.st-and.ac.uk/~history/Mathematicians/Dupin.htmlhttp://www.fordham.edu/halsall/mod/1835ure.htmlhttp://www.cbi.umn.edu/exhibits/cb.htmlhttp://robert-owen.midwales.com/http://robert-owen.midwales.com/http://robert-owen.midwales.com/


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End of Part One

Bobby Caples - Industrial Revolution

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