Theory of the Visible Hand

The theory of the visible hand of Alfred D. Chandler determined that it was not the invisible hand of the market that determined corporate effectiveness but the visible hand of management. His book, “The Visible Hand: The Managerial Revolution in American Business,” which won both the Pulitzer and Bancroft prizes in 1978, rewrote the

The Traditional Enterprise in Commerce: Institutional Specialization and Market Coordination

In the half century after the ratification of the Constitution American business enterprise became increasingly specialized in commerce and pro- duction. The trend was particularly evident in commerce. As commerce expanded and as commercial activities became more specialized, the dependence on market mechanisms to coordinate these activities increased proportionally. In the 1790s the general

The Traditional Enterprise in Commerce: The General Merchant of the Colonial World

In 1790 general merchants still ruled the economy. In this economy the family remained the basic business unit. The most pervasive of these units was the family farm. In 1790 only 202,000 out of the 3,930,000 Americans lived in towns and villages of more than 2,500, and of the 2,881,000 workers, 2,069,000 labored on

The Traditional Enterprise in Commerce: Specialization in Commerce

Even without the boom in cotton and textiles, specialization in commer- cial business enterprises certainly would have come to the United States in the fifty years after 1790. Before the Revolution specialization was already appearing in the distribution of goods in New York, Philadelphia, and other large towns. The distinction between merchants and shopkeepers

The Traditional Enterprise in Commerce: Specialization in Finance and Transportation

The expansion of trade in the first decades of the nineteenth century caused business enterprises to specialize in the financing and transportation of goods as well as in their marketing and distribution. Specialization in finance and transportation, unlike that in distribution, led to an important institutional development: the growth of incorporated joint-stock companies. Merchants

The Traditional Enterprise in Commerce: Managing the Specialized Enterprise in Commerce

Because of these technological constraints on the speed and volume of moving goods through the economy, not even the rapid expansion of that economy and its resulting specialization in business activities brought specialization within the business enterprise itself. Nor did the expanding economy lead to the integration of several operating units into a single

The Traditional Enterprise in Commerce: Managing the Specialized Enterprise in Finance and Transportation

In managing the specialized enterprise in transportation and finance, American businessmen were somewhat more innovative, although their practices did not differ greatly from those of their British and Dutch predecessors. In the operation of private banking firms and shipping lines, they continued to use the partnership form and the same types of internal record

The Traditional Enterprise in Commerce: Technological Limits to Institutional Change in Commerce

The specialization of enterprise in commerce, finance, and transporta- tion is, then, the central theme of the institutional history of the American economy during the first half century after the ratification of the Consti- tution. Such specialization brought an end to the personal business world of the general merchant of the colonial era and

The Traditional Enterprise in Production: Technological Limits to Institutional Change in Production

Until the 1840s traditional enterprise remained as all-pervasive in pro-duction as in commerce, and for the same reason. The volume of activity was not large and owners had no difficulty in administering their enter- prises. In farming, lumbering, mining, manufacturing, and construction the enterprise remained small and personal. In nearly all cases it was

The Traditional Enterprise in Production: The Expansion of Prefactory Production

In 1790 nearly all the families who raised or processed crops or goods lived on the same premises on which they worked. The largest group of producers who lived and worked in the same place were, of course, the farmers, who accounted for close to 90 percent of the labor force in 1790. In

Managing Traditional Production

As this profile suggests, the management of production was no more complex than that of commerce. Artisans, craftsmen, shipbuilders, house builders, distillers, and refiners who relied on the labor of apprentices and journeymen found the age-old methods of accounting completely adequate. Like the merchants, they kept records of their financial transactions by using the

The Plantation- an Ancient Form of Large-Scale Production

Until the nineteenth century, in both the United States and Europe there were many more large-scale enterprises in agriculture than in industry. In Europe the large landed estates with their salaried land agents or managers had some influence on the evolution of industrial management.45 In the United States this was not the case. One

The Integrated Textile Mill – a New Form of Large-Scale Production

Unlike the operation of the plantation, the management of the inte- grated textile mills, the largest industrial establishments of their days, did create new challenges. Owners and managers paid close attention to expanding output and increasing productivity. Nevertheless, their man- agerial methods adhered to those of the mercantile world that spawned them. The transition

The Springfield Armory – Another Prototype of the Modern Factory

Before the mid-1830s the only industrial enterprises in the United States to have an internal subdivision as extensive as that of Adam Smith’s famous pin factory were a small number of gunmaking establishments. Even here integration preceded specialization and subdivision. Only after the integration of production of all parts of a gun within a

The Traditional Enterprise in Production: Lifting Technological Constraints

Until the 1840s, then, the armories and textile mills remained the excep- tion. In all other manufacturing enterprises the volume of production was not enough to bring the subdivision of labor nor the integration of several production processes within a single establishment. The primary constraint on the spread of the factory in the United

The Railroads in 1850s-1860s: Innovation in Technology and Organization

Modern business enterprises came to operate the railroad and telegraph networks for both technological and organizational reasons. Railroad companies were the first transportation firms to build and to own rights- of-way and at the same time to operate the common carriers using those rights-of-way. Telegraph companies also both built the lines and ran the

The Impact of the Railroads on Construction and Finance in 1850s-1860s

Any detailed analysis of the history of modern business enterprise in the United States must, therefore, pay particular attention to the 1850s. There was some preliminary activity in the 1840s. Not until the 1850s, however, did the processes of production and distribution start to respond in strength to the swift expansion of the new

The Railroads in 1850s-1860s: Structural Innovation

Such constant coordination and control were, however, fundamental to the management of the railroads. Once a large road was financed, con- structed, and in operation, the next challenge t was that of management. Without the building of a managerial staff, without the design of internal administrative structures and procedures, and without communicating internal information,

The Railroads in 1850s-1860s: Accounting and Statistical Innovation

As Latrobe, McCallum, and Thomson so clearly understood, a constant flow of information was essential to the efficient operation of these new large business domains. For the middle and top managers, control through statistics quickly became both a science and an art. This need for accurate information led to the divising of improved methods

The Railroads in 1850s-1860s: Organizational Innovation Evaluated

The railroads were, then, the first modern business enterprises. They were the first to require a large number of salaried managers; the first to have a central office operated by middle managers and commanded by top managers who reported to a board of directors. They were the first American business enterprise to build a