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 single establishment did specialization come in the manufacture of each part of the gun: the lock, stock, and barrel. Of the handful of establishments producing guns for the army, the United States Army’s Armory at Springfield, Massachusetts, was the most important. With its work force of 250 men, the armory was for decades the largest metalworking establishment in the country. Because it was the first works in the United States to develop extensive internal specialization, and because it was in the metalworking industry, the industry where so many of the techniques of modern factory management were first to appear, the armory became an even more important prototype of the modern factory than the integrated textile mill.
However, its organization and operation, like those of the Second Bank of the United States, were unique. It had even closer relations with the federal government than did the bank, and was much less of a private business enterprise. Its large market was guaranteed. It could and did pay more for fuel and scarce raw materials than private metalworking enter- prises. As part of the nation’s military organization, its managers and supervisors were accountable to both the War Department’s Ordnance Department and to Congress. Finally, the single military officer who was accountable for the armory’s performance had an awareness of organiza- tional and bureaucratic procedures that was still totally foreign to the American merchants.
Even so, the contribution of the Springfield Armory was as much the result of the administrative capabilities of its superintendent, Colonel Roswell Lee, as of its special and unique condition.70 The other large federal armory located at Harpers Ferry continued to be operated in a personal way along traditional craft lines. When Lee took command at Springfield in 1815, his first move was to centralize authority and responsibility in the office of the superintendent. He then reorganized the administration of the armory. He devised and put into operation a set of controls that assured accountability for material used and for the quality of the product, and at the same time permitted the piecework wages to be accurately determined.
Lee used these accounting controls to monitor and supervise work done in four departments—three sets of “shops” where the metal and wood parts were fabricated and the central building where they were assembled. The central building also housed the forge, casting furnaces, and a magazine. In the shops fabricating the lock mechanisms, barrels, and stocks, the subdivision of labor had increased rapidly after 1815. In 1815 the different occupational specialties at Springfield numbered thirty-six. In 1820 they had increased to eighty-six, and by 1825 to one hundred.71
Each shop had its foreman and an inspector. They, and apparently the several foremen responsible for the furnaces, forges, and assembling the guns, reported to the master armorer. That manager was directly respon- sible to Lee for the production of firearms. Lee had other assistants who handled the purchasing and shipping of materials and the deliveries of the finished guns. The management of the armory was thus effectively centralized. ,
Lee achieved control over production and accountability for work done in two ways. One was through careful inspection. Each worker placed his “private mark” on each piece he made. After the assistant master armorer had inspected and passed the piece, he put his mark on it next to that of the worker. The supervisor also submitted a monthly office report which listed pieces passed and rejected.
The second method of control was through bookkeeping, that is, by accounting for each transaction carried on within the enterprise involved in production through the use of the standard double-entry accounts. The master armorer and each foreman had a day book in which he entered the amount and value of wood, coal, and supplies (cutting steel, files, emory, and the like), which the workers had received. These amounts were transcribed monthly into a ledger or “abstract book,” the debit side of which listed the total of items received and the credit side the parts produced, materials still on hand, and scrap. The foreman, in turn, had similar books for each worker under his control. In his monthly abstract, the foreman credited each worker with units completed, units on hand, scrap, waste, and tools returned as worn out. “All these must equal each workman’s debit [for materials taken] or he is made to pay for the deficiency,” reported an army officer who reviewed the work of the armory in 1819.72 In addition, each worker submitted each week and each month a statement of amount and value or “return,” as it was called, of materials he had on hand. These accounts were consolidated monthly in tabular form for each shop or other operating unit by its foreman, and for the armory as a whole by the master armorer. Through these accounts Lee reviewed in detail the work of each subunit. As the 1819 report noted: “Complete accountability is established and enforced throughout; and if there is any error committed, it will be discovered on a comparison with the books and it can be traced to its source.”
The accounting and inspection controls Lee set up at the Springfield Armory were certainly the most sophisticated used in any American industrial establishment before the 1840s. Precisely how Lee employed the data so generated to assist in the management of his work is uncertain. He and his master armorer surely used them to monitor and evaluate the performance of the departmental foreman and even of workers within the subunits. There is little evidence, however, that Lee developed accurate figures on the cost of making a single gun, bayonet, or other product. At least present-day historians have found it necessary to compute such data in analyzing the performance of the armory. Nor did Lee use his information to obtain more effective internal coordination and so speed up the flow of materials through his establishment. The output of guns remained steady, and production continued at the same relatively slow pace for the two decades after Lee took over the arsenal.73
Nevertheless, in later years, the organizational innovations at Springfield came to be used in the management of metalworking factories whose processes of production involved the fabricating and assembling of interchangeable parts. The systems and controls developed at the armory were as critical to the development of what became known as “the American system of manufacturing” as the new metalworking machinery and machine tools. They began to be used in the production of axes, shovels, and other simple implements in the mid-1830s and 1840s, and in the making of sewing machines and firearms for the commercial market in the 1850s.74 Finally in the 1880s, over half a century after Lee devised his methods, the practices and procedures developed at Springfield were taken up and perfected by the practitioners of modern scientific factory management.
Modern factory management (but not, it must be stressed, the manage- ment of large modern multiunit enterprises) had its genesis in the United States in the Springfield Armory. Although the practices and procedures developed there became significant after 1840, they had little relevance for contemporary manufacturers or other producers. The small shops, mills, farms, and plantations that accounted for an overwhelming share of American production had little need for such methods of internal accounting and inventory and quality control. Their output was small enough and the pace of their work slow enough so that production was easily supervised by their owners.
Source: Chandler Alfred D. Jr. (1977), The Visible Hand: The Managerial Revolution in American Business, Harvard University Press.