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 States appears to have been technological; the demand for such volume production existed. In fact, steam-driven factories in Manchester, Birmingham, and other European industrial cities were satisfying this demand.75

The armories were able to become large integrated and subdivided factories because their guaranteed markets permitted them to pay the high costs of production and distribution. Even so, the private contractors had difficulty in fulfilling their contracts and in remaining solvent.76 The textile manufacturers were able to set up factories by harnessing the power of large rivers, by relying on wooden equipment and leather belting, rather than on iron machinery and gearing. Yet the water power sites generating the needed head of water were limited. By 1840 industrial establishments using such sources of power were relatively few, and the class of managers that operated them was still small.

Of all the technological constraints, the lack of coal was probably the most significant in holding back the spread of the factory in the United States. The opening of the anthracite coal fields in eastern Pennsylvania lifted this constraint.77 Anthracite first became available in quantity for industrial purposes in the 1830s. Before that time the only source of do- mestic coal for the American northeast, where manufacturing was concen- trated, remained the limited output of mines on the James River. The value of the hard or stone coal of eastern Pennsylvania was first recognized during the War of 1812. Owners of coal lands first began to build canals into the anthracite regions in the 1820s. As the Schuylkill, the Lehigh Valley, and the Delaware and Hudson canals came into operation, output of anthracite coal soared. It rose from almost nothing before 1825 to 91,100 tons in 1828, to 290,600 in 1830, to 1,039,000 in 1837. Moved by canal to New York and Philadelphia, coal was then transported by small coastal ships to Boston and the smaller New England ports. By 1831, 563 vessels carried 56,000 tons of anthracite from Philadelphia to Boston. By 1836, 3,285 vessels moved 345,000 tons. By the mid-1830s the price of anthracite had dropped from close to $10 a ton to less than $5 a ton. By the mid-i840s production had risen to over 2 million tons, and the price fell to $3 a ton. Anthracite, first used for heating houses and other buildings in the seaport cities, thus became increasingly available for industrial purposes.

The metal-working and metal-making industries were among the first to expand output on the basis of the new fuel. In the early 1830s, fabricators of wrought iron were just beginning to use anthracite in the shaping of axes, shovels, wire, and similar finished products. In the mid-i 830s iron- makers devised the anthracite reverberatory furnace to replace the charcoal-heated, water-driven forge to make wrought iron bars, sheets, and rods. In 1840 the first anthracite coal blast furnace to make pig iron went into blast. By 1849, 60 such furnaces were in operation, and by 1853 their number had doubled to 121 . In 1849 the average work force of these furnaces numbered eighty and their average capital assets were valued at $83,OOO.78. By 1854, 45 percent of all the iron made in the United States was produced by anthracite coal—303,000 tons as compared to 306,000 tons produced by charcoal and 49,000 by bituminous coal. The coming of anthracite coal thus quickly assured American manufacturers for the first time of an abundant domestic supply of iron.

Inexpensive iron and coal permitted the factory to spread quickly in a wide variety of metal-working industries. Not only did the output of es- tablishments making axes, scythes, hoes, and plows increase, but for the first time the fabricating and assembling of interchangeable parts became widely used in making metal goods besides guns for the United States army. Locks, safes, clocks, and watches were produced in large depart- mentalized factories. In the small-arms industries, new men and new firms—Colt, Remington, Sharpe, Lawrence and Robbins, and the forerunners of the Winchester Arms Company—all of whom had built large factories in the late 1840s and 1850s, replaced the older private contractors and armories as the industry’s leaders. During the late 1840s manufacturers first began to use the technology of interchangeable parts in factories to produce newly invented machines, such as sewing machines and reapers. The need for specialized machinery in all these industries led to the creation almost overnight of the American machine tool industry. By the 1850s the Ames Manufacturing Company in Chicopee, Pratt and Whitney in Hartford, Browne & Sharp in Providence, and Sellers & Bancroft in Philadelphia were already established machinery-making enterprises.79

By mid-century the availability of coal, iron, and machinery transformed the processes of production in other industries. Coal not only provided heat so essential for large-scale production in foundries and furnace industries and also in the refining and distilling trades, but it also provided an inexpensive and efficient fuel for generating steam power. Cheap coal permitted the building of large steam-driven factories in commercial cen- ters close to markets and existing pools of labor. In the heat-using indus- tries the factory quickly replaced the artisan and craftsman in the making of sugar, spirits, beer, chemicals, glass, earthenware, plated ware, and India rubber.80 In the non-heat-using industries the coal-powered steam engines encouraged the relocation of industries. One significant example was the building of integrated textile mills along the coast from New London to Portsmouth. Comparable factories came, though more slowly, in the cloth, wood, and leatherworking industries. Coal, then, provided the source of energy that made it possible for the factory to replace the artisans, the small mill owners, and putting-out system as the basic unit of production in many American industries.

In the decade and a half before the Civil War, as the availability of coal and the introduction of coal-using technologies brought fundamental changes in the processes of production, the railroad and the telegraph were also beginning to transform the processes of distribution. They made it possible for middlemen to receive and distribute goods in a far greater volume than ever before. These basic changes in production and distribu- tion reinforced one another. The factory could only maintain high levels of production if materials flowed steadily in and out of the factory site in volume and on schedule. And the new factories provided the goods that railroads carried in unprecedented volume to be distributed by jobbers and other marketers. The new sources of energy and new speed and regularity of transportation and communication caused entrepreneurs to integrate and subdivide their business activities and to hire salaried managers to monitor and coordinate the flow of goods through their enlarged enterprises. The almost simultaneous availability of an abundant new form of energy and revolutionary new means of transportation and communication led to the rise of modern business enterprise in American commerce and industry.

Source: Chandler Alfred D. Jr. (1977), The Visible Hand: The Managerial Revolution in American Business, Harvard University Press.

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