The Visible Hand, Managerial Revolution In American Business

ALFRED D. CHANDLER, JR. The Visible Hand The Managerial Revolution in American Business The Belknap Press of Harvard University Press Cambridge, Massachusetts and London, England Copyright © 1977 by Alfred D. Chandler, Jr. All rights reserved Printed in the United States of America Fifteenth printing, 1999 Library of Congress Cataloging in Publication Data Chandler, Alfred Dupont. The visible hand. Includes bibliographical references and index. 1. Business enterprises-United States-ManagementHistory. 2. Industrial organization-i-Unired StatesHistory. 3. United States-Industries. I. Title. HFS343·CS84 6584'00973 77- 1529 ISBN 0-674-94051-1 (cloth) ISBN 0-674--9405z-() (paper) To Fay-with love Acknowledgments This book had its beginnings some fifteen years ago, when the late Arthur C. Cole, Thomas C. Cochran, and I agreed to write a three-volume series on the history of American business. Cole was to review the evolving structure of the American business system. Cochran was to examine the place of business in its broader culture, and in 1972 published Business ill American Life. I was to study changing business practices, particularly those concerned with the management of the firm. My own study acquired its first focus when I received a grant from the Alfred P. Sloan Foundation to examine the rise of big business and the public response to it. By concentrating on the coming of modern business enterprise I believed that I could broaden my contribution to the series by describing the changing processes of production and distribution in the United States and the ways in which they have been managed, since the eighteenth century. The second part of the Sloan Foundation project, that dealing with the public response to big business, was carried out by Louis Galambos, who published his results in 1975 in The Public 1111age of Big Business in A merica, 1880-194°. The work I began under the Sloan Foundation grant was completed with assistance from the Division of Research, Graduate School of Business Administration, Harvard University. I am greatly indebted to the officers of the Sloan Foundation and to Dean Lawrence E. Fouraker and the heads of the Division of Research at the School who provided funds to pay for time and facilities so necessary to the completion of such an extended study. The research and writing of this history was carried out in a traditional manner. It has been pieced together from reading business records and secondary works, and from countless discussions with students and colleagues. No teams of scholars or computerized data were involved. I learned much from graduate students, particularly those who wrote dissertations on topics related to the themes in this book. These included William H. Becker, Charles N. Cheape III, Russell I. Fries, Harold Livesay, Edwin J. Perkins, P. Glenn Porter, and Mary A. Yeager. I am espe- .. VII viii ] Acknowledgments ~ially grateful to Chuck Cheape who, as my research assistant, carried out the laborious work of compiling and collating the data for Appendix A and other tables. Without the major contributions of these young scholars the study would have been far less complete. As valuable were those long talks with academic colleagues, many of whom were willing to plow through parts or all of the lengthy manuscript at different stages of its completion. Fred V. Carstensen, Herman Daems, Louis Galambos, Thomas K. McCraw, H. Thomas Johnson, and P. Glenn Porter read large parts of the manuscript. Stuart Bruchey, Alfred S. Eichner, Stanley Engerman, Max R. Hall, Albro Martin, and Peter T emin read it from beginning to end. All provided invaluable suggestions that corrected errors of fact, refined interpretations, and improved the presentation