From Market to Manager

The Canadian Review of American Studies, Volume 10, Number l, Spring, 1979 From Market to Manager AlfredD. Chandler, Jr. The Visible Hand: The lvfanagerial Re1·olution m .fo1errcan Business. Cambridge, Mass.: Harvard University Press, 1977608 pp. Robert D. Cuff' In 1965 John Higham drew attention to a new genre then emerging in .\mencan historical writing: "Deriving partly from studies in entrepreneurial andbusiness history and partly from contemporary American sociology, this kindof history is less concerned with motives than with structure and process. It shows men managing and being managed through rational systems of control and communication. Perhaps we may call this the new institutionalism ; for it is bringing back to life a morphological study of organizations, now freed from the formalistic, evolutionary emphasis of 19th century scholarship. Although institutionalists thus far have not gone much beyond the monographic level," he continued, "the breadth and importance of their contribution seem sure to grow." 1 There is no better example of the accuracy of Higham's prediction than The Visible Hand. It is a model institutional history, a magisterial historical synthesis and interpretation of modern corporate enterprise, and a penetrating examination of the interaction of technology and administrative structure in economic and organizational growth. Chandler had already produced a substantial body of work when Higham wrote. An early study of Henry Varnum Poor, a nineteenth-century journalist andrailroad analyst (the author's great-grandfather), was followed by a series of major articles, including "The Beginnings of 'Big Business' in American Industry," a mainstay of U.S. History anthologies, and in 1962 Strategr and Structure: Chapters in the History of Industrial Enterprise appeared. This 48 Robert D. Cuff book, a detailed study of the four firms that pioneered in the administrative decentralization of corporate organization after World War I (Du Pont, General Motors, Standard Oil Company [New Jersey], and Sears, Roebuck and Company) has had a continuing impact on the business history field both in the United States and abroad. It has also become something of a handbook among organizational sociologists who in earlier years preferred the construction of imaginative definitions and typologies to doing original research. 2 In the meantime Chandler also participated in editing the Theodore Roosevelt and Dwight D. Eisenhower Papers, and in so doing continued his interest in the decision-making structures of modern institutions. "The value of such historical analysis is emphasized," Chandler commented in 1973, "when we consider how drastically the institutions in which economic decisions are made have been re-shaped during the past century and a half. These changes have not only altered the process of deciding about prices, investment, output, inventory, employment and technological and organizational innovation. They have also created new types of business enterprise and helped to reform the structure of many industries and indeed the organization of whole economies." 3 In The Visible Hand, Chandler builds on his own original research, on that of his students, and on his mastery of the primary and secondary sources in the field to present now his overall viewof the institutional transformation of the American industrial economy. He begins his study in the traditional world of early American commercial capitalism. In this business world partnership remained the legal medium of enterprise; accounting procedures continued much as they had been under the, Venetian merchants; business was small and personally managed; hierarchies of career managers, a key test of modernity for Chandler, were non-existent. Some specialization occurred in business activity between 1790 and 1840,to ; be sure. The all-purpose, general merchant of colonial America had ultimately to yield to more effective sources of distribution and financial credit in an expanding economy. From the perspective of modern management, however. it is the hold of traditional farms of commercial enterprise that Chandler finds most striking. Even the Second Bank of the United States, the period's major financial institution, relied for overall direction upon Nicholas Biddle and two assistants. , The exceptions, moreover, simply proved the rule. The early New England , textile mills did pioneer in the technology of mass production; the plantation overseer might be considered '"the first salaried manager in the countr)" (p. 65 [!]); and the government's Springfield Armory did contribute to the evolution of...