The History of Management Thought

1
The History of Management Thought

• By
• Julia Teahen and Regina Greenwood

Based on The History of Management Thought, 5th
edition, 2005 by Daniel A. Wren
2
Part OneEarly Management Thought
3
Chapter Five

• The Industrial Revolution in the United States

4
The Industrial Revolution in the United States

• British mercantilism kept the U.S. as a colony
  which delayed economic development.
• Great Britain prohibited the sale of
  manufacturing equipment and emigration of skilled
  labor to U.S.
• Adam Smith influenced writing of the U.S.
  Constitution and economic system.
• Textile Industry
• Commonwealth vs. Hunt 1842
• American System of Manufactures
• Railroads

5
Early Industrial Development Textile Mills

• Largest industry at the time was textile.
• Even though the textile industry was the largest
  business, factories were still small.
• Photo on the left depicts an early textile mill.

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Textile Mills

• Samuel Slater Rhode Island System
• First to use steam-driven power looms
• Relied on sole proprietorship or partnership form
  of ownership initially.
• Relied on family for labor with growth had to
  hire professional managers.
• Vertically integrated operations forward and
  backward.

Samuel Slater
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Textile Mills

• Francis Lowell Waltham System
• Used water-power looms.
• Hired non-family supervisors managers with
  corporate model.
• Used integrated spinning and weaving to
  manufacture goods in large quantities.
• Relied on adult female labor.
• Praised by Charles Dickens for better treatment
  of employees.

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Textile Mill at Pawtucket, Rhode Island
Mill present day reconstruction
Depiction of Mill
9
Commonwealth v. Hunt (1842)

• Worker combinations (unions) were no longer
  illegal unless their intent was criminal.
• Seeking a closed shop and striking were no longer
  illegal.
• Only applied to Massachusetts but discouraged
  prosecution of worker organizations elsewhere.

10
The American System of Manufactures

• Manufacture by interchangeable parts was not new
  previously confined to making muskets and
  revolvers.
• The Springfield (MA) Armory was an early factory
  prototype.
• 250 employees largest factory in the U.S. until
  after the Civil War.
• Organized by Colonel Roswell Lee in 1815.
• Used piece rate incentive payments and accounting
  system.
• Labor was more specialized.
• Uniform standards promoted interchangeability of
  parts.

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The American System of Manufactures

• Ideas spread to other areas of manufacturing.
• Ex The reaper by Cyrus McCormick
• The American System received its name at the
  exposition of 1851 in London.
• U.S. factories remained relatively small.
• The McLane report of 1832 found the firms were
  mostly
• Family owned and managed
• Few corporations unlimited liability
• Little use of steam power
• Similar to findings of Andrew Ure regarding
  English firms

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The Railroads Pioneering in U.S. Management
Courtesy of Association of American Railroads
(AAR)

• First big business in the U.S. developed c.
  1830.
• Started the transportation revolution.
• Facilitated U.S. industry move from local markets
  to national markets.
• Railroads had size and complexity.
• Required a management system.

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Communication Revolution

• Telegraph, patented by Samuel Morse in 1837,
  started concurrent revolution in communication.
• By 1860, about 50,000 miles of wires extended
  over the eastern U.S.
• Dramatic effect on business communication.
• Facilitated U.S. industry move from local markets
  to national markets.
• Richard Sears used the telegraph to see gold
  watches the first electronic commerce.

Samuel Morse
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The Age of RailsDaniel McCallum (1815-1878)

• Developed a system of managing on the Erie
  Railroad
• Specific job descriptions
• Accurate performance reports
• Merit basis for pay and promotion
• Organizational chart to show lines of authority,
  responsibility, and communication
• Use of telegraph for dispatching trains and
  checking on performance

Daniel McCallum, Circa 1865
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Daniel McCallum

• System of management relied on division of labor,
  personal responsibility, and organization.
• Developed a formal organization chart.
• Developed highest state of the art information
  management.
• Lost his job when the locomotive engineers would
  not follow his rules.
• Workers were on strike for ten days in June 1854
  then 6 months in 1857 in defiance of McCallums
  system.
• Successful career building bridges and served as
  master of the Unions railroads in the Civil War.

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Erie Railroad Organizational Chart

• This is perhaps the first organizational chart
  ever made
• McCallum created the organizational chart to
  explain the Erie Railroad Operation

Erie Railroad Organization Chart of 1855.
Library of Congress, Haer, N.Y.
17
Henry V. Poor (1812-1905)A Broader Management
View

• Editor of the American Railroad Journal
• Became conscience of first U.S. big business
• Looked for broader principles of railroad
  operations (financing, regulation, and role of
  U.S. Railroad in life)
• Developed three principles based on McCallums
  ideas organization, information, and
  communication

Henry Varnum Poor
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Henry V. Poor

• In later work, Poor felt the answer to problems
  of top management was through better leadership
• Unity in the organization
• Selecting leaders on merit
• Developing better information systems

Courtesy of Pics4Learning. http//pics.tech4learni
ng.com
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Emerging Governance Issues

• Early industries were partnerships or sole
  proprietorships.
• Railroads, requiring large amounts of capital,
  saw the growth of joint-stock companies.
• Without uniform, adequate laws in Great Britain,
  management malfeasance occurred.
• Henry Poor wrote about the need for government
  regulation but not control.

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Summary

• From independence to 1860, the U.S. grew and
  developed industry.
• Period was critical to development of the modern
  enterprise.
• Railroads and the telegraph allowed firms to grow
  for economies of scale and scope.
• Managers were required for large, complex
  organizations.
• Quality of life for people was improving.

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Figure 6-1 Synopsis of early management
thought.
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Additional Internet Resources

• Academy of Management Management History
  Division Websitehttp//www.aomhistory.baker.edu/d
  epartments/leadership/mgthistory/links.html
• List of Internet Resources compiled by Charles
  Booth http//www.jiscmail.ac.uk/files/MANAGEMENT-H
  ISTORY/links.htm
• Western Libraries Business Library Biographies
  of Gurus
• http//www.lib.uwo.ca/business/gurus.html
• Developments from Ancient History
  http//www.accel-team.com/scientific/index.html
• Max Weber http//www.faculty.rsu.edu/felwell/The
  orists/Weber/Whome.htm
• Nicolo Machiavelli Medieval Source Book The
  Prince 1513
• http//www.fordham.edu/halsall/basis/machiavelli-
  prince.html
• John Locke Biography
• http//www.blupete.com/Literature/Biographies/Phi
  losophy/Locke.htm
• Adam Smith http//socserv2.socsci.mcmaster.ca/ec
  on/ugcm/3ll3/smith/
• James Watt by Carnegie http//www.history.rochest
  er.edu/steam/carnegie/
• Developments during the Industrial Revolution
  http//www.accel-team.com/scientific/scientific_0
  1.html

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Additional Internet Resources

• The Robert Owen Museum http//robert-owen.midwale
  s.com/
• Charles Babbage Institute
• http//www.cbi.umn.edu/exhibits/cb.html
• Andrew Ure - The Philosophy of the Manufacturers
  1835 http//www.fordham.edu/halsall/mod/1835ure.h
  tml
• Charles Dupin Biographyhttp//www-groups.dcs.st-a
  nd.ac.uk/history/Mathematicians/Dupin.html
• Cyrus McCormick - Biography
• http//www.vaes.vt.edu/steeles/mccormick/bio.html
  
• Samuel F.B. Morse
• http//memory.loc.gov/ammem/atthtml/mrshome.html
• Henry R. Towne Address delivered at Purdue
  University (1905)
• http//www.cslib.org/stamford/towne1905.htm
• Andrew Carnegie http//www.americaslibrary.gov/cg
  i-bin/page.cgi/aa/carnegie
• The Rockefellers PBS Documentary
• http//www.pbs.org/wgbh/amex/rockefellers/
• The Samuel Gompers Papers
• http//www.history.umd.edu/Gompers/index.html