The early twentieth century was a time of technological revolution in the United States. New inventions and corporations were transforming the economic landscape, bringing a stunning array of consumer goods, millions of additional jobs, and ever more wealth. Steven J. Diner draws on the rich scholarship of recent social history to show how these changes affected Americans of all backgrounds and walks of life, and in doing so offers a striking new interpretation of a crucial epoch in our history.
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About the Author
Steven J. Diner, professor of history at George Mason University, is the author or editor of five other books, including A City and Its Universities: Public Policy in Chicago. He lives in Washington, D.C.
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A Very Different Age
Americans of the Progressive Era
By Steven J. Diner
Hill and WangCopyright © 1998 Steven J. Diner
All rights reserved.
OWNERS, MANAGERS, AND CORPORATE CAPITALISM
"We have come upon a very different age from any that preceded us," proclaimed New Jersey governor Woodrow Wilson, Democratic candidate for President of the United States in 1912. Men now work "not for themselves" but "as employees ... of great corporations." Wilson's words expressed the anxieties of millions of Americans, who watched corporations transform the way they spent their working hours and the way they spent their money. Corporations elevated top managers to positions of unprecedented power and simultaneously destroyed the livelihoods of many small entrepreneurs. We turn first, therefore, to the people who managed American business large and small, those who benefited from the rise of corporate capitalism and those who suffered.
The organizers of the giant trusts, men like John D. Rockefeller, fearful of the exigencies of the traditional competitive market, sought order, predictability, and control of all aspects of production and distribution to ensure steady profits. No one exemplified this quest for total control better than J. P. Morgan, the preeminent business leader of the early twentieth century. A financier, Morgan hated disorder, devoting himself to eliminating price competition in business and bringing about orderly consolidations to maximize profits. In the late 1880s, he began to consolidate and stabilize America's railroads, which had high fixed costs and regularly engaged in price wars. Morgan brought together officers of competing railroad lines to encourage agreements to limit competition. During the depression of the mid-1890s, Morgan consolidated numerous competing railroads into a limited number of large railroad systems in different regions.
Morgan is best known for putting together U.S. Steel, the first billion-dollar corporation in America. The consolidated company manufactured over half the country's basic iron and steel, giving it effective control over prices. Morgan also helped to consolidate the telephone industry and to develop the electrical industry. Because of barons like Morgan and Rockefeller, a small number of corporations in most major industries controlled the majority of their market by the early twentieth century.
Consolidations created a new set of problems for corporate leaders, however. Great size did not automatically make a company efficient or profitable. Giant manufacturers had to develop systems to supply their multifarious manufacturing plants with raw materials, to organize the flow of materials and goods from one stage of production to another, and to coordinate the production output with the transportation system that shipped the goods to distributors. A small manufacturer might know intuitively what it cost to make a product and what profit he made when he sold it, but big corporations needed to assess the costs of every aspect of the operation.
Complex corporations therefore required executives with substantial managerial ability. Professional career managers who did not necessarily own large quantities of company stock became the corporations' administrators and leaders. Although these positions typically went to the sons of businessmen from old-stock families in the Northeast, family background alone became insufficient.
MANAGERS OLD AND NEW
Systematic management, dependent upon bureaucracies rather than on individuals, began to take hold at the end of the nineteenth century. Mechanical engineers initiated the earliest discussions of how to direct large enterprises. Henry Towne, an engineer and lock manufacturer, told fellow engineers in 1886 that the management of industry required men who combined the qualities of a mechanical engineer and those of a businessman. A few heads of corporations experimented with new procedures. Andrew Carnegie required each department at Carnegie Steel to submit detailed figures on the costs of materials and labor. Accountants in his central office processed these figures, and Carnegie reviewed the accountants' cost statements daily and demanded explanations from the head of any department where they increased. One of his managers complained, "The men felt and often remarked that the eyes of the company were always on them through the books."
Many corporate heads clung to familiar modes of operation, however. Often it took a generational change in company leadership to bring systematic management, as at E. 1. Du Pont de Nemours & Company, manufacturer of gunpowder. For nearly a half century, Henry Du Pont, the company president, directed the large family business out of a one-room office overlooking the gunpowder mills, writing by hand almost all of the company's correspondence. In addition to running his own company, he bought controlling interests in several other large powder companies and dominated the Gunpowder Trade Association, formed in 1872 to regulate production. Three years after Henry's death in 1899, four of the five Du Pont partners, all elderly or infirm and unwilling to assume the presidency, contemplated selling the company, but Alfred Du Pont, the youngest and least experienced, objected. He convinced his cousins Coleman and Pierre Du Pont to join him in buying the family business. Coleman, who had worked at the company until 1898, left out of frustration with the conservative ways of the elderly partners. At the time of the purchase, Pierre wrote to his brother, "We have not the slightest idea of what we are buying, but we are probably not at a disadvantage as I think the old company had a very slim idea of the property they possess." The new partners integrated the company's diverse holdings, centralized management, developed a specialized research department, and started their own marketing unit.
Foremen and other front-line managers felt the impact of centralized management first. In the late nineteenth century, factory foremen exercised considerable independent authority. They hired, trained, supervised, and fired workers, and usually decided which tools and materials would be used in each job. So long as they got the work done, upper managers left foremen alone.
Foremen cherished the autonomy and social status of a manager. Most began their careers as skilled craftsmen, priding themselves on their superior knowledge of the craft. According to a history of a silversmith firm, foremen "deported themselves with great dignity and customarily reported for work attired in silk hats, cutaway coats, and attendant accessories." Despite their origins as skilled workers, or perhaps because of it, foremen vigorously opposed unions and sometimes treated workers harshly. One analyst observed in 1911 that foremen "spurn the rungs by which they did ascend."
Systematic management undermined the autonomy of foremen and lower-level managers. When Stuyvesant Fish became president of the Illinois Central Railroad in 1896, he complained of "an absence of system in the organization as a whole" and described managers' treatment of employees as "personal and paternal." Fish implemented a code of personnel policies to allow the railroad to function and expand "without the slightest fear of being disturbed by the withdrawal of any man from any position." At Scovill Manufacturing in Connecticut, which made brass products, foremen decided what to pay each of their workers until the company president ordered that timekeepers report to the payroll supervisor the actual hours worked by every employee, including the foremen. Elsewhere, special clerks relieved foremen of responsibility for purchasing materials needed for a job, and engineers began to instruct foremen on the tools to use and the sequence in which tasks should be performed.
Foremen and other front-line managers resisted this attack on their autonomy and status. One manager complained that foremen "resented taking instructions from abrasive, soft-handed college men who had never themselves poured a mold or run a machine." Superintendents complained vociferously about the number and extent of reports demanded by the central office. Occasionally a foreman might prevail in a conflict with a senior manager. In one instance, an experienced foreman got into an altercation with a supervisor and told him to stay out of his shop for a month. The supervisor complained to a senior manager, who responded, "Well, Mr. Lawrence, the foreman of the plating-room has the reputation of carrying through with his word. If I were you, I think I should keep out of that department for the rest of the month."
Similar tension developed between buyers and managers in big city department stores. These retail corporations, begun in the late nineteenth century, attracted middle-class shoppers by offering package delivery, child care, entertainment, and other services while customers shopped for all kinds of goods under a single roof. Initially, department stores gave considerable autonomy to buyers for each department. They determined what merchandise to sell, managed the department sales staff, wrote advertisements, and arranged floor displays. After the depression of the 1890s, store managers concerned with overall store profits tried to limit the quantity of goods buyers stocked and eliminate harmful competition among departments. To the consternation of buyers, store managers placed goods on sale to meet competition from other stores and readily accepted returned goods. Like factory foremen, buyers resisted these challenges to their autonomy. Store managers, dependent on buyers' relationships with numerous manufacturers of clothing and other goods, sometimes relented. This tug-of-war between buyers and store managers continued for many years.
These conflicts between front-line and senior corporate managers seemed minor when compared with the conflicts between management and labor. Corporations depended upon large numbers of workers. Numerous strikes, frequent worker turnover and absenteeism, and concerted efforts by workers to restrict the pace of production limited managers' control of production. Although most employers responded to workers in the time-honored way — attempting to coerce them to produce more and forcefully breaking strikes — some large corporations also looked for ways to rationalize labor relations without relinquishing control over production. Two general approaches emerged: scientific management and corporate welfare programs.
Frederick W. Taylor, an enormously creative and unyieldingly rigid engineer and industrial manager, devoted much of his career to solving corporate management's labor problem by dramatically increasing the efficiency of workers. This win-win strategy, he argued, made possible both higher wages and larger profits. Taylor was born in Philadelphia in 1856 to wealthy native-born parents. His mother participated in the antislavery and women's rights movements, and his father worked as a lawyer and pursued a gentlemanly interest in literature. As a child, Frederick showed a penchant for orderliness and insisted on elaborate sets of rules when he played games. The young Taylor attended Phillips Exeter Academy to prepare, according to his father's wishes, for Harvard and a career in the law. The son preferred to attend medical school, but in his last year at Exeter he developed headaches and vision problems. Instead of going to Harvard, this eccentric young man became an apprentice pattern maker, despite the fact that the work required him to read complicated mechanical drawings, and his eye problems miraculously cleared up.
His apprenticeship completed, Taylor went to work at Midvale Steel Company, partly owned by a family friend, as a journeyman machinist and took home-study courses in physics and mathematics in his spare time, earning a degree in mechanical engineering from Stevens Institute of Technology. Promoted to chief engineer six years later, he struggled to find more efficient ways for his workers to perform their tasks and attempted, without success, to persuade the workers to increase their productivity by using his new methods.
Taylor left Midvale in 1903 to become a full-time "management consultant." At Bethlehem Steel Company, his most important client, he accumulated extensive information on the speed and effectiveness of tools and machines, and helped develop a steel alloy for use in manufacturing new high-speed machines. He also conducted time and motion studies to determine how quickly workers could do a particular task and when they became fatigued. From this work, Taylor developed a system of "shop management" in which engineers determined the optimum use of each machine and the most efficient pace at which a worker could do a task. He matched each worker to the task that man could do best, and provided substantial wage incentives to get the workers to achieve maximum efficiency.
Taylor's reputation spread among professional engineers, and the American Society of Mechanical Engineers elected him president in 1906. Three years later, officials at federal arsenals engaged Taylor to apply his principles to munitions manufacture. Soon thereafter, liberal lawyer Louis Brandeis, representing clients opposed to a railroad rate increase before the Interstate Commerce Commission, used several of Taylor's disciples as expert witnesses to argue that scientific management could greatly reduce railroad costs, and that the railroads should not charge consumers for their own inefficiency. Brandeis' appeal to scientific management stirred intense national interest. The American Magazine, edited by progressive journalist Ray Stannard Baker, serialized Taylor's recently completed manifesto, The Principles of Scientific Management.
In Principles, Taylor described how he increased daily steel hauling from 12 ½ to 47 tons per worker at Bethlehem. He watched seventy-five men for three or four days and picked out four "who seemed physically able to handle ... 47 tons." He and his associates looked up the men's histories and made inquiries about their "character, habits and ... ambition." They selected a "little Pennsylvania Dutchman who had been observed to trot back home for a mile or so after work in the evening, about as fresh as he was when he came trotting down to work in the morning." Then they called out the man, whose name was Schmidt, and offered to raise his pay from $1.15 to $1.85 a day if he agreed "to do exactly as this man tells you to-morrow, from morning till night," with "no back talk."
Schmidt started to work, and all day long, and at regular intervals, was told by the man who stood over him with a watch, "Now pick up a pig and walk. Now sit down and rest. Now walk — now rest," etc. He worked when he was told to work, and rested when he was told to rest, and at half past five in the afternoon had his 47 ½ tons loaded on the car. And he practically never failed to work at this pace and do the task that was set him during the three years that the writer was at Bethlehem.
"One man after another was picked out and trained to handle pig iron at 47 ½ tons per day," Taylor boasted, until all of the pig iron was handled at this rate, and the men were receiving 60 percent more wages.
Taylor made sweeping claims for his system, describing it as a "science" resting "upon clearly defined laws, rules and principles." Scientific management will "double the productivity of the average man engaged in industrial work," provide cheaper and better goods to consumers, increase both profits and wages, and thereby "eliminate the wage question as a source of dispute." In short, Taylor proposed to increase dramatically the autonomy of management engineers and simultaneously reduce that of both workers and traditional corporate managers, promising in exchange greater economic security for workers and greater profits for owners.
Taylor's system never worked nearly as well as he claimed. Unions resisted it, often through strikes, and individual workers sabotaged Taylor's time and motion studies. After civilian government workers struck against the introduction of Taylorism at the arsenal in Watertown, Massachusetts, in 1911, Congress held hearings on the Taylor system, and investigators concluded that scientific management did not enhance the welfare of workers. In 1916, Assistant Secretary of the Navy Franklin D. Roosevelt banned the Taylor system in government arsenals and navy yards.
Workers understood that Taylorite engineers sought to take away from them all matters of judgment about their jobs: what tools to use, in what order tasks should be performed, how many pounds they should lift at one time, how fast they should work, when they should rest — in short, every aspect of control over work. "In the past, the man has been first," Taylor declared, but "in the future the system must be first." Although workers surely wanted higher wages, few would willingly sell their autonomy for Taylor's wage incentives. Moreover, workers recognized better than Taylor that corporate managers, faced with pressures to control costs, would not maintain high wages once they had established higher standards of worker productivity. In the end, workers rejected scientific management because it threatened both their autonomy and their economic security.
Excerpted from A Very Different Age by Steven J. Diner. Copyright © 1998 Steven J. Diner. Excerpted by permission of Hill and Wang.
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Table of Contents
PROLOGUE: CRISIS IN THE 1890s,
1 - OWNERS, MANAGERS, AND CORPORATE CAPITALISM,
2 - INDUSTRIAL WORKERS' STRUGGLE FOR CONTROL,
3 - IMMIGRANTS IN INDUSTRIAL AMERICA,
4 - RURAL AMERICANS AND INDUSTRIAL CAPITALISM,
5 - AFRICAN-AMERICANS' QUEST FOR FREEDOM,
6 - WHITE-COLLAR WORKERS IN CORPORATE AMERICA,
7 - THE COMPETITION FOR CONTROL OF THE PROFESSIONS,
8 - THE PROGRESSIVE DISCOURSE IN AMERICAN POLITICS,
9 - THE GREAT WAR AND THE COMPETITION FOR CONTROL,
ALSO BY STEVEN J. DINER,