(your name)
Quarter/Year
Merchants
and Manufacturers: Studies in the
Changing Structure of Nineteenth-Century Marketing (Baltimore:
The Johns Hopkins Press, 1971), x + 257pp.
Authors: Glenn
Porter: b. 1944; Ph.D. Johns
Hopkins, 1970; student of Chandler; former editor of BHR; author, The
Rise of Big Business (1973); presently dir. of Hagley
Museum; Harold C. Livesay: b. 1934; Ph. D. Johns Hopkins, 1970; student
of Chandler; taught at Michigan; Chair, Dept. of History, VPI; presently
teaching at Texas A&M.
Scope: A
combination of the authors' dissertations, the book analyzes the fundamental
changes in the marketing of manufactured goods in 19th century
Sources: about 50
manuscript collections; over 10 dissertations and theses; numerous secondary
sources; government publications, including census reports; newspapers and trade
periodicals.
Theses
of the book:
1. Assumption:
Economic institutions are inherently resistant to change so long as they
can continue to function effectively.
2. Changes in marketing techniques in the 19th
century derived from the concentration of production and population and from
the effects of technological innovations.
3. During the colonial and early national
periods, the merchant was all-purpose in nature. He traded a wide variety of goods
encompassing the range of merchandising (exports, imports, wholesale, retail,
insurance and shipping.)
4. An expanded market allowed the specialization
by wholesalers and jobbers (1815-1870).
The wholesalers supported internal transportation improvements, lent
money in times of scarce capital, and rationalized the flow of trade from
dispersed producers to dispersed customers.
5. Specialization, however, made the merchant
vulnerable to erratic changes in the market.
6. During the last third of the 19th century,
certain factors combined to bring about the demise of the commission
merchant: better and faster
transportation and communication; growing concentrated markets (cities);
concentration of productive capacity (oligopolies); the appearance of
large-scale firms; and, the growth of banks.
The last three subsumed the functions of the commission merchant into
large-scale operations.
7. The perishable goods industries (ice, meat
packing, film) required expensive and
technically-advanced delivery systems that the commission merchant could not or
would not furnish.
Style
of presentation: Effectively organized, with little
repetition, the book fills a void in the literature on merchants. A bland writing style detracts from the
overall effect.
Importance: This book
presents an important chapter in the story of the rise of big business in the
Reviews
consulted: H. N. Scheiber, JAH
(Dec. 1972); Choice (Sept. 1972).
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(your name)
Quarter/Year
Pioneering in Big Business: 1882-1911, History of Standard Oil (
Authors: Ralph W. Hidy: b. 1905;
AB Miami University, MA Clark University; Ph.D. Harvard; taught at Norwich
University, Wheaton College and Harvard; Straus Professor Business History;
books: House of Baring in American
Trade and Finance (1949); Timber and Men, the Wyerhaeuser
Story (1963); The Formative Era of American Enterprise (1967); The
Great Northern Railway (1988); casebook, 1963. Muriel E. Hidy: Associate of the Business History Foundation,
Inc.; George Peabody, Merchant and Financier, 1829-1854 (1979)
(originally her thesis at Radcliffe, 1939).
Scope: An
institutional biography, the book illustrates the importance of the Standard
Oil combination to the petroleum industry and describes the controversy
surrounding the combination. The issues
of managerial experience, institutional custom, and
legal forces reveal important subtexts.
Sources: Standard Oil
business records (minutes, memos); papers of individuals; contemporary papers,
books, articles; court cases; interviews.
Theses
of the book:
1. Factors influencing the direction the firm
took included "habit, inertia, pride, desire for profit and prestige, normal
human reaction to the novel and the disproportionately powerful new economic
developments, modifications in public beliefs and concepts, and the political
and legal climate arising from the convictions, reasonable and unreasonable, of
an electorate swayed by the politicians and the press." (p. )
2. The firm defended and enlarged
3. Standard was the first corporation to rely
heavily on chemical research and engineering to develop new markets (e.g.,
industrial oil).
4. A system of committees marked the managerial
strategy of Standard. Many ideas and
innovations originated at the lower levels; the committee system encouraged the
transformation of these ideas into firm policies. An informal system, the committees operated
to facilitate entrepreneurial decisions to benefit the general interest of the
firm.
5. Standard reflected the American principle
that "it is better to have a large market with a smaller margin of profit
than a high profit per unit on a smaller volume." (p. )
6. Standard developed the following big business
techniques: consultation through
committees; differentiation of staff functions through standard accounting
systems and collection of statistics; vertical integration of operations;
accepting bigness as a prerequisite for utilizing scale economies.
Style
of presentation: One can hope that business-institutional history could
be more lively.
While the organization is solid, the biographical approach becomes
tedious and the attempt to weave into the narrative personality sketches
fails. This is a good reference source, but
the pro-Standard, defensive tone creates skepticism about the authors'
conclusions.
Importance: The first of
its kind, it established the example for further investigations of single
corporate structures that will form the basis for future comparative analyses.
Reviews
consulted: A. P. Dudden, AHR
(July 1956); R. C. Cook, AER (June 1956); D. W. Grantham, PSQ
(Sept 1956).
---page
break---
Discussion
Both books investigate over
substantial periods of time the evolution of business institutions in the
political economy of 19th century
Porter and Livesay
describe and analyze changes in marketing techniques, the people who performed
these changes, and the reasons why they did so.
The context is economic history; the subtext encompasses the changes
forced on marketing. Essentially, Merchants
and Manufacturers suggests that the acceleration of changing business
techniques brought about the demise of an American symbol: the private commission merchant. By 1900, large-scale firms had taken over the
basic functions of the independent merchant:
financier, collector of raw materials, and distributor of finished
products. The transformation they
describe did not occur overnight and it was resisted, a point that needs to be
emphasized given the later work of Alfred Chandler, Jr.
Porter and Livesay
have written a dispassionate history; they condemn neither the large
corporation nor the merchant. Nor do
they lament the demise of the merchant.
Instead they point out that the old-style merchant could not handle the
plethora of new goods (especially the perishable ones) and that the new
large-scale firm could distribute the goods more efficiently. Balanced as they are, the authors seem to
have left out something of larger importance.
Paradoxically, notwithstanding the greater variety of goods produced and
distributed, the consumer appeared to be subject to, rather than master
of, the new, modern, more efficient distribution system. Yes, Porter and Livesay
were interested in institutional changes, but surely their vision could have
been expanded to include discussion of the consequences of those changes for
key players in the economy.
Pioneering in Big Business,
in contrast, contains more passion and therein lies a
problem. Although the Hidys deny it, and a couple of reviewers deny it, I
interpreted the book as an attempt to justify the actions of the Standard
combination. Standard Oil paid for a
substantial amount of the research and opened its records to the Hidys. This was an
important event in itself, but how "independent" of Standard were the
historians? The book, then, reflects
inherent tensions that historians of business firms face: whether true or not, fair or not, they will
be open to criticism that their work is "biased."
Nonetheless, the central
contribution of the book lies in the description and analyses of the managerial
strategies and structures Standard developed.
In the use of scale economies, the acceptance of large-scale operations,
the development of accounting and statistics, and in
the ability to motivate and manage people, Standard must be included with the
railroads as a pioneer in big business.
The passionate history the Hidys tell raises numerous and important issues for
historians to ponder. For example, they
assert that harsh public opinion, guided by politicians and the press, affected
two of the most important institutions of the time -- Standard Oil and the
federal judiciary. While attractive,
perhaps, the assertion is unproved and may be unprovable. More concretely, the Hidys
argue effectively that petroleum, despite Standard's apparent control,
was in fact a very competitive industry.
Their allegation that small-scale competitors often began the infamous
price wars misses the point, of course; the claim clearly reveals their biased
view toward Standard (if the combination did not start the price wars then the
combination was not culpable!). Such
reasoning undermines their important insight (one not accepted generally even
today) that the oil industry is really an industry very competitive in nature.
The problems noted above are
important ones for historians. Yet, we
should not lose sight of the fact that both of these books remain landmarks in
economic and business history. Their
approaches to understanding institutional change remain useful models; future
historians should not ignore them, but seek to use recently developed
approaches to enhance them.