Change in the Growth of American Corporations

Change in the Growth of American Corporations

Technological change and organizational change both played integral parts in the growth of large American industrial corporations in the late nineteenth century. I don’t believe that you can truly choose one or the other to be more important then the other because they are so directly related to each other, as one expanded the other would change. As technology improved you saw restructuring of management and planning, yet you also saw technology being forced to advance by the industries change in planning and restructuring.

The railroads played a very large part in the emergence of large industries in America. The American railroad systems were growing and expanding across the nation and the railway systems were becoming more and more complex all the time. These complexities led to the first pivotal point in our nations large industrial history. On October 5, 1841 two trains collided in Western Massachusetts. One conductor and one passenger were killed and seventeen other passengers were injured. The collision of the two trains was caused by an error in scheduling and this error is what led to the first restructuring within a very large company. Although this tragedy was seen as the major reason for the restructuring and planning of the railroad, the board of the railroad used this opportunity to look within itself and make the changes that would push the railroad into the future (Blackford and Kerr 125-126).

The railroad was faced with a couple of very large problems. The first problem that it faced was the on going expansion of the railroad. The restructuring had to be able to keep up with the overall growth of the railroad itself. In order to adapt to this problem the railroads setup the first ever-American business bureaucracies. The first changes that were made were new management systems that were put in place, that were designed to address specific business problems. The next set of changes included the separation of staff officers, who made strategic decisions at headquarters, and the line officers who carried out these decisions in the field. The railroad also added precise record keeping which would allow for headquarters to stay up to date on events in the field. The railroad also moved on to break the nation into three separate parts that were managed separately but all reported to the headquarters in Massachusetts. The railroad went on to develop and legal and secretary department. They also continued to develop the railroad from within creating even more elaborate bureaucracies. They continued to separate the duties of the managers from the three separate branches from the managers in the headquarters. The railroad also began to replace greater importance on middle managers. The higher management concentrated on the growth and strategy of the railroad while the middle managers were able to concentrate on the operational details. All of these changes allowed for a greater control of the railroad and pushed our nation into the first steps of growth for large industries (Blackford and Kerr 127-132).

Andrew Carnegie and Carnegie Steel is a great example of illustrating the ties between restructuring and the importance of the railroad systems. The growth of the railroads proved to be a vital market for Andrew Carnegie and his industry. Carnegie had learned through his time with the railroad that in order to maximize his profits he would have to lower his costs and create higher volume of production. During this time period Carnegie targeted projects like the railroad tracks, bridges, and locomotives. These projects would see Carnegie reach his volume goals. He would now search for ways to lower his costs. Carnegie implemented sophisticated cost accounting and record keeping which closely mimicked the same planning used by the executives of the Pennsylvania Railroad. The use of these methods would allow for Carnegie to identify production inefficiencies as well keeping tabs on his plant managers. From these changes Carnegie was able to create one of the most successful steel production company’s in the country.

The next step in the evolution of big business came along with J.P. Morgan. He was America best-known banker and a very powerful man. He bought Carnegie Steel and combined this company with other smaller companies to create the world’s first billion-dollar corporation. J.P. Morgan took Carnegie steel and Andrew Carnegie’s