As a result, in the Great Britain Exhibition of the Industry of All Nation (1851), the visitor was amazed by the unpickable locks of Alfred Hobbs, the sewing machine of Isaac Singer, the repeating pistol of Samuel Colt, and the mechanical reaper of Cyrus McCormick. Those product's parts were made with such exacting standards that they were interchangeable. These production techniques become known as American System of Manufactures.
The Communication Revolution
The technological revolution of the telegraph and the railroads would sweep away local trade barriers, open new lands for settlement extend markets and reshape distribution strategies.
Telegraph
Telegraph was invented by Samuel F.B. Morse, an American inventor and painter who built a long line of scientific discoveries about electricity and magnetism, in 1832. In 1944, an experimental line was completed between New York and Washington, D.C. The telegraph provided the beginnings of a nationwide communication system. The telegraph facilitated the transportation system as well as handling commercial and personal messages. The impact on business communication was dramatic. News items could be sent by telegraph, enabling daily newspapers to keep their readers informed; money could be sent by wire; a submarine cable under the Atlantic Ocean connected America to European Continent.
Railroads
The railroads were truly the United State's first big business. The railroads grew to such a size and complexity that means had to be developed of coping with massive financial requirement, developing integrated systems of trackage and station agents, spreading large fixed cost, and handling a labor force dispersed over wide geographical area. Rail road operations could not be controlled by personal inspection of the hundreds of stations, thus making communications a significant problem. Extensive long range planning was required to prevent large fixed capital outlays from being placed in the wrong market area. Passenger safety and the prevention of loss cargo were critical to successful operations. Scheduling service required planning and coordination.
It was the New York and Erie Railroad that pioneered systematic management in the first big business in the United States. Daniel Craig McCallum joined the New York and Erie Railroad company in 1848. He became superintendent of the Susquehanna Division, where he developed an early set of procedures to govern that division's operations.
To McCallum, good management was based on good discipline, specific and detailed job description, frequent and accurate reporting of performance, pay and promotion based on merit, a clearly defined hierarchy of authority of supervisors over subordinates, and the enforcement of personal responsibility and accountability throughout organization.
McCallum separated and identified each grade of worker as task and required all workers to wear a prescribed uniform with the insignia of their grade. He developed comprehensive rules to limit the ability of individuals to do their tasks as they pleased. McCallum developed a formal organizational chart that took the form of a tree and depicted the lines of authority and responsibility, the division of labor among operation unit, and the communication lines for reporting and control. He also developed information management to probably the highest state of the art for the times. He used the telegraph to make operations safer as well as to facilitate administration. He designed a cross check control system by requiring both freight and passenger conductors to report to train movements, loadings, damage freight, and so on; by comparing the reports, he could detect discrepancies and dishonesty.
McCallum system was successful from management's point of view. In 1857 he established the McCallum bridge company and built bridges throughout the country. In 1862 he was asked by Secretary of War Stanton to manage the nation's railways, with the power to seize and operate any railroad necessary to the Union's war effort. Organizational growth, geographical separation of activities, and the separation of ownership and management were the driving forces for systematizing railroad management.
McCallum's works was published widely by Henry Varnum Poor, an editor of the American Railroad Journal. Whereas McCallum spoke of internal operating problems, Poor looked for broader principles of railroad operations, including financing, regulation, and the role of the railroad in U.S. life. After the war, Poor's Manual of Railroads n the United States continues his effort to further the dissemination of financial and operating information.
Poor looked for a science, or system, of management, and from McCallum's work Poor gleaned three fundamental principles: organization, communication, and information. Poor began to look for some broader principles to overcome dangers of regarding man as mere machine. Poor's solution was a leadership that would overcome dullness and routine by infusing the organization with an esprit de corps. Top management should become the soul of the enterprise, reaching and infusing life, intelligence and obedience into every portion of it. Leaders not only had to know all aspects of railroad operation and administration but also needed to be able to handle people, to know the total system, and to prevent interdepartmental conflicts that could destroy unity of purpose. The breakdown in leadership came from two sources: selection on some basis other than ability or training, and lack of an information system to pinpoint weak managers.
