The Public Image of Big Business in America, 1880-1940: A Quantitative Study in Social Change

1

THE LARGE-SCALE ORGANIZATION IN MODERN AMERICA

The single most significant phenomenon in modern American history is the emergence of giant, complex organizations. In the present day it is apparent that bureaucracies of one sort or another dominate our economic system, control the central features of our polity, and shape many of the important aspects of our culture. Most of the things that most of us do each day are either accomplished directly within this type of administrative network or are indirectly dependent upon the activities of one or more of the great modern organizations surrounding us. In recent years this situation seems to have made some Americans uneasy and others angry, but even the criticism of bureaucracy, the so-called establishment, or the military-industrial complex eventually finds expression in organizations that are themselves of great size and complexity. It would appear that we have become organization men and women, whether we like it or not.1

Since the late nineteenth century, big business has played a major role in our industrial economy. It has been the owners and professional managers of large firms who have made most of the vital decisions involving the production and distribution of our goods and services, who have for better or worse guided our progress in technology, who have determined the locus of economic activity in the nation. Their decisions have, of course, been influenced by a variety of considerations, including the growth of other large and powerful organizations. Sometimes these have been competing business firms. In many industries labor unions have achieved a measure of “countervailing power.”2 Increasingly, governmental agencies of awesome size and complexity have come to play a crucial role in the national economy.

Today large-scale political organizations perform functions which influence the daily decisions of most Americans. Federal bureaucracies promote technological change, gather taxes, regulate business behavior, administer welfare programs, and carry out activities ranging from defense to development, from environmental protection to education, from forestry to farming, and on through the alphabet. In 1970 the federal government alone accounted for more than one-fifth of our gross national product and employed almost three million persons in civilian jobs. One department, agriculture, provided employment for 116,012 persons—more than had worked for the entire government in 1881.3 A similar, though less debated, expansion has taken place in state and local government; in New York, for instance, public expenditures in 1969 were about fifteen billion dollars and local government employees in the state numbered 879,000. At all levels of government, large numbers of people and great amounts of money are deployed by giant bureaucratic institutions.4

The tracks of these modern organizations can be followed into almost every facet of American life. In higher education the “multiversity” has invited the enmity of many (usually those most closely associated with it), but even their attacks testify to the powerful influence universities of this structure and size now exert in the academic world.5 Similar changes have taken place among our churches: an elaborate hierarchy of national agencies has gradually emerged and acquired an important and growing role in the nation’s religious life.6 In the professions—from welfare work to engineering—the same distinct pattern can be seen.7 In the modern era, power has come to be centered in new types of organizations, most of which are very large, complex in structure, and organized along bureaucratic lines.

This type of organization has certain distinct characteristics. As Max Weber pointed out, the formal attributes of the bureaucratic form of authority include a hierarchical structure in which power is allocated according to abstract rules. These rules or laws provide relatively precise definitions of authority and responsibility. Bureaucracies place emphasis on impersonal decisions made by a staff of experts filling positions which, theoretically at least, do not change when the personnel does. Men fill these positions on the basis of explicit technical qualifications, and in a normal career they advance in regular steps within the organization.8 Weber explained both the origins of this style of formal organization and its final triumph in modern society in terms of efficiency: “Experience tends universally to show that the purely bureaucratic type of administration … is, from a purely technical point of view, capable of attaining the highest degree of efficiency and is in this sense formally the most rational known means of carrying out imperative control over human beings.”9

In recent years a number of scholars have challenged Weber’s emphasis upon efficiency and have also offered a variety of new ways to analyze bureaucracies. Some have focused on the web of personal relations and the structure of informal authority which persists even in supposedly impersonal organizations. In prisons, for example, an organizational chart may show that the guards give orders to the inmates; in reality the prisoners exercise considerable power over the guards—in an informal and extralegal way.10 Other scholars have suggested that the flow of information within a bureaucracy may provide a more accurate guide to authority relationships than the explicit, legal relationships that Weber felt were so important. Whatever correctives students of bureaucracy have offered to Weber’s model, however, they have continued to use many of the basic concepts of Weberian sociology and have also reaffirmed Weber’s central vision of the rise of the bureaucratic organization as a crucial feature of modern society.11

This book is based on the major premise that historians as well as sociologists should acknowledge that the process of organizational change has had a more decisive influence on modern America than any other single phenomenon.12 My purpose is not to test this premise. That will be the task of many historians writing articles and monographs that explore different aspects of bureaucratic development in the United States. The cumulative results of their work (and mine) will eventually indicate how influential bureaucratization was. For the present, however, all that one can do is pronounce this central assumption, study in detail particular patterns of organizational change, and work toward the goal of a general history. There are already signs that a broad historical synthesis along organizational lines is beginning to emerge.13 But for the most part our recent history continues to be written from a different vantage point, one stressing the overriding significance of a special variety of political events. These are the elections, the legislative and judicial struggles, the political conflicts highlighted by the progressive or liberal approach to the past. The ribs of our history continue to be past politics, and even the severest critics of progressive history have not rejected this assumption. Now the time has come to do that. I am substituting a different point of view, one that centers about the large-scale organization and assumes that our political system, our economy, and our culture have experienced an organizational revolution in the past century.14

This book examines one facet of that revolution. My subject is the public response in America to the most powerful and rapidly growing form of bureaucracy, the large corporation. The objective is to determine how people, most of them middle-class citizens, perceived the rise of big business and how their perceptions changed over a period of three generations.15 Insofar as their attitudes shifted, I try to find out what caused the changes that took place. My focus is largely on the first phase of organizationbuilding in the United States, the years 1880 through 1930, when big business was all-powerful and all-important. I conclude with a chapter on the thirties, when government bureaucracies appear to have taken center stage, but I examine these political developments only to the extent that they influenced public attitudes toward the evolution of large-scale organizations in business. Here, then, is an extended essay in social perception—an examination of the origins of what might be called a corporate or bureaucratic culture. Given this subject, we must begin by describing the evolution of big business and by showing how this phenomenon was related to the major patterns of American organizational growth.

II.

The rise of the large-scale organization in the United States began no earlier than the 1850s.16 Even a brief examination confirms this choice of a starting point. In the colonial era some rather large joint stock companies were involved in the business of colonization; these organizations quickly gave way, however, to smaller groups and to individual efforts to cope with the frontier environment. It would appear that the problems of communication were too great, the need for flexibility and innovation too pressing, for the larger companies of the seventeenth and eighteenth centuries to survive. Poor transportation restricted the size of the colonial market, and limited markets imposed a constraint upon economic ventures, whether in commerce, agriculture, or manufacturing.17 The political structure was almost as localized and fragmented as the economy, and the agencies of empire did little to counter the forces making for decentralization of power.18

These underlying conditions persisted with minor changes through the first half of the nineteenth century. Despite the creation of a nation state, despite advances in communications and transportation, despite the beginnings of industrialization, the scale of enterprise in America remained small. The adoption of a federated system and the widespread opposition to further centralization limited governmental growth at the national level. Even the Second Bank of the United States, a “monster corporation” in the eyes of its enemies, was a relatively small undertaking. Although the Second Bank maintained numerous branches around the country, they were never coordinated in a bureaucratic manner; and this lack of coordination, plus the bank’s short life, prevented it from becoming a prototype for subsequent large-scale organizations.19 The state canal administrations and the New England cotton textile mills were just as distinctly pre-bureaucratic.20

Around 1850, however, crucial changes in the transportation and communication systems produced a new kind of organization. The railroad began to integrate and round out the nation’s transportation network, especially after the consolidation of the major east-west trunk lines. The resulting water and rail system, improved and extended in the following decades, laid the foundation for a truly national economy. Of equal importance was the telegraph, an invention that in the late forties and fifties made rapid, long-distance communication possible for the first time. These dual developments were the prime movers of organizational change in the modern era.

Between 1850 and 1880 a few organizations with a distinctly modern scope and style of operation emerged. Most impressive were the railroads, in part because of their size but also because of their bureaucratic mode of organization. The early trunk lines were capitalized at amounts dwarfing all previous ventures in the private sector of the economy: in 1855 the New York Central alone had over twenty-eight million dollars invested in road and equipment.21 Extensive operations and a technological imperative for coordination fostered a series of experiments with more systematic forms of administration. The result was a prototype of the modern industrial corporation, a style of firm which by 1880 had most of the characteristics we associate with large-scale enterprise in the twentieth century.22

For our purposes, we will label this type of organization a primary bureaucracy—that is, a large and complex organization essentially concerned with the job of marshaling people and resources in order to produce goods or services. Secondary bureaucracies we will define as those organizations chiefly involved in coordinating the activities of, and communicating between, other organizations.23 Examples of secondary bureaucracies included union federations, trade associations, and some government agencies. As late as 1880, however, there were hardly any notable secondary organizations at the national level, and the ones that did exist in the private sector—like the railroad freight pools and the National Labor Union—enjoyed only a fleeting existence.24

By 1880, in fact, the modern primary organizations were just beginning to get a secure foothold in America. There were hardly any private businesses to compare to the railroads. The Standard Oil Company grew fast, but not until 1882 did it change from a loose alliance of separate companies into a trust, and even then it took some years to consolidate the combine along bureaucratic lines.25 The same could be said for Andrew Carnegie’s iron and steel interests, which by 1880 had also reached substantial proportions.26 Several national trade unions successfully weathered the severe depression of the 1870s, but these organizations and such early professional groups as the American Medical Association and the American Society of Civil Engineers were still isolated phenomena in a society oriented to local or regional affairs and to less formal styles of organization.27

Developments within the states in the years 1850–80 demand as much attention as events on the national level. State and local governments made important organizational innovations in the fields of education and mental health; a number of the states created regulatory agencies prefiguring the independent commissions that the federal government later established.28 Unfortunately, we know less about these changes than we do about those which took place nationally, and it is hazardous even to guess whether bureaucratization within the states had a causal relationship with the subsequent organizational innovations in the national sphere. In the years following 1880, however, we are on firmer ground in asserting that the major thrust of organizational change came in bureaucracies operating across, not within, state lines.

III.

Between 1880 and 1930 thousands of new primary organizations emerged at the national level, most of them in the private rather than the public sector. Though many were business firms, many were not. During these years there was a tremendous expansion of professional organizations.29 Although the American Society of Civil Engineers had been active since 1852, as late as 1879 ASCE and the American Institute of Mining Engineers (formed in 1871) were the only national engineering groups in the country. In 1880 the American Society of Mechanical Engineers joined them; two years later the stationary engineers formed an association; and by the end of the decade the electrical and naval engineers had also come together on the national level.30 In the 1890s professional engineers organized five more groups, and during the following ten years the processes of differentiation and organizational innovation actually accelerated: the automotive engineers, the refrigerating engineers, and at least seven other groups found it necessary to organize their own separate associations. By the end of the 1920s, over thirty such organizations existed in the engineering profession alone, and an even larger number of state and local groups was arrayed beneath and around these associations.31 By this time any action that would threaten or reward any substantial group of engineers was likely either to arouse a response from or actually originate in one or more of the professional associations. Before 1880 this had not been the case.

Engineering was only one of the many occupations experiencing this sort of organizational transformation. Similar patterns of development could be found in the academic disciplines, among social workers, doctors, and lawyers, as well as professional managers. Skilled laborers built a phalanx of new primary organizations, mostly craft unions, which were now able to survive major depressions and to control access to employment in a number of industries.32 Among farmers the drive to organize on a nationwide basis was temporarily diverted into third-party presidential politics, but after the defeat of William Jennings Bryan in 1896, farmers increasingly turned their energies to the job of building less dramatic organizations. Their success ultimately brought them influence far greater than that of the more colorful agrarian reformers of the late nineteenth century.33

Of all the new primary organizations that evolved in the fifty years after 1880, however, business firms clearly ran ahead of the field in terms of power, wealth, and degree of bureaucratization. At the beginning of this period only the larger railroads and a few manufacturing firms could be classified as modern corporations, and companies capitalized at five million dollars or more were a rare species. By 1929, a list of the five hundred or so largest industrial corporations—even if one left out the railroads—would include companies with assets ranging from around thirty-five million to almost two and a half billion dollars.34 Some of these corporate giants had reached their awesome proportions simply by expanding their plants and reinvesting the earnings achieved through efficient production and distribution; most, however, had arisen out of mergers between competing firms—that is, out of combinations that initially aimed at achieving market control and the profits of monopoly. While they all had to settle for something less than a complete or pure monopoly, many of the combines came close enough to inspire widespread public concern about the trust movement.35

These fears were understandable, for the trust or concentration movement effectively restructured the American economy. The most significant changes took place at the turn of the century, during a five year period (1898–1902) in which 2,653 separate firms disappeared via the merger route. There was a second round of mergers during the First World War and a third wave in the latter part of the 1920s.36 By then giant corporations dominated most of the nation’s leading industries, and the largest of these firms together owned a significant portion of the private property in America.37 The family enterprise steadily gave way to the bureaucratized corporation. Although the families of great wealth lingered on and occasionally came to grips with the new age of organizations, control in most of the largest corporations gradually shifted to professional managers—men who brought to their tasks special skills and who built a career in the firm, not the family.38

For men of this breed the organizational changes we have been describing provided a new kind of frontier, a new path to success. Great financial rewards could be gained, along with power and prestige, if men—or women—could succeed in building an organization or consolidating one along bureaucratic lines. To us the improvement of communications within an organization may seem inherently less exciting than life on the frontier, but both jobs demanded a particular kind of innovative spirit and both offered to their respective generations an opportunity for upward mobility.39 After 1880, there was certainly less room at the top of corporate society in the sense that few could expect to command the new organizations; by the same token, however, the path to this elevated position was actually wider, since the bureaucracies valued technical achievement more highly than the personal characteristics or family origins which had been so important in the early nineteenth century.40 When the government informed Americans in 1890 that the old frontier was closed, a new one was thus already opening for those who could build, perfect, or administer a modern organization.

Many problems had to be solved. In most primary business organizations, combination was achieved quickly but the development of effective central controls took years to accomplish. The history of the Standard Oil Company is instructive. When John D. Rockefeller and his colleagues took their first steps toward control of the oil industry in the 1870s, they were content to reduce competition in refining without actually consolidating the several companies they ran. Gradually, they converted an “alliance” into a trust (1882) and then into a centralized bureaucracy, in which detailed information—often in the form of statistics—flowed upward to a series of committees which used the data to set policy for Standard’s sprawling industrial empire. It was almost 1900, however, before Standard achieved thoroughgoing centralization.41

The need to centralize power along bureaucratic lines was not limited to the business corporation; it was, in fact, one of the three crucial problems that leaders of all of the primary bureaucracies faced. The top men in the professional associations, no less than the union officers in the national craft organizations, spent much of their energy ensuring that channels of communication operated effectively and that the prerogatives of the primary organizations were respected by their own members. Among unions, for example, the nationals fought intense and frequent battles against the very local unions that had joined together to create national bodies in the first place. Sometimes these difficulties were precipitated by questions of policy—on strikes, for instance; sometimes they centered about the problem of determining union membership. As early as 1870, the Bricklayers Union had acknowledged the need for a single set of rules on membership, particularly since the organization had to deal with the problem of expulsion. In the words of the union president: “The National Union should specify the offense that may be punishable by expulsion and guarantee to every member a fair and impartial trial, and the Executive of the National Union should be vested with the power to set aside the action of a union by which such punishment has been inflicted without a legal trial.” Nevertheless, it was the 1890s before the union was able to solve this problem by establishing and enforcing a “Code of Crimes and Penalties.” Power in matters of membership and of the purse was centralized only after a long struggle, and this type of conflict took place within all of the primary organizations during the years after 1880.42

A second major problem involved the definition and maintenance of optimal external boundaries. The Standard Oil combine initially concentrated on refining and transporting oil products, but demands for internal efficiency and external defense against competitors led Standard to expand. Like the Roman Empire, the oil trust kept seeing new threats on its frontiers. The corporation began to produce and transport its own crude oil and to market its own products. When the sources of crude and the markets for finished products were overseas, Standard became a multinational corporation with affiliates spread from Europe through Latin America and on to the Orient.43 Similar, though less grandiose, problems faced the leaders of professional organizations: if they defined their boundaries too narrowly and limited their membership too drastically, their association could find itself threatened by rival organizations. Thus, in 1904 a group of technicians formed the American Society of Refrigerating Engineers, specifying that their members would be only those who “have accomplished important work in the refrigeration field or shall occupy an important executive position in the field.” This requirement was stringent. Within a few years the result was a new group, the National Association of Practical Refrigerating Engineers, which could accommodate those turned away by the American Society.44 One solution to this problem was simply to define the profession more loosely, but this too had a price; if entry to the organization was too easy, its members might suffer loss of both income and prestige. In the associations, industrial corporations, and national unions, expansion was also constrained by the ability of the organization to maintain effective communications with and controls over its constituent parts.

The third problem generic to this era of bureaucratization was that of maintaining contact with and power over the organization’s external environment. Frequently this was expressed as a desire for stability or rationality—goals that were on the face of it quite unexceptional. Lurking behind these slogans, however, were the age-old questions of the distribution of power, wealth, and status, changed in the modern era only by the size, complexity, and bureaucratic nature of the contestants. Sometimes the call for stability actually reflected a desire to preserve the status quo, but often stability could only be achieved, it seemed, by rather drastic changes in society or some part of it. Hence, the business leaders who proclaimed themselves exponents of the traditional concept of individual competition could also seek stability even when the means they used to achieve that goal destroyed competition.45 Unions, professional associations, and farm organizations all found themselves forced to exercise power in an effort to create the kind of environment best suited to their interests.

This task involved communication as well as control. The organizations needed a steady flow of information from their immediate surroundings if they were going to stabilize or—even better—manipulate their environments. They needed to know what other primary organizations were doing. Unwilling to leave their fates in the invisible hand of competition, the bureaucracies soon discovered that they could benefit from a measure of intergroup coordination. The result was the formation of a wide variety of secondary organizations. Among labor unions, for example, the American Federation of Labor was a secondary organization built on top of a foundation of national craft unions. The AFL sought to coordinate the work of the nationals; it also provided a clearing house for information and on occasion arbitrated disputes between the crafts.

As the AFL’s history illustrates, one of the outstanding characteristics of the secondary organizations in the years before 1930 was their relative weakness. In wealth and power they lagged far behind the primary bureaucracies. The AFL’s officers tried on many occasions to persuade the nationals to adopt certain policies, but aside from withholding support—a dangerous alternative—the Federation could do little to coerce its constituent craft unions.46 The same relationship existed between corporations and the trade associations they organized; whether these associations were attempting to control prices and production or merely to formulate industry-wide political goals, the member companies kept a tight rein on cooperative activities.47 Although the leaders of the primary bureaucracies wanted frequent communication and occasional coordination, they were unwilling to pay much for these goals when the price was their autonomy or the short-run self-interest of their basic organizations.

We have become accustomed recently to think of government as a coordinating mechanism, and during the years before 1930 some public bureaucracies attempted to perform this function. But they did so in a hesitant and half-hearted style. The regulatory agencies sought to discipline the behavior of individual primary organizations. The commissions tried to ensure that businesses adopted correct standards of organizational behavior in both their internal and external relations. Negative restraints were proclaimed and occasionally invoked. The government attempted, for example, to solve the boundary problem by setting limits for organizational growth through the antitrust policy. Federal power was attractive enough to persuade some businessmen (i.e., those who were serious about the need for coordination) actually to seek regulation; hence the creation of the Federal Reserve System in 1913.48 The Fed was an exception, however, and most of the regulatory commissions were merely captured and neutralized by the businesses they sought to regulate.49 Neither the public nor the private secondary bureaucracies provided effective central control to the imposing array of primary organizations that had arisen by the end of the 1920s.

IV.

The Great Depression of the thirties exposed some of the weaknesses of this ill-coordinated system and launched a second phase in America’s organizational revolution. Now the central innovations came in the coordinating-liaison units, particularly those in the public sector, and the changes that took place once again involved three major problems: the centralization of power; the definition and maintenance of optimal boundaries; and the preservation of control over the external environment. At first there was some attempt, under the National Recovery Administration, to absorb private secondary organizations into the government and vest them with coercive powers. After 1935, however, attention increasingly turned to public, not private, institutions.50 Gradually, and often haphazardly, the federal government devised policies that sought to centralize control over aggregate demand in the economy and thus to guide development along selected paths. The evolution of these programs and their supporting institutions continues today: witness the wage-price guidelines of the 1960s and the wage-price controls of the 1970s. Power is slowly shifting from the primary to the secondary bureaucracies, essentially in response to the needs created by the new and uncoordinated system of powerful primary organizations that had developed in the years 1880–1930. In that sense it transcends partisan politics and the liberal-conservative terminology that contemporary observers have usually applied to these developments. For the same reason, the process is likely to continue regardless of which political party is in power or which leader sits in the White House.

Although they were less obvious than the innovations in public policy, important changes also took place within the primary bureaucracies during the years following 1930. For one thing, traditional concepts of organizational boundaries began to break down. Among unions the historical concept of “crafts” had operated as a constraint upon organizational growth long after the crafts themselves had become largely irrelevant to the tasks performed in most of the modern, technologically advanced industries. In the thirties and forties, however, new industrial unions abandoned the craft concept and succeeded in organizing workers in such major industries as automobiles and steel. These unions were not the first ones in America to look beyond the traditional crafts, nor was their growth wholly a function of their more flexible concept of unionism. They were, nevertheless, the first such organizations to become permanent elements in our industrial economy.51

Similar changes took place among business corporations. In previous years the concept of the “industry” had imposed a constraint upon the expectational horizons of corporate managers; a firm in the iron and steel industry or in copper production focused almost exclusively on that single product. While the company might begin to extract its own raw materials, transport them, and distribute its final products, all these operations were closely tied to the basic goal of making and marketing steel or copper. A few leading companies had begun to abandon this approach even before the 1930s; the result in the chemical and automobile industries was the diversified firm manufacturing and marketing a variety of different products. By the end of the 1940s, the diversified firm had become the rule rather than the exception among America’s largest corporations.52 More recently, the conglomerates have taken a further step in this direction, leaving behind even the restraint imposed by the idea of exploiting related technologies or similar distributing systems. Under current conditions, tradition no more limits the growth of the firm than does a national frontier.

As they expanded their boundaries along these new lines, the primary bureaucracies found it increasingly difficult to solve the other two problems generic to this age of organizations: they found it harder to control their internal operations and to stabilize their external environments. The three major problems facing the organizational entrepreneurs were thus closely interrelated, and once again Standard Oil provides an instructive example. By the early 1940s this giant firm had grown so large and had become so complex that its top officers could no longer remain in touch with all of its major operations; the company underwent two reorganizations aimed at improving its system of internal communications. In 1942, however, when Standard’s president testified before a congressional committee, he revealed a lack of knowledge about his own company that even defensive duplicity could not explain.53 The responses to these communication problems were varied. On occasion the organizational elite merely adopted new policies, but more often they introduced structural changes in the firm. Among large business corporations (including Standard Oil), decentralization became the most popular response to the demands imposed by diversification and by far-flung international operations.54 Many professional associations followed a similar course, creating an elaborate system of regional divisions and standing functional committees which was supposed to keep the organization intact, meet the needs of a varied constituency, and avoid the loss of members to splinter groups. Important developments have thus taken place in the primary as well as the secondary bureaucracies during recent years.

Changes of this magnitude could hardly have taken place without influencing the attitudes and values that made up the national culture. Indeed, this organizational revolution appears to have forced Americans to adopt a new culture, one attuned to the needs of bureaucracy in an urban setting. In the past century, the individualistic orientation of an atomistic, competitive society has given way to an emphasis upon group or collective effort. It is large-scale organization, I think, which best explains the transition that David Riesman and others identified some years ago as a shift from inner- to other-direction. The other-directed man was, in their definition, in harmony with “a group milieu”; “at home everywhere and nowhere,” he was “able to receive signals from far and near”—from many and changing sources. The other-directed man guided himself not by an independent code of behavior but by “elaborate equipment” that told him how others were reacting to what he did. “As against guilt-and-shame controls, though of course these survive, one prime psychological lever of the other-directed person is a diffuse anxiety. This control equipment, instead of being like a gyroscope, is like a radar.” In the early 1950s Riesman and his colleagues felt that this type of character was “emerging in very recent years in the upper middle class of our larger cities.”55 I would argue to the contrary: the other-directed man was already working for Standard Oil in the 1890s. By the early 1900s, his values were displacing individualistic concepts, at least in the middle class.

Other, related cultural changes took place. Powerful bureaucracies demanded new types of followers, as well as leaders, and the United States eventually became the kind of society that could regularly provide the men and the values modern organizations needed. In the new bureaucratic order men tended to define their relationships to others in very specific terms, and they evaluated behavior in a relatively neutral, unemotional manner.56 They applied standards that were more universalistic than those which had characterized the fragmented, particularistic, agrarian and small-town society that was being supplanted in the modern era.

What emerged in America was a new culture, a corporate culture, which included, I think, a new public image of the giant corporation. My focus in the following pages is upon that image and thus upon a single strand of the corporate culture; only by inference and by drawing heavily upon the work of others can I show how opinions of the giant firm were related to their cultural matrix. Chancy as that may be, the risks will be proportionate to the rewards if I can thereby place my subject in what I consider to be its proper historical context.

V.

Fortunately, earlier historians have told us a great deal about that context and about the public response to the rise of big business. Their various interpretations deserve careful attention. In the Marxian view of history, for instance, business combines played a central role in the class conflict that capitalism inevitably produced, a conflict centered upon real and vital economic issues. Attitudes were rooted in socioeconomic classes and in class interests. The large firm accelerated the process of capital accumulation leading to the “immiserization” of the working class and to the multiplication of the army of the unemployed.57 As Marx explained: “The growing accumulation of capital implies its growing concentration. Thus grows the power of capital, the alienation of the conditions of social production personified in the capitalist from the real producers. Capital comes more and more to the fore as a social power.… The contradiction between the general social power into which capital develops, on the one hand, and the private power of the individual capitalists over these social conditions of production, on the other, becomes ever more irreconcilable, and yet contains the solution of the problem, because it implies at the same time the transformation of the conditions of production into general, common, social, conditions.” Bourgeois, meliorative measures could not prevent the final resolution of capitalism’s central contradiction through class warfare and the triumph of the proletariat.58

Joseph A. Schumpeter envisioned a different process of change with a somewhat similar result. Large firms, he felt, spurred technological progress and thus contributed to capitalism’s economic success; but innovation and progress were accompanied by waves of destructive competition, which in turn fostered widespread discontent. Intellectuals channeled this dissatisfaction into reform movements that sought to prevent monopoly through antitrust proceedings and to control business through regulatory measures. Meanwhile, the large corporation itself changed, substituting administrators for entrepreneurs, and as a result it became less likely to innovate. Bureaucratization also supplanted the family firm and eventually eroded the social values that had sustained capitalism. The modern liberal state, the new attitudes, and the new style of giant firm were together choking off entrepreneurship and destroying the capitalist system. Socialism would ensue, Schumpeter said, from a peaceful evolutionary, not a violent revolutionary, process, and the large corporation would play a crucial role in that transformation.59

America’s progressive or liberal historians offered a different perspective.60 While they shared with Marx the assumption that real economic interests were the root cause of conflict between the trusts and society, liberal historians did not use the Marxian dialectic as a central feature in their interpretation of history, nor did they adopt Marx’s vision of the triumph of the proletariat. Instead, they portrayed modern American history as a series of clashes between liberals and conservatives, with big business marching in the armies of the right wing. Liberal historians saw success, not subterfuge, in bourgeois reform. In their view, the Populist, Progressive, and New Deal reform movements provided effective political solutions to such problems as the concentration of economic power.61 Like Schumpeter, they felt that intellectuals played a vital role in shaping public attitudes and thus in guiding political change; they gave more emphasis than Schumpeter did to liberal political leadership, and of course they did not see socialism as the inevitable product of reform.62 Antitrust and regulatory measures, they concluded, broke up some combines and curbed the power of others; modern American history was a study in progress, and change was the product of creative political tensions. They saw opposition to the large corporation disappearing as government solved the trust problem.63

In recent years, many scholars examining America’s response to the rise of big business have abandoned progressive concepts. Revisionists have discovered that large companies were not always the opponents of reform; instead of a monolithic “business community” they have found businessmen, large and small, arrayed in complex and changing coalitions which sometimes sought and sometimes opposed political change.64 Some New Left historians have characterized the entire progressive movement at the national level as a product of efforts on the part of big business to establish through government regulation the stability and security that could not be achieved in the private sector.65 The motives and behavior of reformers as well as those of businessmen have been reappraised. To the more conventional motives, such as direct economic and political interest, revisionists have added status anxiety, a longing for order, and a variety of irrational and nonrational desires. Cultural values have become almost as important in explaining man’s behavior as market values once were.66

Revisionist and New Left historians alike have battered the central pillars of the progressive synthesis: the assumption of progress and the related premise that the good society was achieved largely through a process of creative political conflict. By looking beyond the passage of liberal legislation, by examining in some detail the manner in which, for instance, regulatory and antitrust measures actually worked, scholars have come to realize that progressive historians exaggerated the extent to which American society was reformed. Instead of change, many recent historians have found continuity to be the most outstanding aspect of the nation’s history. Instead of conflict, they have asserted that consensus over basic values characterized the American past. Louis Hartz has concluded that Americans were, in fact, never very concerned about the trust movement and the manner in which large corporations concentrated economic and political power. To most Americans big business did not pose a real threat because the trusts and the people actually agreed on the basic goals of their society.67

While Richard Hofstadter was one of the founding fathers of consensus history, he broke with this tradition when he set forth his own ideas on the historical dimensions of America’s antitrust movement. In his opinion, opposition to the trusts was widespread for a time and had substantial political impact. More recently, however, fear of big business seemed to have faded, particularly since World War II. The antitrust movement died, Hofstadter said, for a variety of reasons, including the excellent performance of the national economy after 1940, the “countervailing bigness” of labor unions and the government, and the country’s actual experience with bigness—an experience that put to rest fears about continued concentration, technological decline, and opportunities for individual advancement. The post-World War II years saw the emergence of a new generation accustomed to bigness; these Americans were bent upon bureaucratic careers and interested in security. Meanwhile, Hofstadter said, the public had become aware that the small companies which often harbored right-wingers nevertheless frequently ran to the government for help.68 As a result of these developments, Hofstadter concluded, most Americans had become placid about, if not actually pleased with, the role of the large corporation in our society.

Another eminent historian, Robert H. Wiebe, has used a different perspective and given us a different set of conclusions. In The Search for Order, Wiebe employed to good effect a brand of social equilibrium model. Eschewing the dynamic or long-run considerations that provided the foundations for the Marxist and Schumpeterian systems, Wiebe examined the more limited problem of how American society maintained, lost, and regained a sense of order in the nineteenth and early twentieth centuries. In his viewpoint, mid-nineteenth-century America consisted of a series of “island communities,” each of which functioned as a largely autonomous social, economic, and political system. This stable order broke down as a result of rapid industrialization, urbanization, and immigration, leaving Americans from the seventies through the turn of the century searching for a new order. Then, the nation’s “new middle class” of urban professionals and specialists provided organizations and values that restored equilibrium. The political phase of the new society was progressivism, but reform politics was only one part of the general transformation to a bureaucratic order.

By adopting an equilibrium model, Wiebe was able to provide an innovative interpretation of the role of big business in American society. As he saw it, business leaders were as confused as most other Americans in the late nineteenth century: “As shrewdly as some of them pursued the main chance, they were also trapped by the present, scurrying where they appeared to stalk.”69 When these “scurrying” businessmen formed large combines, many Americans condemned the trust movement, focusing on business all the animosities generated by the strains of a major social transformation. In the twentieth century, however, the trusts began to consolidate their operations and the bureaucratized corporation shared many values with the middle-class reformers who led the progressive movement in state and national politics. The managers of big business no less than the managers of reform sought a stable social order that stressed continuity, rationality, and centralization of authority. The climax of progressivism came in the 1920s when, as Wiebe explained, the new bureaucratic order rallied under the banner of the engineer-president, Herbert Hoover.70 By this time most Americans accepted large enterprise in matters public and private as an essential element in their society.

The syntheses of Hofstadter, Wiebe, and others provide a variety of conflicting viewpoints on the public response to the rise of the large corporation. While my primary interest in the following chapters is in contrasting a liberal-progressive approach with an organizational-bureaucratic framework (of the Wiebe variety), all of the historical interpretations surveyed above generate useful questions. Were the trusts a source of intense politico-economic conflict? Or was the anti-monopoly movement only a slight symbolic ripple in a society largely characterized by social harmony? If in fact there was widespread concern about the trusts, did this unease follow class lines? Was it rooted in tangible economic interests? Or were Americans projecting onto the corporation the anxieties engendered by the breakdown of their traditional social order? If there was an antitrust movement, what were the roles of intellectuals and political leaders in molding opinion; when and why did the movement disappear? Was the acceptance of large-scale enterprise a post-World War II phenomenon, as Hofstadter suggests, or was this shift in public attitudes fully developed by the 1920s, as Wiebe postulates?

My goal in the following pages is to provide answers to these and similar questions. The social theory that seems best suited to this task is an equilibrium model resembling the one Wiebe employed. Equilibrium in this mode of analysis does not mean stasis, the total absence of change; nor does it posit assumptions about the organic nature of social systems.71 What equilibrium does mean is that there are patterns in human behavior, and that societies—whether large and complex nations or smaller social systems within a nation—can be analyzed in terms of the internal and external forces that act to maintain or disrupt those patterns. In dealing with the topic at hand, equilibrium can be defined as a situation in which public attitudes toward the large corporation are relatively stable and in which those attitudinal changes taking place are gradual or evolutionary. Sharp fluctuations in public thought will be taken as an indication of disequilibrium, regardless of what the evaluative content of the ideas was and regardless of the direction change takes.

While my approach is similar to Wiebe’s, there are some important differences that should be clarified. Wiebe predicates a stable social order for the entire nation, using the sociological counterpart of what economists would call a general equilibrium model. Because I am focusing on the public response to the rise of only one type of modern organization, I am using the idea of equilibrium in a much more restricted sense; mine is the sociological version of the economist’s partial equilibrium model. I hope that I have traded breadth for depth of analysis, particularly in the case of causal relations. I am as interested in the process as I am in the patterns of change (Wiebe’s central concern). To study the forces that shaped attitudes, I will go below the level of the national society and analyze particular groups and their subcultures. I have, however, tried to examine each of these groups and each set of attitudes toward big business from the vantage point provided by the concept of social equilibrium.

All of the questions I have asked about the public response to big business can be translated into testable propositions that are compatible with an equilibrium analysis. If the consensus historians are correct, for example, I will find few signs of instability or disequilibrium, and hostility toward the corporation will emerge as a minor and fleeting phenomenon. If, however, group attitudes are found to be unstable and there are indications of conflict and deep hostility, it will be necessary to turn to one of the several conflict-centered explanations. The major factors shaping these opinions may be socioeconomic classes, as the Marxists would have it, and the long-run trend would thus be toward a sharpening of class differences and their related antagonisms. On the other hand, Hofstadter and the progressive historians have concluded that over the years these antagonisms disappeared. The social equilibrium framework is, I believe, broad enough and sufficiently neutral to encompass these varied hypotheses in addition to some of my own.72

I began this book with some tentative answers in mind for most of the questions I have raised. In the early years covered by this study, I expected to find a relatively stable set of attitudes about the large corporation in most, but not all, groups of middle-class Americans. Relations with the trusts would be neither entirely amicable nor homogeneous; farmers, for instance, seemed to me to be different from most other citizens, and I thought they were very angry at big business as early as the 1880s. For most other groups of Americans, however, I believed that unfavorable attitudes were balanced by favorable opinions, that values held in common throughout much of the society dampened discontent, and that above all, prosperity was a powerful and highly generalized force muffling conflicts of interest and stabilizing social relations.

These patterns were, I assumed, seriously disrupted by economic distress and by the continued spread of the concentration movement in the nineties. While the ensuing struggle became an important political issue, in my viewpoint the factors most responsible for instability and for the ultimate restoration of equilibrium were economic in nature. Economic change cut across the various groups and subcultures, providing the sort of generalized force that could restructure public opinion about big business. While income had different effects upon different groups, I did not feel that these differences could be analyzed in terms of socioeconomic classes. In that sense I began as a non-Marxist economic determinist, a historian who believed that income was the most powerful sanction in American social relations. This has not been a very popular position in recent years, but my suspicion was that many historians had swapped accuracy for subtlety in their quest for intellectually pleasing explanations of human behavior.

While economic factors were paramount, my initial assumption was that organizational change itself ranked second in importance as a factor shaping group attitudes toward big business. I felt that the most influential organizational developments would be those taking place within the groups antagonized by the emergence of big business; new elites and new organizations would provide either the reality or the semblance of countervailing power. I also thought that new organizations such as the professional associations that developed around the turn of the century promulgated values which blended easily with the bureaucratic point-of-view (à la Wiebe) in the business system.73 I expected to locate some of these changes among the primary bureaucracies, others among the secondary organizations that stood between the groups and the giant corporation. Gradual changes in the large firm itself might also have influenced public attitudes, although I thought Americans probably perceived these changes in a number of different ways.

Ranking third in importance were the political factors which at times fostered conflict and at other times made for a decline in hostility toward the corporation. My hypothesis was that progressive historians had greatly exaggerated the impact of political reform movements and that at best one could give only a tertiary role to the antitrust and regulatory measures that had so tightly gripped the attention of liberal and revisionist scholars. While anticipating that reform politics would be more influential in some groups than others, I was doubtful that political events or political leadership would provide a sufficient explanation of the changing opinions in any substantial part of the middle class. Similarly, I suspected that both the progressive historians and Schumpeter had grossly overstated the role of intellectuals. Ideas and values seemed important to me, but only to the extent that all actions are infused with ideas and values, not because the ideas could be traced back to some leading intellectual. I thought that most of the behavior which interested me could probably be explained without ever once mentioning Lester Frank Ward, Richard T. Ely, or, for that matter, even John Dewey.

In varying mixtures these political, organizational, and economic factors made for accommodation, for a new equilibrium in the relations between major groups in America and the giant firm. This was a long term, gradual, and uneven process of change; it was one that I thought was probably completed for major groups in society during the 1920s. By that time the corporate culture was, I felt, securely planted among the middle classes in America. At the end of that decade, however, I knew that the stock market crash and the Great Depression created new tensions and an air of crisis. I was baffled by the 1930s, uncertain and unwilling to formulate a clear hypothesis about the impact of economic distress and New Deal politics on the public image of the giant corporation. Here my own assumptions trapped me. On the one hand it was only reasonable to believe that depression in the thirties would arouse anger at big business just as unemployment and declining income had done in the nineties. On the other hand, I was aware that Franklin D. Roosevelt’s attempt to revive the antitrust movement in the latter part of the decade had not been very successful. So I decided to proceed, without providing that part of my study with a guiding hypothesis. By that time, however, I was already long on hypotheses and short on the evidence that would enable me to test my ideas and those of the other interpretations reviewed. I found it useful to develop a particular kind of quantitative data to serve that purpose; the origins and the nature of my evidence are explained in the next chapter.