The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supercompany

by Charles R. Morris

  Ship plate and ship cannon production required very large-scale planing and boring operations, so Taylor immediately focused on the machine shop, introducing the full panoply of his management ideas. By the second year of the engagement, however, although the shops were running more smoothly, managers complained that they weren’t actually producing any more than usual. To their irritation, they discovered that Taylor had still not begun work on the time studies and piece rate systems, which was the main reason he had been hired.

  The fact is, Taylor had found something more interesting to do. For some twenty years he had been gnawing at the problem of optimizing machining operations, along the way experimenting with a great variety of cutting tool steels. Early in the Bethlehem assignment, he recommended a favorite tool steel from Midvale, and was embarrassed when it performed badly in a bakeoff with other steels. Checking further, he found that when it was forged, the toolsmith had overheated it to “dull cherry” (steel heat was still measured by color), which, as the smith should have known, made it soft and crumbly under pressure. Taylor had wangled a full-scale lab setup at Bethlehem, so he did some experiments on his own, corroborating that the Midvale steel got very hard just below cherry, but lost its integrity above that point. Then, to his amazement, he discovered that as he increased the heat through “salmon” to “yellow,” the steel went through yet another phase change and got super hard.

  That was a big deal, and Taylor knew it. With the assistance of Maunsel White, the Bethlehem metallurgist, he spent much of the next year on a model set of empirical experiments that completely specified the detailed processes for making the new steel. Along the way, experimenting with the newly invented pyrometer, they succeeded in replacing all the color-based heat descriptions with precise temperatures, so “light cherry” became “845°C.” Centuries of lore, and the traditionalists’ beloved color categories, were swept away into the attics of industrial museums.

  The performance of the new tools was startling: they typically ran at double or triple the speed of standard tools, heating all the way to “cherry” (about 1000?C) without any loss of cutting efficiency. A spectacular Taylor-White tool exhibit at the 1900 Paris Exposition got the attention of the entire industry—it was a giant lathe cutting at high speed, and positioned in semidarkness to highlight the cherry-red glow of the tool and the blue glow of the stream of hot chips. High-speed steel swept through the industry, and by 1902 machine makers were creating entirely new lines of equipment to take advantage of the new tools. (But it took some years to take full advantage of them. Re-gearing motors to triple the speed of the cutting tool was easy enough, but it was much harder to redesign, say, a heavy planing table to feed three times as fast, and still stay true.) Although the Taylor-White patents secured his fortune, Taylor, ever the obsessive, downplayed their importance, insisting that they were just a component of the comprehensive “Taylorized” shop system. He was even disappointed at the rousing reception accorded his 1906 ASME presidential address, “On the Art of Cutting Metals,” because the audience focused only on the new tools, ignoring the functional foremen, the stopwatch timing, the piece rates, and the rest of his apparatus, which he regarded as equally fundamental.*

  After Taylor was ushered out of Bethlehem—he had managed to antagonize a remarkable number of people, from top management down to the shop floor—he effectively retired from active business, building a large house near Philadelphia, working hard at his golf game, and serving as a kind of mountaintop guru for the cause of “scientific management.” He frequently played host to small groups of businessmen, treating them to lunch and a Taylor disquisition. Taylor could be a mesmerizing speaker, and his stories and successes steadily improved with each re-telling; as one biographer delicately put it, “potential dramatic appeal . . . outweighed any consideration of historical accuracy.” The day would wind up with a tour of a local factory run by a friend and admirer, James Dodge, who had installed one of the few examples of a pure Taylorized operation. Many of those tours resulted in consulting assignments, which he parceled out among a still small but growing band of disciples.

  And there, under normal circumstances, Taylor’s story would have ended. Although he was little known outside of professional circles, his machining contributions would have warranted a special note in industrial histories. One imagines that the ASME might have honored him with a statue, much as they did Holley. What happened instead is that in 1910, Louis Brandeis decided to take up the cudgels for Taylorism.

  Enter Mr. Brandeis

  We last met Brandeis as the sworn opponent of reckless financial management at Pierpont Morgan’s New York, New Haven & Hartford Railroad. In the midst of that long struggle, all the major eastern railroads made application to the Interstate Commerce Commission for a 10 percent tariff increase based on rising wages and other operational costs. The subsequent hearings, in the so-called 1910 Eastern Rate case, were a major event, and Brandeis leveraged himself into the role of public representative.

  Brandeis was a matchless advocate—a brilliant lawyer, unusually thorough in his preparation, and with a lethal flair for publicity. He heard of Taylor’s little band of efficiency gurus through a factory-owning friend and, after some inquiry, decided it was a promising line of attack. Brandeis thereupon plunged into an immersion-style education, meeting several times with Taylor, spending time at Dodge’s model factory, and organizing a group of Taylor’s disciples as advisers and witnesses. Besides Gantt and Dodge, there was Horace Hathaway, another Midvale veteran, and two more recent adherents, Harrington Emerson and Frank Gilbreth. Emerson was a former language professor, and a born promoter who, after an indifferent business career, had read Taylor’s books and become a management consultant. Gilbreth was a building contractor, who had made a fetish of “motion studies.” Where Taylor had considered an action like “filling a shovel” an elementary task, Gilbreth used a high-speed camera to analyze micro-motions, which he called “therbligs”—for Gilbreth spelled backward—insisting that the therbligs were “the same whether a hand held a scalpel, a trowel, or a monkey wrench.”*

  Brandeis carefully scripted the order and style of their presentations. He wanted the Taylorites to project dogmatic certainty and absolute consistency (Taylor must have loved it), and he wanted a headline-grabbing name for what they did, and midwifed the selection of “Scientific Management.” At the hearings, Brandeis posed a seemingly innocent set of questions to a series of executives. They ran more or less:—“What is the cost of [some railroad activity]?”—“I’m afraid I can’t answer that.”—“Is it performed efficiently?”—“Of course.”—“How can you be sure?”—“Well, through the long experience of our managers.” His traps laid and sprung, Brandeis then trundled out his parade of Scientific Management witnesses, who announced that since the executives did not practice Scientific Management, they couldn’t possibly know what they were talking about.

  Gantt declared that management’s transition to a “science” was “very recent; not more than three or four years at the most.” While “systematized management” imposed order on routine tasks, Scientific Management was based on a “scientific investigation in detail of each piece of work and the determination of the best method and the shortest time in which the work can be done.” As Gilbreth put it: Scientific Management “separated the planning from the performing. Put that in writing in the form of an instruction card . . . [So a man says:] ‘That is the way the scientists have found out that this can be done the best.’” It had taken him many years to find the best way of carrying bricks, Gilbreth said, but he never despaired because “in the process of scientific management that fact was prophesied, that we would be able to do it as surely as the position of one of the outer planets was prophesied by mathematics.” Hathaway said that with Scientific Management the workman “no longer trudge[d] alone in darkness afoot through a sandy road.”

  All of the time-honored claims were trotted out—quadrupling pig iron loaders’ output, tripl
ing shovelers’. Gilbreth claimed to have reduced bricklayers’ motions from eighteen to only four and a half—all bricklayers had once tapped their bricks with their trowels after placing them, for instance, and by eliminating such useless motions, he had tripled their output. And all the witnesses agreed that Scientific Management put an end to labor difficulties. Gantt said that Scientific Management gives the workman “pride in his work and [he] soon distinctly improves in personal appearance.” The improvement was even more marked in “girls than in men, for the girls invariably acquire a better color and improve in health.” The journalist Ray Stannard Baker wrote, “Few of those present had ever heard of scientific management, or of Mr. Taylor, its originator, and the testimony, at first, awakened a clearly perceptible incredulity,” which was swept away by “the extraordinary fervor and enthusiasm expressed by every man who testified. Theirs was the firm faith of apostles.”

  Emerson trumpeted the success of a consultancy with the Santa Fe Railroad* where he claimed to have halved the turnaround times for locomotive repairs. When Brandeis asked him how much the railroads could save if they all followed his advice, Emerson averred that it was at least $1 million a day, extrapolating his Santa Fe experience across all the nation’s roads. The other witnesses had done their independent calculations, which remarkably enough, all came within a few percentage points of Emerson’s. It was a sensation. The New York Times headlined

  ROADS COULD SAVE $1,000,000 A DAY

  Brandeis Says Scientific Management Would Do It

  Calls Rate Increases Unnecessary

  Brandeis won his rate case, and Taylor was suddenly a celebrity. “Weeding Waste Out of Business Is This Man’s Special Joy,” the New York Tribune headlined. He found himself beset by interviews, magazine profiles, pilgrims to his home; his name was spread over the Sunday supplements. “Taylorism” was suddenly a household word, and there was a rash of “time-and-motion” cartoons, including a spoof “The Fifteen Unnecessary Motions of a Kiss.” Pressed to produce a popular version of his teachings, Taylor rushed to produce Principles of Scientific Management. To his irritation, the ASME, which had sponsored his other work, refused to publish it, because they did not believe management was a “science.”† Harpers was happy to, however, and gave it much greater exposure. Gilbreth, Emerson, and others all rushed into print with their own Scientific Management manuals. Gilbreth’s, with a preface by Brandeis, was framed in a question-and-answer format that perfectly captures the quasireligious, catechizing spirit of Taylorism. Samples:

  Why is Scientific Management not called “the Taylor System”?

  [It] should . . . and would . . . be, but for the personal objections of Dr. Taylor.

  At what speed does Taylor’s plan expect any man to work?

  . . . At that speed which is the fastest at which he will be happy and at which he can thrive continuously.

  As the nation’s pundits were swept up in an “efficiency craze,” Taylor did his best to feed their ambitions. The coda to his Principles stated:

  [S]cientific management . . . may be summarized as:

  Science, not rule of thumb.

  Harmony, not discord.

  Cooperation, not individualism.

  Maximum output, instead of restricted output.

  The development of each man to his greatest efficiency and prosperity. . . .

  Scientific management will mean, for the employers and workmen who adopt it . . . the elimination of almost all causes for dispute and disagreement between them. What constitutes a fair day’s work will be a question for scientific investigation, instead of a subject to be bargained and haggled over. . . .

  [Scientific management] means increase in prosperity and diminution in poverty . . . for the whole community. . . .

  Is not the realization of results such as these of far more importance than the solution of most of the problems which are now agitating the English and American peoples? And is it not the duty of those who are acquainted with these facts, to exert themselves to make the whole community realize this importance?

  That swelling peroration fed into a growing consensus that the future belonged to technocrats and engineers. Comfort Adams, a professor of electrical engineering at Harvard, asked an audience of engineers in 1908: “Are there no laws in this other realm of human relations which are just as inexorable as the physical laws with which we are so familiar?” Much like Taylor, many leading engineers were convinced that there were “scientific laws” that would provide the permanent solution to knotty problems like railroad rate setting or labor problems, finally illuminating “the sane middle ground between grasping individualism and Utopian socialism.” All that was required was “placing engineers in all responsible positions in these great industries,” a sentiment that was loudly cheered by technocratic groupies like Lippmann. This “new professional class with special skills to solve socio-industrial problems” readily discovered that Taylorism was the ideal banner for their cause, and, until the 1920s, Taylorites dominated most of the professional engineering societies. Herbert Hoover may have been the greatest representative of the tradition.

  “Scientific Shoveling” clearly required “Scientific Shovels.” This advertisement takes for granted that its customers will know about Frederick W. Taylor’s work and “Scientific Management.”

  In the meantime, the eponymous hero of the shining new cause found his cup of victory laced with bitterness. There was a strong reaction against his theories on the part of unions and other worker advocates, and he was given decidedly rough treatment by a 1912 congressional committee investigating a job action at a “Taylorizing” federal arsenal.* Nearly two years of lionizing may have disarmed Taylor, for he made his appearance as almost a regal figure, delivering an initial statement that consumed more than seven hours and two committee sessions. To his dismay, he then found himself politely skewered for another two full sessions, especially by the chairman, a canny old miner named William Wilson, who drilled relentlessly at the holes in his theories, like the “scientific” definition of a “first-class man,” and the large arbitrary fudge factors in his time studies. Taylor never bore up well under attack, and finally fell back on abject logic chopping—it was impossible for Scientific Management to be abused, he stubbornly insisted, for if it was abused, it was no longer Scientific Management. Thereafter Taylor sharply limited his public appearances, pleading that an ill wife required his full-time attention. (She was very demanding, it seems, but a Taylor biographer, Robert Kanigel, wonders if he was using her as a shelter.) The less he said in public, perhaps, the better. In one of his few appearances, before the U.S. Industrial Relations Commission in 1913, he proudly declared, “We never take a human instrument that is badly suited for its work. . . . We take a proper human animal, just as we would take a proper horse to study.”

  Taylor died in 1915, at only fifty-nine years of age. To the last, he remained obsessively vigilant against imputations that Scientific Management might have had a history before his work at Midvale, and came down like avenging thunder on any of his acolytes who deviated from the pure doctrine.

  Taylor and the Intellectuals

  Brandeis’s publicity fireworks for Taylorism seems to have ignited a long-smoldering, vaguely defined, and highly protean intellectualist fantasy of Scientific Management as a kind of philosopher’s stone capable of unlocking secrets of great power. When Taylor speaks of laws “so intricate” and science “so great,” he sounds like a Grand Master Mason claiming the runic keys to a mystic kingdom—in this case, the secret path to Edward Bellamy’s managerial utopia, or John Dewey’s Republic of Experts, or Walter Lippmann’s blessed state of “Mastery.” More recent scholarship, in contrast to the unabashed Taylor idolatry of a generation or so ago, takes a more skeptical tone. But there is still much tiptoeing around the legend, even though it requires a violent reordering of the evidence to conflate Taylor’s work with the broad upgrade in business practice that was in full flood when he was still in high sc
hool.

  The curt summary by the historian Phillip Scranton—that Taylor was “a batch and specialty shops veteran obsessed with eradicating variation and uncertainty”—has it exactly right. It is not true that Henry Ford’s Model T factory was just a special case of Taylorism, as Alfred Chandler would have it, or Taylor himself claimed. Taylor’s machine shop work was aimed at increasing the production of skilled machinists making variable goods with general-purpose machines. The Ford factory, by contrast, was the apotheosis of the Armory tradition of making interchangeable parts with singlepurpose machines operated by unskilled labor. Instead of devising standardized instructions for machinists, as Taylor did, Ford eliminated machinists in favor of machine tenders. If a part needed the slightest fitting by a skilled machinist, the line would have broken down. Inspiration for the line itself came from canning, flour, and meat-packing factories, industries that Taylor knew little or nothing about. Similarly, materials management in a large, fast-moving, mass-production factory like Ford’s was on a different planet from the ticket-based stores tracking systems Taylor used in his shops. The only overlap between Taylorism and a Ford factory is that the Ford engineers conducted what they later called time and motion studies to work out the speed of the line and the best layout for assembly materials. They may have gotten those ideas from Taylor—although Ford said not—but it’s hard to imagine they couldn’t have come up with them independently. Canning factories had long dealt with the same problems, and even the first department stores had quickly realized that a well laid-out work area let a salesclerk handle more customers.