INDUSTRIAL ORGANIZATION AND ADMINISTRATION. In the consideration of the organization and management of manu facturing establishments let us, after glancing at the evolution of American business admin istration, divide the subject into three parts, namely, the handling of finances, the admin istration of the manufacturing processes, and the control of the personal relations. The management of the selling and advertising functions, which should be considered in a gen eral review of the subject, are treated under the heading INDUSTRIAL DISTRIBUTION.
Historical Review.— In the early decades of American business, the organizations used for administrative control were of the sim plest character. Private and family-owned en terprises or small partnerships operated plants which might be described as shops. The first large undertakings, which required the cor porate form, and which necessitated any con siderable formality of financing, were the toll roads, canal companies and the railroads. The chief factor which caused an increase in the size of businesses during the half-century 1840-90 was the invention of machinery. The large-scale operation which machinery and the use of mechanical sources of power sug gest has been realized because of the enor mous domestic market, the ample capital avail able, the freedom of the country from tradi tion and the existence of a spirit of daring. By the decade these experiments had sufficiently developed the technical aspects of manufacturing, that engineers could boldly plan groups of specialized plants under united control. Meantime the accountants had learned how to keep untangled the most heterogeneous affairs; and the distributive or marketing machinery was devised for handling the entire domestic market in a single campaign. Since the possible economies. from the elimination of competition were very large, there occurred the so-called "trust which resulted in the consolidation of many hundreds of in dividual plants into a small number of great consolidated corporations. In the process of putting these enterprises together, and of op erating them, the art of corporation financing, and its underlying technique of accounting, have achieved a forced growth. Overlapping
this period in part, but operating most inten sively from 1910 to 1914, there occurred the movement known as "scientific management.* Broadly speaking the purport of this move ment is that a group of engineers applied the precise and systematic methods of investiga tion and calculation recognized in the engi neering sciences to the study of shop processes, and that by so doing they uncovered astonish ing inefficiencies and were able to recommend a system of functionalizatinn of shop executives and a policy of standardization upon the best methods which systematic study should dis cover. Scientific management is an effort to apply the scientific method to a certain portion of shop practice. It met with determined op position because it did not adequately apply the knowledge and spirit of the times in its han dling of the wage-earner. A further account of this movement may be found under the heading SCIENTIFIC MANAGEMENT. At the present time the interest of business execu tives in the evolution of new methods centres upon "human engineering.* There has been an accumulation of knowledge concerning hy giene and public medicine, the causes of fa tigue and accidents and the wastes of the hir ing-and-firing methods in vogue, which de mands application. It is realized that men should be carefully chosen for their work and given special training for it. Organized labor has enforced the idea upon the public mind that the laborer should have a voice in deter mining the conditions in which he works. And finally there are new ideals of the square deal and of service which are making their way among the more advanced employers.
Departments of Business Administration. ordinary functions of business adminis tration fall into four classes: (1) Financing— in charge of the chief officers, working in close relations to the board of directors. (2) Manu facturing—in charge of a general manager or superintendent, directing a corps of foremen in the shops. (3) Selling—under the direction of a sales manager, with district agents and salesmen. (4) Personnel Relations — in charge of an employment manager or superintendent of personnel.