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Family and Bureaucracy in German Industrial Management, 1850–1914: Siemens in Comparative Perspective*

Published online by Cambridge University Press:  11 June 2012

Jürgen Kocka
Jürgen Kocka
Affiliation:
Wissenschaftlicher Assistent in History, University of Münster
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Abstract

This study analyzes the changing role of pre-industrial family and bureaucratic traditions in the development of Germany's leading electrical manufacturing firm. The Siemens company developed a decentralized, multi-divisional structure ten to twenty years before duPont and General Motors pioneered a similar organization in the United States. The pre-industrial bureaucratic traditions, considered in a multi-national context, facilitated the development of efficient modern management in Germany and help explain the relative success of German industry in the two decades before World War I.

Type
Research Article
Information
Business History Review , Volume 45 , Issue 2 , Summer 1971 , pp. 133 - 156
Copyright
Copyright © The President and Fellows of Harvard College 1971

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References

1 See Hoffmann, W. G., ’The Take-Off in Germany,” Rostow, W. W. (ed.), The Economics of Take-Off into Sustained Growth (London, 1964), 95–119Google Scholar, esp. 96 for the first period of German industrialization from the mid 1830's to 1873.

2 For the purposes of this article this “ideal type” seems sufficient. See Weber, M., Wirtschaft und Gesellschaft (Köln/Berlin, 1964), 160–66, 703–738Google Scholar. Weber's concept applies better to public administrations around 1900 than to those in 1830. Most of the above mentioned attributes were already existent, though less developed, in the German Vormärz, especially in Prussia. See Rosenberg, H., Bureaucracy, Aristocracy, and Autocracy (Cambridge, 1958)Google Scholar; Koselleck, R., Preussen zwischen Reform und Revolution (Stuttgart, 1967)Google Scholar.

3 For a definition of the modern family stressing its character as a primary group, its intimacy, and cooperative features see König, R., Materialien zur Soziologie der Familie (Bern, 1946), 103–131, esp. 119.Google Scholar

4 A. D. Chandler, Jr. and L. Galambos recently stressed the temporal differences between the development of largely private bureaucracies (since the 1870's) and of coordinating and regulating public bureaucracies (which remained relatively weak until the 1930's) in the United States. See their “The Development of Large-Scale Organizations in Modern America,” Journal of Economic History, XXX (March, 1970), 201–207Google Scholar. In Germany the pattern was reversed.

5 The Prussian-German experience not only differed from the pre-bureaucratic Anglo-Saxon industrialisations. It was also peculiar if compared with other European countries such as France. Here, it is true, a strong central bureaucracy had developed before industrialization; but the processes of economic, social, and political modernization occurred in France with more criticism, rejection, and distrust of the governmental authorities and their interventions than in neighboring Prussia. The bureaucratic permeation of the French social fabric thus remained much weaker. See Koselleck, Preussen; Beutin, L., “Das Bürgertum als Gesellschafsstand im 19. Jabrhundert,” in Gesammelte Schriften (Köln/Graz, 1963), 284ff.Google Scholar; Henderson, W. O., The State and the Industrial Revolution in Prussia 1740–1840 (Liverpool, 1958)Google Scholar; Fischer, W., Der Staat und die Anfänge der Industrialisierung in Baden 1800–1850 (Berlin, 1961)Google Scholar; Kindleberger, C. P., Economic Growth in France and Britain, 1851–1950 (Cambridge, Mass., 1964), 193CrossRefGoogle Scholar; Goguel, F., “Six Authors in Search of a National Character,” In Search of France (Cambridge, Mass., 1963), 369Google Scholar.

6 For examples of close connections between government agencies and industrial enterprises in the mercantilist period: Rachel, R., Das Berliner Wirtschaftsleben im Zeitalter des Frühkapitalismus (Berlin, 1931), 14, 123, 142Google Scholar. For the active role of Prussian civil servants around 1800 see Redlich, F., “The Leaders of the German Steam-Engine Industry During the First Hundred Years,” Journal of Economic History, IV (1944), 121 ff.CrossRefGoogle Scholar; Zunkel, F., “Beamtenschaft und Unternehmertum beim Aufbau der Ruhrindustrie 1849–1880,” Tradition, IX (1964), 261–276Google Scholar; Krampe, H. D., Der Staatseinfluss auf den Ruhrkohlenbergbau in der Zeit von 1800–1865 (Köln, 1961)Google Scholar. For technical and industrial schools and associations: Chronik der Kgl. Technischen Hochschule zu Berlin 1799–1899 (Berlin, 1899)Google Scholar; Schnabel, F., Die Anfänge des Technischen Hochschulwesens (Karlsruhe, 1925)Google Scholar; Matschoss, C., Preussens Gewerbeförderung und ihre grossen Männer (Berlin, 1921)Google Scholar; Matschoss, C., “Geschichte der Königlich-Preussischen Technischen Deputation für Gewerbe,” Beiträge z. Gesch. d. Technik u. Industrie III (1911), 239–253Google Scholar.

7 In 1850 Prussia had an engineering corps of 220 officers and 4,000 men. See Kocka, J., Unternehmensverwaltung und Angestelltenschaft am Beispiel Siemens 1847–1914 (Stuttgart, 1969), 177 ffGoogle Scholar. for the Prussian technical civil service, and p. 101 for former civil servants among Siemens employees. An example of a civil servant hired by a private railroad company is in v. Unruh, V., Erinnerungen aus dem Leben, v. Poschinger, H. (ed.), (Stuttgart, 1895)Google Scholar. The participation of civil servants in private railroad building became a problem for Prussian authorities, who tried to reduce this steady loss of trained personnel. See Beuth's ordinances from September 25, 1844 and March 31, 1845, in v. Rönne, L. and Simon, H., Die Baupolizei des Preussischen Staates, suppl. (Breslau, 1852), 44 fGoogle Scholar.

8 See for example Laing, S., Notes of a Traveller, 2nd ed. (London, 1854) 95 ff., 121 ffGoogle Scholar. Rather similar fifty years later is Whitman, S., Imperial Germany (Boston, 1899), 88–115Google Scholar. The popularity of the civil service was reflected by a tremendous run on open positions. See Koselleck, Preussen, 438 ff., 444. See also the recognition of a leading industrialist: Siemens, W., Lebenserinnerungen (München, 1967), 47Google Scholar.

9 See Weber, M., Wirtschaftsgeschichte, 2nd ed. (München, Leipzig, 1924), 199 ffGoogle Scholar. and Sombart, W., Der moderne Kapitalismus, 2 vols. (Leipzig, 1902), I, 30 fGoogle Scholar. See also Sombart, W., “Die Entstehung der kapitalistischen Unternehmung,” Archiv f. Sozialwissenschaft und Sozialpolitik, XLI (1916), 300 ffGoogle Scholar.

10 See Brunner, O., “Das ‘Ganze Haus’ und die alteuropäische Ökonomik,” Neue Wege der Verfassungs- und Sozialgeschichte, 2nd ed. (Göttingen, 1968) 103–127Google Scholar; Habermas, J., Strukturwandel der Öffentlichkeit, 3rd ed. (Neuwied/Berlin, 1968) 55–63Google Scholar; Schelsky, H., Wandlungen der deutschen Familie in der Gegenwart, 2nd ed. (Stuttgart, 1954), 19 f.Google Scholar, 150 ff.; Oeter, F., “Die Familie als soziale Funktionseinheit,” Familie und Gesellschaft, Oeter, F. (ed.), (Tübingen, 1966), 1–22Google Scholar; Bramsted, E. K., Aristocracy and the Middle-Classes in Germany, rev. ed. (Chicago/London, 1964), 200 ff.Google Scholar, 214 f. See also Riehl, W. H., Die Familie (Stuttgart and Augsburg, 1885)Google Scholar, critical from a reactionary standpoint, but with some sharp observations: see for example p. 150 for the transition from previous extended family life, including servants, to smaller, more intimate relations. Similarly critical, but from a socialist viewpoint, is Dr. Müller-Lyer, , The Family (New York, 1931), 241 ff.Google Scholar

11 See Zunkel, F., Der Rheinisch-Westfälische Unternehmer 1834–1879 (Köln/Opladen, 1962), 72 f.CrossRefGoogle Scholar

13 For an informative history of the Siemens enterprises see Siemens, G., History of the House of Siemens, 2 vols. (Freiburg/Munich, 1957).Google Scholar

13 Werner to Carl Siemens, December 25, 1887, in: Matschoss, C. (ed.), Werner Siemens (Berlin, 1916), 911CrossRefGoogle Scholar. See for his family background and concern: W. Siemens, Lebenserinnerungen, 12, 30, 34. Two more recent biographical sketches are by Busse, K., “Werner Siemens,” Die Grossen Deutschen, 5 vols. (Berlin, 1956), III, 422–55Google Scholar and v. Weiher, S., Werner von Siemens (München, 1966).Google Scholar

14 See W. Siemens, Lebenserinnerungen, 20 ff., 298 t.

15 A cousin provided for nearly 7,000 Taler. See G. Siemens, History, I, 17.

16 Werner Siemens called the salaried personnel the company's “Achilles' heel” in a letter to Carl Siemens, December 21, 1857, in: Matschoss, Werner Siemens, 125. “My yardstick for salaried employees is whether they never put their own interests beyond the company's interest, or whether one cannot rely on that.” (Werner to Carl Siemens, April 7, 1880, in: Siemens-Archiv-Akte (hereinafter cited as SAA) Briefsammlung (hereinafter cited as BB). Similar problems in Great Britain are mentioned by Pollard, S., The Genesis of Modern Management (London, 1965), 17 ff.Google Scholar, passim; also Harbison, and Myers, , Management in the Industrial World (New York, 1959), 49, 87 ffGoogle Scholar. with respect to recently developing countries.

17 See Werner to Carl Siemens, December 12, 1847 in: Matschoss, Werner Siemens, 51, for the first office employee Friedrich Siemens; for William Meyer (“Oberingenieur und Prokurist”) see W. Siemens, Lebenserinnerungen, 272; Ehrenberg, R., Die Unternehmungen der Brüder Siemens (Berlin, 1906), 458Google Scholar; for the foundation of “Gebrüder Siemens” under Louis Siemens see the contract of partnership from December 14, 1872 (SAA 21/Lc 594).

18 For details of the international coordination see Kocka, Unternehmensverwaltung, 76, 82, 132 f., 207, 253. For conflicts between Siemens Brothers London and S&H Berlin in the 1880's: v. Weiher, S., “Die Entwicklung der englischen Siemens-Werke und des Siemens-Uberseegeschäftes in der zweiten Hälfte des 19. Jahrhunderts” (Diss., Freiburg/Br., 1959), 156 ff.Google Scholar — Carl Siemens left Petersburg in 1867. See Ehrenberg, Die Unternehmuneen, 97 ff.

19 See for British examples Pollard, S., “The Genesis of the Managerial Profession,” Studies in Romanticism, IV (Winter, 1965), 63 fGoogle Scholar. See also Habakkuk, H. J., “The Historical Experience on the Basic Conditions of Economic Progress,” in Dupriez, L. H. (ed.), Economic Progress (Louvain, 1955), 159Google Scholar, who regards the family firm as a main agent of rapid industrial progress in the nineteenth century.

20 Werner Siemens' statements of his labor policy principles: Werner to Carl Siemens, December 21, 1857 and to Stülpnagel, November 19, 1875, in Matschoss, Werner Siemens, 125 f., 482; W. Siemens, Lebenserinnerungen, 324. Labor shortage: Werner to Carl Siemens December 15, 1854 and April 29, 1872 (SAA BB). For a sympathetic overview see Burhenne, K., Werner Siemens als Sozialpolitiker (München, 1932)Google Scholar. For the company's insurance plan of 1872 in addition SAA 14/Lm 727, and: W. Siemens, Lebenserinnerungen, 297. McCreary, E. C., “Social Welfare and Business,” Business History Review, XLII (Spring, 1968), 24–49CrossRefGoogle Scholar; Ascher, A., “Baron von Stumm,” Journal of Central European Affairs, XXII (October, 1962), 271–285Google Scholar. Other examples of paternalism in German enterprises are: Geck, L. H. A., Die sozialen Arbeitsverhältnisse im Wandel der Zeit (Berlin, 1931)CrossRefGoogle Scholar. Some comparisons between Germany, Britain, and the U.S. are in Shadwell, A., Industrial Efficiency (New York, 1909)Google Scholar. Examples of “familism” in Japanese factories: Marshall, B. K., Capitalism and Nationalism in Prewar Japan (Stanford, 1967), 62 ff.Google Scholar; Hirschmeier, J., “The Japanese Spirit of Enterprise 1867–1970,” Business History Review, XLIV (Spring, 1970), 13–38, esp. 28CrossRefGoogle Scholar.

21 See W. Meyer to Werner Siemens, June 9, 1855 on a “Werkstattdienstinstruktion” (SAA 2/Lh 849). The shop rules of 1872 and 1895 are reprinted in Kocka, Unternehmensverwaltung, 575 ff.

22 See Fischer, Der Staat, 357 for an example from 1837; Neuloh, O., Die deutsche Betriebsverfassung und ihre Sozialformen bis zur Mitbestimmung (Tübingen, 1956), 79Google Scholar mentions the wide application of such rules in the 1870's. For an early British example (1821), see Pollard, The Genesis, 216.

23 See the correspondence between W. Siemens and W. Meyer in 1855 (SAA 2/Lh 849). An early example of written office rules is mentioned by Köllmann, W., Friedrich Harkort (Düsseldorf, 1964), I, 187Google Scholar (Hakort's mechanical factory in Wetter-Ruhr, 1830).

24 Chandler, A. D., “The Railroads: Pioneers in Modern Corporate Management,” Business History Review, XXXIX (Spring, 1965), 16–40CrossRefGoogle Scholar.It is however, interesting to recognize that Siemens (like the railroads) was partly engaged in services (installation, maintenance of telegraph lines and cables), and it might well be that systematic, bureaucratic nongovernmental management was first developed in service enterprises, not in pure production establishments.

25 Werner Siemens, partly as a consequence of the tense labor market, the limited exchangeability, and the confidential positions of his salaried employees, partly on a traditional basis, followed the principle of not laying off one of his salaried employees “as long as he is not guilty of anything, even if we don't have anything for him to do” (to William Siemens May 14, 1858, SAA BB).

26 For details see Kocka, J., “Industrielle Angestelltenschaft in frühindustrieller Zeit,” in Büsch, O. (ed.), Untersuchungen zur Geschichte der frühen Industrialisierung vornehmlich im Wirtschaftsraum Berlin-Brandenburg (Berlin, 1971).Google Scholar

27 For some remarks on the financial incentives used at Siemens, see Werner to Carl Siemens June 16, 1868 and November 29, 1869, in Matschoss, Werner Siemens, 292 and SAA BB; Burhenne, Werner Siemens, 64 ff.; for the role of financial incentives in early German management in general see Kocka, J., “Management und Angestellte im Unternehmen der industriellen Revolution,” Braun, R. and Fischer, W. (eds.) Industrielle Revolution (Cologne, 1971)Google Scholar.

28 There were some minor disadvantages, however. A certain slowness and formality in the treatment of customers was included, but the most important customers were large, partly bureaucratic organizations themselves (government agencies, railroads), and did not mind too much. Also, the bureaucratic orientation of certain employees may have reduced their innovative ability and initiative. On the other hand, with a society largely convinced of bureaucratic values and virtues, a bureaucratic image could even become an asset in terms of public relations.

29 While the former officer and civil servant, W. Meyer, was the strongest advocate of bureaucratic regulations, the men in the shop, the foremen, and the artisan Halske (cofounder) tried to resist his attempts of systematization. See W. Meyer to W. Siemens October 13, 1856 and W. Siemens to W. Meyer October 18, 1856 (SAA 2/Lh 849).

30 See Redlich's, F. remarks in Gilchrist, D. (ed.), Economic Change in the Civil War Era (Greenville, Del., 1965), 158 fGoogle Scholar. Redlich stresses progress in the development of communication and transportation as a condition of more centralized forms of control.

31 Hintze, O., “Der Beamtenstand,” Soziologie und Geschichte (Göttingen, 1964), 77Google Scholar.

32 For the British alternative see Pollard, The Genesis, 129 ff.

33 See Kocka, Unternehmensverwaltung, 303–311, 507–513.

34 Dunsheath, P., A History of Electrical Engineering (London, 1962)Google Scholar; G. Siemens, History, I; Pinner, F., Emil Rathenau und das elektrische Zeitalter (Leipzig, 1918)Google Scholar; Helfferich, K., Georg von Siemens, 3 vols. (Berlin, 1921–1923), II, 120Google Scholar. In 1890, the capital stock of the AEG amounted to 20,000,000 marks, of S&H to 14,000,000. There were eighty-one electrical manufacturers with 1,157 employees in Germany in 1875; by 1895 the figures had increased respectively to 1,326 and 26,321. See Gutenberg, H., “Die Aktiengesellschaften der Elektrizitätsindustrie” (phil. Diss., Berlin, 1912), 2Google Scholar.

35 See Landes, D. S., “French Entrepreneurship and Industrial Growth in the Nineteenth Century,” Journal of Economic History, IX (1949), 52 ffGoogle Scholar. See also Landes, D. S., “French Business and the Businessman,” in Aitken, H. G. J. (ed.), Explorations in Enterprise (Cambridge, Mass., 1965), 185 ff.Google Scholar; J. R. Pitts, “Continuity and Change in Bourgeois France,” In Search of France, 261.

36 Werner to Carl Siemens, February 6, 1882 (SAA BB).

37 Werner to Carl Siemens, February 20, 1882 (SAA BB). See also W. Siemens' letters from June 10, 1874, November 26, 1877, December 14, 1878, January 3, 1879, August 27, 1880, February 12, 1881, in Matschoss, Werner Siemens, 448, 544 f., 593, 597, 671, 686.

38 For his continued feeling of being overworked see his letters from May 5, 1882, January 22, 1884, October 29, 1886, December 22, 1883, in Matschoss, Werner Siemens, 732, 804 f., 806 f., SAA BB.

39 See the recollections of the engineer Grabe, who was hired in the 1880's (SAA 12/Lk 801, p. 2). Criticism of this personal “one-man-regime” was raised by contemporary authors, which points to the fact that this was a difficulty not restricted to Siemens. See Sinzheimer, L., Über die Grenzen der Weiterbildung des fabrikmässigen Grossbetriebes in Deutschland (Stuttgart, 1893), 252Google Scholar.

40 Werner to Carl Siemens, March 16, 1883, in Matschoss, Werner Siemens, 774.

41 For a good description of this system as far as the AEG was concerned see Pinner, Emil Rathenau, 186 ff.; see also Helfferich, Georg von Siemens, II, 111 ff.; mainly for the years after 1890, but with special reference to the role of the banks: Liefmann, R., Beteiligungs- und Finanzierungsgesellschaften (Jena, 1913), 81 ff., 358 ff., 456 ff.Google Scholar; Jeidels, O., Das Verhältnis der Grossbanken zur Industrie (Leipzig, 1905), 230 ff.Google Scholar

42 For details of the first years of Rathenau's German Edison Company (since 1887: AEG): Helfferich, Georg von Siemens, II, 38–93; Pinner, Emil Rathenau, 80–180; 50 Jahre AEG (Berlin, 1956), 11 ff.Google Scholar

43 See for the sons: Conrad, , Arnold Siemens zum Gedächtnis (Berlin, 1918)Google Scholar; Rotth, A., Wilhelm von Siemens (Berlin/Leipzig, 1922)Google Scholar; Werner to Carl Siemens, November 4, 1884, in Matschoss, Werner Siemens, 830; and May 10, 1886 (SAA BB) for W. Siemens' hope that he would soon be replaced by his sons; December 15 and 22, 1881, February 6, 1882 (SAA BB) for his refusal to hire an outsider.

44 The successful reform led by Werner Siemen's successor in 1890–1895 seems to support both contentions.

45 A case in point was the already mentioned conflict between the Berlin and the London Siemens companies in the 1880's. A lack of coordination resulted from the waning personal influences of the Siemens brothers as heads of the branches, especially in London, which led to increased power of employees not determined by brotherly loyalty. Not before new coordination techniques were applied (capital exchange, specified contracts, and finally a central office in Berlin which decided the distribution of market spheres between the branches of the concern), did these frictions disappear.

46 See Maass, R., Die auswärtigen Geschäftsstellen der Siemens-Werke und ihre Vorgeschichte (München, 1958), 19 f.Google Scholar, 31 for the practice of communicating with customers by means of mechanically multiplied forms according to visible standard procedures, and for the time-consuming routine of the mail department.

47 See the recollections of Grabe (SAA 12/Lk 801, p. 9) for a case in point.

48 Broderick, John T., Forty Years with General Electric (Albany, N.Y., 1929), 62Google Scholar.

49 For a detailed analysis of this pattern: Kocka, Unternehmensverwaltung, 291–97. This combination of a systematic, formalized middle management structure and informal, traditional leadership techniques is certainly not a peculiarity of German enterprises of the nineteenth century, but characterized and still characterizes to a certain extent large-scale organizations in general. There are some indications, however, that this pattern was particularly manifest in the German case: German entrepreneurs early and thoroughly accepted bureaucratic methods for nearly all parts of the industrial enterprise but they rejected them as long as possible for their own sphere of action at the top. See also Hartmann, H., Authority and Organization in German Management (Princeton, N.J., 1959), 51–63, 260 ffGoogle Scholar.

50 Already in 1897, both AEG and S&H held a capital of 35,000,000 marks.

51 Employment figures according to SAA 29/Le 931, 1.

52 Figures according to E. Waller et al., “Studien zur Finanzgeschichte des Hauses Siemens” (SAA 38/8/57), III, 58; IV, pt. 1, 83.

53 From 1898 to 1914 S&H, supported by a group of banks under the leadership of the Deutsche Bank, issued bonds amounting to 50,000,000 marks. Total investments used for the expansion of SSW from 1903 to 1918 are estimated at about 510,000,000 marks. A little more than half of this sum was taken from the corporation's retained earnings, the rest from bonds, loans, and credits. See Jordan, E. L., “Die Wirtschaftspolitik des Hauses Siemens,” (Diss., Königsberg, 1922/1923), 28 ff.Google Scholar; Waller, Stadien (SAA 38/8/57), IV, pt. 1, 73 ff., 111.

54 Felix Deutsch started to establish such field offices in 1885. See Pinner, Emil Rathenau, 126 ff. Wilhelm von Siemens built his first one in 1890, thus starting to replace the previous system based on rather independent commissioners and representatives. The same year Edison General Electric started a similar reorganization, but seems to have given more autonomy to the district managers than in the case of Siemens. See Passer, H. C., “Electrical Manufacturing Around 1900,” Journal of Economic History, XII (1953), 380 ffGoogle Scholar. These parallel developments resulted from the same technological and market characteristics of electrical manufacturing products. See ibid., 392.

55 This office served partly as Wilhelm's staff, but also claimed some authority over the unit heads. See the standing rules of the “Zentralstelle” from October 25, 1890 and Wilhelm's related comments from November 5, 1894 (SAA 68/Li 65).

56 Compare the standing orders of 1898 and 1903 (SAA 33/Ld 603, I) for the increasing power of Wilhelm von Siemens. The former civil servant Tonio Bodiker had been endorsed by the banks and appointed first chairman of the executive board of S&H in 1898. He left this position in 1903.

57 It should be stressed that, contrary to what is usually argued, surviving family traditions can contribute to managerial success even in huge enterprises. In the case of Siemens they also seem to have served the interests of management in terms of labor policy. In contrast to the AEG, the Siemens management after 1905 succeeded in reviving and strengthening certain modified paternalistic traditions which helped to check the increasing challenge of organized labor. See Kocka, Unternehmensverwaltung, 347–363.

58 Forty-seven per cent of all 7.176 white collar salaried employees of SSW (1912) worked in such sales offices. See the autobiographical description of the work in such an office by Dominik, H., Vom Schraubstock zum Schreibtisch (Berlin, 1942), 55 ffGoogle Scholar. See also Maass, Die auswärtigen Geschäftstellen. Departments and offices received voluminous organization manuals which regulated their set-up and operations in detail. See SAA 32/Lb 978 and 32/Ls 109.

59 For the reforms of the Siemens production process see SAA 11/Lb 733 (instructions of December 1910). A similar system existed in the Berlin-Anhaltische Maschinenbau-AG. See Technik und Wirtschaft, IV (1911), 214 ffGoogle Scholar.

60 Kocka, Unternehmensverwaltung, 466–513 for a detailed analysis of the status of the Siemens white collar employees. The best pre-war treatment of white collar employees as a social group is Lederer, E., Die Privatangestellten in der modernen Wirtschaftsentwicklung (Tübingen, 1912)Google Scholar.

61 See Bendix, R., Work and Authority (London, 1956), 198–253Google Scholar; Gouldner, A. W., Patterns of Industrial Bureaucracy (Glencoe, Ill., 1954)Google Scholar; Bahrdt, H. P., Industriebürokratie (Stuttgart, 1958)Google Scholar; Blau, P. F., The Dynamics of Bureaucracy (Chicago, 1963)Google Scholar; Crozier, M., The Bureaucratic Phenomenon (Chicago, 1964)Google Scholar; Bossetzky, H., “Bürokratische Organisationsformen in Behörden und Industrieverwaltungen,” in Mayntz, R. (ed.), Bürokratische Organisation (Köln/Berlin, 1968), 179–188Google Scholar.

62 Still, changes in top personnel could cause changes in the “formal” distribution of responsibilities. Siemens' power resulted largely from sources (capital property, family traditions) which were external to the bureaucratic organization. This power enabled him to circumvent the bureaucratic distribution of responsibilities and authority. Many important decision making processes took place through informal channels (correspondence between Wilhelm and bank representatives, social meetings, informal conferences without records), not at all prescribed by the formal structure.

63 For example, they did not enjoy tenure, but most of them had to fear lay-offs in a business recession more than in previous years. Ultimately all these limits of industrial bureaucratization resulted from the. market dependence and achievement orientation of the capitalist enterprise in which private property continued to play an important role.

64 For this first overall standing order (Geschäftsordnung) from April 1884 see SAA 33/603, I. Before that, written standing rules had only referred to the shop and to single departments (first to the technical department in 1872). Krupp issued an overall standing order (Generalregulativ) already in 1872. For that see Schröder, E., “Alfred Krupps Generalregulativ,” in Tradition, I (1956), 35–37Google Scholar.

65 Until then they had been bound together by “collective procura” and regular conferences. Both were abandoned now. See the standing rules from October 25, 1890 in SAA 68/Li 65.

66 See Wilhelm's notes from December 5, 1906, p. 2 (SAA 4/Lb 832).

67 For the opposite trend in many American corporations, especially since the mergers of the 1890's, see Chandler, A. D., Strategy and Structure (Cambridge, Mass., 1962), 31 ff.Google Scholar; Passer, “Electrical Manufacturing,” 380 ff.

68 The following figures in brackets refer to the employment level in 1912. Not included are the field sales offices, the loosely affiliated (semi)raw material production units, and the power station. Siemens & Halske (S&H): Wernerwerk (7,751) for most low-tension current products; Glühlampenwerk (3,832) for light bulbs, etc.; Gebrüder Siemens & Co. (1,498) for carbons, alcohol measurement apparatus, heaters; Blockwerk (1,018) for railroad measurement devices; Bahnabteilung (963) specializing in the construction of the Berlin S-Bahn (subway); the Vienna unit (1,510) for low-tension current products. SSW: Charlottenburg plant including Dynamowerk (11,224) and the Nürnberg plant (9,070) for the production of power current articles; cable plant (2,868); car plant (649) for a short-lived attempt to build electrical cars; two projection and sales departments (2,801 and 1,224).

69 See the organization chart of the Wernerwerk from 1912 in SAA 33/Ld 393. The Bahnabteilung was less developed.

70 See Hidy, R. W., “The Standard Oil Company (New Jersey),” Journal of Economic History, XII (1952), 411–24, esp. 415 ffCrossRefGoogle Scholar.

71 For early examples of this organization type see Chandler, Alfred D., “The Beginnings of ‘Big Buisness’ in American Industry,” Business History Review, XXXIII (Spring, 1959), and Strategy and Structure, 38 ffGoogle Scholar.

72 Power current projects (like a power plant) were planned, calculated, constructed, installed, sold, and serviced by huge non-producing white collar departments (combining technical and commercial staff), which thus intermediated between the plants (each of which, for the most part, only produced parts of each complex project) and the customers. The plants “sold” their products to these projection and sales departments only, and did not need any sales department of their own.

73 For the internal price system see SAA 33/Lh 292, 1; for a criticism of resulting centrifugal effects: A. Berliner's exposé from November 10, 1902 (SAA 4/Lk 20), 1, 6, 7, 15. For the similar internal price system of the AEG see Huret, J., “Die A.E.G.,” Organisation, X (1908), 608 fGoogle Scholar.

74 The pioneering achievement of these two corporations who introduced this pattern widely used by highly diversified firms up to the present, has frequently been stressed. See Chandler, A. D., “Management Decentralization,” Business History Review, XXX (June, 1956)Google Scholar; Chandler, Strategy and Structure, 9 ff., 42 ff., and 52–162 for two case studies on DuPont and General Motors; Chandler, , “The Structure of American Industry in the Twentieth Century,” Business History Review, XLIII (Autumn, 1969), 277 f.Google Scholar; Dale, E., The Great Organizers (New York, 1960), ch. 3Google Scholar.

75 Sombart, W., Die deutsche Volkswirtschaft im 19. Jahrhundert und im Anfang des 20. Jahrhunderts, 8th ed. (Darmstadt, 1954), 315Google Scholar early noted the (in many respects) pioneering character of the electrotechnical enterprises.

76 Westinghouse and General Electric, for example, did not cover the field of communications equipment and installation, an area which was of great importance with S&H. See Passer, H., The Electrical Manufacturers 1875–1900 (Cambridge, Mass., 1953), 363 f.CrossRefGoogle Scholar; G. Siemens, History, I, 252–282.

77 This is what happened in the U.S. See Litterer, J. A., “Systematic Management: Design for Organizational Recoupling in American Manufacturing Firms,” Business History Review, XXXVII (Winter, 1963)Google Scholar.

78 For the concepts see Chandler, Strategy and Structure, 7–17, and 36–41 for the development of large systematic structures in American industry since the 1890's.

79 See Marshall, A., Industry and Trade (London, 1919), 129 ff.Google Scholar; Levine, A. L., Industrial Retardation in Britain 1880–1914 (New York, 1967), 57–78Google Scholar.

80 Before systematic comparisons can be completed the evidence for this hypothesis remains weak. But consider the rather unsystematic state of affairs at Standard Oil of New Jersey in the 1880's and later described in , R. W. and Hidy, M. E., Pioneering in Big Business 1882–1911 (New York, 1955), 68 ff., 327 ffGoogle Scholar. Ex negativo the criticisms and demands raised in the American management literature since the 1880's seem to point to a rather improvised, unsystematic, sometimes chaotic reality in the enterprises. In contrast, the demands in the German parallel literature were different and had much less response. See J. A. Litterer, “Systematic Management,” 461–476; Jenks, Leland H., “Early Phases of the Management Movement,” Administrative Science Quarterly, V (1960), 421–447CrossRefGoogle Scholar; for the development of the German management literature since the 1870's see Kocka, J., “Industrielles Management,” Vierteljahrsschrift f. Sozial- und Wirtschaftsgeschichte, LXI (1969), 332–372Google Scholar.

81 Stressing some economic advantages of the bureaucratic conditions of German industrialization, this article has not considered their possible “social costs.” What has favored economic growth may have hampered the liberal democratization of society and state, but this problem cannot be discussed here.