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Management's Crisis of Confidence and the Origin of the National Industrial Conference Board, 1914–1916

Published online by Cambridge University Press:  11 June 2012

H.M. Gitelman
H.M. Gitelman
Affiliation:
H.M. Gitelman is professor of economics at Adelphi University.
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Abstract

In this essay, Professor Gitelman draws upon new primary source materials to help clarify the outlook of American business leaders in the years immediately preceding U.S. entry into World War I. He shows how business leaders brooded, at periodic private conferences, over the profound loss in public esteem they believed business had suffered. This “crisis of confidence,” he concludes, precipitated defensive associational efforts. The creation of conference boards—the brainchild of Magnus W. Alexander—provided an institutional base for these efforts, and pointed the way to the creation of the National Industrial Conference Board.

Type
Research Article
Information
Business History Review , Volume 58 , Issue 2 , Summer 1984 , pp. 153 - 177
Copyright
Copyright © The President and Fellows of Harvard College 1984

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References

1 Walter Drew to J.P. Tumulty, 16 October 1914, Woodrow Wilson Papers, Library of Congress.

2 William Leiserson to Charles McCarthy, 4 February 1915, McCarthy Papers, box 19, Wisconsin Historical Society. See also Commons, John R., Myself (Madison, 1963), 175–77.Google Scholar

3 Frank P. Walsh to William M. Reedy, 17 April 1915, box 143, Walsh Papers, New York Public Library. For more details of the incident see Commons, Myself, 171–75, and Adams, Graham Jr, Age of Industrial Violence (New York, 1966), 206–14.Google Scholar

4 The four inactive participants in the joint committee were George Pope and Ferdinand C. Schwedtman, president and vice-president of the National Association of Manufacturers; Charles E. Cheney, secretary of the National Erectors' Association; and Robert Campbell, president of the National Safety Council.

5 See the entry in Who Was Who in America 1897–1942; also Noble, David E., America by Design (New York, 1977), 52Google Scholar and passim. Emery and Barr are mentioned briefly in Wiebe, Robert H., Businessmen and Reform (Cambridge, Mass., 1962).Google Scholar

6 Ibid., 32–33.

7 Weinstein, James, The Corporate Ideal in the Liberal State (Boston, 1968), chapters 1–2.Google Scholar

8 See the author's “Being of Two Minds: American Employers Confront the Labor Problem, 1915–1919” forthcoming in Labor History.

9 Hays, Samuel P., “The New Organizational Society” in Building the Organizational Society, ed., Israel, Jerry (New York, 1972)Google Scholar, and Hawley, Ellis W., The Great War and the Search for a Modern Order (New York, 1979), 1–11.Google Scholar

10 This pattern seems clear not only from the proceedings of the founding conventions of such contemporary associations as the National Safety Council (1912) and the National Association of Corporation Schools (1913), but from studies of the dynamics of union organizing as well. The sociological literature on professional associations, unfortunately, fails to address this issue. Freidson, Eliot, ed., The Professions and Their Prospects (Beverly Hills, Calif., 1971).Google Scholar

11 On this last point see Wiebe, Businessmen, 173–76. The general observation stands despite Wilsonian collaboration with businessmen in fostering international trade or the later domination of the war administration by businessmen. See Kaufman, Burton I., Efficiency and Expansion (Westport, Conn., 1974)Google Scholar, and Cuff, Robert D., The War Industries Board (Baltimore, 1973).Google Scholar

12 M.W. Alexander to Walter Drew, 17 June 1914. This letter is no longer extant. It is quoted in the Rogers Manuscript in the Conference Board Papers, one of several in-house histories prepared from records since lost or destroyed.

I wish gratefully to acknowledge the kindness and cooperation of Professors James Morris and Maurice Neufield of Cornell University, and that of Dr. David Moore, Joseph Naar, and Mamie Noel of the Conference Board. All of them helped make records available for my use. The Conference Board Papers, hereafter cited as the CB Papers, have, since my examination, been deposited at the Hagley Library, Greenville, Delaware.

13 The details of Alexander's origins and background remain unclear. The incomplete 1870 birth records of New York City do not include a listing for him. One of the Austrian universities he claimed to have attended has no record of his matriculation. The other two schools failed to respond to queries. The New York Times on 12 September 1932 carried his obituary.

14 I am grateful to George Wise, historian at General Electric, and to Harold Walker of the Lynn Historical Society for their assistance in tracing Alexander's career at Lynn.

15 Noble, America by Design, 188f. See also Alexander, M. W., “A Plan to Provide for a Supply of Skilled Workmen,” Transactions of the American Society of Mechanical Engineers, 26 (1906).Google Scholar Evidence of Alexander's involvement in municipal politics comes from a newspaper clipping in the CB Papers.

16 M.W. Alexander, “The Economic Value of industrial Safety” in Proceedings of the Second Cooperative Safety Congress. Copy kindly made available by the National Safety Council, Chicago, Illinois.

17 M.W. Alexander to E.W. Rice, Jr., 12 March 1915, in which Alexander refers to his original proposal of 15 August 1910. A synopsis of this letter was kindly provided by George Wise of GE from extant executive office papers.

18 His paper on turnover, “Waste in Hiring and Discharging Employees,” was delivered before the National Machine Tool Builders Association in October 1914. It was subsequently published in The Annals 65 (May 1916). Evidence of his activities in connection with the New York Manufacturers' Association appears in Owen D. Young to M.W. Alexander, 13 November 1914 and 18 December 1914. These letters are in Owen D. Young Papers, Van Hornesville, New York. I am indebted to Mr. and Mrs. Everett Case for examining the papers on my behalf and for making copies available to me.

19 M.W. Alexander to Walter Drew, 29 September 1913. This letter is no longer extant. It is quoted in the Powell Manuscript in the CB Papers.

20 An undated letter provided by George Wise from the GE executive office papers indicates that some time before 1910, when Alexander's title was chief draftsman, his annual salary was $2,400. As of 1 January 1910, he was making $7,500 per year and had very heavy expenses for travel and entertainment. His title was unchanged. His continuing relationship with GE is substantiated in O.D. Young to M.W. Alexander, 7 January 1925, Owen D. Young Papers.

21 See Knight, Robert, Industrial Relations in the San Francisco Bay Area 1900–1918 (Berkeley, 1960), 155–56.Google Scholar The obituaries carried in the New York Times and the Herald Tribune on 29 September 1955 disagree on some details of Emery's background.

22 For background on C.W. Post's activities see McLaughlin, Doris B., “The Second Battle of Battle Creek,” Labor History 14 (Summer 1973): 3.CrossRefGoogle Scholar Drew's obituary appeared in the New York Times of 27 December 1961. See also Grant, Luke, The National Erectors' Association and the International Association of Bridge and Structural Iron Workers (Washington, D.C., 1915).Google Scholar

23 Scattered Drew correspondence appears in the CB Papers. A much more extensive collection of Drew Papers has recently been deposited at the Michigan Historical Society. I am grateful to Professor Dallas Jones for granting me limited access to this collection before it was closed. The McNamara item comes from a letter written by McNamara to W.L. Mackenzie King, 24 February 1917, King Papers, Public Archives of Canada, Ottawa.

24 The Buffalo Courier-Express of 18 November 1944 carried an obituary notice and article on Barr.

25 There are two plausible hypotheses to explain the origin of the conference board idea. On the one hand, the Safety and Sanitation Committee that Alexander headed at GE was structured in the conference board manner. Each of GE's nine plants was represented on the committee but preserved a high degree of autonomy within its own plant. Only where agreement could be reached among seven of the representatives did the committee wield corporatewide authority. The second hypothesis points to the possibility of a slightly more exotic origin. When Alexander came into GE, and subsequently, local unions of iron molders were grouped by regions into what they called conference boards. Since the molders in the Schenectady GE plant were union members, Alexander would have been familiar with their method of organization and might have taken a page from their book.

26 The participants included as association representatives: William H. Barr, Buffalo, president, National Founders' Association; Walter Drew, New York, general counsel, National Erectors' Association; Albert G. Duncan, Boston, president, National Association of Cotton Manufacturers; James A. Emery, Washington, D.C., general counsel, National Council for Industrial Defense; John Kirby, Jr., Dayton, president, National Council for Industrial Defense; George Pope, Hartford, president, National Association of Manufacturers; H.H. Rice, Indianapolis, president, National Metal Trades Association; F.C. Schwedtman, Springfield, Illinois, vice president, National Association of Manufacturers; John P. Wood, Philadelphia, president, National Association of Wool Manufacturers; and as corporate executives: E.R. Behrend, Erie, Pennsylvania, president, Hammermill Paper Company; Charles F. Brooker, Ansonia, Connecticut, president, American Brass Company; T.F. Donnelley, Chicago, president, R.R. Donnelley & Sons Company; Philip T. Dodge, New York, president, Mergenthaler Linotype Company; Frederick P. Fish, Boston, former president, American Telephone & Telegraph Company; Henry M. Leland, Detroit, president, Cadillac Motor Car Company; W.H. Marshall, New York, president, American Locomotive Company; R. Pegenstecher, New York, director, International Paper Company; E. W. Rice, Jr., New York, president, General Electric Company; Charles A. Stone, Boston, partner, Stone & Webster Engineers; F. A. Vanderlip, New York, president, National City Bank; Magnus W. Alexander, West Lynn, Massachusetts, with General Electric Company; Walter C. Fish, West Lynn, Massachusetts, plant manager, General Electric Company; J.J. Moorehead, New York, chief surgeon, Interborough Rapid Transit Company. W.C. Fish was the brother of F.P. Fish and Alexander's immediate superior. Dr. Moorehead headed the Conference Board of Physicians in Industrial Practice. The participants are listed in the typescript proceedings, marked “Confidential,” in the CB Papers.

27 F.P. Fish obituary, New York Herald Tribun, 7 November 1930.

28 First Yama Proceedings, 5, CB Papers.

29 Weinstein, Corporate Ideal, 117.

30 W. Drew to M.W. Alexander, 6 February 1917, CB Papers.

31 First Yama Proceedings, 11.

32 Ibid., 19.

33 Ibid., 21.

34 First Yama Proceedings, 20. Possibly the speaker was Walter Drew. On two different occasions, he had tried to interest Broadway impresario, Daniel Frohman, in stories that might be made into plays or movies. One was the story of the lone Chicago electrical worker who remained on the job to issue fire and police signals while 5,000 other electrical workers struck. Drew suggested the title “The Traitor.” W. Drew to D. Frohman, 28 July 1914, and 30 March 1915, Drew Papers, Michigan Historical Society.

35 Ibid., 22. Internal evidence suggests that Alexander may have been the speaker.

36 Readers may wish to compare the concerns of the first Yama participants with those of contemporary businessmen in Silk, Leonard and Vogel, David, Ethics & Profits: The Crisis of Confidence in American Business (New York, 1976).Google Scholar This is a report on the proceedings of the Yama Conference held in 1976.

37 Among the eight newcomers, one was sitting in for his superior and a second was yet another executive officer from General Electric, Owen D. Young. The six new companies represented included Otis Elevator, Bullard Machine Tool, Westmoreland Coal, Packard Motor Car, Westinghouse Electric, and Pelzer Manufacturing, a large southern textile firm.

38 Pritchett was an astronomer by profession. Prior to assuming his position with the Carnegie Foundation, he had served as the president of the Massachusetts institute of Technology. His career and Vail's are treated in Noble, America by Design, passim. Pritchett's involvement cannot have been too deep, since he almost immediately had second thoughts about participating in the Yama scheme. H. S. Pritchett to F. A. Vanderlip, 19 April 1916, F.A. Vanderlip Papers, Butler Library, Columbia University. On Vanderlip, see Kaufman, Efficiency, passim.

39 The associations were NAM; National Council for Industrial Defense; National Founders' Association; National Metal Trades Association; National Association of Cotton Manufacturers; National Cotton Manufacturers Association; National Association of Wool Manufacturers; Silk Association of America; United Typothetae and Franklin Clubs of America; American Paper and Pulp Association; and National Erectors' Association.

40 Third Yama Proceedings, 4, CB Papers.

41 The number of strikes rose from 1,593 in 1915 to 3,789 in 1916. Historical Statistics of the United States (Washington, D.C., 1960), 99. On strike outcomes, see the estimates of Griffin, John I., Strikes (New York, 1939), 91.Google Scholar

42 W. Drew to F. P. Fish, 27 July 1916, CB Papers.

43 W. Drew to M.W. Alexander, 8 September 1916, CB Papers. Both men were bachelors at the time. Alexander helped Drew play the stock market, and Drew on occasion vacationed with Emery.

44 W.H. Barr to W. Drew, 29 December 1924, CB Papers. It should be noted, however, that even after the organization of the NICB under his direction, Alexander continued to participate in the formation of new professional associations, as he did in the case of the Employment Manager's Association in 1917.

45 The five new participants included Frederick C. Hood of Hood Rubber; L.P. Loree, president of the Delaware & Hudson Railroad; H.R. Towne of Yale and Towne; W.H. Van Dervoort, of Root & Van Dervoort Engineering (attending in his capacity as the new president of the National Metal Trades Association); and H. H. Westinghouse of Westinghouse Air Brake. Henry H. Rice, one of the regular participants moved from Indianapolis to Detroit in the process of becoming assistant to the president of General Motors. In a similar way, Ferdinand C. Schwedtman had earlier continued to participate after leaving his position as an engineer in a midwestern electrical equipment firm to become an officer in Frank Vanderlip's National City Bank.

46 Quoted in the Rogers Mss., CB Papers.

47 Fourth Yama Proceedings, 3, CB Papers.

48 Steigerwalt, Albert K., The National Association of Manufacturers (Ann Arbor, 1964).Google Scholar Steigerwalt reports the 1913 income of the NAM as $241,000 (p. 153). The AFL's income in 1916 was $314,000, according to its convention proceedings for that year.

49 Names and amounts appear in W. Drew to Raynal C. Bolling, 19 February 1917, CB Papers. Bolling was counsel to U.S. Steel, in W. Drew to F.P. Fish, 27 February 1917, CB Papers. Drew advised that Gary was considering making a contribution. Drew also suggested ways in which U.S. Steel might tunnel support to the NICB without making its role public.

50 The National Industrial Conference Board has since changed its name to The Conference Board. Yama Conferences are still referred to by that name although they have not taken place at Yama Farms for more than fifty years.

51 A scathing review of two early NICB studies appeared in the New Republic, 15 (25 May 1918): 104. Negative assessments by staff associates of John D. Rockefeller, Jr., appear in R.B. Fosdick to Starr Murphy, 15 April 1917, and George S. Anderson to R.B. Fosdick, 9 May 1923. Records Group 2, Economic Reform Interests, John D. Rockefeller, Jr., Papers, Rockefeller Family Archives, Tarrytown, New York. However, by 1926, several NICB reports were being used as textbooks at the Harvard Business School, and the U.S. Department of Commerce was reproducing the boards' statistical series on wages, hours, employment, and the cost of living in its “Survey of Current Business.”

52 As per example in Walter Drew to N.W. Alexander, 25 June 1920, J.A. Emery to M.W. Alexander, 29 June 1920, J.A. Emery to Walter Drew, 22 August 1922, and Walter Drew to J.A. Emery, 2 February 1923, CB Papers.