American Made

Shaping the American Economy

Harold Livesay

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315510354
• Edition: 1
• Topic: History
• Subtopic: North American History
• Index: History

American Made is a best-selling collection of biographical sketches that introduces key trends of American business.The book details American business through time by presenting the history of people who forever changed the way that Americans do business. Harold Livesay maintains clarity and intellectual acumen while highlighting two themes: globalization and the impact of information technology on business. This edition includes updated stories of its hallmark historical business figures with the latest scholarship as well as additional biographies of figures that have redefined American business in recent years.

Chapter 1

Introduction

In 1978, for the original version of this book, I wrote in and of an America that manufacturing had made, literally and figuratively. I wrote in Vermont, in a converted one-room schoolhouse overlooking a dairy farm. The hayfields, the cows gleaning them, the barns, and the machinery fitted together like tiles in the mosaic of agricultural self-sufficiency that underlay American prosperity since the first few starving years in the colonies. Nestled in a stunning mountain valley deep in rural New England, this farm nevertheless exemplified the importance of science, technology, and manufacturing to every facet of American society. Its very existence depended upon science, embodied in breeding and inoculating the cows, fine-tuning their feed mixes, and testing the milk, as well as upon an arsenal of equipment: tractors, manure spreaders, hay balers, feed mixers, conveyor belts, milking machines, storage facilities, testing equipment, and on and on.

The farmers themselves, though dimly aware of a time gone by when such equipment didn’t exist, could no more imagine doing without it than they could imagine their windows without glass, or their lives without an automobile. In 1978, these Vermont farmers, like virtually all Americans then and since, lived and expected to live in a world of high consumption, mechanized comfort, and entertainment, sustained by access to a factory-made cornucopia of things readily found at stores and in catalogues, at an intersection of good quality and low prices.

The notion of consumption as a routine part of daily life has so deeply interwoven the American fabric that those who do not or cannot engage in it—the homeless, the mentally ill—find themselves consigned to the margins of American society. Charity shops such as those of the Salvation Army or Goodwill Industries serve many purposes, not least of them enabling economic (and thus social) participation by providing jobs for some people who otherwise would have none and selling goods to some customers who otherwise could not afford them.

Since colonial days, the core American religions have defined prosperity as proof, rather than a contradiction, of worthy life. “As soon as ever a man begins to look toward God and the way of his Grace,” said the Reverend John Cotton, a pillar of early New England Puritanism, “he will not rest ’til he finds out some warrantable calling and employment.” His grandson, Cotton Mather, declared, “Would a man Rise by his Business? I say, then let Him Rise to his Business.… Let your Business ingross the most of your time.” The Quaker William Penn urged diligence as “the Way to Wealth.” “The diligent Hand makes Rich,” he declared; moreover, diligence coupled to frugality offered a “better way to be rich,” for it led to a more peaceful life, with “less Toil and Temptation.”

In 1978, Americans prided themselves, as Americans had since the late nineteenth century, that these “things,” as well as the people who invented them, the factories that produced them, and the outlets that sold them all bore the label “Made in the U.S.A.” By then, however, plenty of evidence existed for those who could see that beneath that perception, reality had changed. Japanese and German cars proliferated even as American cameras, for example, gradually disappeared. Gloomy pundits loosed a spate of books and articles predicting dire consequences looming in the Japanese economic ascendancy, a threat now largely forgotten or, more accurately, now perceived in a different quarter: China.

As an optimist, I found it hard to take these forebodings seriously; as a historian of American business, I thought them flawed by an ignorance of the past (a chronic problem with pundits, especially in the field of business analysis). It, therefore, appealed to me to write a book that focused on the construction of the American industrial economy and some of those who built it. From the array of possibilities, I chose manufacturers for reasons both personal and professional. Born into a family of factory and railroad workers, I had my share of pride in American creativity and productivity (and had swallowed a dose of the macho nonsense with which society coated blue-collar tedium as a sweetener). In addition, I shared with Andrew Carnegie a preference for people who “made things” such as steel over those who generated “bits of paper.”

Professionally, I favored manufacturers because the centrality of factory-made goods to American life formed the core around which ancillaries such as finance, transportation, and distribution arrayed themselves. In addition, most Americans had long accepted the notion that science and technology, especially the homegrown variety, had facilitated the country’s rise as an industrial powerhouse. I knew, however, from both personal business experience and research in business history that whatever scientists and engineers might dream up mattered little until manufacturers turned it into a product that people bought.

Above all, from any viewpoint, the American reality stemmed from the ability, past and present, to mass-produce and mass distribute. In 1978, most of the production had taken place and took place still in the United States itself, so I felt comfortable writing a book about some American businessmen, their impact on the country, and the country’s influence upon them. From the host of actors who had played the businessman’s role in America’s past, I chose a particular cast that shared a common trait: they manufactured things, and the things they made, or the way they made them, became part of the kit of tools used, first to carve American civilization out of the continent’s wilderness, and then to construct the world’s most powerful economy.

One could easily and literally see that business had shaped America’s past and present. In the seventeenth and eighteenth centuries, churches and steeples had dominated the city skylines; in the nineteenth century, the horizon had silhouetted mills and smokestacks; in the twentieth century, corporate skyscrapers reigned. This visible progression of business dominance, although not uniquely American, surely enveloped American society more completely, and sooner, than elsewhere. In American cities, business shouldered aside the past to make room for its symbols of present power, spiking itself deep in the earth and high in the sky from coast to coast. With the John Hancock Building in Boston, the World Trade Center in New York, the Sears Building in Chicago, and the Transamerica Tower in San Francisco, businesses nationwide memorialized their own achievements and the values of a society that found such power congenial and reassuring. The fact that to less fortunate folks elsewhere, or to those who might follow a different creed, these symbols might evoke fear or hatred, few Americans knew, and fewer still cared until September 11, 2001, when the World Trade Center towers collapsed into blazing funeral pyres.

In other societies, business, retarded by the state of economic development, or constrained by different sorts of ideals, often projected a lower profile. Cities served as pedestals for monuments to the past—the Acropolis in Athens, Palatine Hill and St. Peter’s in Rome, the Sacré Coeur and the Louvre in Paris—or furnished settings for symbols of cultural imperatives—the Holmenkollen ski jump in Oslo, Tivoli Park in Copenhagen, Big Ben in London, and the “Blue Mosque” in Istanbul. Vivid examples of alternatives mark cities such as Paris and Copenhagen. In these capitals of countries where businesses have long thrived, the citizens allowed the building of one skyscraper within the city limits and decided to have no more. The history of manufacturing thus offers an unpromising starting point from which to study societies such as these.

In the history of America, however, manufacturers had played a dynamic role in propelling the country from colonial dependency to world power, a role with which Americans still struggled in 1978 after thirty years of the Cold War and in the wake of the Vietnam tragedy. Other factors had facilitated the passage to prosperity, of course. The country’s original economic viability had grown from the capacity of its land, the benevolence of its climate, and the industry of its farmers. (In the long run, ironically enough, clinging to vestigial prosperity may depend primarily on the same factors. A lush country such as New Zealand, with millions of sheep and cows but few factories, offers a hopeful prospect.) Other people, people who grew nothing and produced nothing, had contributed by assembling the capital needed by those who did. But, more than anything else, twentieth-century America had ridden to prosperity on a human-made river of goods.

Thus, I thought, the goods makers deserved attention, not just as builders of prosperity, but also as architects of the society as a whole. Conversely, their society had molded them as well, providing much of their mental equipment, shaping their aspirations, and inculcating some sense of moral propriety and political pragmatism. That the culture was American made a difference. Every society confronts the problem of coming to terms with its physical environment and presumably does so with a core of universal instincts among its members, but the responses vary from the furiously energetic to the fatalistically passive, a variety too great to explain solely by differences in climate and natural resources. Sweden, cold and resource poor, has made itself rich; Indonesia, warm and resource rich, remains poor. Even among societies that embrace the creed of industrialization, dissimilar answers emerge to such fundamental questions as who raises capital, how, and for what, as well as who decides what to produce, in what quantity, and how to price it.

American manufacturers’ behavior formed a vital component of the country’s particular response to humankind’s fundamental dilemma: in the pure state of nature, every human awakens every day cold, hungry, and uncertain of living to see another dawn. The human race tightropes across the span between cradle and grave with necessities few and simply stated: something to eat, some way to keep warm, something to believe in. These requirements, so simply put, have proven achingly difficult for most societies to fulfill, but mass production, for those that have achieved it, holds the wolf, if not the demons, at bay, at least for a time. In the nineteenth century, American manufacturers made mass production the core of the business system; in the twentieth century, they forged an economy of unprecedented potency, as well as an enduring national way of life.

That said, the choices for the original version of this book came readily enough: Eli Whitney, for the cotton gin and interchangeable parts that unleashed torrents of change; Cyrus Hall McCormick, who mechanized American cereal agriculture and developed a dealer network that truly opened millions of acres in the West, thus loosing the titanic potential of free-soil agriculture; Andrew Carnegie, a legendary success story who learned cost-based management on the railroad and used it to build the largest steel company in the world; Thomas Edison, for all his wizardry, but also as the prototype of market-focused professional innovators who deride “inventions” as gadgets or as hobbies unless they sell; the Henry Fords, I and II, and Alfred P. Sloan, who by revolutionizing product development, manufacture, assembly, and marketing drove the automobile industry into its role as the central dynamic force in twentieth-century America and in much of the world by the twenty-first; Pierre du Pont, who created the archetypical management bureaucracy around the principles of cost accounting, “return on investment,” and market forecasting; and Edwin Land, a scientist turned entrepreneur, whose Polaroid camera showed the potential for science-based products, driven not by the science, but by an accurate market perception.

Well and good in 1978, but almost three decades later, the world had changed in ways that touched virtually every American. Strikingly, many of the alterations involved interactions with the two most menacing opponents during the Cold War—China and Russia. “O.K.,” observed the New York Times in 2005, “Japan Isn’t Taking Over the World. But China …” Think tanks, economists, and essayists issued forebodings of the twenty-first century as “the Chinese Century” in the wake of the American twentieth. Indeed, the shelves of virtually every American retail outlet groaned with once-banned Chinese goods, harbingers, perhaps, of the arrival of a new order of business. Certainly China’s relationship to America had mutated out of all recognition compared to the first decades after the Communists took power. In the 1950s, 1960s, and 1970s, some fools, seeing in China an ongoing “yellow peril,” anticipated Chinese paratroopers dropping from the sky onto the streets of San Francisco, or troops wading ashore on the beaches of Los Angeles, never mind the lack of planes or ships to haul them across the Pacific. Instead, Communist China proved itself a paper tiger, doomed to economic failure by a regime that thought it could forge industrial might from iron smelted in backyard blast furnaces.

Within that Maoist straitjacket had lurked an enormous force ready to burst forth: the profound Chinese entrepreneurial energy and ability, on display not only in the Chinese diaspora that had built businesses on every continent, but also in the streets of Beijing itself, where virtually every corner sported enterprisers ready to cut hair, make clothes, mend bicycles, cobble shoes, and serve lunch. This entrepreneurial vigor, coupled to the savings of thrifty Chinese peasants and the vast capital amassed by Chinese people abroad, held the potential for an economic transformation. It should, therefore, have come as no surprise that when the wallop landed, it came not from Communist but from newly capitalist China, transformed as if by alchemy, or some particularly Chinese elixir, from a paper tiger into a ferocious dragon inhaling coal and iron ore and petroleum, exhaling a river of goods, and belching a miasma of pollution into the gasping streets of Beijing, Shanghai, and Guangzhou.

In the streets of Chinese cities, the once grey-clad ranks now rippled with the color and shimmer of what had become some of the best-dressed people in the twenty-first-century world. In grim contrast, through those same streets, the ever more polluted winds of change blew millions of discarded plastic bags that swirled in a calypso of modernity’s promise and peril until they drifted like a never-melting snow against fences and buildings.

In the face of these changes, American dread of the communist “Red Menace” in Asia had yielded to worry about the potential impact on the price of gasoline at home if the ratio of motor vehicles to population in China (1 vehicle for every 650 people in 2005) rose to match that in the United States (5 for every 6). Dread of Chinese troops landing on California beaches had given way to anticipation of well-heeled Chinese tourists swarming the beaches of Maui. The delight in low prices attached to Chinese goods in American stores trumped the fear that American factory jobs had vanished forever into the Far Eastern mists.

Meanwhile, the American dream of reaching the vast Chinese market (embodied in the “China Clipper” ships of the early nineteenth century) had found fruition at last for a few American companies, both old (General Motors, Ford, Boeing) and new (Dell Computer, McDonald’s, Walmart). Indeed, the Beijing McDonald’s, opened in 1991, together with the Moscow branch (1990) had quickly become the most famous McDonald’s outlets in the world, bizarrely ballyhooed by gleeful xenophobes as proof positive of America superiority.

The 1989 fall of the Soviet Union, once the heart of Ronald Reagan’s “Evil Empire,” produced a different outcome in Russia, a country that had effectively outlawed capitalism for seven decades with the upshot that only outlaws and foreigners knew how to work it. The startling results clearly appeared in Moscow’s Red Square (around the corner from McDonald’s), where the tomb of Lenin, architect of the 1917 Russian Revolution, gazes across the cobblestones at such upscale emporia as Gucci and Louis Vuitton, caterers to capitalism’s glitterati, a sight no doubt sufficient to spin Lenin in his grave. The sprawling GUM building, long a cocoon of drab offices for Soviet apparatchiks, metamorphosed into a sparkling galleria of Western shops, many of them trendy numbers such as Harvey Nichols, Burberry, and Hugo Boss, as well as more middling brands such as Levis and The Gap. These rugged capitalist paladins did as much as any nuclear arsenal or military alliance to unhorse Soviet communism (and could easily do the same if unleashed in Castro’s Cuba, an unlikely scenario given that in my lifetime, self-styled “conservatives” have lauded capitalism but thought it frail, while “liberals” have felt the reverse).

Meanwhile, away from the fleshpots of Moscow and St. Petersburg, abandoned factories rotted amid clusters of idle freight cars rusting on idle tracks along six thousand miles of the Trans-Siberian Railway, casualties of the abrupt shift to capitalism, a system that few Russians understood and fewer still welcomed. Past these relics of Soviet futility rattled trainloads of Korean and Polish pipeline materials destined to carry Russian natural gas to the more agile economies of Western Europe. Russian timber, coal, and petroleum rumbled eastward to more muscular markets, especially those of China, whose booming border cities cast an ominous glow across the Amur River onto the darkling, emptying spaces of Siberia. By 2005, the United States itself had, of course, witnessed massive changes in its economic landscape. Huge businesses once deemed immortal, omnipotent, and unassailable by economists such as John Kenneth Galbraith had shown the folly of these analyses by staggering toward, and sometimes over, the brink of bankruptcy. The once-mighty American steel industry had crumpled, its titan, U.S. Steel, reduced to a fragment of the firm J.P. Morgan had built around Carnegie Steel; Bethlehem Steel, long number two, had vanished in insolvency. The American automobile industry, long the envy of much of the world, staggered under assaults from foreign competitors that it seemed powerless to resist.

By 2005, America no longer had a domestic consumer electronics industry, or a high-tech camera industry. Indeed, so deeply had the American economy intertwined with the rest of the world’s that a vow to buy only goods manufactured entirely of American components amounted to a decision to buy nothing at all. On the other hand, some American firms held their own against all comers in fields such as computers and their implementation, and they had used this expertise to catalyze the reshaping of the American economy into one more balanced among agriculture, manufacturing, and service industries.

Any revision of American Made had to acknowledge this evolution and relate it to the theme of the original edition, a task less difficult than one might imagine, for America remained a country of high-consumption lifestyles shaped by manufacturing. Many of the factories that sustained it, however, lay elsewhere, often in erstwhile enemies such as Germany, Japan, China, and Vietnam, a shift symbolized by Walmart’s abandonment of its once trumpeted slogan “We Buy American So You Can Too” in favor of an unstated policy “we buy Chinese (or Indian, or Bangladeshi, or Vietnamese) so you can buy cheap.” Americans had in general accepted this proposition, despite job loss through buying abroad and “offshoring” work once done in American factories. Manufacturing, wherever it took place, thus remained crucial to American life, although factory jobs may not have.

The rise of the “service” economy had not negated but rather had perpetuated the importance of manufacturing to maintaining Americans in the style to which the past had accustomed them. Whatever elusive definition of “services” one employs, the underlying reality involves manufacturing in multiple roles. The U.S. government, for example, includes in its definition of “Service Producing Industries” the following: “transpo...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Acknowledgments
• Table of Contents
• Preface to the Third Edition
• Chapter 1 Introduction
• Chapter 2 The Artist of His Country
• Chapter 3 The Grim Reaper
• Chapter 4 The Star-Spangled Scotchman
• Chapter 5 The Most Useful American
• Chapter 6 The Insolent Charioteer
• Chapter 7 The Patriarchal Pioneer
• Chapter 8 The Organization Man
• Chapter 9 Avatar of the Worldwide Car
• Chapter 10 The Philosopher Scientist
• Chapter 11 And So It Goes: Burgers, Bargains, and Bytes
• Chapter 12 Of Things Past and Things to Come
• A Note on the Sources
• Photo Credits
• Index