6 ] The Visible Hand

States became industrial and urban. These decades witnessed revolution

ary changes in the processes of production and distribution in the United
States. Within this time period I examine the ways in which the unirs
carrying out these changing processes of production and distribution
including transportation, communication, and finance-were admims
tered and coordinated. I have not tried to describe the work done by the
labor force in these units or the organization and aspirations of the work
ers. Nor do I attempt to assess the impact of modern business enterprise on
existing political and social arrangements. I deal with broad political,
demographic, and social developments only as they impinge directly on
the ways in which the enterprise carried out the processes of production
and distribution.

Some general propositions

This study is a history. It moves chronologically. It is filled with
details about men and events, about specific processes, policies, and
procedures, and about changing technologies and markets. It attempts to
carry out the historian's basic responsibility for setting the record straight.
That record, in turn, provides the basis for the generalizations presented.
The data have not been selected to test and validate hypotheses or
general theories. I hope that these facts may also be useful to scholars with
other questions and concerns other than those relevant to the generaliza
tions presented here.
Before I enter the complexities of the historical experience, it seems
wise to outline a list of general propositions to make more precise the
primary concerns of the study. They give some indication at the outset
of the nature of modern business enterprise and suggest why the visible
hand of management replaced the invisible hand of market mechanisms.
I set these forth as a guide through the intricate history of interrelated
institutional changes that follows.

The first proposition is that modern multiunit business enterprise re

placed small traditional enterprise when administrative coordination
permitted greater productivity, lower costs, and higher profits than
coordination by market mechanisms.
This proposition is derived directly from the definition of a modern
business enterprise. Such an enterprise came into being and continued to
grow by setting up or purchasing business units that were theoretically
able to operate as independent enterprises-in other words, by internaliz-