The Rise of Big Business I–The Railroads

1. Markets vs. Hierarchies--The Central Issue in Business History
   1. Business in the Early Nineteenth Century--Market Coordination
      1. Small Scale
      2. Single Location
      3. Limited Function
      4. Transactions Handled by the Market--Adam Smith's "Invisible Hand"
   2. By 1900
      1. Transportation and Communications--Dominance by Giant Enterprise
      2. Manufacturing--The "Great Merger Movement" and the Billion-Dollar Corporation
      3. Internalized Transactions--The "Visible Hand"
2. The First Big Businesses--The Railroads
   1. Characteristics
      1. Profitability--Control of Traffic on Their Lines
      2. Huge Demand for Capital
         1. The Rise of Wall Street
         2. Separation of Ownership and Management
      3. Complexity of Operations
         1. Intricacies of Scheduling
         2. Rate-Setting and Billing
         3. Legal Work--Rights of way, Liability, etc.
         4. Multiple Functions--Repair Shops, etc.
         5. New Accounting Issues
   2. New Management Models
      1. Inspiration--Management Backgrounds
         1. The Military
         2. Engineering
      2. Characteristics
         1. Line-and-Staff Bureaucracy
         2. Strategic Planning as a Separate Managerial Function
      3. Management as a Profession
         1. Rising in the Bureaucracy--Careerism
         2. Corporate Consciousness
         3. "Going By the Book"
   3. Interfirm Cooperation
      1. Technological Standardization
         1. Standard Gauge (1886)
         2. Standard Time (1883)
      2. Operating Agreements
         1. Car Interchanges
         2. The Through Bill of Lading
      3. Rate-Setting--The Pools
   4. Internalizing Cooperation--The Systems
3. Significance--Replacing the Invisible Hand With the "Visible Hand"