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Creating Control Systems: Edwin F. Gay and the Central Bureau of Planning and Statistics, 1917–1919

Published online by Cambridge University Press:  13 December 2011

Robert D. Cuff
Robert D. Cuff
Affiliation:
Robert D. Cuff is professor of history atYork University. For the period July 1989-June 1991, he is visiting professor of business administration at the Harvard Business School.
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Abstract

In tracing the work of Edwin Gay in the mobilization effort during the First World War, this article presents an intriguing picture of the wartime administration's gradual realization of its need for more accurate information for central economic and political decision making. Although Gay's specific agency was short-lived, the work he did, and the viewpoint he represented, contributed significantly to the search for coherent administration in the executive branch.

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Articles
Information
Business History Review , Volume 63 , Issue 3 , Autumn 1989 , pp. 588 - 613
Copyright
Copyright © The President and Fellows of Harvard College 1989

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References

1 Dahl, Robert A. and Lindblom, Charles E.'s Polines, Economics and Welfare: Planning and Politico-Economic Systems Resolved into Basic Social Processes (New York, 1953)Google Scholar is indicative of a post-Second World War interest among political scientists and economists in the organizational and analytical techniques of planning and control. See also Redford, Emmett S., Administration of National Economic Control (New York, 1952).Google Scholar For relevant literature on budgeting, see Mosher, Frederick C., Program Budgeting: Theory and Practice, with Particular Reference to the U.S. Department of the Army (Chicago, 1954)Google Scholar; Musgrave, Richard A., “Fiscal and Monetary Problems in a High-Level Defense Economy: A Study in Taxable Capacity,” American Economic Review, Papers and Proceedings … 40 (May 1950): 209–22Google Scholar; Novick, David, ed., Program Budgeting, Program Analysis and the Federal Budget (Cambridge, Mass., 1965)Google Scholar; Smithies, Arthur, The Budgetary Process in the United States (New York, 1955)Google Scholar; and Smithies, , “Federal Budgeting and Fiscal Policy,” in A Survey of Contemporary Economics, ed. Ellis, Howard S. (Homewood, Ill., 1948), 1: 174–209.Google Scholar On defense economists and economics, see Herken, Gregg, Counsels of War (New York, 1985), 76–79Google Scholar, and 355n4; Hitch, Charles, et al. , The Economics of Defense in the Nuclear Age (Cambridge, Mass., 1965)Google Scholar; and Decision-Making for Defense (Berkeley, Calif., 1965); Clark, John J., The New Economics of National Defense (New York, 1966)Google Scholar; Kennedy, Gavin, Defense Economics (London, 1983)Google Scholar; and McKean, Roland N., ed., Issues in Defense Economics (New York, 1967).Google Scholar See also Palmer, Gregory, The Mc Namara Strategy and the Vietnam War: Program Budgeting in the Pentagon, 1960–1968 (Westport, Conn., 1978)Google Scholar; Rosen, Stephen, “Systems Analysis and the Quest for Rational Defense,” Public Interest 76 (Summer 1984): 3–17Google Scholar; and Trewhitt, Henry, McNamara: His Ordeal in the Pentagon (New York, 1971).Google Scholar

2 The theme elaborated here, that organization matters, has been explored in a great deal of recent work both on the business corporation and on the state. On the relationship between organizational design and corporate success, between structure and strategy in corporate enterprise, see Chandler, Alfred D. Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977)Google Scholar; and Williamson, Oliver, “Emergence of the Visible Hand,” in Managerial Hierarchies: Comparative Perspectives on the Rise of the Modern Industrial Enterprise, ed. Chandler, Alfred D. Jr, and Daems, Herman (Cambridge, Mass., 1980), 182–202.Google Scholar See also McCraw, Thomas K., “The Challenge of Alfred D. Chandler, Jr.: Retrospect and Prospect,” Reviews in American History 15 (March 1987): 160–78.CrossRefGoogle Scholar For an introduction to the theme in the context of government structure, see Evans, Peter B., et al. , eds., Bringing the State Back In (New York, 1985).CrossRefGoogle Scholar Klaus Knorr made a pioneering attempt to link organizational and administrative factors to war mobilization in The War Potential of Nations (Princeton, N.J., 1956), esp. part 3, “Administrative Capacity for War.” See also Milward, Alan S., War, Economy and Society, 1934–1945 (Berkeley, Calif., 1979), 20–21Google Scholar; and Willoughby, W. F., Government Organization in Wartime (New York, 1919).Google Scholar

3 Beniger, James R., The Control Revolution: Technological and Economic Origins of the Information Society (Cambridge, Mass., 1986).Google Scholar

4 Heaton, Herbert, A Scholar in Action: Edwin F. Gay (Cambridge, Mass., 1952), 98–99CrossRefGoogle Scholar; and Cruikshank, Jeffrey L., A Delicate Experiment: The Harvard Business School, 1908–1945 (Boston, 1987), 39ff.Google Scholar For a brief reminiscence on aspects of Gay's wartime work by a participant, see the four-page MS by Paul Cherington, an HBS professor, attached to Gay to Cherington, 21 Jan. 1919, Paul Cherington Collection, HBS Archives, Boston, Mass. See also Bulletin of the Bureau of Business Research, Object and History of the Bureau with Some Preliminary Figures on the Retailing of Shoes (Cambridge, Mass., 1913)Google Scholar, and Sass, Steven A., Entrepreneurial Historians and History: leadership and Rationality in American Economic Historiography, 1940–1960 (New York, 1986), 29–52.Google Scholar On the theme of entrepreneurship in government, see Doig, Jameson W. and Hargrove, Edwin C., eds., Leadership and Innovation: A Biographical Perspective on Entrepreneurs in Government (Baltimore, Md., 1987).Google Scholar

5 From Federal Trade Commission, Fundamentals of a Cost System For Manufacturers [1 July 1916] (Washington, D.C., 1916), 6.Google Scholar See also Hurley's, Awakening of Business (New York, 1917)Google Scholar, which reprints a letter from Wilson endorsing Hurley's campaign for improved cost accounting and standardized business methods as a means to strengthen the nation in export competition. “Intelligent cost accounting,” wrote Hurley, “lies at the basis of efficient management” (p. 3). See also Gantt, H. L., “The Relation Between Production and Costs,” reprinted in Business Statistics, ed. Copeland, Melvin T. (Cambridge, Mass., 1917), 543–50Google Scholar; and Hathaway, William A., “Internal and External Statistical Needs of American Business,” Journal of the American Statistical Association 16 (June 1918): 1–15.CrossRefGoogle ScholarYates, JoAnne describes the evolution of information systems in industrial enterprise in Control Through Communication: The Rise of System in American Management (Baltimore, Md., 1989).Google Scholar

6 Cruikshank, Delicate Experiment, 57ff. In 1916, Shaw observed: “In a word, as the division of labor is carried further and further in the activities of production and of distribution, the control of operations becomes increasingly complex…. The necessity of coordinating and supervising the countless resulting details compels the management to deal with paper representations of the materials, motives, and relations involved instead of directly with the things for themselves.” From Shaw, Arch Wilkinson, An Approach To Business Problems (1914; Cambridge, Mass., 1916), 297.Google Scholar See also Shaw, , Some Problems in Market Distribution, Illustrating the Application of a Basic Philosophy of Business (1915; Cambridge, Mass., 1951), 16–17CrossRefGoogle Scholar; and Copeland, Melvin T., And Mark an Era: The Story of the Harvard Business School (Boston, 1958), 43–44.Google Scholar

On the significance of administration in the approach that Gay and Shaw took to business education the following is germane: “It seems to me that I was rather stupid last year in not really seeing your point of view. The school is a Graduate School of Business Administration and not a school to make expert correspondents, or expert salesmen, or expert accountants. At least, that is what it seems to me it is now. … In other words, it seems to me we want to formulate a system of business from the point of view of the management, and based now largely on tradition and practice, but which we believe can be corrected and verified by scientific research.” Shaw to Gay, 20 Dec. 1911, Harvard Business School, Dean's Office, School Correspondence, box 5, Shaw folder, HBS Archives. The University of Pennsylvania's Wharton School, in contrast, emphasized functional specialties, especially accounting. See Sass, Steven A., The Pragmatic Imagination: A History of the Wharton School, 1881–1981 (Philadelphia, Pa., 1982), chap. 5.CrossRefGoogle Scholar

7 Shaw to Gay, 11 May 1917; and Gay to Shaw, 15 May 1917, both in Shaw folder, HBS Archives. On cost problems in government war contracts see Crowell, J. Franklin, Government War Contracts (New York, 1921)Google Scholar, esp. chap. 8. For government attempts during the war to establish standard accounting practices, see, “Government Contracts and Cost Accounting Method” American Industries 18 (Sept. 1917): 19–22; and Clinton H. Scovell, “Eliminating Interest as a Factor in Costs,” ibid. (Nov. 1917): 13–14. On the Commercial Economy Board's efforts to reduce business inefficiencies, see Copeland, Melvin T., “Standardization of Products,” Bulletin of the Taylor Society 6 (April 1921): 55–59.Google Scholar On Shaw's prewar activity, see Shaw, A. W., “In the Day of Prosperity,” System 31 (Feb. 1917): 123–32Google Scholar; and Shaw, , “To Checkmate Europe's War-Begotten Efficiency,” The Nation's Business 5 (Feb. 1917): 9–12, 63.Google Scholar

8 “Statement of Edwin F. Gay,” interview with Grosvenor B. Clarkson, 5 Nov. 1920, available in the Papers of Bernard M. Baruch, Seeley Mudd Library, Princeton University, Princeton, N.J. (hereafter cited as Gay statement).

9 Ibid.

10 Among introductions to the government's shipping program, see Safford, Jeffrey J., Wilsonian Maritime Diplomacy, 1913–1921 (New Brunswick, N. J., 1978)Google Scholar, and Zeis, Paul Maxwell, American Shipping Policy (Princeton, N.J., 1938).Google Scholar On the military dimension, see Huston, James A., The Sinews of War: Army Logistics, 1775–1953 (Washington, D.C., 1966), 348–54.Google Scholar

11 Baker to Wilson, 3 Nov. 1917, box 4, Papers of Newton D. Baker, Library of Congress, Washington, D.C. (hereafter cited as Baker Papers).

12 Gay statement; Heaton, Scholar in Action, 102. See also The Cabinet Diaries of josephus Daniels, 1913–1921, ed. Cronon, E. David (Lincoln, Nebr., 1963), 261.Google Scholar

13 Gay Statement.

14 Edwin F. Gay, Charles Day, and Lewis B. McBride to Chairman, U.S. Shipping Board, 2 Jan. 1918, Papers of Edward N. Hurley, Notre Dame Library, South Bend, Indiana (here after cited as Hurley Papers); and Heaton, Scholar in Action, 107.

15 Hurley, Edward N., The Bridge To France (Philadelphia, Pa., 1927), 101.Google Scholar

16 Raymond Stevens to Wilson, 31 Jan. 1918, Papers of E. M. House, Vance McCormick file, drawer 39, f. 48, Sterling Memorial Library, Yale University (hereafter cited as McCormick Papers).

17 Ibid.

18 Ibid. For the recollection of a British shipping official that supports Stevens on this point, see Salter, Arthur, Slave of the Lamp: A Public Servant's Notebook (London, 1967), 78–82.Google Scholar For further detail, see Salter, J. A., Allied Shipping Control: An Experiment in International Administration (Oxford, England, 1921).Google Scholar

19 Gay Statement; and Vance McCormick to Wilson, 31 Dec. 1917, Wilson Papere. See also Report of the War Trade Board (Washington, D.C., 1920), 421–23. On Commerce Department-WTB wartime rivalry, see Becker, William H., The Dynamics of Business-Government Relations: Industry and Exports, 1893–1921 (Chicago, 1982), 152–56.Google Scholar

20 McCormick to Wilson, 7 Feb. 1918; see also Wilson to McCormick, 11 Feb. 1918, both in McCormick Papere.

21 Aware that President Wilson was skeptical about Franklin's character and business back ground, Hurley “named the Committee and made the announcement in the press, without consulting the President. He made no comment upon it at the time.” See Hurley, Bridge, 103. International Mercantile Marine was a J. P. Morgan interest; see Chandler, The Visible Hand, 191–92. Franklin had earlier fought against Wilson's plans for a government-controlled merchant marine. See Safford, Wilsonian Maritime Diplomacy, 47–50.

22 Hurley, Bridge, 104; and U.S. Shipping Board, Second Annual Report [1 Dec. 1918] (Washington, D.C., 1918), 65. See also Salter, Slave of the Lamp, 68ff. for a British perspective on the evolution of inter-Allied administrative control.

23 Hurley, Bridge, 104–5. See also Benedict Crowell and Wilson, Robert Forrest, The Road To France (New Haven, Conn., 1921), 2Google Scholar: chap. 26. The Shipping Board also used in its work the flow charts pioneered by management consultant H. L. Gantt. Gantt's wartime work for the Ordnance Department, navy, and Shipping Board earned him a Distinguished Service Medal. See Alford, L. P., Henry Laurence Gantt: Leader in Industry (New York, 1934)Google Scholar, chaps. 14–15; Clark, Wallace, The Gantt Chart: A Working Tool of Management (New York, 1922)Google Scholar; and Wren, Daniel A., The Evolution of Management Thought (New York, 1987), 137.Google Scholar

24 Report of the U.S. War Trade Board (Washington, D.C., 1920), 232–33.

25 Heaton, Scholar in Action, 110–13; and Secrist, Horace, “Statistics of the United States Shipping Board,” Journal of the American Statistical Association 16 (1918–19): 236–47.CrossRefGoogle Scholar

26 Hurley, Bridge, 108, 109.

27 Ibid. For a sample list of the dozen or so factors that Shipping Board statisticians included in their analysis of “how much tonnage,” see Secrist, “Statistics of the United States Shipping Board,” 238. See also U.S. Shipping Board, Division of Planning and Statistics, Stowage Factors for Ship Cargoes: Space Requirements of Commodities Packed for Overseas Shipment (Washington, D.C., 1919).Google Scholar

28 Gay statement.

29 Ibid. Frictions arose between Gay's group and WIB commodity sections over allocation of authority for designing specific import activities. For one attempt at settling matters, see Bernard Baruch to Gay, 2 May 1918, Records of the War Industries Board, file 21A-A1, box 2, National Archives, Washington, D.C. See also Schwarz, Jordan A., The Speculator: Bernard M. Baruch in Washington, 1917–1965 (Chapel Hill, N.C., 1981), 67–68.Google Scholar

30 Gay statement.

31 Ibid.

32 surveys, Leo Wolman, “The Statistical Work of the War Industries Board,” in the Journal of the American Statistical Association 16 (1918–1919): 248–60.Google Scholar One of the more frequently cited studies is Garre, Paul Willard, et al. , Government Control over Prices (Washington, D.C., 1920)Google Scholar, number 3 in a series of 57, History of Prices During the War, Wesley C. Mitchell, editor-in-chief. See Garrett, Paul W., “Money, Prices, Credit, and Banking,” American Economic Review 9 (March 1919): 167–75Google Scholar for an introduction to the series. For an example of a recent use of the Garrett volume, see Rockoff, Hugh, Drastic Measures: A History of Wage & Price Omtrok in the United States (New York, 1984), chap. 3.CrossRefGoogle Scholar

33 An indicator of the data gathering that proliferated during the war is an estimate that in January 1918 at least seventeen different government organizations had related economic investigations under way, including the Federal Trade Commission, the War College, the Tariff Commission, and the War Trade Board. By November 1918, the WTB's Bureau of Research alone employed 217 people, compared to 35 in August 1917. See Report of the War Trade Board (1920), 246.

34 See Cuff, Robert, “We Band of Brothers: Woodrow Wilson's War Managers,” Canadian Review of American Studies 5 (Fall 1974): 135–48.CrossRefGoogle Scholar

35 Wilson to Baruch, 24 May 1918, Wilson Papers. See also Diary of Chandler P. Anderson, 28 May 1918, vol. 3, box 3, Chandler Anderson Papers, Library of Congress, Washington, D.C.

36 Wilson to W. B. Wilson, 1 June 1918, cited in The Papers of Woodrow Wilson, ed. Arthur Link, et al., vol. 48 (Princeton, N.J., 1985), 139; see also 188.

37 Potter, Z. L., “The Central Bureau of Planning and Statistics,” Journal of'the American Statistical Association 16 (March 1919): 285.Google Scholar For a history of the federal government written from this point of view, see Short, Lloyd M., The Development of National Administrative Organization in the United States (Baltimore, Md., 1923).Google Scholar See also Arnold, Peri, Making the Managerial Presidency: Comprehensive Reorganization Planning, 1905–1980 (Princeton, N.J., 1986), 35.Google Scholar

38 Gay statement.

39 Baker to Wilson, 25 Oct. 1918, box 8, Baker Papers.

40 Gay Statement.

41 Ibid.

42 James A. Campbell, “Report on the Shipping Board Contact,” n.d., Records of the Central Bureau of Planning and Statistics, box 34, in the Records of the Bureau of the Budget, National Archives, Washington, D.C.; hereafter cited as BOB Records. See also C. E. Griffin, “Contact with the U.S. Railroad Administration and the Interstate Commerce Commission,” n.d., ibid. For an interesting description of the activities of the statistician in private enterprise, see Walter S. Gifford [of AT&T], “The Function of Statistics in the Telephone Business,” reprinted in Copeland, Business Statistics, 684–96. Henry S. Dennison refers to the “less sharply defined advisory positions like ‘Economist’ and ‘Statistician,’ in modern firms,” in “Management,” chap. 7 of Recent Economic Changes in the United States (New York, 1929), 2: 495–546.

43 Gay Statement.

44 Potter, “Central Bureau,” 279–82. In its first consolidated monthly survey for September 1918, the bureau concluded that with an army of almost two million overseas, “the most pressing problems have become those of supply…,” and it noted that there was “scant equipment of many important guns and tractors,” and “no adequate supply of high explosive shells… expected for some time. The shortage of pistols and revolvers was still serious.” The navy, in contrast, the bureau found in good shape. Shipping, on the other hand, remained worrisome: “The shortage of ships is one of the most critical elements of the War Program.” See Central Bureau of Planning and Statistics, “Status of War Activities: A Consolidated Monthly Survey as of October 1, 1918,” Washington, D.C., WIB, 31 Oct. 1918, box 29, BOB Records.

45 Gay to Vance McCormick, 30 Aug. 1919, Papers of Edwin F. Gay, Hoover Institution, Stanford, Calif.

46 Heaton, Scholar in Action, 132–36; and Alchon, Guy, The Invisible Hand of Planning; Capitalism, Social Science, and the State in the 1920s (Princeton, N.J., 1985), 35–37.Google Scholar

47 Cherington MS.

48 For discussion on the organization of government statistics among statisticians themselves, see Mitchell, Wesley C., “Statistics and Government,” Journal of the American Statistical Association 17 (March 1919): 223–35CrossRefGoogle Scholar; Potter, , “Central Bureau of Planning and Statistics“; Chauncey D. Snow [Assistant Chief of the Commerce Department's Bureau of Foreign and Domestic Commerce], “Our Statistics of Foreign Commerce and the War,” Journal of the American Statistical Association 16 (Dec. 1918): 175–89Google Scholar; and Allyn A. Young, “National Statistics in War and Peace,” ibid. (March 1918): 873–85. See also Church, Robert L., “Economists as Experts: The Rise of an Academic Profession in the United States, 1870–1920,” in The University in Society, ed. Stone, Lawrence (Princeton, N.J., 1974), 2: 604–6Google Scholar; Schmeckebier, Laurence F., The Statistical Work of the National Government (Baltimore, Md., 1925), 5–6Google Scholar; and Skowronek, Stephen, Building a New American Slate: The Expansion of National Administrative Capacities, 1877–1920 (New York, 1982), 203 and 165ff.CrossRefGoogle Scholar, which places Gay's experiment in the context of prewar recommendations for central statistical control.

49 Appleby, Paul H., Policy and Administration (Birmingham, Ala., 1949), 67.Google Scholar Appleby was a top administrator with the Department of Agriculture and the Bureau of the Budget before becoming dean of the Maxwell Graduate School for Public Administration at Syra cuse University. See also his Big Democracy (New York, 1945), 6. Harold Smith was director of the Bureau of the Budget from 1939 to 1946.

50 Emmerich, Herbert, Federal Organization and Administrative Management (Huntsville, Ala., 1971), 8.Google Scholar

51 Among studies that bear on this theme, see Alchon, Invisible Hand of Planning; Arnold, Making the Managerial Presidency, chaps. 3 and 4; Berman, Larry, The Office of Management and Budget and the Presidency (Princeton, N.J., 1979)Google Scholar, chaps. 1 and 2; and Clawson, Marion, New Deal Planning (Baltimore, Md., 1980).Google Scholar For the explicit connection between war mobilization and the origins of the Bureau of the Budget, see Charles Dawes, G., The First Year of the Budget of the United States (New York, 1923), ix–x.Google Scholar Henry Dennison, a member of both Gay's bureau and the National Resources Planning Board, claimed in the 1940s that the experience of the Central Bureau and the NRPB “have rooted planning-whatever new alibis may be coined to call it by.” Dennison to Virginia Thompson, 8 May 1947, in the Papers of Henry Dennison, case 1, Baker Library, Harvard Business School, Boston, Mass. The lineage is even more direct between Gay's Central Bureau and the Central Statistical Board that Franklin Roosevelt established in 1933. See Eckler, A. Ross, The Bureau of the Census (New York, 1972), 15–21.Google Scholar During the 1920s, the Commerce Department's Census Bureau led the search for cooperation among statistical offices of the federal government. Julius Klein, another of Gay's wartime assistants, was director. See Report of the Secretary of Commerce, June 1925 and June 1926, 82–83 and 40–49, respectively.

52 Chandler, Alfred D. Jr, and Galambos, Louis, “The Development of Large-Scale Economic Organizations in Modern America,” Journal of Economic History 30 (March 1970): 215.CrossRefGoogle Scholar

53 Beniger, The Control Revolution.