Special adaptations of the means of transport to food shipping, in the form of insulated and refrigerated compartments (at first iced, later mechanically cooled), made possible the long-distance movement of the most essential commodities required by the rapidly growing urban centers. The cities were released from their dependence on local supplies and made part of an international market. Gustavus Swift began in the mid-1870s to market Western meat in the Eastern region, and by the end of the century his organization had become a giant vertically integrated manufacturing, shipping, and marketing empire. This lead was soon followed by a number of other meatpackers, as well as by Andrew Preston who, beginning with bananas in the 1890s, had laid the foundation for the United Fruit Company by the end of the decade.
In general, the industrialization of the food industry provided the indispensable basis of the type of urban life that was being created; and it was in the food industry that the marketing structure of the corporationembracing sales, distribution, and intensive consumer promotion and advertisingbecame fully developed. The canning industry had come into being in the 1840s with the development of stamping and forming machinery for producing tin cans on a mass basis. The expansion of this industry to embrace national and international markets did not come, however, until the 1870s, when further technical developments, including rotary pressure cookers and automatic soldering of cans—not to speak of the development of rail and sea transport made it possible." And soon thereafter, in the 1890s, the automatic-roller process for milling grain formed the basis for the international marketing of centrally produced flour.
Apart from food, various other industries based themselves upon the urban pattern of life that was coming into being. Steel-frame construction in the cities brought about a demand which supplemented and soon replaced the railroads as the prime market for steel. The production of petroleum was perforce localized, while its use was international, and the marketing apparatus of the oil industry corresponded to this. The tobacco industry is another example: cigarettes were smoked almost entirely in the cities. The cigarette rolling machine devised in 1881 furnished the technical basis upon which Duke raised a national and international sales organization.
Cyrus McCormick's vast agricultural-machinery enterprise was built upon his own worldwide marketing and distribution organization, as was William Clark's Singer Sewing Machine Company. In these cases, as in the cases of the many machine-building and electrical-equipment companies that came into existence in the early period of monopoly capitalism, the need for a self-operated marketing organization was imposed, in addition to those factors we have already discussed, by two further reasons. First, the orders, specifications, and uses of the products became more technical and complicated, and demanded a specially trained sales organization which could work closely with the engineering division. And second, the new machines could not be sold without the provision of maintenance, service, and in many cases installation. This made it difficult for the manufacturer to be represented on the spot by existing trade facilities. Factors such as the need to provide service and replacement parts virtually dictated to the new automobile industry the construction of its own marketing network.
Thus marketing became the second major subdivision of the corporation, subdivided in its turn among sales, advertising, promotion, correspondence, orders, commissions, sales analysis, and other such sections. At the same time, other functions of management were separated out to form entire divisions. Finance, for example, although not as a rule large in size, became the brain center of the entire organism, because here was centralized the function of watching over capital, of checking and controlling the progress of its enlargement; for this purpose, the finance division has its own subdivisions for borrowing, extending credit, collections, supervising cash flow, stockholder relations, and overall supervision of the financial condition of the corporation. And so on, throughout the various functions and activities of the corporation, including construction and real estate, legal, public relations, personnel and labor relations, etc.
Each of these corporate subdivisions also requires, for its own smooth functioning, internal departments which reflect and imitate the subdivisions of the entire corporation. Each requires its own accounting section, ranging from the complex cost accounting of the manufacturing divisions to the simpler budgeting functions required of even the smallest divisions. Each often controls its own hiring through its own personnel department; many require separate maintenance and cleaning sections, as well as traffic and routing, office management, purchasing, planning, correspondence, and so forth. Thus each corporate division takes on the characteristics of a separate enterprise, with its own management staff.
The picture is rendered still more complex by the tendency of the modern corporation to integrate, vertically as well as horizontally. Thus, by growth and by combination, the manufacturing corporation acquires facilities for the production of raw materials, for transportation, semi-banking institutions for the raising of capital or extending of credit, etc. At the same time, horizontal integration brings together a variety of products under the aegis of a single aggregate of capital, sometimes assembling under one overall financial control products and services bearing no discernible relation to each other except in their function as sources of profit. Each of these massive sub-corporations requires a complete management structure, with all of its divisions and subdivisions.
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Labor and Monopoly Capital
The Modern Corporation
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