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Chandlerian image or mirror image?managerial and accounting control in thechemical industry: the case of Albright &Wilson, c.1892 to c.1923Mark Matthews , Trevor Boyns & John Richard Edwardsa Cardiff UniversityPublished online: 04 Jun 2010.

To cite this article: Mark Matthews , Trevor Boyns & John Richard Edwards (2003) Chandlerian imageor mirror image? managerial and accounting control in the chemical industry: the case of Albright &Wilson, c.1892 to c.1923, Business History, 45:4, 24-52, DOI: 10.1080/00076790312331270209

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Chandlerian Image or Mirror Image?Managerial and Accounting Control in the

Chemical Industry: The Case of Albright &Wilson, c.1892 to c.1923

MARK MATTHEWS, TREVOR BOYNS and JOHNRICHARD EDWARDS

Cardiff University

This article examines the development of Albright & Wilson (hereafter A&W),a British multinational chemical firm, during the period c.1892 to c.1923. In thelate 1890s and early 1900s, this Birmingham-based phosphorous manufacturercame to control three subsidiaries in North America, the Oldbury Electro-Chemical Company and the Phosphorous Compounds Company, both at NiagaraFalls in the US, and the Electric Reduction Co. Ltd at Buckingham, Canada.Overseas expansion clearly brought about new problems for the company’smanagement, and required the development of an efficient organisationalstructure and associated mechanisms by which to control the subsidiaries.Contrary to the assessment of Chandler, who found that A&W, a family-run firm,abrogated its responsibilities to its American sales agents, J.L. and D.S. Riker, astudy of the archival evidence reveals that A&W set up an accountinginformation system, run from its Birmingham headquarters, to help manage itsNorth American operations. This system, through the use of standards, enabledthe effective monitoring of the performance of A&W’s overseas subsidiaries,and provided the basis for making strategic decisions, such as the location ofproduction. Further examination of the company’s archives reveals anunderstanding, by A&W’s management, of the need to use different costs fordifferent purposes, and of the relevance of direct (marginal) costs for decision-making purposes.

To provide contextualisation for this study, in section II of this article wereview the predominantly American literature concerned with the issue of thedirection of flow of management ideas within the context of the Anglo-Americanchemical industry. This section reveals some difference of opinion betweenChandler and other writers on this matter. In section III we provide a brief outlineof the history of A&W and its subsidiaries, followed by a consideration, basedon recent perspectives, as to whether or not the business constituted amultinational enterprise. Section IV presents a detailed examination of thedevelopment of A&W’s accounting system between c.1892 and c.1923 in thelight of contemporary accounting and economic theory. A particular focus of this

Business History, Vol.45, No.4 (October 2003), pp.24–52PUBLISHED BY FRANK CASS, LONDON

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section is on the accounting control methods used by A&W to administer itsNorth American operations. In section V, we move beyond the question offinancial control to consider what light the A&W case throws on broader issuessuch as the relationship between entrepreneurship, innovation and the familyfirm. Our conclusions are presented in the final section.

II

According to Chandler, throughout the late nineteenth century and for much ofthe first half of the twentieth century, British entrepreneurs continued to viewtheir businesses in personal rather than organisational terms. Even in thoseindustries where British entrepreneurs made the necessary three-prongedinvestment in production, marketing and management, they recruited fewersalaried managers and placed a smaller number of them on the governing boardsof their enterprises than did American and German industrialists.1 In Chandler’searlier work on the growth of transnational firms, based largely on evidence fromthe chemical and food industries, it is suggested that one of the most strikingdifferences between American and British multinational enterprises (MNEs) wasthat managerial hierarchies became larger and appeared much more quickly inthe former.2 Jones, in his 1986 discussion of the origins, management andperformance of British multinationals, concurs: ‘Appropriate managerialhierarchies were slow to develop. British companies manifested a liking forcartels’.3

Speaking specifically of industrial chemicals, Chandler relates how, in thelate 1880s and early 1890s, American entrepreneurs made the investments andcreated the managerial teams necessary to exploit new electrolytic technologiesin chemistry and also in metallurgy. In the chemical industries, these included:James T. Morehead, Thomas L. Willson, and Charles Brush in carbon-electrodes; H.Y. Castner in bleaching powder and caustic soda; and Herbert H.Dow in chlorine and magnesium. After building massive plants, theseentrepreneurs and their associates organised national and international salesforces. Both the manufacturing and marketing of these products requiredengineers with complex skills, in particular, a knowledge of chemistry as well asof physics, a combination that was rare among managers of existing commercialintermediaries.4 Despite these deficiencies, by World War One, Americanchemical enterprises were beginning to make impressive investments in researchand development. Much larger than those of British firms, these investmentsgreatly enhanced American organisational capabilities after World War One.5

Against the successful organisational response of the US, Chandler charts theexperience of the UK chemical industries. In industrial chemicals, the twoBritish firms that had developed effective organisational capabilities beforeWorld War One, Brunner Mond and Nobel Explosives, merged (with others) inDecember 1926 to form a company, Imperial Chemical Industries Ltd. (ICI),able to challenge effectively German and American competitors in international

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markets and to diversify into related lines. But ICI was exceptional. Accordingto Chandler, of the other listed producers of industrial chemicals, only one,British Oxygen, is considered to have begun to build a managerial hierarchy byWorld War Two.6 Chandler’s synopsis of events at ICI, based largely on Reader,7

suggests that reorganisation of ICI was both in collaboration with and along thelines pioneered by Du Pont. By World War Two, ICI had recruited as large andas experienced a managerial hierarchy as any enterprise in Britain. For Chandler,the model established by ICI helped Fisons, Albright & Wilson, British Oxygen,and other smaller, personally managed British chemical companies to developsuch capabilities in the years after World War Two.8

Organisational change in large British firms was not, in Chandler’s view, acarefully planned process, but rather the result of ad hoc responses to immediateneeds. Thus, according to Chandler, it would normally take a British firm threegenerations to reach the size and managerial strength a comparable Americanenterprise achieved in one. Further:

delays in building management hierarchies meant that the British wereslow in adopting modern management methods. The American managersin the first years of the twentieth century and even earlier, as they wereperfecting the basic techniques of mass production and mass distributionwere also devising new methods of inventory and quality control. Inaddition they worked out cost accounting procedures based on standardvolume and capacity that permitted middle managers to monitorsystematically and continuously the work of the operating units under theircommand.9

For Chandler, such accounting control methods, so important in improving afirm’s competitive ability by reducing unit costs, only began to be adoptedextensively in Britain in the 1930s. In many cases such methods are seen to havebeen borrowed directly from the United States, where senior executives drew uporganisational plans that defined the functions of managerial positions, drew thelines of authority, developed accounting and budgetary procedures to permit topmanagement to monitor systematically the performance of their middlemanagers and to allocate resources for future activities of the enterprise.10

An examination of the evidence of the activities of British chemical firms inthe US to 1914 has led Wilkins to derive somewhat different conclusions fromthose of Chandler. In this alternative interpretation, foreign direct investment hada much greater impact on the pre-World War One American chemical industrythan on any other US industry. European-based MNEs within the chemicalindustry were ubiquitous actors, either threatening investment in the US or, morefrequently, actually investing there. In the period 1875–1914, in no otherindustry were Europeans so far in advance of Americans; in no other singleindustry was the foreign technological contribution so dramatic.11

By 1914, Wilkins notes that few branches of the US chemical industry wereuntouched by foreign direct investment, and no other American industry had

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been so influenced by European business enterprises.12 The significance of thisfinding is strengthened when Wilkins draws attention to the fact that she hasneglected the numerous US chemical companies founded by Europeanimmigrants and the presence of immigrant managers in existing firms.13

European direct investment made vital contributions by supplying America’schemical needs and, in certain branches of the chemical industry, in stimulatingUS production and providing the first US output of high-technology products.14

Amongst others, British firms such as Courtaulds, Brunner-Mond, BurroughsWellcome, Beecham’s, Albright & Wilson and United Alkali ‘introduced intoAmerica not just capital but men, skills, scientific knowledge, technical ability,marketing experience, patents, processes, trademarks, and goods, along withmultinational business organisation’ (emphasis added).15

Recent research by Levenstein, on the US chemical company Dow, alsosuggests that Chandler’s view of the advances in respect of management andaccounting control in the American chemical industry may somewhat exaggeratethe true state of affairs. Levenstein has found, for example, that, prior to c.1897,‘there did not exist a body of information gathering and processing techniques toprovide the information that Dow’s new strategy demanded’.16 In addition, ‘Dowmanagers were almost surely not even aware of the debates about the design ofmanufacturing information systems that were going on in the management andengineering journals of the day’.17 Although Levenstein claims that, after 1897,‘Dow plant managers regularly produced and used systematic reports on costs,quality, and technical efficiency to make decisions’, there is no evidence that,before 1914, the company adopted the use of standard costs or direct costs.18 Evenin companies in the US chemicals sector where the adoption of elements ofscientific management had been attempted, progress was far from smooth. At theArlington Celluloid Company, for example, c.1913, J.E. Crane19 has indicated that:

Efficiency experts had been engaged to systematise and improveoperations at the Arlington plant, but the number of clerks employedincreased to the point where it seemed as if there was somebody makingstudies for almost every worker! Conditions became so unsatisfactory andcostly that the pendulum swung too far the other way. The whole systemwas thrown out and with it all paperwork except stock lists, so that noteven cost records were maintained. The management lacked data for themost efficient conduct of the business.20

The views of Levenstein and Crane suggest that management and accountingtechniques in US chemical firms may not have been as advanced as Chandler haspreviously suggested on the eve of World War One, whereas Wilkins hassuggested that there was a much greater influence of foreign, including British,MNEs. Wilkins has further suggested that such firms, including A&W amongtheir number, had a marked impact upon the US chemical industry. In contrast,Chandler tends to damn A&W with faint praise. While considering A&W tohave been the most successful of the family firms engaged in the British

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chemical industry in the late nineteenth and early twentieth centuries, havingmade a major investment in a new electrolytic production process before the turnof the century and setting up production plants in America and Canada, Chandlerconcluded that:

Abroad it left the management of its integrated American enterprise whollyto American managers, who helped to finance the subsidiary; but at homethe company continued to be personally managed by its owners. The homecompany’s cost-accounting procedures, still used during World War I someyears after Du Pont had adopted the most advanced costing methods,exemplify the workings of its personal management. … Still, the ownersdid add a manager or two. ... [but] ... the senior managers remained theWilsons, Albrights, and Threlfalls, whose families still held 40% of thevoting shares of the company in 1951.21

For Chandler, significant managerial and accounting developments at A&W hadto wait until after World War Two, following the example provided by thedevelopment of ICI.

There is, however, a fundamental problem with Chandler’s analysis of A&W,namely that it relies purely on the evidence presented in a single secondarysource, a biography of the company written in 1951 by R.E. Threlfall. Threlfall,whose father, Richard, had become associated with A&W as Director ofResearch in 1899 and joined the board of the company two years later,22 washimself associated with A&W. He was therefore in a good position to know whathad occurred within the company but, in relation to his comments on theaccounting system, a detailed examination of his published text shows a numberof inconsistent statements, and a comparison of the text with the company’srecords, where this is possible,23 reveals some factual inaccuracies. Indeed, fromThrelfall’s book, it is impossible to trace accurately developments in thecompany’s accounting and costing systems, or assess the manner in which A&Wcontrolled its overseas subsidiaries. Thus, while Chandler states that A&W’scosting system reflected the company’s personal management, nowhere doesChandler explain what he means by this, neither does he proffer any evidenceregarding the nature of the company’s costing system. In order to advance apicture of backwardness, however, Chandler stresses K.H. Wilson’s laterassertion that J.W. Wilson frowned upon the use by Richard Threlfall of a sliderule rather than carrying out long-hand calculations.24

In order to assess Chandler’s claims in respect of management control at thecompany’s subsidiaries, we have utilised the archival records of A&W depositedat the Birmingham Central Library, which contain not only papers relating toA&W, but also to its overseas subsidiaries in both the US and Canada. It will beshown in the following sections that Chandler, through his reliance on Threlfall,has totally misread the basis of the organisational and management controlstructure of A&W and the role played therein by accounting information. It willbe shown that this relatively small, personally controlled British MNE put in

BUSINESS HISTORY28

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place an accounting information system which enabled it to regularly monitor itsoverseas subsidiaries and effected significant advances in decision-makingprocedures prior to, or simultaneously with, such developments in the US. In thenext section we examine the development of A&W and its main subsidiaries andconsider the company’s claim to be considered as an MNE.

III

Arthur Albright (1811–1900) was born at Charlbury, Oxfordshire, to a Quakerfamily and was later apprenticed to an uncle in Bristol who was a chemist.25 In1841 his family connections secured him a junior partnership with theBirmingham firm of manufacturing chemists, John and Edmund Sturge. In 1844Albright persuaded Edmund Sturge to manufacture phosphorous by Scheele’smethod (using bone ash) in order to meet the growing demand from the matchmaking industry. The partnership thus began to manufacture white phosphorouson a commercial scale.26 In 1849, Albright purchased the patent for the stable andnon-poisonous amorphous, or red, form of phosphorous (derived from the whiteform), and set about devising an industrial process for its manufacture. In 1851Albright purchased two acres of land at Oldbury, Birmingham and commencedproduction of amorphous phosphorous, but it was only after 1855, when theSwedish brothers Lundström invented their safety match, that amorphousphosphorous found a large-tonnage market.27

In 1855 the partnership was dissolved, the Sturges retaining the business offine chemicals while Arthur Albright took over the phosphorous and chlorate ofpotash works. Albright then traded for a year under his own name before forminga new partnership with a fellow Quaker, J.E. Wilson, in 1856.28 Just prior to itsconversion to a limited liability company in 1892, the partnership comprised fourpartners: W.A. Albright, who acted as engineer and works manager at Oldbury;G.S. Albright and J.W. Wilson, both trained chemists who also played a role onthe accounting side of the business; and G.E. Wilson, whose métier was ‘in thecommercial and sales side of the business’.29 The new company, known asAlbright & Wilson Ltd, was registered on 15 July 1892 with a nominal capital of£400,000. From the time Albright took Wilson into partnership, through to 1914,the firm was a monopoly producer of phosphorous in Britain, and grew steadilybut not spectacularly (see Table 1). During this period, the only outlets forphosphorous were in match manufacture and for making marine flares and, in1908, despite considerable expansion of A&W’s capacity, 75 per cent of itsphosphorous output went to the match industry.30

Before World War One, A&W had begun to diversify into both the inorganicand organic fields, for example, cyanide and carbon tetrachloride production, butnot on any substantial scale. After the war the firm developed its interest ininorganic phosphates, which were used in a wide range of products including themanufacture of rust-proofing agents, catalysts, activated carbon, dentifrices,metal-cleaning agents, and in the pharmaceutical, dyeing, textile-processing,

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paper, oil, and tanning industries.31 A&W became particularly interested in thatbranch of inorganic phosphates used in the foodstuffs industry. In addition,phosphorous chlorides, used in the manufacture of plasticising agents forplastics, were first produced industrially in Britain by A&W in 1923, althoughthe company had produced them in small quantities considerably earlier.32

Technically, at least, the company was by no means backward, either before orafter World War One.

The Oldbury Electro-Chemical Company (OECo), primarily established tomanufacture white phosphorous, was incorporated in 1896 in New York, with aninitial capitalisation of $20,000. The company had three shareholders: W.A.Albright – 600 shares; J.J. Riker – 195 shares; and E. Floyd-Jones – five shares.J.J. Riker was the head of J.L. & D.S. Riker of New York, the agency throughwhich A&W had been selling phosphorous in the US for ‘some decades’,33 andthe firm which was to act as the sales agents for the newly formed OECo. TheA&W main board minutes note that the three shareholders were also to be thefirst directors of OECo and provide an explanation of the nature of theshareholdings. The holdings of Riker and Floyd-Jones reflected the fact that itwas ‘necessary under US law that at least two [shareholders] should be residentsin the state of N.Y. It was felt desirable however that A&W should berepresented by a majority on the board whether by nominee or otherwise andshould have first refusal of Riker’s share in case of transfer by death or othercause’.34 While A&W was complying with US law, the intention from the outsetwas clearly that A&W, through its nominee, W.A. Albright, would hold themajority of shares in OECo and thereby have control of the company’soperations, something that does not seem to have been compromised whensuccessive increases in the company’s share capital were effected during the

BUSINESS HISTORY30

TABLE 1SIZE OF A&W’S OPERATIONS, OLDBURY, BIRMINGHAM, 1851–1920 1

Production ofWhite Phosphorous Employment

(tons)

1851 541881 4461894 4001896–7 (av.) c.7501902 c.4401903–8 (av.) 6312

1910 c.5501914–18 (av.) 9001920 (Nov.) 300

Note 1. Systematic data on A&W’s size are difficult to come by. The figures presented in Table 1 aredrawn from manuscript sources and from R.E. Threlfall, One Hundred Years of PhosphorousMining (Oldbury, 1951), passim.2. By this stage, the production of the company’s two plants in North America, totalling anaverage of 574 tons p.a., had almost reached the levels at Birmingham.

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early twentieth century.35 Riker eventually resigned from the board of OECo in1923, at the same time as the firm of J.L. & D.S. Riker was dissolved. JosephTurner, who had been an employee of the Rikers, succeeded to the agencies andcontinued to act in this capacity until his death in 1935. At that point, theseparation of manufacturing and sales was ended, OECo establishing its ownsales department.

In 1893, William Taylor Gibbs, a British-born chemist who had moved toBuckingham, Canada to work for a London-based phosphate mining company,with financial help from S.P. Franchot, a former US citizen who had previouslyoperated a phosphate mine, began experimenting on the electrolytic productionof potassium chlorate.36 With additional capital subscribed by A. Maclaren, a sawmill and pulp mill owner, who also owned the water power rights in the Lièvrevalley, a plant using hydroelectric power was built at Masson, just belowBuckingham, on the Lièvre river. A&W were both interested and aware of thesedevelopments, with W.A. Albright visiting Maclaren’s water power facilities onthe Lièvre in June 1893 following a visit the preceding month to Niagara Falls.Reports were produced on both the Gibbs-Franchot electrolytic chlorate processand on hydro-electric power costs.37

The Gibbs–Franchot plant only operated successfully for a year before thefurnace burnt out.38 Following the fire, and with Maclaren being unwilling toinvest more capital, no further development took place at Buckingham for twoyears. In 1896, together with Walter A. Williams, a former timber importer ofCardiff, now resident in Buckingham, Gibbs set about re-establishingphosphorous production at Buckingham. With the need for further capital soonarising, Gibbs approached friends in the Anglo-Continental Gold Syndicate. Itwas determined to form a new British registered company, the ElectricReduction Company Limited (ERCo), with its head office in London, makingERCo an example of a free-standing company.39 ERCo was incorporated inNovember 1897 with an authorised capital of £40,000, 51 per cent of the sharesbeing held by the Anglo-Continental Gold Syndicate.

In 1900 A&W filed a law suit against ERCo for infringement of its Canadianpatents and, following negotiations relating thereto with the company’s Londonshareholders, A&W acquired a controlling interest in ERCo in 1902.Arrangements were made to distribute ERCo’s share capital on the basis of 60per cent to A&W and 40 per cent to the Canadian directors, Williams and Gibbs.The company’s registered office was subsequently moved to Oldbury,Birmingham, and the company’s activities were largely fused into the A&Worganisation.40 ERCo’s books were to be kept at the Oldbury headquarters ofA&W in Birmingham, and G.E. Wilson and J.E.H. Lloyd both became directorsof ERCo. From this time, the ‘direction of [the] works and sales’ were conductedfrom Birmingham, though local management remained in the hands of Gibbs andWilliams.41 Following the death of Gibbs in 1910, A&W took over his shares andF.A. Lidbury, works manager of OECo at Niagara, was appointed in 1911 to thevacant directorship of ERCo.

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In 1914 Williams resigned as managing director and his shares were alsotransferred to A&W, giving the company sole ownership of ERCo, whichbecame a wholly owned subsidiary of A&W. Monitoring of operations in Canadawas then moved, in part, from Birmingham to Niagara, where Lidbury becamethe conduit for information which had originally flowed direct from Buckinghamto Oldbury, Birmingham (see Figure 1).

BUSINESS HISTORY32

FIGURE 1STYLISED FLOW OF MONTHLY/QUARTERLY ACCOUNTING INFORMATION RELATING

TO COST, YIELD AND MAKE FROM A&W’S NORTH AMERICAN SUBSIDIARIES

Albright & Wilson

Oldbury, Birmingham

Electric Reduction Co.

Buckingham, Quebec

Manufacturer of white phosphorous

Sales and management directed from Oldbury

between 1902–14

manufacturing accounts

(1902–14)

management directed

from OECo 1914–44

manufacturing accounts

(1914–44)

(bulk of main product

shipped to A&W)

Oldbury Electro-chemical Co.

Niagara Manufacturer of white phosphorous(sales in US through Riker’s)

OECo.manufacturing accounts

PCCo. manufacturing accounts

ERCo. manufacturing accounts

(post-1914)

Phosphorous

Compounds Co. NiagaraManufacturer of

compounds from white phosphorous

Sales and management directed from OECo.

PCCo manufacturing accounts

JL & DS Riker

New York

Sales agency

OECo consolidated

sales and manufacturing

accounts

ERCo office

A&W directors on ERCo board

A&W directors

responsible for

US business

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The Phosphorous Compounds Company (PCCo)42 was incorporated in theearly years of the twentieth century43 for the purpose of manufacturingcompounds of phosphorous, initially producing phosphoric acid andhypophosphite for pharmaceutical purposes. PCCo contracted to buy itsphosphorous from OECo and was located in a separate building on the same siteat Niagara. As with OECo, the company had three shareholders: G.S. Albrightrepresenting A&W, J.J. Riker representing OECo and E. Mallinckrodt, Sr., of thenew company’s sales agents, the Mallinckrodt Chemical Works, St. Louis.Though there is no detail of the exact nature of the size of the individualshareholdings, in 1927 A&W acquired complete control, suggesting that, as atOECo and ERCo, it had always been the majority shareholder. Management wasdirected from OECo, and quarterly reports on PCCo’s operations were sent toOldbury, Birmingham, along with those for OECo.44 There is also evidence thatA&W had control of the appointment of staff at PCCo.

Varying definitions of the MNE have been put forward in the last 30 years,though they all concur on the centrality of control of the overseas operations.According to Wilkins, ‘multinational enterprise signifies investment that carriescontrol, not investment only for financial return where operations of the businessare left exclusively to others’.45 Hertner and Jones have noted that ‘there is stillno generally accepted definition of the MNE’ and have offered suggestions thatinclude ‘an enterprise that controls and manages production establishments in atleast two countries’.46 The recent working definition offered by Dunningsuggests that ‘a multinational or transnational enterprise is an enterprise thatengages in foreign direct investment and owns or controls value-adding activitiesin more than one country’.47

From the late nineteenth century, A&W clearly satisfies the ownershipcriteria for an MNE, since it owned productive operations in three countries. Itheld a majority shareholding in OECo from 1896, in ERCo from 1902 and PCCofrom 1903 (finally acquiring complete control in 1927). But how does A&W farein relation to the issue of control? Chandler clearly has his doubts, suggestingthat control of the North American subsidiaries was left to the US sales agents.This suggestion is consistent with the more general view that European MNEs,in certain vital respects, grew, organised and behaved in different ways fromthose of American MNEs.48 More specifically, in the case of Britishmultinationals, Jones has argued that, prior to World War Two, management:

was characterised by a lack of systematic control by the parent company,and, often, a high degree of operational autonomy by the foreignsubsidiary. Until the 1930s many British companies paid only spasmodicattention to their foreign subsidiaries, and coherent overseas businessstrategies were rare. As the parent company was also the main operatingcompany, the affairs of overseas subsidiaries rarely had a high place onboard agendas … the usual form of parent control … came when a directoror official from Britain was despatched on an investigation or specialmission. … This system had a high capacity for disruptive and inconsistent

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management, even if it did offer peripatetic directors an escape route fromBritish winters.49

If this analysis provides a true representation of how British companies engagedin foreign direct investment, then they would clearly fall outside the generallyaccepted definitions of an MNE, which stress the importance of control. In thefollowing section we present archival evidence which indicates that A&W was atrue MNE since, through a system of management and accounting controlsinstigated and executed by both staff and directors of the British parent company,the company exercised systematic control of its north American subsidiaries.

IV

For Chandler, the development of advanced organisational structures andmethods of control is connected with both strategy and size. As businessesbecame larger, especially as a result of strategies of overseas expansion, newstructures and administrative methods of control were developed. A&W, whiledeveloping a strategy of overseas production and, it will be argued below, anadvanced system of accounting control, was not, by international, or evendomestic, standards, a large company (see Table 1).50 Despite this, the archivalevidence indicates that the company’s top-level management developedsystematic managerial control of its overseas operations, in which accountingplayed a major part. In the remainder of this section we focus on the accountingdevelopments at A&W during the period studied and the way in which A&Wutilised accounting information to control its main North American subsidiaries.The last quarter of the nineteenth century and the first quarter of the twentiethcentury witnessed significant developments in costing in both Britain and theUS. Although the main concern was initially with determining ‘actual’ cost, itwas during this period that doubts over the relevance of this concept began toemerge.51 Differences of opinion arose as to whether such items as interest oncapital, plant obsolescence, and so on, ought to be included in cost, and the issueof overhead cost allocation was perceived to raise many problems. Two mainavenues of accounting innovation were explored: one attempted to develop morerefined methods for allocating overheads, while the other focused on ways ofseparating out and quantifying the effect of some or all of the factors (todaytermed ‘cost drivers’) which generated significant changes in cost.

Discontent with methods of determining ‘actual’ cost found its first majorexpression in the best-known British cost accounting text of the period, Garckeand Fells’ Factory Accounts, first published in 1887. In this work, which was inits seventh edition by 1922, Garcke and Fells asserted ‘the futility of allocating“fixed” overheads’ to produce figures for total product cost and thus, inSolomons’ opinion, ‘must be counted among the founders of the “marginal cost”school of thought’.52 In economics, in Britain at least, the most importantadvocate of the marginal approach, and hence of the marginalist revolution, wasAlfred Marshall. In discussing Marshall’s division of costs into variable (prime)

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and fixed (supplementary) costs, first introduced in the 1890s, Napier concludesthat ‘it is difficult to tell how far Marshall … was simply reflecting hisobservations of industrial operations and how far he was influenced by [Garckeand Fells’] Factory Accounts’.53 The theoretical development of marginal (ordirect) costing, however, still lay somewhere in the future, the first major articleoutlining the concept not appearing in the US until 1936.54 Prior to this, in 1923,the American economist, J.M. Clark, published his work, Studies in theEconomics of Overhead Costs, in which he famously pointed out that there wasno single definition of cost, rather that there were ‘different costs for differentpurposes’.55 Examining nine typical problems a businessman might face, rangingfrom the decision to build a new plant, determining its size, or pricing theproduct through to the choice as to whether or not to abandon production, Clarkconcluded that ‘no one formula for cost will fit all the cases’.56 Rather, heconcluded, the concern should be with ‘alternative costs’ or ‘differential costs’:‘when one is making a decision of a financial sort, one needs to know the costsincurred as a result of making this particular decision; meaning costs whichwould not have been incurred otherwise’.57

As well as pointing in the direction of marginal costing, Garcke and Fells alsosuggested the possibility of establishing norms or ‘standards’ with which ‘actual’costs may be compared, something that found an echo in Norton’s text of 1889,58

where he considered it appropriate to compare costs with the ‘trade’ or ‘country’prices charged by outside specialists. During the first three decades of thetwentieth century, the use of standards was developed more fully, particularly inthe US, and the technique of standard costing was born, largely through the workof Harrington Emerson and Charter Harrison.59 In Britain, an early advocate ofstandard costs was the chartered accountant H.S. Garry who, in a paper deliveredbefore the Society of Chemical Industry in November 1902,60 discussed the ideaof comparing actual and standard costs.

It is clear, therefore, that there were changes afoot in the costing literatureduring the period in which A&W was becoming an MNE. While the practicalapplication of both marginal and standard cost concepts can be found prior to thisperiod, both in Britain and the US,61 it was during the early twentieth century thatthe ideas gained a strong foothold in the costing literature. To what extent,though, did A&W utilise best practice methods?

Prior to A&W becoming a limited company in July 1892, monitoring ofproduction was carried out through a mixture of weekly production statistics,indicating output, yields, and so on for various processes and products,62 whileannual costs were calculated at the end of each financial year by G.S. Albright.63

Evidence from 1892 also indicates that, in relation to chlorate production, dataon process wage costs, and the wage costs of repairs was collected weekly.64

However, it was following the appointment as manager of George Gatheral, inAugust 1892, that quarterly cost accounts came to be prepared and utilised tohelp management monitor performance. The quarterly cost figures provided abreakdown of the total cost into a number of key categories: phosphate, the main

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raw material; other raw materials (as a combined figure); bleaching; energy;wages; general works expenses; repairs; expenses (e.g. direct charges, insurance,interest, taxes and rent); packages; sundries; royalty; and establishmentcharges.65 Except for the omission of any charge for deprecation, the figuresproduced would appear to represent an attempt to determine ‘actual’ total cost.In this sense, then, A&W would appear to have been no different from manyother firms operating in the late nineteenth century.66

Part of the new management system involved the presentation of regular,detailed reports to the board analysing differences between successiveaccounts.67 A&W was, therefore, already in the habit of using comparativequarterly and annual unit costs for monitoring its domestic plants and processeswhen it began to expand overseas. When operations were established at Niagaraand Buckingham, similar systems were introduced at the outset to monitor theirperformance. The precise system of control, however, was not the same for all ofA&W’s overseas operations. As Figure 1 shows, the lines of control in respect ofboth ERCo and PCCo were more direct than they were in the case of OECo. Wenext examine the nature of the control relationship between OECo and A&W andshow that, contrary to Chandler’s view, A&W did effectively control OECo, viathe aid of its accounting information system.

At OECo, managerial responsibility was clearly split into two. From theircommencement in 1897, production operations at Niagara were under the controlof the works manager, H.A. Irvine, who had been sent over from the Oldburyworks in Birmingham,68 where he would clearly have been conversant with theaccounting control system in place there. Correspondence between Birminghamand America around this time reveals important evidence as to the variousresponsibilities of Irvine and J.J. Riker, and the methods of control utilised byA&W. Thus a minute from the Birmingham weekly managing directors’ meetingheld on 25 January 1897 notes that:

[Riker’s] remarks as to his and Irvine’s responsibilities in the undertakingwere noted, and while agreeing that the main control of commercial andsecretarial management should rest in his hands it was not wished thearrangement should be allowed to unduly restrict Irvine’s authority in anyway. JWW[ilson] is to write Riker expressly on this point.69

Other evidence clearly indicates that Riker was to be responsible for keepingthe financial accounts and compiling the periodic statements though, in the earlystages, it is clear that his proficiency in this respect was somewhat lacking. On 3November 1898, for example, it was recorded that Riker ‘is to be again asked fora more lucid statement of P&L account on the year’s running’.70 Six days later,on 9 November 1898, a letter from J.W. Wilson in Birmingham contained acriticism of the form of the balance sheet supplied by Riker, particular mentionbeing made of the confusion over the allocation of expenditure between thecapital account and the operating or working account, and the absence of anydetailed profit and loss account ‘such as we are accustomed to make up here’.71

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A number of other letters at this time also make reference to discrepancies inOECo’s accounts and, in the process of ironing out these inconsistencies, oneletter to Irvine at Niagara in January 1899 warned: ‘You must bear in mind thatMr Riker’s office is a purely commercial one and has no familiarity withmanufacturing details. It is therefore important that all manufacturing figuressent to them should be stated in such a way that they can be clearly understoodby those who have no special technical knowledge.’72

Whether due to the failings of the Riker organisation, or because it had beenthe intended policy from the outset, the works manager at Niagara becameresponsible not only for keeping the manufacturing records and relaying weeklyreports back to Birmingham, but likewise details of costs. It was not the case,however, that A&W received such information from Niagara and merely filed itaway. Indeed, given its experience in utilising cost information relating to itsUK-based operations, it is not surprising to find A&W’s managing directorscarefully scrutinising the manufacturing and cost reports from Niagara and, inthe light of the figures, issuing instructions to the works manager there. Indeed,as the correspondence noted below makes clear, A&W’s directors had beenresponsible for determining the form in which returns should be made and inestablishing the standard against which Irvine, as works manager at Niagara,would be judged.

Initial results from Niagara did not prove as good as had been hoped. At theA&W board meeting held on 24 February 1898 it was noted that ‘a statement ofcost up to December 31st last had been received, the result per lb. being nearly25 cents against 20 cents estimated, which was explained and discussed’.73 Threemonths later, however, it was recorded that ‘GSA[lbright]’s reports [on theNiagara works] were very satisfactory, and he stated that under favourableconditions he looked forward to 16.8 cents or less as a manufacturing cost beforelong’.74 The figure of 16.83 cents75 then came to form the standard against whichthe performance of the works manager at Niagara was judged: ‘OECo phos. – astatement of costs on the 72,385 lb made during the 3 months ending June 30 wasreported showing 17.03 cents against 16.83 cents GSA’s standard per lb. Theenergy [cost of] 3.492 cents appears too high and has been written about.’76

Further evidence that A&W exercised direct management control over OECo isindicated by the fact that, in 1898, it was directors at Oldbury who consideredestimates for the production of chlorate at Niagara and who, three months later,informed Riker that they were in favour of proceeding with such manufacture.

Various letters written in 1899 detail that weekly manufacturing reports anda quarterly cost analysis were being sent from OECo to Oldbury.77 Twosubsequent letters to Irvine suggest that the form of these reports did not remainset in tablets of stone but were modified over time in consultation with A&W.78

In 1902, for example, poor results on the chlorate side of OECo’s operationswere viewed by the board with dissatisfaction. Their response was that‘GEW[ilson] is to continue pressing Irvine with a view to improvement, and inthis connection he and GG [George Gatheral] are to try and devise a morecomplete system of process reports from Niagara’.79

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Irvine continued to remain the major conduit for the submission of regularweekly reports to Birmingham from OECo and, from 1903, of PCCo, until hisresignation in 1905. He was replaced by the British chemist, F.A. Lidbury, whohad originally arrived in Niagara in 1903 as chief chemist of OECo.80 When, in1914, he was given responsibility for overseeing ERCo’s operations atBuckingham, following the resignation of Williams, Lidbury became responsiblefor all of A&W’s North American plants. The monitoring system set up atNiagara while Irvine was works manager continued to operate under Lidbury,being applied both to OECo and PCCo and, from 1914, to ERCo.

Copies of the weekly reports for A&W’s Oldbury works, for the OECo andPCCo plants at Niagara, and for the ERCo plant at Buckingham, were scrutinisedat the weekly meetings of A&W’s committee of management.81 The reports,containing information on output, yield and wage costs, together with stock andtransfer information, were also examined by the main A&W board at its monthlymeetings. Both the committee of management and the board also consideredquarterly and annual cost figures, the minutes of the two sets of meetingsrevealing that they were discussed in detail and that actions were taken in thelight of the details revealed. Thus weekly manufacturing information, togetherwith quarterly and annual cost information for each of A&W’s overseassubsidiaries, was being regularly sent to Birmingham and subjected to scrutinyby A&W’s senior management. The function of the firm of J.L. & D.S. Rikerwithin this monitoring system was somewhat peripheral, being concerned withthe preparation and submission to Birmingham of the financial accounts. Thedetailed management accounts and reports were sent direct from the variousworks to the A&W board, with only condensed versions of the manufacturingexpenses at OECo being sent to the Rikers so it could complete that company’sfinancial accounts. Thus the contention of Chandler that A&W left themanagement of its integrated American enterprise wholly to American managersis clearly false.

From the arguments presented in the various memos which accompanied thecost reports, it is clear that A&W’s management was aware that, in differentcircumstances, some component parts of the total cost figures were irrelevant fordecision-making purposes. Thus, in 1897, when comparing the figures for theold, gas-fired retort method of manufacturing phosphorous with those for theelectrolytic process, it was noted that ‘the final result 10.623 [d./lb. for theelectrolytic process] compares with 10.114 by the old process but as economicalprocesses we must deduct royalty which makes the electric 9.623 compared with10.114’.82 Thus, although a royalty payment had to be made, the managementunderstood that it was not relevant in any comparison of the relative efficienciesof the two processes.

Other evidence that A&W’s management understood from an early date theconcept of different costs for different purposes, not elaborated by Clark until1923 but certainly used by some companies before that date, is available in thecompany’s archives. In attempting to make a judgement between two alternative

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methods of improving steam raising in 1893, Gatheral provided a statement, forboth plans, of the respective estimated outlay and estimated annual cost saving.From the latter, he then deducted interest and depreciation at the rate of 15 percent on the relevant capital outlay, in order to determine a figure for the‘estimated nett annual saving’.83 This approach clearly fits with Clark’s viewthat, when considering the purchase of new equipment to replace existingmachinery, ‘it is clear that the new process must save enough in operatingexpenses to cover depreciation and interest on the extra investment involved’.84

In considering alternative partial implementations of the two plans, Gatheral notonly provided a calculation for the net annual saving, but also expressed it as apercentage return on the outlay.

In 1905, A&W’s management was concerned with determining the bestpossible location for phosphorous production. In a report on the subject ofelectric distillation, specific reference was made to the problems the companyfaced in generating electric power at Oldbury, it being noted that ‘our future atOldbury depends on our power cost – and this depends entirely on the engines’.85

Having decided to erect its own power plant due to the very high cost ofpurchased electricity, when establishing its new, larger electrolytic plant in theearly 1900s, the company used Mond gas producers. The ‘worst’ estimate wasthat the unit cost of electricity would be 0.1419d per unit; in 1904 the actual costhad been 0.261d per unit. Causes of this ‘serious’ estimating error wereexamined, and the report then went on to examine four alternative futurepolicies. These, however, not only involved a comparison of estimatedproduction costs, but also issues such as the logistics of concentrating productionof phosphorous in other locations if the Oldbury plant should be closed, and thefact that the technology in relation to engines for electrical power generation wasstill somewhat unproven. The memo ended with the following point: ‘Thealternative to really grappling with the entire question as soon as the reliabilityof the large German engine is established is not to potter at putting in one smallCrossley [engine] of a new type, but prepare for a move to Buckingham,Q.[uebec] Canada.’86

We have already noted that A&W used standards to monitor the performanceof the Niagara operations virtually from the outset, but this was not the only usemade of them. Indeed, A&W’s archives abound with other instances of the useof standards, whether determined by ex ante expectations or estimates, orestablished in the light of actual experience of plant operation.87 For example,having determined to erect a new electrolytic plant for producing phosphorous atOldbury just before the turn of the century, A&W’s management decided to erecttheir own electricity generating station to provide the necessary power. Ininitially deciding to put in gas engines for this purpose, A&W’s managementclearly established estimates of the expected unit cost of electricity and, as thereport just referred to indicates, monitored actual cost against the estimated cost. As already noted, A&W’s management had revealed an understanding of Clark’srule of different costs for different purposes at least as early as 1893. In the early

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1920s there is evidence that the company had pushed this concept furtherforward, undertaking an analysis which clearly reflects an approach close todirect costing.

In the aftermath of World War One, excess capacity existed in thephosphorous market and there was a large stockpile of manufacturedphosphorous. A&W was immediately faced with the problem of how muchphosphorous to produce, and of deciding in which plant or plants it should beproduced. An important role in taking this decision seems to have been playedby C.D. Sykes, who, having been his assistant for 11 years, replaced Gatheral asworks manager on the latter’s retirement in 1912.88 Sykes had played asignificant role in developing A&W’s costing system during and after World WarOne, and assisted the A&W board in assembling relevant information withwhich to analyse the post-war problems.

Correspondence between Birmingham and North America reveals that anumber of individuals within the company’s top management were coming torealise the significance of direct cost information for the purpose of making keydecisions. Thus, in January 1921, in a letter to Lidbury, J.W. Wilson indicatedthat the Oldbury works at Birmingham had been idle since Christmas and waslikely to remain so for several months. He further noted that ‘the raw materialhaving been bought … and overhead charges running, a substantial part of thecost is the same whether conversion into the selling article takes place now or inthree to six months’ time’.89 One purpose of Wilson’s letter was to get Lidburyto arrange with Hambly90 for the output at Buckingham, which at that time wassupplying all of A&W’s white phosphorous, to be reduced to the lowest figurecompatible with economic working and the maintenance of a nucleus of skilledlabour, which was duly done.91

Continuing problems forced A&W’s management to examine the situationfurther in September 1921, when more details of the thinking behind the methodsused to inform decision-making are revealed. Thus, on 17 September 1921,Lidbury wrote to J.J. Riker regarding the operations of OECo at Niagara:

You will recollect that when I saw you [last] ... we came to the conclusionthat the present formal cost figures were, for several reasons, entirelyvalueless as a guide on which to base any conclusions for future policy.You expressed your intention at the time to ... get out some cost figures insuch form as would show you as clearly and definitely as possible wherewe stood in regard to costs and to fixed charges. The object was to be todetermine, under present conditions, how we could reduce any losseswhich we might incur to a minimum.

On thinking the matter over ... it seemed to me that it would beimpossible for Poeller [the accountant] to make the necessarysegregation of the costs, since he is naturally not aware which items areaffected, and which are not, by output, and to what extent; neither wouldhe be in a position to estimate the amount of standby charges, at any rate

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in some items, which would be involved if we closed down the plant. … it seemed to me on the whole advisable to get this information … and

prepare for you ... a sort of digest of the situation. This I have done andenclose it herewith … I have not tried so much to evaluate the absoluteamount of fixed and overhead charges as to preserve a fair balance,relatively, between charges which we will incur in any event and thosewhich we will incur only if running.92

The key, for Lidbury, therefore, was not the distinction between fixed andvariable costs, but between marginal and sunk costs. The nature of thissegregation had been spelt out in a document prepared some three weeks earlier,entitled ‘Segregation of Current OEC Costs’.93 Its purpose was stated to be anattempt to answer the following questions:

(a) what charges would be incurred if OECo shut down? (b) what charges, other than those directly distributable to the severalproducts without arbitrary assumptions, would be incurred if OECocontinued to operate?; and(c) eliminating elements of cost included in (b), what would be the costs ofthe articles manufactured, and how would these vary with the make?

Calculations revealed that:

it would pay us to run (i.e. we would actually lose less by running) if wecould only use approximately 1000H[orse ]P[ower] profitably, and byprofitably in this connection is meant to make goods to be sold at anyprices greater than those corresponding to the direct costs. …

[ Table 1 [summary of direct costs](figures in dollars) if running if not runningPower 53,620 less amt. Used 53,620Wages 14,000 5,500Expenses 32,516 31,216Establishment charges 23,300 14,000

123,436 104,336

less HP used x $20 ]

From table 1 we can draw the conclusion that to shut down would cost usabout $100,000 yearly; whereas the amount of fixed charges to be borne bythe costs on a running basis would be about $120,000 yearly less theamount of power used – i.e. $100,000 yearly if we were consuming1000HP, $80,000 if we were consuming 2000HP and about $70,000 yearlyif we were using all our firm … One very interesting feature of the matteris the light which the figures shed on the question as to whether we shouldoperate in amorphous and perchlorate. Whether we do so or not affects the

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fixed charges little or not at all; and therefore if prices higher than thoseshown to correspond to the direct costs can be obtained, it would pay us,as a matter of pure calculation, to run.94

The recognition, by Lidbury, of the relevance of direct (marginal) costs to thedecision of whether to produce or not is clear. Furthermore, the earliercorrespondence between members of the A&W board and Sykes would appearto suggest that the ideas expressed in Lidbury’s letter and accompanyingexplanatory memorandum formed part of a conceptual development whichspanned the Atlantic, rather than simply originating on one side and then beingdisseminated to the other.

The foregoing analysis has shown that the management of A&W, a relativelysmall British MNE, had, by 1914, imposed on its US and Canadian subsidiariesa system of control based on accounting information. The reporting systemdeveloped by the company enabled A&W’s directors in Birmingham to exertcontrol through the collection and interpretation of accounting numbers andcomparison of performance against standards. Indeed, the archival evidenceindicates a concern not only with financial planning, but particularly co-ordination, measurement, accountability and control. While it is fullyacknowledged that such powers were also exercised at a local level at Niagaraand Buckingham, this was largely carried out by British staff, some of whomreceived an initial training in Birmingham, and were appointed by A&W.Ultimately it was A&W who held the reins and exercised control, not A&W’sAmerican agents, J.L. and D.S. Riker, as suggested by Chandler. Furthermore,A&W did not rely on the loose form of social control which Jones has suggestedwas favoured by British MNEs,95 and, indeed, the A&W case lends support toWilkins’ argument for the utilisation of advanced European business practice inthe American chemical industry before World War One.

The basis of the control of A&W’s overseas operations was regular weeklymanufacturing reports and quarterly and annual cost reports. There is clearly anissue here as to whether or not scrutiny of such information formed a sufficientlyeffective method of control. Contemporary opinion in the British chemicalindustry clearly thought it was. Garry, in 1902, recommended the use ofquarterly costing where costs were subject to fluctuations,96 while 25 years laterPulford noted that:

The costing periods referred to should not be too short, particularly in thechemical industry. Weekly costs, generally speaking, would fluctuate toomuch to be of much interest; even monthly costs are not too reliable, but arun of two or three months should give us a fairly stable basis, both foryields and expenses, on which to build.97

While the chosen periodicity of costs reported at A&W were in line with bestpractice, as advocated in the contemporary theoretical literature, were theycapable of providing meaningful information for monitoring purposes? Again,judging by contemporary standards, the costing system utilised by A&W before

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World War One had many, if not all, of the attributes mentioned by Curtis (1921)in his paper praising the costing system introduced at government explosivesfactories during the war: A&W’s system enabled a comparison of the results ofdifferent works; it utilised the concept of a standard against which to monitorperformance; and cost information was compiled by the works manager who wasoften also the works chemist.98 It also seems likely that the managers of the NorthAmerican subsidiaries used the information they generated not only to monitorperformance but also to take remedial action prior to this information beingtransmitted back to head office.99

The evidence presented in this article of the use of accounting controlmechanisms by A&W suggests that the company was in control, rather thansimply monitoring events over which it really had no say. The management atA&W took a keen interest in the overseas subsidiaries, visiting them at thecommencement of operations and quite regularly thereafter, often for specificpurposes, such as overseeing the installation of new plant and processes, orimplementing changes in the cost and process records. In addition, themanagement at A&W set the subsidiaries’ performance and cost targets, and putin place trusted British managers who were accountable if the subsidiaries fellshort of the standards set. Further, there is evidence that the decisions to set upoverseas production operations were not taken lightly, and reflected a monitoringof new technologies and a priori assessments of relative costs and returns.100

V

For Chandler, personal capitalism in Britain represented a retrograde feature in adeveloping industrial economy since, in his assessment, family firms failed toinvest adequately in the three ‘prongs’ of production, marketing andmanagement. For Lazonick, Victorian Britain suffered entrepreneurial failurebecause managers merely optimised within given sets of constraints, rather thanattempting to remove them. The interpretation of specific events within any onecompany, particularly when it is a matter of assessing whether an action isdesigned to remove a constraint, or to merely operate within that constraint, islargely a matter of perspective and can be highly subjective. Nevertheless, it isour view that A&W’s archives reveal evidence not only of the adoption of a newmanagerial approach, but also of a management that acted to overcomeconstraints, and acted entrepreneurially.

The new managerial approach coincided with the move from the partnershipto a limited liability company in 1892. The growth of the business during eightyears of prosperity in the 1880s101 meant it was getting to a size that was beyondthe combined capacities of the four partners. W.A. Albright, who had acted asworks manager, had been assisted by a ‘working-man manager’ but, in order torelieve him of many of his works management functions, the new company’sboard, at its the second meeting in August 1892, appointed George Gatheral asworks manager at a salary of £1,000 per annum. This move has been describedas ‘the first step from the old set-up of employers and “hands” to the modern

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organisation’.102 As we have seen above, Gatheral played an important role inupgrading the role of accounting information as a management tool, and it washe who wrote many of the reports and memos in the 1890s which exhibited anunderstanding of the relevance of different costs for different purposes.

The second major area of organisational change within the business concernedresearch activity. During the partnership years, research had been conductedunder the auspices of G.S. Albright and G.E. Wilson, both themselves chemists,the former having achieved a double first in the Natural Sciences Tripos atCambridge. In 1899, to allow them to concentrate on other matters, RichardThrelfall, as noted earlier, was brought in to act as Director of Research. Aprofessor of physics at the University of New South Wales in Australia prior tojoining A&W,103 his appointment led to a number of achievements at Oldbury,where supposedly ‘the application of physical chemistry to commercial processeshad been virtually unknown’.104 Threlfall quickly turned his mind to many issuesconcerned with productive operations, and was responsible for developing

electrolytic methods of making chlorates, pure zinc and ammonium;modifications of the phosphorus furnaces; … tetrachloride and bisulphideof carbon; … [a] tunnel for the conversion of acid sodium orthophosphateto acid sodium pyrophosphate; improvements in the “wet” phosphorusprocess; the esters of silica; glycerophosphates.105

The appointment of key outsiders, one as works manager and the other as headof research, enabled the former partners to focus more on their executivefunctions. G.S. Albright, whose ‘speciality was the preparation (and criticism) ofreports, and of summaries of costs and efficiencies’106 began to focus on morestrategic issues: G.E. Wilson, who had ‘a hereditary capacity for figures’, wasresponsible for much of the partners’ private accountancy work until theappointment, in 1896, of J.E.H. Lloyd as company secretary,107 and thensubsequently became responsible for tabulating and co-ordinating the results ofthe various production operations of A&W and its subsidiaries.108 While controlof the business remained clearly in the hands of the Albright and Wilsonfamilies, despite the appointment of Threlfall to the board in 1901, managerialchanges are observable at A&W, and it is probably no coincidence that theseoccurred simultaneously with developments in the management informationsystem, in particular in respect of the use of accounting information.

While A&W experienced developments in its organisation of administrationand research in the late nineteenth and early twentieth centuries, to what extentwere organisational changes made in the production sphere? At the time of theconversion of the business to limited company status in 1892, the firm was in thethroes of developing new technology. Readman’s patent for producingphosphorous via the electrolytic process had been granted in 1888, but theprocess still required perfecting. After protracted negotiations, A&W secured,for £16,000, the rights to Readman’s patent, together with the works of thePhosphorous Company which had been set up to try to exploit the technique.After overcoming many problems with the original furnace design, A&W

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commenced the regular production of phosphorous using the electrolytic processin 1893 and by the end of the 1890s had abandoned the former method ofproducing phosphorous in clay retorts inside gas-fired furnaces.109 From that timeonwards, ‘phosphorous was to be cooked not by gas but by electricity’.110

The development of the new electrolytic process, however, was something ofa two-edged sword for A&W. While having secured the patent rights andundertaken the necessary additional work to make the technique viable as amanufacturing process, A&W found that the new process undermined one of thekey locational advantages which had led Arthur Albright to choose Oldbury forphosphorous production, namely cheap coal.111 Although other advantages, suchas a supply of vital ingredients from the neighbouring works of ChanceBrothers,112 remained, the fact that the new process required large amounts ofelectricity was to prove significant in determining the future location of thebusiness. The key to future low cost manufacture was to be low-pricedelectricity. With domestic electricity prices high, A&W quickly carried outinvestigations of cheap sources of power, rapidly focusing their attention onhydro-electric power, most notably in North America. An investigation of theAmerican/Canadian border area, especially Niagara Falls, was conducted by thecompany and, within three years of introducing the electrolytic process atOldbury, A&W had set up OECo to undertake the manufacture of phosphoroususing hydro-electric power at Niagara Falls.

The advent of the electrolytic process, and the existence of cheap sources ofhydro-electric power in other parts of the world, meant that the economics ofproducing phosphorous at Oldbury were becoming increasingly unfavourable.Recognising this, A&W not only established overseas subsidiaries using hydro-electric power, but also re-vamped their Oldbury operations in a continuousattempt to lower production costs. By the summer of 1900, A&W was well aheadwith plans to erect a much larger manufacturing unit at Oldbury and, sincepurchasable power was scarce and expensive, the plan included theestablishment of a power plant as well as furnaces.113 As usual, detailed costestimates were drawn up in advance of the investment being carried out but,while the estimates of the unit cost of generated electricity proved to be seriousunder-estimates, continued development of the electrical plant and continuousimprovements to the phosphorous manufacturing process enabled the economicproduction of phosphorous to continue at Oldbury until the early 1920s, when itwas eventually abandoned.

From a production point of view, therefore, it is clear that A&W invested innew methods during the period studied by this article. But how did they fare inrelation to Chandler’s third prong, marketing? Throughout the period prior to1914, A&W had a virtual monopoly of the British market and for much of theperiod was engaged in an international cartel with other key manufacturers, suchas the French firm Coignet et Cie. However, in the 1890s and early 1900s, as theminute books of A&W’s directors reveal, the company began to suffer increasedcompetition. In 1899 there are references to competition from Russia and Canada

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(i.e. ERCo), and it was noted that both Sweden and Romania were beginning tomake chlorate of potash. It was competition from the German manufacturerGriesheim, however, that most concerned the A&W board. In 1900 it was notedthat it was making amorphous phosphorous, and in 1901 that it was trying to sellit in England. While a meeting over prices with ‘our French allies’ was noted in1901, in the following year it was recorded that Griesheim was still cuttingprices, and that the quality of its amorphous phosphorous had improved. TheSwedish firm Jönköping, a major customer of A&W, threatened to produce itsown phosphorous in 1904 but, after a visit from J.E.H. Lloyd, the two companiessigned a five-year supply deal. From around 1906, increased competition wasbeing felt in the US, J.J. Riker reporting on the activities of the AmericanPhosphorous Company which, in 1907, began to seek information in Paris andHamburg regarding European prices. In 1913 and 1914, the development ofproduction activities by the Japan Electric Furnace Industrial Co. forced A&Wto reduce its prices in Japan.

While the threat to the company’s market in America was partly countered byestablishing OECo, in which A&W’s American sales agents held a minorityshareholding, the nature of its marketing operations did not undergo anysignificant change. A&W continued to rely, as it had always done, on theservices of overseas selling agents, there being no attempt to establish its ownsales operations. The activities of A&W’s overseas agents, however, weremonitored closely by J.W. Wilson.114 From the point of view of productdiversification, although A&W continued to rely heavily on phosphorous beforeWorld War One, new products were experimented with as part of the company’sresearch activities headed by Richard Threlfall, and some of these were producedon a small scale prior to the end of the period covered by this study. Most notablehere was the development during World War One of the production of foodphosphates.115

While there were clearly limits to the extent to which A&W invested incertain of Chandler’s three prongs of management, production and marketing, itis our contention that, between the early 1890s and the early 1920s, the companyhad taken major strides in key directions which are associated by Chandler withlarge, multidivisional businesses. A&W, however, was not large, and thoughmultinational in its operations, did not have a multidivisional structure, all of thecompany’s activities being centrally controlled by members of the Albright andWilson families from Oldbury. While A&W can therefore be seen to havedeveloped certain Chandlerian features normally associated with the modernbusiness enterprise, it retained many traditional features. To what extent, though,can A&W be seen as innovative?

According to Lazonick, ‘innovation can be defined as any new way ofproducing or designing a product that (in contrast to invention per se) the firmdeems it profitable to introduce’.116 From this perspective, A&W’s taking over ofReadman’s patents and introducing the electrolytic process was innovative, sinceit confronted and overcame the constraints to increased production created by the

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existing method which involved clay retorts being heated in gas fired furnaces.The need to successively fill the retorts, fire them and then extract the product,before they could be cleaned and re-filled, meant that manufacture hadpreviously been by batch production. The electrolytic process, however, allowedproduction to be continuous, the ingredients, mineral phosphate, silica andcarbon, being fed into the furnace and the phosphorous being condensed fromthe resulting gas given off.117

A&W’s investment in the new electrolytic process, since it overcame theconstraints of the old process, can clearly be seen as an example of Lazonick-type innovation.118 The constraints facing firms, however, can be of a number offorms: technological, organisational or market. While A&W was clearlyinnovative in relation to production techniques, how did it fare in relation toorganisational and market constraints? As we have already seen, through theformation of overseas subsidiaries, A&W faced a new set of organisationalproblems, which it was able to overcome through the development of a reportingand control system, based on accounting records. In regard to markets, ratherthan overcoming them, it was more a case of A&W having to react to changingcircumstances. Having, for much of its early history, largely been insulated fromcompetitive forces through its monopoly position at home and the internationalcartel abroad, in the late 1890s and early years of the twentieth century A&Wincreasingly had to face a growing competitive threat. In some instances thecompany’s management reacted defensively, as in protecting its patent rights inCanada when ERCo was set up, and reducing prices to undercut potential rivals,but ultimately it had to react positively, not least by reducing costs of production.The introduction of the large, new electrolytic plant at Oldbury during the earlyyears of the twentieth century is such an example, the lower unit price madepossible by the increased throughput enabling the site to remain an economicallyviable one for a further 20 years:

The [clay] retorts had never made phosphorus at less than 10¼d. a pound(1895). In P.E.O.’s [the original electrolytic plant at Oldbury] best year,1906, the cost was 7¾d. P.E.N. [the new, larger electrolytic plant atOldbury] in 1911 produced it at 5½d. Amorphous phosphorus benefiteddirectly in proportion and in 1911 reached the low cost level of 11d., justhalf what it had cost in 1880.119

The move by A&W to establish a production plant in North America can be seenas having elements of both attempting to overcome constraints, and optimisingwithin constraints. By enabling advantage to be taken of the low energy coststhere, the result of harnessing the benefits of the newly developed technology ofhydro-electric power, A&W was able to overcome constraints at home in respectof adequate, low-cost sources of electrical power. The move, however, alsohelped A&W to overcome the problems that were being created by theenactment of the McKinley and Dingley tariffs in the US. By jumping the tariffbarrier, A&W was able to maintain a hold on its North American markets.

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VI

Although A&W was personally managed, not especially large, and neverdeveloped Chandler’s multidivisional structure during the period examined inthis paper, this MNE nevertheless undertook investment in management,production and marketing. In particular, A&W developed an advancedmanagerial control system commensurate with its strategy of carrying out majoroverseas investments in production. Furthermore, this system was not a responseto ad hoc needs, but mirrored that already in place at Oldbury, and was utilisedto monitor and control its overseas operations as soon as production commencedin the cases of OECo and PCCo, and as soon as the company gained a majorityshareholding in the case of ERCo.

The system was not static and when, following the cessation of hostilities atthe end of World War One, the company had to decide on the most economiclocation of production, the decision was taken on the basis of the entity as whole,leading to the cessation of white phosphorous manufacture at Birmingham andits repositioning at Buckingham. The company’s management recognised thatdecisions about the continued operation or closure of a plant needed to be madeon the basis of marginal costs, at around the same time as economists wereseriously beginning to discuss the concept, but when most, though not all,accounting theorists, showed little interest in it. This article therefore providescounter-evidence to the Chandlerian view that developments in managementaccounting in the early twentieth century were inextricably linked to the growthof large, divisionalised corporations in the US, and reflects Wilkins’ view thatUK and European firms played an important role in developing businessorganisations in the chemical industry. Indeed, the developments at A&Woriginated from Britain and not America, as claimed by Chandler, who hasclearly misunderstood the precise nature of the role of J.J. Riker and his firm inconnection with A&W and its north American subsidiaries. The latter were notmanaged from New York by the Rikers, but locally by British-born managerswho were controlled from Birmingham by the personal owners of A&W througha system of direct regular reporting from the works. The Rikers were essentiallysales agents and financial bookkeepers, and played an insignificant role in themanagement control mechanism established by A&W.

Chandler’s misreading of the A&W case reflects a reliance on a singlesecondary source for his information. While it is recognised that one swallowdoth not a summer make, that his analysis could be so wrong in the case of A&Wraises the issue of whether archival research into other companies used asrepresentative examples by Chandler might reveal further errors of both fact andinterpretation. Further revelations, along the lines produced above for A&W,would seriously undermine the Chandlerian image that personally run Britishcompanies were incapable of engaging in key investments in relation toproduction, marketing and management.

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NOTES

This article is a revised version of a paper presented at the Association of Business HistoriansConference, Royal Holloway, University of London, 30 June–1 July 2000 and we are grateful for thecomments received from the participants. We are also pleased to acknowledge the input of the tworeferees which have helped to both sharpen and broaden the analytical focus of the paper. Weacknowledge the financial support for this research provided by the Economic and Social ResearchCouncil (grant no. R000237946), and the kind and courteous assistance given by the archive staff atBirmingham Central Library (hereafter BCL) who facilitated access to the Albright & Wilson archive(BCL MS1724), for which there exists only a preliminary schedule to the documents.

1. A.D. Chandler, Jr., Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, MA,1990), p.286.

2. A.D. Chandler, Jr., ‘The Growth of the Transnational Industrial Firm in the United States and theUnited Kingdom: A Comparative Analysis’, Economic History Review, Vol. 33 (1980),pp.396–410.

3. G. Jones, ‘Origins, Management and Performance’ in G. Jones (ed.), British Multinationals:Origins, Management and Performance (Aldershot, 1986), p.20.

4. Chandler, Scale and Scope, p.69.5. Ibid., p.70.6. Ibid., pp.337–8.7. W.J. Reader, Imperial Chemical Industries: A History, Vol.2 (Oxford, 1975).8. Chandler, Scale and Scope, p.366.9. Chandler, ‘The Growth of the Transnational Firm’, pp.408–9.

10. Ibid.11. M. Wilkins, The History of Foreign Investment in the United States to 1914 (Harvard, 1989), p.383.12. Ibid., p.411.13. Ibid., pp.414–15.14. Ibid., p.415.15. Ibid.16. M. Levenstein, Accounting for Growth: Information Systems and the Creation of the Large

Corporation (Stanford, CA, 1998), p.173.17. Ibid.18. Ibid., p.175.19. Jasper Crane, son of the company’s president, was Arlington’s chemist. The company was

subsequently taken over by Du Pont (Suffolk Record Office, Ipswich: HC410/G30, letter dated 25Aug. 1922).

20. Suffolk Record Office, Ipswich: HC410/G42, Crane, J.E., ‘A Short History of the ArlingtonCompany’ (unpublished private pamphlet, 1945), p.14.

21. Chandler, Scale and Scope, pp.356–7.22. R.E. Threlfall, One Hundred Years of Phosphorus Making (Oldbury, 1951), p.135.23. The records deposited at Birmingham Central Library relate mainly to the period after the

formation of the limited company, and hence it is harder to check the accuracy of Threlfall’sstatements and analysis for the partnership era to mid-1892.

24. Originally quoted in Threlfall, One Hundred Years, p.158.25. Much of the general overview provided in the following section is based on Threlfall, One Hundred

Years and F.J. Hambly, ‘History of Electric Reduction Company of Canada Ltd’, BCL MS1724Unpublished MS. As previously noted in the text, however, Threlfall is not always a reliable sourceand hence, where necessary, the material in Threlfall has been adjusted in the light of contraryarchival evidence.

26. S. Hays, The Chemicals and Allied Industries (London, 1973), p.14.27. D.W.F. Hardie and J. Davidson Pratt, A History of the Modern British Chemical Industry (London,

1966), p.58.28. L.F. Haber, The Chemical Industry of the Nineteenth Century (London, 1958), p.58.29. Threlfall, One Hundred Years, p.83.30. BCL MS1724, Albright & Wilson collection, introduction to preliminary schedule.31. Hardie and Pratt, History, p.132.32. Ibid., p.120.

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33. Threlfall, One Hundred Years, p.260.34. BCL MS1724 box 62, volume of weekly minutes, min.1772, 7 Dec. 1896.35. Thus, even when A&W’s board offered to increase his stake in ERCo and its management,

following Riker’s indication of a desire to relinquish his shareholding in ERCo in 1913, they onlyoffered him one-third of the company’s shares and ‘a similar part in management’ (BCL MS1724box 61, A&W board minute book, vol.3, min.36, 4 Nov. 1913).

36. Hambly, ‘History’, f.11.37. This visit to Niagara and Quebec in 1893 pre-dates A&W’s involvement in OECo by some three

years, the hydro-electric report providing a basis for the company’s subsequent investment atNiagara Falls.

38. This information, and much of that in the remainder of this paragraph is taken from Hambly,‘History’, ff.12–15.

39. M. Wilkins, ‘The Free Standing Company, 1870–1914: An Important Type of British ForeignDirect Investment’, Economic History Review, Vol.61 (1988), pp.259–82.

40. BCL MS1724 box 104, file marked ‘ERCo private papers’, letter from J.E.H. Lloyd, director, toPrice, Waterhouse and Co., Montreal, dated 4 Oct. 1921.

41. BCL MS1724, box 61, A&W board minutes, min. 824, 22 Jan. 1902.42. Much of this paragraph is based on comments made in a chapter on OECo written by Walter

Wallace, published in Threlfall, One Hundred Years, esp. p.265.43. Wallace, ibid., p.265, gives the year as 1903, but the A&W board minutes note that the initial

formation had occurred by the end of 1901 – BCL MS1724 box 61, A&W board minutes, min. 815,23 Dec. 1901.

44. See, for example, various entries in A&W board minute books, BCL MS1724 box 61, e.g. min.969, 24 Nov. 1904; and min. 1019, 25 May 1905. Copies of the reports can be found at BCLMS1724 boxes 3 and 64.

45. M. Wilkins, ‘Modern European Economic History and the Multinationals’, Journal of EuropeanEconomic History, Vol.6 (1977), p.577.

46. P. Hertner and G. Jones (eds.), Multinationals: Theory and History (Aldershot, 1986), p.3.47. J.H. Dunning, Multinational Enterprises and the Global Economy (Boston, MA, 1995), p.3.48. Hertner and Jones, Multinationals.49. Jones, ‘Origins, Management and Performance’, p.13.50. Obtaining reliable data is difficult since, being a private company, A&W published little

information until going public in 1948.51. For a fuller discussion of these issues, see D. Solomons, ‘The Historical Development of Costing’,

in D. Solomons (ed.), Studies in Costing (London, 1952), especially pp.20–45.52. Ibid., p.36.53. C.J. Napier, ‘Academic Disdain? Economists and Accounting in Britain, 1850–1950’, Accounting,

Business and Financial History, Vol.6 (1996), p.435.54. J.N. Harris, ‘What Did We Earn Last Month?’, NACA Bulletin, Vol.18 (15 Jan. 1936), pp.501–27.

On this issue, see M. Chatfield, A History of Accounting Thought (Huntington, NY, 1977),pp.179–81.

55. J.M. Clark, Studies in the Economics of Overhead Costs (Chicago, 1923). The phrase forms part ofthe title to chapter IX.

56. Ibid., p.201.57. Ibid., pp.ix–x.58. G.P. Norton, Textile Manufacturers’ Book-keeping for the Counting House, Mill and Warehouse …

(Huddersfield, 1889).59. Solomons, ‘Historical Development’, pp.38–50.60. H.S. Garry, ‘Factory Costs’, Journal of Society of Chemical Industry, Vol.21 (1902), pp.1439–43.

Although the paper was delivered in Derby on 26 Nov. 1902, Solomons, ‘Historical Development’,p.41 gives the date as 1903, which was when the paper was reproduced in The Accountant.

61. See, for example, J.R. Edwards and E. Newell, ‘The Development of Cost and ManagementAccounting before 1850: A Survey of the Evidence’, Business History, Vol.31 (Spring 1991),pp.35–57; R.K. Fleischman and L.D. Parker, ‘British Entrepreneurs and Pre-Industrial RevolutionEvidence of Cost Management’, Accounting Review, Vol.66 (April 1991), pp.361–75; R.K.Fleischman and T.N. Tyson, ‘The Evolution of Standard Costing in the U.K. and U.S.: FromDecision Making to Control’, Abacus, Vol.34 (1998), pp.92–119.

62. BCL MS1724 box 85, volume entitled ‘record of make’, 1889 on.

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63. Threlfall, One Hundred Years, p.85.64. BCL MS1724 box 85, weekly statistics, 1892–1903.65. Ibid.66. See, e.g., T. Boyns and J.R. Edwards, ‘The Construction of Cost Accounting Systems in Britain to

1900: The Case of the Coal, Iron and Steel Industries’, Business History, Vol.39 No.3 (1997),pp.1–29.

67. BCL MS1724 box 61, A&W board minute book, vol.1, 1892–1902.68. Threlfall, One Hundred Years, p.262.69. BCL MS1724 box 62, volume of weekly minutes, 1896–99, min. 1799, 25 Jan. 1897.70. Ibid., min. 2534, 3 Nov. 1898.71. BCL MS1724 box 28, letterbook 8 Nov. 1898–17 Jan. 1901: letter dated 9 Nov. 1898, J.W. Wilson

to J.J. Riker.72. Ibid., letter dated 11 Jan. 1899 to Hugh Irvine at Niagara.73. BCL MS1724 box 61, A&W board minute book, min. 392, 24 Feb. 1898.74. Ibid., min. 413, 2 June 1898.75. Unfortunately it is not known whether G.S. Albright determined this figure on the basis of past

experience at Oldbury, Birmingham, or on a theoretical/engineering basis.76. BCL MS1724 box 62, weekly minute book, min. 2926, 11 Aug. 1899.77. A set of cost and manufacturing reports for OECo., covering the period 1899–1905, can be found

in BCL MS1724 box 86.78. BCL MS1724 box 28, letter book 8 Nov. 1898–17 Jan. 1901: letters from G.E. Wilson to H.A.

Irvine, 14 June 1899 and 9 Jan. 1900.79. BCL MS1724 box 62, weekly minute book, min. 5039, 30 June 1902.80. F.A. Lidbury had been born in Cheshire and educated at Owens College, Manchester. He spent a

year at University College, London and then obtained an exhibition scholarship at Leipzig. Havingmoved to America, he subsequently took out American citizenship in 1913 (Threlfall, OneHundred Years, p.270).

81. The weekly reports for OECo and ERCo for 1903-12 are bound in a volume together with reportsfor A&W’s British operations (BCL MS1724, box 64, outsize weekly reports vol. 1), while thosefor 1913–24 and 1925–34 are in volumes which relate to the North American subsidiaries only(BCL MS1724, box 64, outsize weekly reports, vols. 2 and 3). The PCCo manufacturing accountsand some cost accounts for 1907–18 are to be found in BCL MS1724 box 3.

82. BCL MS1724, box 51, ‘Report on 1897 costs’, f.1.83. BCL MS1724, box 2, Management Committee file, ‘Memorandum on Steam-raising Economies’,

20 Jan. 1893.84. Clark, Studies, p.191.85. BCL MS1724, box 7, ‘Report on the present position and future policy in regard to the manufacture

of phosphorus by Electric Distillation’, 9–11 Nov. 1905, f.15.86. Ibid, f.22.87. For example, at the end of the ‘Report on 1897 costs’ for phosphorous produced by electricity at

Birmingham, a ‘standard’ for 1898 was calculated, individual items making up the total cost figurebeing based either on past actuals for 1897, or expected values which were lower than the 1897actuals – BCL MS1724 box 51. Other examples of the calculation of expected costs, based on pastperformance, can be found widely amongst cost statements and memoranda in BCL MS1724 boxes48 and 51, as well as elsewhere in the collection, which comprises over 110 boxes of material.

88. Threlfall, One Hundred Years, p.191.89. BCL MS1724 box 25, USA letter book, ff.1750–51: J.W. Wilson to Lidbury, 4 Jan. 1921.90. F.J. Hambly was born in Plymouth in 1868. A fellow student of W.T. Gibbs at the Royal School of

Science, he accepted his offer of becoming ERCo’s chemist at Buckingham in 1898 and whenWilliams retired in 1914, Hambly became works manager (Threlfall, One Hundred Years,pp.283–4).

91. BCL MS1724 box 25, USA letter book, ff.1766–7: J.W. Wilson to Lidbury, 8 Feb. 1921.92. BCL MS1724 box 34, letter dated 17 Sept. 1921.93. Ibid., ‘Segregation of current OEC costs’, dated 31 Aug. 1921.94. Ibid.95. Jones, ‘Origins, Management and Performance’, p.13.96. Garry, ‘Factory Costs’.

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97. T.C. Pulford, ‘Costing and its Application to the Chemical Industry’, The Accountant (1927),p.405.

98. R. Curtis, ‘Works Accounts from the Chemists Point of View’, Journal of the Society of ChemicalIndustry, Vol.40 (1921), transactions section, pp.175T–176T.

99. It is probably no coincidence that the works managers were usually chemists, and thus wellplaced to understand the technical side of the business. They would thus be able to more readilyassess variations in yield, assessing whether reductions were due to variations in the quality ofinputs, atmospheric conditions, etc., or due to inefficiencies in work and organisation.

100. Although no evidence has been found that, in the manner of Du Pont, A&W used return oninvestment (ROI) figures to assess the performance of their overseas subsidiaries, the concept ofreturn on outlay did feature in assessments of capital expenditure choices at home as early as1892 – BCL MS1724, box 2, ‘Memorandum on Steam-raising Economies’, 5 Dec. 1892.

101. Threlfall, One Hundred Years, p.115.102. Ibid., p.106. Gatheral had previously worked for the Tharsis Sulphur & Copper Co. Ltd., and was

said to be methodical, attentive to detail and always on the look out for ways to improveefficiency and lower production costs associated with any process.

103. Ibid., p.133.104. Ibid. p.136.105. Ibid.106/ Ibid., p.85.107. Lloyd was the second cousin of J.W. and G.E. Wilson, and the son of a sometime General

manager of Lloyds Bank. He received training at the bank after attending Repton School, andafter serving six months probation with A&W was appointed company secretary in 1896 (ibid.,p.151).

108. Ibid., p.87.109. Ibid., pp.97-9.110. Ibid., p.93.111. Ibid., p.94.112. Ibid., p.73.113. Ibid., p.137.114. Ibid., p.83.115. For further details on this see ibid., pp.197–203.116. W. Lazonick, Business Organization and the Myth of the Market Economy (Cambridge), p.79.117. Threlfall, One Hundred Years, p.93.118. Lazonick, Business Organization, p.308.119. Threlfall, One Hundred Years, p.143.

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