Organizations and Markets

The Noir Institutional Economics

2 August 2010 at 2:49 pm Dick Langlois 4 comments

| Dick Langlois |

The Visible Hand

By Raymond Chandler

It was eight o’clock in the morning, sharp, with the sun not shining and a look of hard wet rain on the Manhattan pavement. I was wearing my heavy gray flannel suit, with rounded collar, display handkerchief, and gold tie with streamlined mechanical shapes on it. As always, I was neat, clean, shaved and sober, and I didn’t care who knew it. I was everything the well-dressed professional manager ought to be. I was calling on the head of General Motors.

From two blocks away I stared at the GM building at 57th and Broadway, its terra cotta façade now etched gray as the pavement, as it wrapped itself around the gothic fantasy of the Broadway Tabernacle at 56th Street. I knew which one was really the cathedral. I didn’t get to inspect the building’s interior for as long as I had the outside. The minute I walked through the front door I was met by a tall, striking female, platinum blonde in finger waves. She wore a cardigan jacket over a skirt and sweater. Her eyes were slate-gray, and had almost no expression when they looked at me.

“Mr. Sloan?”

I admitted as much.

“Follow me, please.”

Following her was easy. She led me into a black-and-gilt elevator. Like all New York elevator men, the operator was small and pinched but looked as though he knew something we didn’t. He brought us up to the top floor, where the cast iron grille of the elevator opened onto an anteroom of the inner-sanctum. When I glanced back, the blonde had already disappeared. I walked in.

Billy Durant’s desk was a cityscape of Bakelite. I wondered what noise it would make if all the telephones sounded at once. From behind the skyline rose a trim man of maybe 120 pounds. His smile was friendly, and his brown eyes possessed all the brightness and gleam those of his secretary had lacked. The eyes were frank and shrewd, the shrewdness not of someone looking through you but of someone accustomed to evaluating a situation on the fly, of someone always looking out for a measured challenge.

“Sloan. Have a seat.”

I sat.

“You can smoke if you want. I like the smell of smoke.”

“You know I don’t smoke, Durant. It’s a waste of resources.”

Durant propped his hands onto a part of the desk not covered in telephones and leaned forward.

“Okay, I’ll come right to the point. I want you to do a job for me.”

“I’m listening.”

“Ever heard of ‘The Organization Study’?”

I had heard of it. I wrote it. But that was something I wasn’t about to tell Durant.

“What about it?” I said.

“I want you to find it and destroy it.”

“What if I refuse? Or maybe I can’t find it?”

“Then I’ll get someone else.”

“Who? Not Raskob or one of his goons. Raskob couldn’t find an internal corporate memorandum if it was stuck to his forehead with mucilage.” Raskob was nice enough, but I didn’t like him. He was like Durant, small and energetic, not calm and efficient like a modern professional manager ought to be. Worst of all, he was a Democrat.

“Look, Sloan, I think we’re getting ahead of ourselves here. It’s a simple job, and I’ll pay you handsomely.”

“I get $25 a day plus expenses, along with five per cent of equity in convertible debentures.”

“So I can count on you?”

“Why do you want this study so bad? Why do you want it destroyed?”

“Sloan, you know how I built this company. You know how I run it.”

“Yeah, you run a large twentieth-century enterprise almost by yourself, a staff of maybe three people, not counting the blonde.”

“That’s right. And I want to keep it that way. This is my company. This ‘Organization Study’ says I should give up control, that I should reorganize the business and put it in the hands of a cadre of trained professional managers.”

“So you just can’t let go? Or are you afraid our friends from Delaware might be trying to muscle in on you?” I was in the pocket of the Delaware interests. So was Raskob. But this was something else I didn’t want Durant to know.

“I could let go. But it wouldn’t be good for General Motors. Running a business is a personal thing. You understand that, don’t you, Sloan? Nobody between me and the men at the factory: that way I can notice things that others wouldn’t notice, I can make things happen quickly. You know what I did when I first bought Oldsmobile?”

I knew the story. But I also knew he was going to tell me anyway.

“Rannie Olds had left the company, and they were a mess. They had nothing in the pipeline, no idea what to do about next year’s model. So I drove up there in my Buick. I had the men put the Buick frame on sawhorses. I told them to cut the frame in half lengthwise and then cut it in half again the other way.” He made a cross in the air with his fingers. “I had them separate the four quarters by a few inches. ‘Put your regular hood and radiator on it,’ I told them. ‘There’s your new Oldsmobile for the coming year.’ Do you think a bunch of professional managers in offices would have thought of something like that?”

Actually, I thought it might be exactly what professional managers in offices might think of doing. Change a car’s design in minor ways every year and sell it as a new model. I stored the idea away: could come in handy someday.

“Your style of ‘personal’ capitalism may have worked back in the old days,” I said, “but GM is a huge company now. Several brands of car, most of the parts that go into them, and even this new ‘refrigerator’ thing you’ve bought into. Having all these activities within the company makes no sense if you try to run day-to-day operations yourself. You’ve become the problem, not the solution. Look, Durant, you can’t take advantage of all the economies of scale and scope within GM without a managerial hierarchy.”

“People don’t talk like that to me,” he said thickly. “I ought to throw a Buick at you.” It was not really an angry response. I could see the smile fade, some of the glisten leave the eyes. “Just get me that ‘Study,'” he said finally.

I should have kept my mouth shut. Instead I said: “it won’t make a damned bit of difference if you destroy the ‘Study.’ Things are going to change anyway. Something’s at work here that’s beyond even your control. There’s a managerial revolution going on in American business.”

Durant said nothing. He turned his back on me and moved to the window, where he stood silhouetted in the light, the absurd square turret of the Broadway Tabernacle looming below him, not even reaching up to his 23rd-storey height.

The blonde reappeared as suddenly as she had disappeared. I was ready to follow her anywhere, but this time she didn’t ask. “Mr. Durant has instructed me to give you a check for whatever seems desirable,” she said when we had reached the lobby.

“No money now, thanks. There’ll be plenty of that later.”

Entry filed under: - Langlois -, Business/Economic History, Corporate Governance, Entrepreneurship, Ephemera.