Daniel McCallum

"The road must run save first and fast afterward."

"The magnitude of the business of this road, its numerous and important connections, and. the large number of employés engaged in operating it, have led many, whose opinions are entitled to respect, to the conclusion, that a proper regard to details, which enter so largely into the elements of success in the management of all railroads, cannot possibly be attained by any plan that contemplates its organization as a whole ; and in proof of this position, the experience of shorter roads is referred to, the business operations of which have been conducted much more economically. Theoretically, other things being equal, a long road should be operated for a less cost per mile than a short one. This position is so clearly evident and so generally admitted, that its truth may be assumed without offering any arguments in support of it ; and, notwithstanding the reverse, so far as practical results are considered, has generally been the case, we must look to other causes than the mere difference in length of roads for a solution of the difficulty."

"A superintendent of a road fifty miles in length can give its business his professional attention and may be constantly on the line engaged in the direction of its details; each person is personally known to him, and all questions in relation to its business are at once presented and acted upon; and any system however imperfect may under such circumstances prove comparatively successful. In the government of a five hundred miles in length a very different state exists. Any system which might be applicable to the business and extent of a short road would be found entirely inadequate to the wants of a long one. and I am fully convinced that in the want of system perfect in its details, properly adapted and vigilantly enforced, lies the true secret of their [the large roads’] failure; and that this disparity of cost per mile in operating long and short roads, is not produced by a difference in length, but is in proportion to the perfection of the system adopted."

"In my opinion a system of operations, to be efficient and successful, should be such as to give to the principal and responsible head of the running department a complete daily history of details in all their minutiae. Without such supervision, the procurement of a satisfactory annual statement must be regarded as extremely problematical. The fact that dividends are earned without such control, does not disprove the position, as in many cases the extraordinarily remunerative nature of an enterprise may ensure satisfactory returns under the most loose and inefficient management. It may be proper here to remark, that in consequence of that want of adaptation before alluded to, we cannot avail ourselves to any great extent of the plan of organization of shorter lines in framing one for this, nor have we any precedent or experience upon which we can fully rely in doing so. Under these circumstances, it will scarcely be expected that we can at once adopt any plan of operations which will not require amendment and a reasonable time to prove its worth. A few general principles, however, may be regarded as settled and necessary in its formation, amongst which are:"

"# A proper division of responsibilities."

"# Sufficient power conferred to enable the same to be fully carried out, that such responsibilities may be real in their character."

"# The means of knowing whether such responsibilities are faithfully executed."

"# Great promptness in the report of all derelictions of duty, that evils may be at once corrected."

"# Such information, to be obtained through a system of daily reports and checks that will not embarrass principal officers, nor lessen their influence with their subordinates."

"# The adoption of a system, as a whole, which will not only enable the General Superintendent to detect errors immediately, but will also point out the delinquent."

"1. The several divisions and branches are in charge of superintendents, who are held responsible for the successful working of their respective divisions, and for the maintenance of proper discipline and conduct of all persons employed thereon, except such as are in the employment of other offices "acting under directions from the general superintendent's office, as herein after stated. They possess all the powers delegated by the organization to the general superintendent, except in matters pertaining to the duties of general ticket agent, general freight agent, general wood agent, telegraph "management, and engine and car repairs."

"Each officer possesses all the power necessary to render his position efficient, and has the authority with the approval of the President and General Superintendent to appoint all persons for whose acts he is held responsible, and may dismiss any subordinate when, in his judgment, the interest of the company will be promoted thereby."

"The enforcement of a rigid system of discipline in the government of works of great magnitude is indispensable to success. All subordinates should be accountable to and be directed by their immediate superiors only; as obedience cannot be enforced where the foreman in immediate charge is interfered with by a superior officer giving orders directly to his subordinates."

"It is very important, that principal officers should be in full possession of all information necessary to enable them to judge correctly as to the industry and efficiency of subordinates of every grade."

"When the time-table is so arranged as to call for speed nearly equal to the full capacity of the engine, it is very obvious that the risks of failure in making time, must be much greater than at reduced rates, and when they do occur, the efforts made to gain time must be correspondingly greater and uncertain. A train whose prescribed rate of speed is thirty miles per hour, having lost five minutes of time, and being required to gain it, in order to meet and pass an opposing train at a station ten miles distant, must necessarily increase its speed to forty miles an hour; and a train whose rate of speed is 40 miles per hour, under similar circumstances, must increase its speed to 60 miles per hour."

"A single track railroad may be rendered more safe and efficient, by a proper use of the telegraph, than a double track railroad without its aid,"

"Collisions between fast and slow trains, moving in the same direction, are prevented by the application of the following rule: The conductor of a slow train will report himself to the Superintendent of Division immediately on arrival at a station where, by the time-table, he should be overtaken by a faster train; and he shall not leave that station until the fast train passes, without special orders from the Superintendent of Division."

"The passing-place for trains is fixed and determined, with orders positive and defined that neither shall proceed beyond that point until after the arrival of the other; whereas, in the absence of the telegraph, conductors are governed by general rules, and their individual understanding of the same,—which rules are generally to the effect, that, in case of detention, the train arriving first at the regular passing-place shall, after waiting a few moments, proceed cautiously (expecting to meet the other train, which is generally running as much faster, to make up lost time, as the cautious train is slower) until they have met and passed; the one failing to reach the half-way point between stations being required to back,—a dangerous expedient always,—an example of which operation was furnished at the disaster on the Camden and Amboy Railroad near Burlington; the delayed train further being subjected to the same rule in regard to all other trains of the same class it may meet, thus pursuing its hazardous and uncertain progress during the entire trip."

"Hourly reports are received by telegraph, giving the position of all the passenger and the principal freight trains. In all cases where passenger trains are more than ten minutes, or freight trains more than half-an-hour behind time, on their arrival at a station the conductors are required to report the cause to the operator, who transmits the same by telegraph to the General Superintendent; and the information being entered as fast as received, on a convenient tabular form, shows, at a glance, the position and progress of trains, in both directions, on every Division of the Road."

"This comparison [of division accounts] will show the officers who conduct their business with the greatest economy, and will indicate, in a manner not to be mistaken, the relative ability and fitness of each for the position he occupies. It will be valuable in pointing out the particulars of excess in the cost of management of one division with another, by comparison of details; will direct attention to those matters in which sufficient economy is not practiced; and it is believed, will have the effect of exciting an honorable spirit of emulation to excel."

"All that is required to render tho efforts of railroad companies in every respect equal to that of individuals, is a rigid system of personal accountability through every grade of service."

"Business of a private and important character, which cannot be neglected without great pecuniary sacrifice, has induced me to make this the occasion of tendering my resignation."

"Some differences of opinion exist in the Board of Directors, in regard to the discipline that has been pursued in the superintendence of the operations of the road. [It was his understanding that] a respectable number of them entertain views... somewhat at variance with my own."

"Mr. McCallum's strong point, lies in his power to arrange and systematize, and in his ambitions to perfect his systems. To this end he has untiringly devoted his energies since he was appointed in charge of this great work."

"His great strength was in sharpening lines of authority and communication, and in stimulating the flow of the minute and accurate information which top management needed for the complex decisions it was increasingly being called upon to make Hourly, daily, and monthly reports, more detailed than those called for earlier on the Baltimore & Ohio, provided this essential information."

"The "general principles" of management were set out by Daniel C. McCallum. superintendent of the New York and Erie Railroad, in that company's annual report for 1855."

"McCallum quickly moved to install a management system to replace the overloaded manager. He broke his railroad into geographical divisions of manageable size. Each was headed by a superintendent responsible for the operations within his division, Each divisional superintendent was required to submit detailed reports to central headquarters, from where McCallum and his aides coordinated and gave general direction to the operations of the separate divisions. Lines of authority between each superintendent and his subordinates and between each superintendent and headquarters were clearly laid out. In sketching these lines of authority on paper, McCallum created what might have been the first organizational chart for an American business (Chandler 1962). Soon the other great railroads copied the Erie's system, enabling the big railroads to function as effectively as small ones. As a result, railroads rapidly became the largest industrial companies of that time,"

"In the early 1850s, Daniel McCallum, the General Superintendent of the New York and Erie Railroad, had a problem. At the time, the New York and Erie Railway was the largest railroad in the world. It moved trains over one million miles a year and employed hundreds of people - locomotive engineers, conductors, mechanics, station agents and more. For the first time in history it was impossible for a single person to personally manage every one of his employees. The solution was an historic innovation: the middle manager. With it, the first administrative hierarchies in American business were born and the gap between the owner and the entry-level employee inevitably widened. The corporate ladder received its first rungs."

"The history of McCallum’s great contribution toward Union victory is buried in the forgotten records of that bitter struggle."