195 H Hamilton, Alexander (ca. 1755–1804) poli- tician Hamilton, an American politician and first secretary of the Treasury, was born on the island of Nevis in the West Indies in 1755. As a boy, he worked for a trading company in St. Croix before being sent to America for further education by his employer. He attended school in what is today Elizabeth, New Jersey, before fur- ther study at King’s College in Manhattan (today Columbia University). Hamilton served in the New York artillery dur- ing the Revolutionary War and was a secretary and assistant to George Washington from 1777 to 1781. He was admitted to the bar in New York in 1782 and also became a delegate to the Congress of the Confederation from New York in the same year. During the Constitutional Convention held in Philadelphia in 1787, he, John Jay, and James Madison wrote a series of letters to newspapers urging approval of the new Constitution. These letters were later collected and reprinted as The Federalist. He became secretary of the Treasury under Washington in 1789. Disputes with Madi- son and Jefferson in the early 1790s led to the development of the Federalist Party, which he led at a critical period in American political history. As first secretary of the Treasury, Hamilton attempted to put the United States on a sound financial footing, especially since debt was con- suming more than 50 percent of annual govern- ment revenues. He had a plan, as did a successor, Albert G ALLATIN, to totally extricate the country from debt within 15 years, but the Louisiana Pur- chase would intervene. Hamilton’s main contributions to business were twofold. As Treasury secretary, he favored establishing a national bank and also opposed excessive government spending. He also sup- ported businessmen, whom he believed were the lifeblood of the nation. His essay The Report On Manufactures (1791) strongly supported early forms of manufacturing as a way of developing a strong economy, less dependent upon agriculture and imports of finished goods from Britain. In his view, independence in manufacturing would guarantee economic and political independence in the future. Hamilton resigned as Treasury secretary in 1795 but continued to be involved in politics, taking opportunity to criticize John Adams, a Federalist, as well as Aaron Burr, whom Hamil- ton opposed as a gubernatorial candidate in New York in 1804. His opposition to Burr led to their famous duel, in which Hamilton was severely wounded. He died a day later, in 1804. See also DUER, WILLIAM. Further reading Brookhiser, Richard. Alexander Hamilton, American. New York: Fr ee Press, 1999. Chernow, Ron. Alexander Hamilton. New York: Pen- guin Books, 2004. McDonald, Forr est. Alexander Hamilton: A Biography. New York: Norton, 1979. Harriman, Edward Henry (1848–1909) fin- ancier and railroad developer Born in Hemp- stead, Long Island, New York, by age 14 Harriman was employed on Wall Street. In 1870, Harriman became a member of the N EW YORK STOCK EXCHANGE, specializing in railroad securi- ties. He married Mary Averell in 1879; one of their six children, William Averell Harriman, became a respected statesman and foreign policy expert. Harriman’s association with financier Stuyvesant Fish enabled him to modernize and reorganize the Illinois Central Railroad. Grow- ing conflict with Fish led Harriman away from the Illinois Central and toward the U NION PACIFIC RAILROAD. Harriman realized that Union Pacific’s performance could be improved by restructuring its debt and by making mas- sive physical improvements to accommodate the traffic potential of a region that was begin- ning to emerge from the depression of the 1890s. Within 10 years, Harriman had orches- trated the expenditure of $160 million in capi- tal improvements. In addition to his commitment to modern- ization, Harriman understood the value of com- munities of interest—essentially, interlocking directorates—in the railroad industry in order to prevent overbuilding, guarantee equitable access to the traffic of connecting RAILROADS, and con- trol competition. Harriman envisioned these communities of interest as the precursors of giant rail systems in the West. To that end, he acquired control of the Southern Pacific Railroad in 1901 and began to “Harrimanize” it in much the same manner as the Union Pacific. The Illi- nois Central, the UP, and the SP formed the core of the Harriman system—three technically sepa- rate corporations with similar organizational structures and philosophies, employing stan- dardization to reduce the cost of purchasing, operations, and maintenance. These communities of interest ran counter to the reformist impulses of the Progressive Era and won Harriman the personal displeasure of Presi- dent Theodore Roosevelt. Harriman’s public dis- agreements with former ally Stuyvesant Fish and his association with the financially ailing Equi- table Life further tarnished his reputation. In 196 Harriman, Edward Henry A wood engraving of Alexander Hamilton (LIBRARY OF CONGRESS) 1907, the INTERSTATE COMMERCE COMMISSION launched an inquiry into Harriman’s railroad and financial enterprises. Harriman pledged his corporate and personal resources to a variety of public works. While Harriman never established a charitable trust, as did so many other philanthropists, he was instru- mental in the creation of a state park near his New York home, sponsored a scientific expedi- tion to Alaska, assisted victims of the 1906 San Francisco earthquake, and helped save Califor- nia’s Imperial Valley from flooding. Harriman succumbed to stomach cancer in 1909. See also B ROWN BROTHERS HARRIMAN. Further reading Hofsommer, Don L. The Southern Pacific, 1901–1985. College Station, Tex.: A & M University Press, 1986. Klein, Maury. The Life and Legend of E. H. Harriman. Chapel Hill: University of North Carolina Press, 2000. Alber t Churella Harvard Business School Established in 1908, the school became the first postgraduate school of business to require an undergraduate degree for admission. The first dean was Edwin F. Gay, and the new graduate program lasted for two years, leading to the master of business administration, or MBA, degree. The original fac- ulty numbered 15, with 33 regular students and 47 special students. According to an original school announcement, “the school does not pre- tend to graduate men who will begin at the top or high up in their several lines of business. It does aim to teach them how to work and how to apply powers of observation, analysis, and inven- tion to practical business problems.” Among the first faculty members were Her- bert Knox Smith, commissioner of corporations, James Jackson, ex-chairman of the Massachu- setts Railroad Commission, and Frederick W. TAYLOR, the efficiency engineer. In 1912, the school used its first “case study,” adopting an idea used widely in law whereby a particular case is studied both on its own merits and in the con- text of similar cases that have gone before. In 1924, it adopted case studies as its primary edu- cational teaching technique. In the same year, George F. B AKER donated $5 million, and the school opened its own campus in Boston on the Charles River. Within a few years, it had more than 750 full-time students living on campus. The Harvard Business Review, a leading manage- ment journal, was begun in 1922. In 1963, the school admitted women to the MBA program for the first time. The school expanded its of ferings to both MBA and doctoral students over the years, and its publishing arm, the Harvard Business School Press, became a diversified publisher of management books after its inception in 1993. The institution continually ranks among the top graduate business schools in the country and is a leader in postgraduate management education. One of its graduates, George W. Bush, became the first MBA to be elected president. See also WHARTON SCHOOL. Further reading Copeland, Melvin Thomas. And Mark an Era: The Story of the Harvard Business School. Boston: Lit- tle, Br own, 1958. Cruickshank, Jeffrey L. A Delicate Experiment: The Harvar d Business School, 1908–1945. Boston: Har- var d Business School Press, 1987. Hawley-Smoot Tariff Act A protective tariff introduced in Congress by Representative Willis Hawley and Senator Reed Smoot in 1930. At the time, it became the highest tariff ever introduced in the United States. Widespread disaffection plagued the tariff when it was introduced, but Congress passed it. President Hoover signed it into law in June 1930. The law was passed in the aftermath of the Crash of 1929, at a time when international trade Hawley-Smoot Tariff Act 197 was beginning to decline and domestic unem- ployment was rising. It was similar in many respects to the Fordney-McCumber Tariff Act in 1922. Hoover favored a tariff that would moder- ately increase duties levied on farm products and select manufactured goods. However, the House and Senate versions of the bill contained a long list of items subject to the tax, and the final prod- uct emerging from both versions was harsh and extensive. More than 900 items could be found in the bill. Disputed items were sent to a Tariff Com- mission, which had the power to investigate inequities in trade and make recommendations to the president. The chief executive had the power to set TARIFFS that would equalize the price of an import so that it did not unfairly compete with American-produced goods. Several hundred economists sent the president a letter protesting the tariff, but Hoover decided to employ it when he believed conditions warranted. The tariff was so severe that it caused an inter- national reaction; many other countries enacted protective tariffs in retaliation. The result was a slowdown in world trade, which exacerbated the Depression and led to problems in the FOREIGN EXCHANGE MARKET that were addressed later in the 1930s when the United States and Britain both abandoned the GOLD STANDARD. Another repercussion of the act was the new monetary system constructed after World War II at Bretton Woods, New Hampshire. Part of the reason for establishing the International Mone- tary Fund was to dissuade countries from acting unilaterally in the future when considering devaluations of their currencies, which in the immediate past had been tied to tariff decisions. See also B RETTON WOODS SYSTEM; FOREIGN INVESTMENT . Further reading Eckes, Alfred E. Opening America’s Markets: U.S. For- eign Trade Policy Since 1776. Chapel Hill: Univer- sity of North Carolina Pr ess, 1995. Jones, Joseph M. Tariff Retaliation: Repercussions of the Hawley-Smoot Bill. New York: Garland, 1983. Hill, James J. (1838–1916) railroad builder Hill was born in Ontario and moved to St. Paul, Minnesota, at age 16 after the death of his father. He found work with a steamboat line and soon became a partner in the company. After several other ventures in transportation, he bought, along with two partners, the St. Paul & Pacific Railroad. The line became the basis for the Great Northern Railway Company that would earn him the name “Empire Builder.” Hill envisaged this railroad as reaching the West Coast and set about building the line through the northern tier of states. From Min- nesota, he reached Montana by 1887 and Seattle in 1893. The railroad was notable for being built without any federal government assistance, and, unlike many of the earlier RAILROADS, it suffered no financial scandals or setbacks. The completed line ran from Lake Superior to the Pacific. While a masterful piece of engineering, the line com- peted with the Northern Pacific Railroad, which had been bankrupted in the Panic of 1893. Hill helped reorganize the line, but the courts would not allow a merger between the two rivals. The Northern Pacific was taken over by interests led by J. P. Morgan, a Hill ally. The two again joined forces to attempt to purchase the Chicago, Burlington & Quincy line serving Chicago, in an attempt to prevent E. H. HARRIMAN from buying the line. The battle spilled over to the stock mar- ket, causing the Panic of 1901. As a result, Morgan, Harriman, and Hill established the Northern Securities Company to act as a HOLDING COMPANY for the Great Northern and Northern Pacific. But the company was held in violation of the Sherman Antitrust Act in a Supreme Court decision, the United States v. Northern Securities Co., in 1904. Hill retired as president of the Great Northern in 1907. He also helped construct the Canadian Pacific Railroad and was the author of Highways and Progress, published in 1910. He financed and built a library named after him in St. Paul. Unlike many other railroad tycoons of the 19th century, Hill’s reputation was built upon the soundness of his 198 Hill, James J. ideas, lack of government assistance, and the absence of financial scandal surrounding his operations. See also MORGAN, JOHN PIERPONT. Further reading Malone, Michael P. James J. Hill: Empire Builder of the Northwest. Norman: University of Oklahoma Pr ess, 1996. Martin, Albro. James J. Hill and the Opening of the North- west. New York: Oxford University Press, 1997. holding company A form of industrial organization designed to hold the stock of other companies. In a typical holding company, the parent company is not an operating unit but sim- ply an administrative one, with the subsidiary companies producing actual goods or services. The use of holding companies is quite common and crosses a wide range of business sectors. The first holding company was organized by John D. Rockefeller as a trust in Ohio, the Standard Oil Trust. The term trust was the immediate prede- cessor of the term holding company although its aims were the same. In a trust, a company holds the stock of other companies in trust. The origi- nal Standard Oil Trust did not have stock as such but trust certificates. The purpose of organizing a wide group of businesses into a trust was to con- trol production and prices. Usually, the trust cer- tificates were held by a small group of directors who effectively controlled large sections of an industry. After Standard Oil was moved to New Jersey in 1899, the holding company began to supplant the trusts. Ordinarily, holding companies are organized as acquisition vehicles so that other companies may be brought under the same control. They began to grow after World War I as many compa- nies began to expand, often establishing them- selves in friendly political or tax jurisdictions. Holding companies may also be organized in order to relocate tax liabilities in friendly juris- dictions or to avoid unfriendly legal jurisdic- tions. The Standard Oil Company moved its headquarters from Ohio to New Jersey when its charter was challenged by Ohio after incorpora- tion in that state. In certain industries, holding companies have been regulated. The P UBLIC UTILITY HOLDING COMPANY ACT (1935) and the BANK HOLDING COMPANY ACT (1956) both sought to curtail hold- ing companies in those industries so that they did not circumvent other legislation specifically designed to restrict their expansion activities. Subsequent DEREGULATION eased the original restrictions on many companies established dur- ing the NEW DEAL. After World War II, the CONGLOMERATES also employed holding companies effectively as a means of establishing a portfolio of diverse com- panies under the same roof. By the 1960s, the holding company was the predominant form of industrial organization used by large companies, since many were multinational, and the holding company was used to establish foreign sub- sidiaries and other international operations. See also ANTITRUST;GENEEN, HAROLD S.; GEN- ERAL ELECTRIC; SECURITIES EXCHANGE ACT OF 1934. Further reading Federal Bar Association, Securities Law Committee. Federal Securities Laws: Legislative History, 1933–1982. Washington, D.C.: Bureau of National Affairs, 1983. Stevens, W illiam S. Industrial Combinations and Trusts. New York: Macmillan, 1913. Hudson’s Bay Company The Hudson’s Bay Company is one of the longest-lived business organizations in history. It was chartered by the British Crown in 1670 to trade for furs in the drainage basin of Hudson Bay. Indeed, for much of its life, it was primarily a fur-trading com- pany, purchasing a wide variety of furs, but mainly beaver pelts, at posts along the coast of Hudson Bay and inland and transporting them by ship directly from the bay to Britain. Despite Hudson’s Bay Company 199 the company’s prominence in the fur trade litera- ture, it was in the early years a relatively minor player in the fur market, accounting for less than 10 percent of North American exports. Instead, the trade was dominated first by French and then by Scottish traders operating out of Montreal and farther south. In 1821, after a long and often bitter rivalry, the Hudson’s Bay Company absorbed the North West Company and thereby established a monopoly over much of the fur-trading hinter- land. By that time, however, the intense competi- tion had led to severe depletion of animal populations, and, to allow stocks to recover, the company introduced strict conservation meas- ures. These measures were generally successful, but by the mid-19th century the fur industry had become a minor part of Canada’s economic life. Shortly after confederation in 1867, the Hudson’s Bay Company surrendered its charter to the Crown, thus giving up its claim to the region. In return the company was paid £300,000 and was permitted to keep a 20th of the fertile land as well as land in the vicinity of its trading posts. The relationship between the Hudson’s Bay Company and the Indians with whom it traded has become an area of special interest to eco- nomic, business, and social historians, as well as to geographers and anthropologists. This is due partly to the extensive company records, which were meticulously kept and, happily, have been preserved. These records offer a great insight into how a company with a head office thousands of miles from its main operations—and faced with premodern communication—was able to manage a complex and, in many ways, unfamiliar indus- try. Central to the company’s approach, especially during the 18th century when trade was almost entirely through barter, was a system of accounts based on the Made Beaver (MB). This unit of accounts established prices for every type of fur and every type of European goods traded. For example, at its largest post, York Factory, a prime beaver pelt had a price of 1 MB, and a gun had a price of 14 MB. Thus, at the official rate, guns and beaver pelts traded at a ratio of 14 to 1. Post traders, however, were given flexibility and so actual exchanges depended on a variety of fac- tors, among them how strong was the market for furs in Europe, how severe was the competition from the French and others, and how plentiful were the beaver stocks. Indeed, the company and its traders appear to have responded to these market conditions in a way that preserved the company’s long-run profitability. In the 20th century, the company moved into retailing. Beginning with small outlets in Win- nipeg and Vancouver in the late 19th century, the Hudson’s Bay Company expanded to the point that it now operates a large chain of department stores (The Bay/La Baie) located throughout much of Canada. The company also has a mining arm; it closed its fur trading division in 1996. See also A STOR, JOHN JACOB. Further reading Newman, Peter C. Company of Adventurers, 3 vols. Markham, Ontario: Viking Penguin, 1985–1991. Rich, E. E. The History of the Hudson’s Bay Company, 1670–1870, 2 vols. London: Hudson’s Bay Record Society, 1958–1959. Ann M. Carlos and Frank D. Lewis Hughes, Howard, Jr. (1905–1976) business- man and entrepreneur Born in Houston, Hughes’s family was in the oil drilling business. His father developed an oil bit capable of drilling to previously unreachable areas, and the com- pany became the Hughes Tool Co. Howard Jr. was a tinkerer as a youth and attended several colleges, including Rice Institute, but never grad- uated. When he was 19, his father died and the company passed to him. His newfound wealth became the basis for the wide array of entrepre- neurial enterprises he undertook beginning while he was in his early 20s. After inheriting Hughes Tool, he embarked upon a career in Hollywood, directing several 200 Hughes, Howard, Jr. Hughes, Howard, Jr. 201 movies that achieved notable success. He also continued to develop an interest in flying. In 1932, he became interested in the aviation indus- try and formed the Hughes Aircraft Corp., which developed a plane called the H-1. He also flew a twin-engine plane around the world, a trip that helped prove that passenger air travel was the wave of the future. Subsequently, he bought TWA in 1937 and financed the Lockheed Constella- tion, an advanced-design passenger airplane. During World War II, Hughes took up defense contracting, but his projects did not materialize before the war ended. One was a reconnaissance plane and the other a huge wooden plane, nick- named the Spruce Goose. Like many of his proj- ects, they never fully succeeded while he was personally involved with them. Hughes acquired a reputation as an eccentric whose close personal involvement with a project often spelled its demise. His personal involvement in test piloting was not always successful, either. On a test flight of his reconnaissance plane, the XF-11, in 1946, it crash-landed in California, and he was seriously injured, spending nine months in the hospital recuperating. The Spruce Goose also proved a failure, being unable to carry the large number of military equipment and soldiers as originally planned because war was over. Hughes Aircraft began to succeed after the war as Hughes distanced himself from the company. He also lost control of TWA when the airline needed to purchase its first gener- ation of jet liners, and Hughes could not finance the purchase from company resources. But he still managed to earn more than $500 million when he divested. He also continued to produce the occa- sional Hollywood movie, but none of the later films achieved the success of his earlier ones. In later life, Hughes became extremely reclu- sive and never appeared in public. Much specula- tion about his private life ensued. He made a substantial investment in several Las Vegas resorts, which were eventually sold. One of his few ventures into the public light came just before his death when he called the press to state that a recent biography of him was a fake. He died in 1976 and was buried in Houston. See also AIRPLANE INDUSTRY. Further reading Barlett, Donald, and James B. Steele. Empire: The Life, Legend, and Madness of Howard Hughes. New York: W. W . Norton, 1979. Drosnin, Michael. Citizen Hughes. New York: Holt, Rinehart & W inston, 1985. Phelan, James. Howard Hughes: The Hidden Years. New Y ork: Random House, 1976. Howard Hughes (LIBRARY OF CONGRESS) [...]... precarious financial condition Between 180 3 and 181 2, the secretary of state reported 1,600 American vessels captured by the British, French, Neapolitans, or Danes In contrast, the Embargo Act of 180 7 brought all American trade to a virtual standstill and eliminated the business of marine insurance companies during most of 180 8 With the restoration of peace in 181 5, marine insurance companies proliferated... Managerial Revolution in American Business Cambridge, Mass.: Harvard University Press, 1977 Field, Alexander J “Modern Business Enterprise as a Capital Saving Innovation,” Journal of Economic History 47 ( June 1 987 ): 473– 485 Walton, Gary M., and Hugh Rockoff History of the American Economy, 9th ed Stamford, Conn.: Thomson Learning, 2002 Alexander Field Insull, Samuel ( 185 9–19 38) utilities executive Born... a decade later By 185 0, just under $100 million of life insurance was spread among 48 companies The top three companies— the Mutual Life of New York ( 184 2), the Mutual insurance industry Benefit Life of New Jersey ( 184 5), and the Connecticut Mutual Life ( 184 6)—accounted for more than half of this amount The passage of laws permitting women to purchase life insurance on the lives of their husbands—free... Beginning with New Hampshire in 185 1, Massachusetts in 185 5, and New York in 185 9, most other states followed suit with their own supervisory departments during the postbellum period During the 185 0s and 186 0s, many states enacted protectionist legislation in order to promote local business interests or to raise revenues Out -of- state companies in all lines of insurance were often charged higher taxes, required... arms using interchangeable parts, but the key innovations here were organizational, rather than the application of powered machinery that is typically seen as the hallmark of the Industrial Revolution Between the end of the Civil War and the beginning of World War 1, American industry decisively entered the 20th century in a variety of ways In the 18th and the first part of the 19th century, commerce... particular sector of the economy Further reading Hoogenboom, Ari, and Olive Hoogenboom A History of the ICC from Panacea to Palliative New York: Norton, 1976 Kerr, K Austin American Railroad Politics, 1914–1920: Rates, Wages, and Efficiency Pittsburgh: University of Pittsburgh Press, 19 68 Interstate Highway Act Technically, the name of this legislation was the Federal-Aid Highway Act of 1956, one of. .. entered a period of intense competition during which rate wars forced many companies into BANKRUPTCY A rash of fraudulent insurance claims during the 182 0s further weakened the industry One early historian estimated that one-third of all marine insurance claims from 182 0 to 184 0 were dishonest The industry finally reached a period of stability and prosperity during the 184 0s and 185 0s, only to be disrupted... of the Economic Recovery Act of 1 981 With this law, and the subsequent enactment of the TAX REFORM ACT of 1 986 , the American system of public finance dramatically diminished the role of the income tax, as both individual and corporate rates were severely slashed Although succeeding political leaders have altered the tax structure at the margins, the fundamental concept of Reagan’s low rates and relatively... (chartered 181 2), the Massachusetts Hospital Life ( 181 8), the Baltimore Life ( 183 0), the New York Life and Trust ( 183 0), and the Girard Life, Annuity and Trust of Pennsylvania ( 183 6) Despite this tentative start, life insurance did make some significant strides beginning in the 183 0s Life insurance in force (the total death benefit payable on all existing policies) grew steadily from about $600,000 in 183 0... along with the availability of improved techniques within manufacture itself, affected the economic viability of specialized industrial production and the forms it took So too did war, tariff policy, and the development of a financial infrastructure capable of facilitating the assemblage of large amounts of capital Most of the American economy during the colonial period consisted of subsistence agriculture . the Embargo Act of 180 7 brought all American trade to a virtual standstill and eliminated the business of marine insurance companies during most of 180 8. With the restoration of peace in 181 5, marine. the development of a financial infrastructure capable of facilitating the assemblage of large amounts of capital. Most of the American economy during the colonial period consisted of subsistence. Revolution. Between the end of the Civil War and the beginning of World War 1, American industry decisively entered the 20th century in a variety of ways. In the 18th and the first part of the 19th century,