The University of Michigan, an encyclopedic survey ... Wilfred B. Shaw, editor.
University of Michigan.
Page  1065

THE SCHOOL OF BUSINESS ADMINISTRATION

THE School of Business Administration as a separate entity did not come into existence until 1924, but its antecedents in the Department of Economics of the College of Literature, Science, and the Arts go back to the beginning of the twentieth century.

The first reference to courses in higher commercial education appears in the University Calendar for 1900-1901:

To meet the wants of students — both undergraduates and graduates — who wish to pursue the study of history, economics, and subjects allied thereto, not simply as a portion of a general academic course, but for purposes of specialization and with reference to the careers they have in view, provision has been made for the extension and the systematic grouping of all the courses of study offered in the departments named above, in such a way as to enable a student to plan his work in an orderly manner for a period of two or of three years. For convenience, and to secure uniformity of administration, a special committee* has been named to supervise the work of students who enter upon the special courses; and, while it is not proposed to prescribe a curriculum of study from which there can be no deviation, it is expected that the advice of the committee will be followed by the student in the arrangement of his work.

According to the statement the aim was to give a scientific training in the structure and organization of modern industry and commerce so as to enable the student to master quickly the technique of any business career. In 1902-3 the name of the department appears as "Political Economy, Industry and Commerce, and Sociology," and is accompanied by this statement:

The courses in industry and commerce have for their special object the study of organization and processes of modern business. They are closely related to economics, both as a study of wealth production and as an account of the application of economic principles in industrial society. Some of them are technical in character and are intended to rank as semi-professional courses.

By 1902 an imposing list of courses was offered in the Department of Economics. These included: Commercial Geography of the Extractive Industries (Jones), Commercial Geography of the Manufacturing Industries (Jones), Science of Accounting (Springer), Commercial Law (Knowlton, Mechem, Goddard, Sage, Bunker, and Wilgus), Administration of Corporate and Public Industries (Adams, Smalley), and Technique of Foreign Trade (Jones).

In 1904-5, for the first time, Principles of Industry (Jones) was offered, and in 1906-7 Corporations (Smalley) and The Theory and Practice of Manufacturing Costs (Harpham) were given. In 1907-8 appear Auditing (Kime), Practical Banking (Kime), and Business Organization and Management (Kime). In 1908-9 the only new course is called Wholesale and Retail Trade (Jones, Keeney). In 1909-10, for the first time, the following courses were listed: Railway Organization and Operation (Adams, Jones, Haney), Railway Tariffs (Smalley), Railway Statistics and Accounts (Adams, Haney), Principles of Industrial Technique (Hamilton), and Internal Commerce of the United States (Jones). In 1910-11 additional courses appear as follows: Principles of Industry (Jones), Page  1066Railway Finance (Smalley), Railway Engineering Problems (Anderson, Cooley, Hamilton, Williams, Davis, Allen), Drawing and Projections (Hamilton), Industrial History of the United States (Jones), and Investment (Jones).

Some of these courses were continued for only a few years. Courses in accounting and finance began to assume greater importance. Business Organization and Management, and the law courses, however, were continued until formal establishment of the School of Business Administration. Courses in marketing, statistics, and personnel had also been introduced.

More than twenty years before the establishment of the School of Business Administration a certificate in commerce was granted for the completion of certain prescribed work. The first reference to this certificate appears in the Calendar for 1904-5:

The course in Commerce is organized as a special course in the Department of Literature, Science, and the Arts. Its aim is to give special training in the organization and processes of modern industry and to assist the student in the selection of such general courses, offered in the department [of Political Economy], as will best supplement this training in preparation for a business life.

The course is administered by a committee of the Faculty … enrollment takes place at the beginning of the third year of residence in the University, and may be continued either for two years, leading to the bachelor's degree, or for three years, leading to the master's degree. During the first and second years of University residence it is essential that the student accomplish certain preliminary work, including History, Courses 11 and 12, Political Economy, Courses 2, 3, 29, and 30, and two years of French or German…

The privileges of the Combined Literary and Law Course … are open to candidates for the bachelor's degree in the course in Commerce having 90 hours credit.

Graduates are entitled to receive, in addition to their diploma, a certificate signed by the President stating the special or professional courses completed in the course in Commerce.

For about twenty years, beginning in 1900, Professor Edward David Jones (Ohio Wesleyan '92, Ph.D. Wisconsin '95) taught many of the courses in commerce. Durand William Springer (Albion '86, A. M. Michigan '24) in 1901 began the first instruction in accounting. He became a leader in organizing societies of qualified public accountants and for many years was regarded as the dean of certified public accountants in Michigan. Professor David Friday ('08), to become famous in later years as a federal research and consulting economist, took over the accounting work in 1911 and succeeded in giving it widespread popularity. For many years the elections in the various accounting courses outnumbered all other courses in the department with the single exception of the introductory course, Principles of Economics. Among the instructors who served under Friday in the work and who became distinguished in the field were Martin J. Shugrue ('13) and Russell Alger Stevenson ('13, Ph.D. '19, LL.D. '41). Henry Rottschaefer (Hope '09, J.D. Michigan '15, S. J. D. Harvard '16) was an instructor for several years and assisted Professor Isaiah Leo Sharfman (Harvard '07, LL.B. ibid. '10) in the commercial law courses. Fred E. Clark (Albion '12, Ph.D. Illinois '16) later took over Professor Jones's courses, Business Organization and Management, and Marketing. After 1919 these courses were given by Professor Clare Elmer Griffin (Albion '14, Ph.D. Illinois '18).

It is common in universities for undergraduate work in economics to lead eventually to a demand for courses having a direct and practical application Page  1067to business. To meet this demand courses are added from time to time, and in this way a curriculum grows up which does not take into consideration the program as a whole. Furthermore, the popularity among undergraduates of the more practical courses has had a tendency to draw students away from the study of economics as a social science.

Enrollment in the Department of Economics for courses now given in the School increased greatly in the decade preceding the establishment of the School: 1914-15, 950 students; 1919-20, 1,383 students; 1923-24, 1,440 students. The greatly increased enrollment in commerce in the years immediately following World War I resulted in the organization of a separate School of Business Administration, which put into concrete form a recognition of the growing differentiation in objective between economics and business, to the advantage of both.

Schools devoted primarily to business subjects were already numerous in leading American universities. The Wharton School of Finance and Commerce at the University of Pennsylvania, established in 1881, was the first separate college or school devoted primarily to the teaching of business courses. The development was slow in the early years, the University of California alone setting up a separate curriculum of this character before 1900. In 1900 the Amos Tuck School of Administration and Finance was established at Dartmouth. In 1908 Harvard University established its Graduate School of Business Administration. For admission to this school a bachelor's degree from an accredited college or university was required.

In 1922 preliminary plans were made for the establishment of a separate school of business at Michigan. The merits of basing professional study on a liberal education were recognized. The constantly increasing influence of business leaders on economic, social, and political institutions served to emphasize the importance of a cultural background for the business leaders of the future. For these reasons the idea of establishing an undergraduate school of business was never given any serious consideration. The new school was to offer two years of work in business administration following work in liberal arts. The problem was to decide whether two, three, or four years of background in liberal arts were to be required. It was decided to follow the lead of the Amos Tuck School at Dartmouth, which required three years of collegiate preparation.

When Edmund Ezra Day (Dartmouth '05, Ph.D. Harvard '09, LL.D. Vermont '31), of Harvard, came to Michigan as Chairman of the Department of Economics in February, 1923, one of the problems with which he was primarily concerned was that of working out plans for the new school. Before joining the Harvard faculty Day had been a member of the teaching staff at Dartmouth and thus had had a first-hand opportunity to study the functioning of the Amos Tuck School there.

The three years of preparatory work at Michigan included, as a minimum, one year in the Principles of Economics and one year in the Principles of Accounting, with six hours recommended in Money and Credit. Students in the College of Literature, Science, and the Arts who completed requirements of that College and whose scholarship was of sufficiently high standard were admitted on the combined curriculum in letters and business administration. A student thus was able to earn the degree of bachelor of arts at the end of his first year in business administration and the master of business administration degree at the end of his second year. Students Page  1068from other accredited colleges with the required economics and accounting were admitted at the end of their third year, but had to forego the possibility of earning a bachelor's degree. After several years of experimentation on this basis the entrance requirements for all except Michigan combined curriculum students were raised to a straight graduate basis, with the undergraduate work including at least one year in economics.

The School of Business Administration was formally organized in 1924, with its first quarters in Tappan Hall. Day was appointed Dean, and, until his resignation in 1928, he continued to act also as Chairman of the Department of Economics. This ensured a close relationship between the two units, which was particularly desirable during the formative years of the new School. Day was succeeded in 1929 by Clare E. Griffin, Professor of Marketing, who had been Acting Dean in 1927-28 when Day was on leave.

The close relationship between economics as a social science and professional training for business had been emphasized in the selection of the faculty of the School. In many schools of business it has been the custom to recruit some of the faculty members on a part-time basis from the ranks of active business men. Here, however, not only are the members of the faculty on a full-time basis, but with few exceptions they have come to Michigan from other departments of economics. Thus, graduate training in economics has been considered as important for members of the instructional staff as is an intimate practical knowledge of the subjects taught.

The general purpose of the School of Business Administration is to afford fundamental training for the student which will be of value to him throughout his business career, and to shorten, as much as possible, his period of apprenticeship. This general purpose may be resolved into certain more specific aims. The School endeavors to provide instruction of professional grade in the basic principles of management, to afford training in the use of quantitative measurements in the solution of management problems, and to assure education in the relationship between business management and the more general interests of the community, as represented by both public and private agencies.

The first year in the School has been devoted primarily to work in accounting, statistics, and the major phases of management — that is, production, industrial relations, distribution, and finance. Most of the student's program in this year has been prescribed. The second year has been devoted largely to specialized studies in the separate divisions or phases of business. It is not the aim of the School to teach the detailed techniques of individual trades or industries; such details can be better taught by the trades and industries themselves. The emphasis of instruction is at all times upon such general phases of management as have wide and important applicability.

The use of the scientific method in the solution of management problems has wrought fundamental changes in business administration during recent years. The technique of quantitative measurement in business administration devolves largely around accounting and statistics. These subjects are regarded as fundamental in professional training for business administration. They are given a large place in the instruction of the School, and students are required to become familiar with the application of these methods of quantitative analysis to the several important phases of management.

The relationships of business management to the more general interests of the community can be clearly understood only after broad training in such fields Page  1069of study as the social sciences. Students coming to the School of Business Administration are expected to have included in their undergraduate programs a substantial amount of work in the social sciences, particularly in economics. In the School further attention is given to the relation of business administration to business ethics, legal practice, government control of industry, and more general public policy.

To acquaint students with typical situations that arise in business relationships, instruction in the School of Business Administration has been based on the use of the problem method. The cases have been drawn from actual experience in a wide variety of fields. Much of the case material was prepared by the Bureau of Business Research. By keeping in touch with changing business methods, the Bureau is able to supply the instructional staff with current business problems and with new ideas in managerial policy.

In 1940 there were eighteen members on the faculty of the School and sixteen on the staff of the Bureau of Business Research. Fifty-seven courses were offered, and the enrollment was 217.

Bureau of Business Research

The Bureau of Business Research, established in 1925 as a department of the School of Business Administration under the directorship of Dean Edmund E. Day, provides a means of co-ordinating and facilitating the research work of the members of the faculty. In the performance of its functions, the Bureau makes possible a continuous contact between the School and numerous business enterprises, thereby enriching the instruction and keeping up to date the materials used in teaching. The cooperation thus established between teaching staff and men actively engaged in business is considered essential to the effective conduct of business education.

As contributions to the literature of business, the Bureau publishes the results of its researches in two forms. Michigan Business Studies, a monograph series under the authorship of staff members, deals with investigations in all the major divisions of business. In Michigan Business Cases appears problem material which has been collected for use in the classwork of this and other institutions.

Bureau of Industrial Relations

The Bureau of Industrial Relations, established in 1935 under the directorship of John W. Riegel (Pennsylvania '17, Ph.D. Harvard '25), is a center for study and interchange of information on employer-employee relations. Because of the increasing importance of this field and the need for study and advice, it seemed appropriate to set up a special Bureau for it. This was made possible by a gift of funds for the purpose by the Earhart Foundation. The Bureau studies and reports upon constructive endeavors in this field, convenes meetings of business executives and other groups interested in discussion of such developments, and maintains a specialized library. A reference service is maintained which employers and employees, or their representatives, are invited to use, with the result that requests are continually received for information on widely varying topics. The annual conference of the Bureau brings together representatives of business organizations from the entire country. These annual conferences are, in a sense, a continuation and an extension of a series of conferences held by the School before the establishment of the Bureau. Although for administrative purposes it is a part of the School of Business Administration, the Bureau is designed to serve the entire University.

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SELECTED BIBLIOGRAPHY

Announcement, School of Business Administration, Univ. Mich., 1925-40.
Calendar, Univ. Mich., 1900-1905, 1912-13.
Catalogue, Univ. Mich., 1914-18.
President's Report, Univ. Mich., 1883-1909, 1920-40.
Proceedings of the Board of Regents …, 1900-1940.