Rodney R. Michael MICHIGAN TECHNOLOGICAL UNIVERSITY
and
Paul A. Nelson MICHIGAN TECHNOLOGICAL UNIVERSITY

A LABORBASED EXPLANATION FOR ACCOUNTING INNOVATION IN A LATE NINETEENTH CENTURY AMERICAN CORPORATION

Abstract: In 1888, the Quincy Mining Company changed its payroll accounting practices. Although efficiency was almost certainly a contributing factor, the nature and timing of this accounting innovation cannot be fully explained by efficiency alone. Instead, this paper attributes the new procedures to the transformation of American labor that characterized the last part of the 19th century. It is argued that the accounting changes reflect a realignment of the organizational relationship between management and labor. Through a contextual examination of a 19th century accounting innovation, this paper provides insights to the social and cultural influences upon accounting processes.

In January 1888, the Quincy Mining Company (QMC) changed the way it recorded labor costs. It could be argued that the firm was simply attempting to reduce posting costs and streamline its record keeping. However, our premise is that when QMC made the accounting changes in 1888 and eliminated a service that had traditionally been provided for its labor force, QMC also formalized a new concept of the significance of labor.

This study, a contextual examination of a 19th century accounting innovation, has two primary implications for accounting practice. First, it contributes to an extensive body of literature that interprets accounting activities within the context of social and cultural processes [Burchell et al., 1980; Meyer,

Acknowledgments: We thank R. Richard Michael, Jr. for invaluable assistance during the datagathering phase of this study. We also thank three anonymous reviewers for their insightful suggestions.

1986; Hopper et al., 1987; Hopwood, 1987; Hines, 1988; Miller and O’Leary, 1990; Tyson, 1990; Fleischman and Tyson, 1996; to name a few]. Although the viewpoints within this literature are diverse, a common theme is that accounting can be viewed as more than a onedimensional activity driven by efficiency.

Second, this study provides firmspecific evidence to support a “labour process approach to economic and industrial history” as articulated by Hopper and Armstrong [1991, p. 406]. In contrast to Johnson and Kaplan [1987], who attributed 19th century accounting innovations to management’s search for efficiency, Hopper and Armstrong [1991, p. 406] advocated
laborbased explanations stressing:

. . . crisis rather than continuity; contradiction rather than internal consistency; social and political conflict rather than harmony; the monopoly power of corporations rather than selfequilibrating competitive markets.

This paper argues that the accounting innovation of 1888 is attributable to QMC’s labor processes in two ways. First, the bitter conflicts between management and labor at the Quincy Mine in the late 19th century eradicated any remnants of benevolent paternalism. One result was the elimination of an employee benefit in the form of a free “banking” service.
Second, the timing of the accounting change coincides with the reduction of labor’s ability to constrain management’s actions. In the developmental years of the Michigan copper range, the supply of skilled miners was limited. Mine managers that trod too heavily upon the miners faced strikes and the migration of skilled workers to other mines.2 The ability of miners to

‘See Fleischman et al. [1996] for a discussion of the laborprocess perspective and Fleischman and Tyson [1996] for a laborprocess interpretation of practices within another 19th century American firm.

2Lankton [1991, p. 30] provided the following example of the power wielded by the miners during the early 19th century: “In the. Copper Country, the term ‘miner’ did not apply to all underground workers, but was reserved for shaftsinkers, drifters, and stopers who drilled and blasted rock. The skilled Cornish miners who arrived early at Lake Superior carved out a special niche for their occupation in the hierarchy of underground work. They wanted miners Lo be seen as superior to other underground workers. In the late 1850’s, Quincy’s Cornishmen suddenly walked off the job one day. The perplexed mine agent first assumed they had struck for higher wages, but later discovered that they had struck over the issue of status. The Cornishmen protested that they had been demeaned when the company had handed drills and explosives to inexperienced men from another ethnic group and had called them ‘miners’.”

disrupt operations was a powerful constraint upon management practices. However, the transformation of American labor processes in the late 19th century weakened the power of the miners and made it possible for management to impose both technological and administrative changes. By 1888, labor homogenization and standardization virtually eliminated the value of a skilled individual. Consequently, miners were no longer accorded the privileged status they had enjoyed in the early years of the mining district.

The remainder of this paper will first define QMC’s payroll accounting practices in 1887 and describe the changes made in 1888. Next, an overview of American labor processes in the late 19th century is provided as a backdrop for the events that occurred at QMC. This discussion focuses upon the transformation of labor processes that occurred in America and the resultant growth of organized labor. Finally, correspondence from the years surrounding the accounting innovation is used Lo link QMC’s management practices to contemporary, antilabor sentiments.

LABOR ACCOUNTING PRACTICES

The labor accounting practices used by QMC in 1887 were neither unique nor particularly creative. The methods and documents were, in general, consistent with contemporary practices. The following paragraphs first define these practices as they existed in 1887, precedent to describing the changes made in

Time Books: As shown by Figure 1, payroll information was initially accumulated in a time book prepared by the supervisors for each major activity within the mine’s operation (mining, surface activities, stamp mill, etc.).3 Since they were informal documents and were kept onsite, only a few of the time books have survived. Although the formats of the extant time
3The documents described in this section are part of the historical collection of the Robert Van Pelt Library at Michigan Technological University. At the time of writing, the letters and other similar artifacts were not catalogued. Although only limited examples of the key accounting documents (time books and summary worksheets) have survived, enough information is available to compile a reasonably complete interpretation of the payroll procedures used bv the firm.

books van/ considerably, the information provided is fairly consistent.
FIGURE 1 Payroll Information Flows, December 1887
Time Books

let!
Summary Worksheet
Labor Allocation

Cost Centers
Laborers’ Accounts
To record labor cost

Cash Book

General Journal

Laborers’ Accounts Laborers’ Accounts
Casli Sundry Accounts
To record cash To record transfers
payments to other accounts

Note: Both cash payments and transfers between accounts were made at the option of the individual laborer prior to 1888.
For example, the time book of the Rock House from January 1888 shows the number of days worked, the daily or monthly wage, and the total amount due each laborer. Similarly, the time book from the Stamp Mill for January 1893 lists the individual worker (identified with a number), the days worked, the individual’s pay rate, and the total amount due. A summary schedule entitled “distribution of time” was used to recharge costs to the various operating areas.

4QMC used interdepartmental cost allocations as early as 1862 to portray more accurately the costs of the various operating areas at the mine. Michael and Lankton [1994] related this procedure to the overall ability of the firm to control its operating costs during a time of economic distress following the Civil War.

Summary Worksheets: The second document in the labor accounting process was a worksheet that consolidated the time books and organized information for the preparation of journal entries. One representative summary worksheet, dated July 1893, contains the gross amount due each laborer, deductions for items provided by the company (such as rent, medical care, and mining supplies), and the net amount due. Column totals were calculated for each of these categories on the last page of the schedule and a summary statement was prepared.
Individual Accounts: A key component of QMC’s payroll procedure between 1846 and 1887 was the use of an individual ledger account for each laborer. A worker received a credit to his account in exchange for his labor. He could then “save” the balance, take payment in cash, or “transfer” the credit to settle personal debts to local stores, his landlord, or other individuals.

This “banking” service was particularly beneficial during the early years of the firm when the mine site was isolated and undeveloped. Banks, stores, and other conveniences did not exist in the primitive mining community. Cash transactions were often difficult due to currency shortages and the danger of carrying cash in the rough frontier environment. Therefore, by allowing its workers to transfer amounts between accounts, the company provided a convenient means of conducting business and personal financial transactions. It could be argued that the firm’s accounting system was a vital part of the economic structure of the community.

Providing free “banking” services was consistent with QMC’s other developmental activities, including the funding of a hospital, schools, churches, and housing for its employees. QMC’s management considered these activities and many others as a normal part of conducting business in the Michigan copper range.5 Given the diverse and costly nature of the other developmental activities undertaken by the firm, the costs of providing an accountingbased, economic service to the community were inconsequential.

5Michael and Lankton [1994, pp. 7781] discussed the paternalistic practices of QMC and contended that “paternalism and social control were as integral to operations as the extracting, milling and smelting of copper. Companies that came to a remote wilderness to start highrisk mining ventures had to serve as community builders. While developing underground operations, they also had to hasten the establishment of stable, livable mine villages.”

The labor accounting procedures used in 1887 appear to reflect a balance between the firm’s need to accumulate and control costs, on the one hand, and the economic needs of its employees and the community in general, on the other. This mesh could be interpreted as a relic of the firm’s developmental period when the interests of labor overlapped with those of management. In contrast, the accounting innovation introduced in 1888 reflects a different relationship between management and labor.

Accounting Innovation: When QMC changed its system for recording wage payments to laborers in 1888 (Figure 2), the most visible effect was the elimination of general ledger accounts for individual workers. Instead, the aggregate total was posted to a new account called “Labor.” The timebook total from the summary worksheet can be found on the credit side of the Labor account, while the offsetting debits to the Labor account represent cash payments to the laborers and recharges to various accounts for payroll deductions.
FIGURE 2 Payroll Information Flows, January 1888
Time Books
Summary Worksheet

— Cash Book

Labor Allocation

Labor Account Cost Centers
Cash Labor AccounL
To record payroll To record labor cost
General Journal
Labor Account Sundry Accounts
To record payroll deductions

Note: All of the entries shown above were standardized and prepared on a regular basis. There were no discretionary activities under the new payroll process.

The journal entries shown in Figure 2 were made each pay period and reflected a standardized format. Consequently, the choices available to the individual laborer in 1887 were eliminated. All amounts due were paid in cash each payday and account transfers for personal transactions were no longer possible. In short, the company eliminated the “banking” service that it had traditionally provided to its workers.

The elimination of workers’ accounts reduced the cost of labor information via reduced posting time. This savings may have been particularly important given the increases in the size of the work force that began two years later. However, there are two reasons why cost reductions may not have been the determining factor for the elimination of workers’ accounts.
First, since clerical help could be obtained for less than $50 a month, the cost savings were immaterial within the context of the firm’s profitability at the time. Second, if cost reductions were the controlling factor, the changes would probably have been made much sooner. For example, Michael and Lankton [1994] discussed the extensive costcontrol measures implemented when QMC was struggling to survive after the Civil War. In short, the changes could have been made earlier, but they were not. This timetable suggests that something within QMC’s organizational environment changed to make the accounting innovation possible.

There are at least two reasons to believe that the elimination of individual accounts may have reflected a significant change in the way that management perceived labor. First, modern accounting systems use their account structures to classify and group various types of assets, liabilities, revenues, expenses, and capital items. But QMC’s pre1888 system reflected a different underlying logic.

The Quincy accounts were used, with limited exceptions, either to monitor the debtor/creditor relationships among the various stakeholders or to record business costs. Between 1846 and 1887, QMC recognized the individual miner as a stakeholder, who was either a debtor or a creditor of the firm.6 However, after the accounts for individual workers were replaced with the Labor account, the general ledger reflected only the aggregate wages paid to the labor force. Therefore, it could be
‘Michael and Lankton [1994] found LhaL, in 1867, there was a consistent pattern of credit balances (representing funds left “on deposit” with the company).

argued that labor was transformed from a collection of individual stakeholders to a highly aggregated cost of production.

Second, the costcontrol potential of the accounting process for labor was no longer consistent, with the methods used to control the other costs of production. For example, Michael and Lankton [1994] described QMC’s generalledger practice of isolating costs for specific projects, or for segments of the firm, in individual ledger accounts. In other words, it was the disaggregation of costs (and the resultant increase in accounting visibility) that enhanced management control. In contrast, the aggregation of costs in the Labor account appears to reduce the visibility of the individual laborer.7 Although this practice would seem to reduce management’s ability to control labor, we contend that, by 1888, accounting control via the general ledger was no longer necessary. Dcskilling, mechanization, and widespread antilabor sentiments had rendered the individual miner virtually irrelevant. Labor had been transformed into a highly aggregated component of the production process. The accounting innovation merely formalized this new reality.

The transformation of labor was not unique to QMC. The following section argues that labor transformation was common in 19th century America.

AMERICAN LABOR PROCESSES IN THE LATE 19TH CENTURY

Gordon et al. [1982, p. 100] described a late 19th century homogenization of labor, characterized by “a spreading tendency toward the reduction of jobs in the economy to a common, semiskilled denominator.” The restructured labor processes that followed homogenization displayed three dominant characteristics [Gordon et al., 1982, p. 128]:
… (1) a reorganization of work, facilitated by both mechanization and job restructuring, which produced

7Gordon et al. [1982, pp. 135137] described a tendency of American businesses in the early 20th century to rely upon foremen and supervisors to control the labor process. Hopper and Armstrong [1991, p. 418] pointed out that the expansion of the “foreman’s empire” created two problems. First, the foremen needed to control the labor force. Second, upper management needed to control the foremen. Each need created new administrative tools and procedures. QMC’s shift from centralized surveillance of the labor force, via the general ledger, to decentralized control by the operational managers and supervisors may reflect the emergence of the “foremen’s empire.”

increasingly homogeneous employment for production workers; (2) a rapid increase in plant size, particularly among the larger corporations, which reinforced the spreading impersonality of wage labor; and (3) a continuing expansion of the foreman’s role, which added an insistent supervisory impetus to the new system of employer control.
Each of these characteristics was evident in American firms in the late 19th century.

Bendix [1956, pp. 203204] explained that industrialization had different requirements than did craftsmanship:

Traditionally, skilled work was performed at a leisurely pace or in spurts of great intensity, but always at the discretion of the individual worker. In modern industry work must be performed above all with regular intensity. Traditionally, the skilled worker was trained to work accurately on individual designs; in modern industry he must adapt his sense of accuracy to the requirements of standardization. In handicraft production, each individual owned his own tools and was responsible for their care; by and large this is not true in modern industry, so that the care of tools and machinery is divorced from the price of ownership. Traditionally, skills were handed down from generation to generation and, consequently, were subject to individual variations. In industry the effort has been to standardize the steps of work performance as much as possible.

Not all scholars accept the homogenization of labor as a natural consequence of the mechanization of industry. Braverman [1974] advanced the boldest formulation of the homogenization of labor thesis by labelling it as “deskilling,” the inexorable separation of conception and execution. From this perspective, Braverman [1974, p. 127] described the impact of deskilling on the labor force:

. . . the organization of labor according to simplified tasks, conceived and controlled elsewhere, in place of the previous craft forms of labor, have a clearly degrading effect upon the technical capacity of the workers.

Within a Marxian framework, Braverman [1974, p. 170] developed the argument that this deskilling enables management to gain exclusive possession of technical expertise and to tighten control over labor:

… in the capitalist mode of production, new methods and new machinery are incorporated within a management effort to dissolve the labor process as a process conducted by the worker and reconstitute it as a process conducted by management.

This deskilling of labor involved reducing worker discretion, routinizing work activities, and accustoming the worker to a mindless role. To carry out this deskilling, industry needed to foster the development of engineers, managers, and personnel directors to appropriate the workers’ knowledge and to prevent it from being passed to the other workers [Smith, 1994]. The significance of deskilling to Braverman’s [1974, p. 126] perspective is aptly expressed in his statement that the “… separation of hand and brain is the most decisive single step in the division of labor taken by the capitalist mode of production.” Whether one accepts homogenization as a necessary consequence of mechanization and largescale enterprise or as a sinister consequence of capitalistic greed, there is little doubt that it did occur.

Within QMC, the homogenization of labor resulted in both standardized production processes and a reduction of labor’s ability to constrain management’s actions. The following sections illustrate that at the same time labor’s power was diminished, management’s interaction with labor became more acrimonious. Confrontation and conflicting interests were the norm rather than the exception. Cooperation and the pursuit of mutual interests all but disappeared from American labor processes.

THE GROWTH OF ORGANIZED LABOR

Between 1880 and 1909, an enormous wave of immigration from Southern and Eastern Europe occurred. The bulk of these immigrants came from agrarian backgrounds and possessed few industrial skills. Moreover, they often came with few possessions; many were unable to speak English. Consequently, at least until they established themselves, the immigrants were largely dependent upon urban factories for employment.

One negative ramification of the homogenization of labor was the growth of ethnic and cultural conflicts between the recent immigrants and the primarily AngloSaxon managerial elite [Gies, 1993]. Managers, particularly firstline supervisors or foremen, viewed themselves as “persons of quality,” while immigrant workers were often viewred as socially and intellectually inferior.

The ethnic and cultural conflicts, which were intensified by the poor economic conditions during the 1880s and the changing nature of the labor market, contributed to the growth of labor organizations and an increasingly hostile relationship between labor and management. For example, Rayback [1967, p. 161] described a:

. . . great wave of strikes that swept through the nation early in 1884. For the most part intended to maintain wage levels, the strikes involved all elements; skilled and unskilled, native and foreign, organized, unorganized, and disorganized. Like the strikes of the seventies they met with bitter opposition.
Rayback [1967, pp. 158159] provided the following general description of American labor organizations:

When the year 1884 began, labor . . . was not a united force. On the left were the socialists; the middle road was held by the Knights [of Labor]; the right was shared by the F.O.O.T.A.L.U. [Federation of Organized Trades and Labor Unions of the United States and Canada] and the independent trade unions. . . . There was no unity of aim.
As the labor movement grew, it began to achieve some successes. For example, Pelling [1965, p. 70] described 1885 as:

… a year of rapid growth for both the unions and the Knights — a fact which was to lead them into serious conflict. … In the spring of 1885 they [Knights] seemed to have real success at last with strike action. Members of the Order working three lines of the Gould railroad system . . . launched an unpremeditated strike against wage reductions, and Gould, taken by surprise, at once gave way.

The successes achieved by the Knights of Labor and the growing divergence of interests among the various labor factions led to organizational rivalry and competition. Although each of the labor factions sought its own goals and advocated different methods to attain those goals, a common issue emerged in 1886 — the eighthour day.

Terence Powderly [1889, pp. 471525], who was the leader of the Knights of Labor, traced the development of the eight hour movement in America and provided a firsthand description of the events that would eventually weaken the American labor movement. Powderly [1889, p. 482] claimed that the Knights had been among the original advocates of the eighthour work day, having taken the official position in 1878 “to shorten the hours of labor by a general refusal to work for more than eight hours.” The issue grew more prominent over the next few years until [Powderly, 1889, p. 492]:

The Federation of Trades, at its annual session in 1885, named May 1, 1886 as the day on which to put the eight hour system into operation, but the convention made no provision for the enforcement of the order. It was left to the discretion of each subordinate union to adopt its own plan of operations.

Although the national leadership of the Knights of Labor opted to take no action to promote general strikes on May 1, 1886, support for the movement grew in its local organizations. Both the trade unions and the more radical elements of the labor movement increased the agitation for an eighthour work day, and tensions increased as the May 1 deadline approached. When the day finally arrived [Pelling, 1965, p. 710]:

It was calculated at the time that some 340,000 workers took part in the movement: of these no less than 150,000 secured shorter hours without striking, and 190,000 actually had to quit their jobs when the day came. Fortytwo thousand of the strikers also secured concessions from their employers. The center of the strike was Chicago, where altogether 80,000 took part.

Although interpretations of the events that occurred in Chicago vary, it is generally agreed that the anarchist movement became involved in a general strike at the McCormick Harvester Works. A labor rally degenerated into a riot between strikers and strikebreakers, resulting in police intervention and the death of four men. A protest rally at Haymarket Square on the evening of May 4, 1886 turned violent when someone threw a bomb, killing a police officer. The police then opened fire and killed 50 people and injured numerous others. Eight leaders of the labor movement, including one member of the Knights of Labor, were summarily convicted of murder. Four were hung in November 1887.
Rayback [1967, p. 168] provided the following description of the aftermath:

In the public mind the Haymarket affair was a climax to ten years of labor violence. The Molly Maguire Riots and the Railway Strike of 1877 had produced the impression that the nation’s labor elements were inherently criminal in character: inclined to riot, arson, pillage, assault and murder. … A violent antilabor campaign followed.

In short, the public’s perception of labor was altered by a long series of events culminating in the Haymarket affair and the subsequent execution of labor leaders in late 1887. Antilabor activities were widespread in the following years as American businesses responded to the perceived threat to their interests and property. The next section shows that this atmosphere of hostility and confrontation, which was prevalent at the national level, also existed at the Quincy Mine.

LABOR PROCESSES AT QMC

Between its formation in 1846 and the emergence of largescale operations in I860, QMC’s activities were limited to the exploration and development of mining properties. During this developmental period the remote location of the mine, combined with the harsh winters of Michigan’s Keweenaw Peninsula, enabled both the site manager, or mine agent, and mine labor to function autonomously for most of the year. Consequently, the relationship between corporate management, located in New York, and labor appears to reflect mutual trust, or at least a high level of codependency.

In 1860, QMC began largescale copper production that resulted in substantial profits. As the scale of mining operations expanded, professional managers were introduced and the owners were further insulated from direct involvement with the work force. During this second phase of the firm’s labor history, the appearance of benevolent coexistence disappeared. Instead, the survival of the firm depended, in part, upon its ability to manage the aggregate cost of labor.8 A paternalistic social process emerged that enabled the owners and managers of the

After the Civil War economic necessity forced the Quincy management to implement costcontrol measures, including severe reductions in wages. For example, the annual reports of QMC disclose that the average monthly wage for a miner in 1864 was about $65, dropping to about $50 in 1868 and approximately $46 by 1870. Michael and Lankton [1994] provided a comprehensive analysis of the postwar, costreduction measures implemented by the firm.

various local mines to influence, if not control, virtually every aspect of both the employment market and the mining community in general.

As QMC approached economic maturity in the last two decades of the 19th century, its relationship with the labor force entered a third phase, characterized by a growing antagonism between management and labor as workers began to resist widespread changes in the labor market. By 1890, QMC exhibited most of the physical characteristics of production processes that were prevalent at the national level, including rapid growth, altered production processes, and labor homogenization.10 But more importantly, as shown in the letters discussed in the following section, the class conflicts, ethnic friction, and adversaria] relationships common to the late 19th century can be linked directly to the QMC.11
LETTERS FROM THE COMPANY OFFICERS TO THE MINE AGENT

Between 1884 and 1900, the President of QMC, Thomas F. Mason, and the Secretary/Treasurer, William Rodgers Todd,

9Lankton [1991] and Michael and Lankton [1994] provided a comprehensive discussion of the system of paternalism that existed in the Michigan copper range. In addition to employment, the large copper companies provided housing, medical assistance, churches, and schools. In return, the companies expected loyalty and obedience from their work force.
‘”Lankton and Hyde [1982, p. 50] discussed the QMC’s growth and development between 1870 and 1905 and stated that “no other period in the mine’s history witnessed such widespread alterations in the way work was done. Quincy mechanized several key operations for the first time: machine drills replaced hand drills; electric tramming with locomotives largely supplanted hand tramming; and rock breakers on the surface substituted for calcining. In areas previously mechanized, such as hoisting and stamp milling, Quincy brought in much more modern equipment to take the place of old. The new machines, plus new supplies like dynamite, profoundly affected Quincy’s economic performance, its growth potential, and the si/.e and organization of its labor force.

“Lankton and Hyde [1982, p. 50] related the growth of the Michigan copper range between 1870 and 1905 to the “waves of immigrants from new regions of Europe, most notably Italy and Finland. The new arrivals were unskilled at mining and generally became trammers and laborers. The work force began to divide along ethnic lines, with sharp distinctions between the older established national groups and the newcomers. These developments contributed to growing labor unrest throughout the district, beginning in the 1890s.”

wrote a series of letters to the Mine Agent, S. B. Harris. Although the purpose of the letters was never explicitly stated by Mason or Todd, their frequency and the nature of their content suggest that they provided a major communication link between the Michigan mine and corporate headquarters in New York.

Although the insights gained from an individual letter, written between 1884 and 1900, cannot be indiscriminately applied to other time periods, it may be reasonable to infer a continuity of thought. For example, with the exception of a threeyear period between 1873 and 1875, Mason was president of QMC from 1858 until his death in 1899. During this period Mason, who held large interests in QMC as well as other Michigan mines, actively participated in longrange planning, capitalspending decisions, and even routine staffing and compensation decisions.

W.R. Todd was appointed secretary of the firm in 1870 and became the corporate treasurer four years later. Todd assumed the presidency of the firm in 1902, serving in that capacity until his death in 1924. S. B. Harris, the recipient of the letters, became the mine agent in 1884, a position he held until 1902. In short, since all three were “company men,” their opinions expressed in the letters were seldom extreme in nature and were almost certainly deeply ingrained. It is assumed that the attitudes expressed consistently between 1884 and 1900 were also applicable in 1888, the year of the accounting change.

The financial information published by QMC indicates that the aggregate cost of labor was effectively managed for most of the last half of the 19th century. For example, in the following letter from Thomas Mason dated December 18, 1884, the company unilaterally imposed wage cuts:

The Directors of this Company have been forced to the conclusion that upon entering the coming year we must reduce the expenditures even if the production is made less — in fact as far as we are concerned we think a restriction in production generally would be best for all engaged in mining copper. As preliminary on our part I have to advise that from and after January 1st 1885 we must request you to reduce the rate of wages and salaries of all employees of the company 10% of the amount now being paid.

Mason did not question the ability of the mine agent to enforce a pay reduction; he merely defined the amount and the timing of the cut. Although the reduction appeared to apply to both miners’ wages and management salaries, in a letter dated January 10, 1885, Mason’s business partner, William Hart Smith, assured Harris that:

I have submitted the ‘10% reduction’ to Mr. Mason and he expects that it will be enforced in every case without exception — but he will recommend to the Board, and I think you may rely on favorable action, that the amount taken off of your salary on the mine books shall be made up to you by check from the home office.

The company was able to control labor costs in the long run, but market conditions may have temporarily diminished the firm’s ability to dictate wages. For example, in a letter dated April 6, 1886, Mason counseled Harris:

I don’t know that anything can be done in advance in reference to impending labour difficulties, or that it would be politic to advance wages with a view to counteract a movement of that kind, as if it is contemplated it would be just as likely to come after such an act on our part as before; so we may just as well reserve our strength and have so much more to concede when necessary. Of course would it come you will have to bear the brunt of it in the first instance and will have to use your judgment in meeting it and be governed by conditions at the time existing — I hope however that no such trouble will occur and certainly the condition of business and the situation of our operations do not warrant any dissatisfaction on their part.

In addition to illustrating Mason’s willingness to concede higher wages if forced to do so, the preceding letter also depicted the level of authority delegated to the mine agent.
Mason’s willingness to bow to the demands of labor was of short duration. On May 14, 1886, Mason instructed Harris to recoup previous concessions:
Now that the labour craze has partly subsided you might very properly do something in the way of advancing a little to enable you to put in or keep such as
12This letter apparently refers to widespread labor unrest that occurred in 1886. “That year was also known as the ‘Great Upheaval’….The U.S. Bureau of Labor Statistics recorded 1,432 strikes and 140 lockouts, involving over 600,000 American workers” [Lankton, 1991, p. 205].

you desire to in place of ‘vags and cripples’ pays your money and take your choice and do it in your own way. It looks as if the question of dictation to employers was pretty well abandoned for the present. I am very glad you did not lose your head — in either way and there is no doubt but that the conditions are such that there will be a surplus of labor floating around.

Time did not alter Mason’s concept of labor negotiations. In a letter dated April 14, 1890, he inquired of Harris:

It has occurred to me whether you are going to have any disturbance in the labour market this spring. Do you notice any indications? If so better perhaps anticipate to some extent, and perhaps it might be well to make the announcement that a slight increase would be made on May 1st.
Later in the same letter, Mason reiterated his strategy by saying:

In reference to the labour question; you must try to meet it as cheaply as you can. We can’t afford to shut down now, but rather bend to the storm if it comes and put on more sail, that is reduce again when the elements are more propitious. Cut down when it is more [illegible word] and they want winter quarters.

Evidence of collusion among the agents of the local mines to resolve labor problems is provided by a letter written by Mason on April 22, 1890, in which he advised Harris:
. . . also reference to the Labor Trouble: I think in view of the agitation all around upon that matter it would, perhaps be well to anticipate something of the kind by announcing some time this month, that an advance would be made from and after May 1st of 10% or such an advance as you think would meet the occasion, not exceeding that amt. but I desire that you use your own judgment and act in the matter as the circumstances

“The Quincy management may have used this labor dispute as an excuse to prune activists from the labor force. Antiunion activities by local mines was commonplace in the Michigan copper range. For example, Gates [1951] and Lankton [1991] described the efforts by the Calumet & Hecla Mine in 1891 to get rid of labor activists. The mine superintendent was instructed to “discharge these men as fast as any breech of our regulations or their contracts or duties gives the occasion….If this is too slow then use express reason of joining K. of Ls. [Knights of Labor]” [Lankton, 1991, p. 206].

seem to require. I take it for granted that you will confer with some of the other agents and obtain their view in relation to the subject. The object of course is to disarm the tendency, if any, to their getting up of any demonstration leading to a strike.

The attempts to prevent a strike were apparently unsuccessful. On August 4, 1890, Mason instructed Harris to make concessions, but to recoup them later:
I note what you say regarding the strike at the new mill, of course you can yeild [sic] a little for the time being but don’t forget it but make them pay for it when the opportunity conies, as it surely will some time.

Labor problems erupted once again in 1900 and resulted in predictable instructions to Harris to concede wage increases, but to cut them as soon as conditions permitted. Although the strategy is the same, the tone of the letters appears to be more acrimonious. For example, on May 10, 1900, W. R. Todd confided to Harris:
It is unpleasant and somewhat humiliating to have your men act as bosses, but just at present labor seems to have the upper hand, and it may be for the Company’s interests to submit for a while, at least until men get more plenty, or matters take a turn the other way, and then wages can be gradually reduced until they get to their normal state again.
Harris was further advised that “labor troubles have become epidemic in all sections and we could hardly expect to entirely escape on Lake Superior from this disease.”
In a letter dated May 13, 1900, Todd congratulated Harris on the acceptance by the miners of the “terms offered.” Todd went on to state that the demands of the trammers were “unreasonable” and told Harris to “get along best you can until others can be employed.” This suggests that the various labor classifications, at least miners and trammers, were not unified in their demands since the miners apparently returned to work even though the trammers remained on strike.14
14The apparent lack of unity among the laborers at the mine may represent a natural hierarchy based upon historical distinctions between miners, trammers, and surface labor. Hopper and Armstrong [1991] and Gordon et al. [1982] presented an alternative explanation. Both works described labor segmentation as a management strategy to strengthen control of the labor force.

Michael and Nelson: LaborBased Accounting Innovation 111
On May 15, 1900, Todd told Harris that QMC would not exceed the wages and “privileges” offered by other mines in the area. Harris was instructed to “pay the men off [fire them] and resume work as soon as possible.” The apparent harshness of this policy was reflected in the sentiments expressed by Todd in a letter dated May 16, 1900:
. . . have notified strikers resume work Thursday morning or get settlement. This is sensible and we think right course. If the fellows don’t want to work at increased wages equal to what paid at other mines sooner they get out of the way the better, and give room for others. Parties here that have had trouble with the ignorant foreigners have determined to employ no men who do not speak the English language. Why is this not a good rule? When trouble comes it is hard to reason with a man that does not understand what you say.
In a letter dated May 17, 1900, Todd congratulated Harris for the successful resolution of the strike and instructed him to begin finding ways to eliminate the jobs of the trammers.
From these selected examples, it is apparent that Mason and Todd consistently viewed their relationship with labor as one of confrontation and conflicting interests. They made every effort to reduce the aggregate cost of labor and showed little interest in the welfare of the individual worker. This viewpoint, along with the replacement of skilled labor with an interchangeable labor force, represents the very essence of the homogenization of labor.

Given the perspectives expressed by Mason and Todd, the continuation of labor accounting practices that both recognized and provided benefits to the individual laborer appears philosophically inconsistent. Therefore, the accounting innovation in

By emphasizing natural distinctions within the labor force and creating artificial job classifications and promotional hierarchies, management can reduce the potential for unified action by the labor force. Hopper and Armstrong [1991, p. 420] stated, “From the perspective of labour process theory, the key feature of Scientific Management was not the increases in technical efficiency, but the creation of deskillcd and fragmented labour dependent upon the production engineering and control now incorporated into management.” From this perspective, the apparent willingness of Quincy management to negotiate separate terms with miners and trammers would serve to strengthen the fragmentation of the work force and foster divisive attitudes between miners and trammers.

1888 is consistent with both the concept of labor homogenization and the values expressed by Mason and Todd.

CONCLUDING COMMENTS

There are, of course, numerous potential explanations for the occurrence of the accounting innovation discussed in this paper. For example, it could be argued that prior to 1888 QMC’s management was not concerned with efficiency and cost control. This contention, however, was not the case. Michael and Lankton [1994] showed that QMC implemented comprehensive, costcontrol practices shortly after the Civil War. Clearly, QMC’s management was concerned with cost control and astute enough to implement comprehensive changes.

It might also be argued that the accounting changes were originated at the mine and reflect only the preference of the site accountant [mine clerk]. However, this scenario is unlikely. In 1888, QMC’s central management consisted of a president and a secretary/treasurer. Site management consisted of a mine agent, a mine clerk, and various supervisors. As shown earlier in this paper, top management was deeply involved in the routine activities and operating decisions at the mine. As the ultimate authority at the mine, the mine agent [who was also a QMC stockholder] was involved in every facet of mine operations and planning. Within this structure QMC’s top management and the mine agent worked closely together on even routine operating decisions. It is unlikely that the mine agent or the mine clerk would have implemented accounting changes without consulting their superiors.

The argument could also be made that the accounting innovations in 1888 merely reflected contemporary notions of “good” accounting practice. Although the Michigan mine site was remote, the wealth generated by the mines provided ready access to both transportation and communication. Therefore, it is entirely conceivable that mine managers were influenced by new ideas relative to accounting and information processes. However, extensive archival research did not provide evidence either to support or refute this hypothesis. A comprehensive examination of surviving accounting records, letters, and other documents from the QMC did not provide a single artifact addressing the motivations for any accounting practices.

The arguments presented in this paper are admittedly conjectural. However, we have followed the premise that an historical interpretation is legitimate if it “coheres well with the evidence” and provides a “fair representation of the subject” [McCullagh, 1984, pp. 3334]. The accounting change implemented by QJVIC is consistent with the overall concept of labor homogenization, contemporaneous antilabor sentiments, and attitudes expressed by QMC’s top management. Therefore, in this particular instance, an accounting innovation appears to reflect not only the movement towards more efficient accounting systems, but also the social and cultural influences of turbulent labor processes.

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