Early
Days In Cleveland
My first contacts with the Company were in 1909. I
was Chief Clerk, Journal and Statistical Division, American Steel and Wire
Company in Cleveland. American Steel
and Wire was a constituent company of the United States Steel Corporation. I
made a trip to Pittsburgh to study the application of the Hollerith machines at
the Carnegie Steel Company. I decided that the machines could be useful at the
American Steel and Wire Company.
I ordered the machines through Phillip P. Merrill,
who was a combination salesman and repairman at the Tabulating Machine Company.
Merrill was in charge of the lakeshore installation of the New York Central
Railroad.
As I recall, ours was the only installation in
Cleveland at this time. After considerable delay, the machines arrived in the
summer of 1910. When the crates arrived, Mr. Merrill was notified. He connected the machines up to an
electrical current, came over to my desk and shook hands. Before he could get
out of the office I asked him what help might be given in regard to starting
the work. He replied that he was only required to connect the machine to a
suitable source of electrical energy. He assumed no further responsibility,
except to repair the machine, if it got out of order. That was the established
policy of the company at that time. This, by way of contrast to the Company's
current policy of assistance and help to customers. However, the machines were
successfully installed and proved to be a more efficient way of handling the
statistical and accounting work.
Two years later, at the solicitation of Mr. Merrill,
I entered the employment of the Tabulating Machine Company as a salesman.
Shortly thereafter, I offered a suggestion regarding a back-stop on the
punching machine. Information received from head office in Washington however,
was to the effect that this young man "should confine himself to selling,
not inventing, with the customary sarcastic reference that the idea was as
"useful as a button on a shirt-tail."
At about the time I joined the Company in 1912, a
decision had been made to divide the United States into districts. District
Managers were appointed in Philadelphia (T.J. Wilson), New York (Hyde), Boston
(Sayles), Cleveland (Merrill), Chicago
(Hayes) and Denver (Stoddart). The District Managers attended the annual
meetings, either in Washington or New York. Information regarding the
activities at the conferences was not divulged to salesmen. At that time it was
a small, but close Corporation!
The first convention of the Tabulating Machine
Company Division was held at the Vanderbilt Hotel in New York in December of
1915. Much to the surprise of the District Managers, and even more so to the
salesmen, a telegram was received from Mr. Watson notifying District Managers
that they were to bring the salesmen to New York to the annual convention. This
was the first mark of progress in the Company's affairs, since my connection
with it. This action brought the salesmen together as a team for the first
time. Mr. Watson will never realize the
uplift and inspiration that he imparted
to the salesmen of that day as a result of his conduct at the meetings. (Some
District Managers, however, were a
little confused!)
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Prospecting
For Customers
Embarrassing incidents occurred from time to time
while prospecting customers in the Cleveland area. One such incident was to have the General Manager or the
President of a company reach into his desk during a sales call and pull out a
four or five line letter from Dr. Hollerith.
The letter would say something to the effect that "In answer to
your letter of today, relative to the use of our tabulating machines for your
business. I can say only that your company's scope and activity is not
sufficiently large enough to warrant an installation of our machines."
This usually proved a hard one to hurdle!
The remarkable growth of the Company following the
radical departure from the non-lister to the printer justified the time, effort
and expense which Mr. Watson incurred in making this change. Mr. Watson
engineered this change in spite of the hostile and sarcastic criticism of Dr.
Hollerith who was opposed to a printing
tabulator.
Herman Hollerith
The thought that the non-lister was superior to the
printer was so ingrained into the minds of the salesmen that it took quite a
period of time before the printer's obvious superiority was acknowledged. The
printer made complete reports without transcription, which was not the case with
the non-lister. Thus, hand printing and transcribing was eliminated. The
printer then became an integral part of the accounting system, rather than a
machine to grind out statistics.
In 1914, the Vacuum Oil Company of Rochester New
York, one of the Standard subsidiaries, discontinued its contract with us. The
reasons for this discontinuance was that the salesman who took the order had
designed a faulty product code. After the monthly sorting of the cards, the
product groups would have to be re-arranged by hand before tabulating. The
Company found that the work involved was greater than if they had just posted
the information by hand in the first place. Not surprisingly, the machines were
thrown out.
Walter Dickson
Jones ca. 1920
I had been working on Standard Oil Company of Ohio
and had almost got an order when news came of Vacuum's discontinuance. I found
out the facts about the faulty Vacuum code and then went to see the President
of Standard Oil, Mr. Coombs. I explained the situation to him and he agreed
that I could work with the Company Controller, Mr. Connelly, to determine a
more logical product code arrangement. I worked with Connelly for three solid
weeks and coded every one of their products in the natural and proper
arrangement. I got the order and installed the machines. Thereafter, Connelly
was considered the product coding authority amongst the various Standard Oil
companies.
One of the toughest pieces of prospecting that I
encountered had to do with a steel company in Youngstown, Ohio. After having
called numerous times and been turned down by a number of top officials, I
finally got a response from the Assistant-Treasurer. He set a time for a
meeting when we would discuss my proposition. Imagine my surprise when I
arrived at his office for the meeting and discovered that the sales
representative for our chief competitor was also on hand for the same meeting.
Mr. X, the Assistant Treasurer, said "Now, I have called you men in to
give both of you a chance to explain what your respective machines can do for
me. Now Mr. Jones, you tell us what your tabulating machine will do. When you
finish your story, then Mr. Doe will explain his proposition. I will then
decide which is the better of the two proposals. This sales call was made at a
time when the Company's stock was pretty active on the market and he telephoned
to one of his officials to see if they had the latest quotation. Apparently the
stockbroker's offices were pretty busy and he couldn't get the information.
After he had asked me to start my talk I got up and said that we could not get
anywhere with two salesmen wrangling over the respective merits of their
machine, and that I was willing to let my competitor have his say first.
I took the elevator to the ground floor, just at the
time when the 3 o'clock edition of the paper was being brought in. I quickly
got one of the paperboys, gave him a quarter and told him to take a paper up to
Mr. X right away and to tell him that Mr. Jones had sent it up to him. After
about an hour, I was invited into Mr. X's office. Mr. X was very cordial indeed
and thanked me for the newspaper. This little incident paved the way for very
cordial relations with Mr. X. I finally
had the satisfaction of taking his order.
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Commissions
- A Big Step
In 1912, a very limited and small commission plan
was introduced to supplement the salesmens' earnings. This scheme continued
until sometime in 1914. Speaking from a salesman's point of view in the
Cleveland district, I never knew the basis for the payment of the commissions. It did not concern me as most, if not all of
the commission went to the District Manager. It was discontinued because it was
not a well thought out plan.
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Hiring
Mr. Gershom Smith
It might be of interest to record how it came to
pass that the late Mr. Gershom Smith, comptroller of the Pennsylvania Steel
Company, Steelton, Pennsylvania, came to be appointed General Manager of the
Tabulating Division of the newly formed Computing-Tabulating-Recording
Corporation. Mr. Smith, while a good accountant and user of tabulating
machines, was quite unfitted by experience and training to head this division.
The facts as related to me by a friend to whom Dr. Hollerith had told the
incident, are as follows.
Charles R. Flint (the trust specialist who set up the
CTR in 1911)and
a Director visited Dr. Hollerith in Washington, to get his recommendations in
regard to someone to operate the Tabulating Division. It happened that a short
time before, Mr. Smith had presented Dr. Hollerith with a large framed
photograph of himself. In Dr. Hollerith's words, "As I raised my eyes to
Mr. Flint, they happened to rest on the photograph of Gershom Smith. I thought
to save myself a lot of bother, I might as well recommend him, for I fully
expect to buy this division back from CTR before my retainer expires. In the
meantime, Mr. Smith could not do much harm to the business, even if he could
not do much good, and I will be kept in touch with developments."
The young men (some of whom became District
Managers) whom Dr. Hollerith had trained in Washington to repair the machines
adopted his views. This was at a time when the Doctor was making his first
inroads with the railways and the insurance companies. The Doctor looked upon
and considered his customers to be clients, in a true professional sense,
rather than in a commercial sense. Hence, it was the rule to speak of customers
as clients. Another deeply rooted idea which came from Dr. Hollerith was that
the machines were to be used solely for statistical purposes, and they had no place
in the accounting field as such.
None of the young men who had been trained by Dr.
Hollerith had much, if any, accounting experience and it was therefore natural
that they did not see the sales opportunities for the machines in the
accounting field.
It was perhaps because of my background of
accounting experience and the fact that when I ordered the machines for the
American Steel and Wire Company, they were installed for accounting work
primarily. In that installation, the statistics were a by-product of the
accounting work.
In every order I took as a salesman in the Cleveland
District, I would always work in some accounting features. My theory was that
there was less chance of a discontinuance if the machines were part of the
company's accounting processes, rather than merely being used for the gathering
of statistics. I always insisted that the installation be under the control of
the company's accountant - this assured greater accuracy and it also
established friendly relations with the accounting department.
In the natural development of things, my
discontinuances were very few. In 1915 I took twelve new contracts and
installed them personally. There was not a discontinuance in my territory for
the whole year.
About twenty years ago (1924), Jim Bryce was
developing a high speed calculating machine, which was later put in the E.A.M.
line as the Multiplier. On account of
its speed and capacity, there were doubts raised as to whether such a machine
could be used commercially by existing customers. The sales Department was
consulted as to its potential. I was drawn into the discussion and asked for an
opinion. In conversation with Mr.
Bryce, Mr. Wilson and Mr. Lamotte, I pointed out that while there was little or
no work in the present installations that could support such a multiplier,
there were fields that we had not touched, where the multiplier would be
invaluable.
I cited the case of the municipal tax bill. The bill
must show the valuation of the property, which is calculated by three different
rates, i.e., school rate, municipal rate and the county rate. I estimated there
were between five hundred and three thousand cities in the United States who
could use a multiplier to advantage.
This angle interested Mr. Bryce, as well as the Sales Department with
the result that Mr. Lamotte asked me to write out my ideas about municipal tax
accounting. My ideas were turned over to the Research Department. The subject
of municipal accounting was one with which I was quite familiar, having worked
four years for the Town of Westmount, writing out by hand, and calculating, the
tax bills for the entire town.
In 1928, while having lunch at the Bankers Club in
New York with Mr. Mack Gordon, one of my old Cleveland customers, I was
discussing with him the marvel of being able to send Mr. Watson's photograph
through telegraph wires to Chicago.
Thomas Watson Sr.
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New
Ideas
The thought occurred to me that if a photograph
could be sent through space, it should also be possible to transfer a figure
from a document through a punching machine to a hole in a card and thus
eliminate the human error in punching.
In other words, the transferring of facts and
figures from the document of original entry would be done electrically, thus
completing the cycle of electric accounting. Upon my return from the Bankers
Club, I dropped into Mr. Watson's office and found him in conversation with the
late Andrew Jennings and explained my idea. Mr. Watson's comment was "If
it can be done, it will be worth a million dollars to the Company." I was
told to discuss it with Mr. Bryce. After talking it over with Mr. Bryce an
appropriation was issued for the experimental work to develop an electric eye
principle, which Mr. Bryce thought would be the best medium to experiment with.
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In
Europe
The Scale Company in France (a division of the
Dayton Testut Company) was sold because it was a losing venture. This was also
true of our experience with the German Scale Company. At the same time, there
was no better scale manufactured in France or Europe than the Dayton Testut
Scale.
However, the marketing and sale of the machines was
done through agents and salesmen in every corner of France. These salesmen
invariably operated without regard to Company policy, which resulted in
shortages and losses. The agents to whom the scales were shipped on consignment
were careless handlers of the Company's property, to say the least of it.
The late Mr. Jennings considered that the business
was profitable. This was so because, as he explained to me, what they lost in
agency operations, they more than made up for in the sales from the factory to
the agents. Shipments from the factory
to the agents were billed at full sales price and naturally showed a profit
over and above cost. I pointed out to Mr. Jennings that this was only a book
profit which only became a real profit when the agents paid in cash for the
machines that we had shipped to them. I also pointed out that the Company was
carrying the agents' accounts receivable which had not, and would not be paid because
all the agents were broke.
The arrangement with the Testut group in France
provided a clause that said that they agreed not to enter the computing scale
field and our Company agreed not to enter the non-computing scale field, both
light and heavy capacity. I subsequently found out that one of our strongest
competitors in the sale of computing scales in France and Italy was a company
financed and operated by the French Testup group. This constituted a breach of
their contract. At that time, the Dayton Tetsup Company was losing money, so I
came up with the proposition to sell the French group the Dayton Testup
Company, good will and patents, up to the point of sale, rather than enter suit
against them. Permission to negotiate was given by New York.
I approached Colonel Desrouche, a director of the
Dayton company, but not connected with the competitive scale company and gave
him to understand that an agreement might be reached. He in turn mentioned the
possibility to Mr. Testut and Colonel Montgomery, directors of the Dayton
Testut and principals in the competitive scale company. After two years of
thinking it over the French group stated that they were willing to purchase the
Dayton Testut.
On the date of consummation we had gathered in the
office of our attorney, Mr. Marion, and had agreed to the amount of stock that
we would take in the new Company and the cash consideration. There was only one
thing still up in the air; the verification of the count and quality of
machines in the hands of the agents scattered all over France. It had been
tentatively agreed that we would each appoint a representative who would make
visits to the various agencies and arrive at a valuation of each agent's stock.
In case of a dispute, a referee would be called in to arbitrate the difference.
The amount involved in the inventory of machines in the hands of the agents
amounted to about 3,250,000 francs.
Much to my surprise, Mr. Cadier, General Manager of
the Testup group made a proposition that if our group would consider a discount
of 600,000 francs, that they would settle in cash for the inventory, sight
unseen. In view of what I knew about the scale business in the United States
and Europe, and the irresponsible and careless way in which agents operated, I
considered this a good proposition from our point of view and accepted it.
Subsequent findings of the Testup group, when they checked on the agents'
inventories, proved that the inventory of scales when they finally got hold of
them showed a shrinkage greater than the 600,000 francs discount which was
agreed to.
The Tabulating Machine Company (TMC) was never
legally established as an operating company in France. It operated in the
offices of S.I.M.C., which was the French Company, at 29 Boulevard Malesherbes.
The work of rendering the bills to the customers
throughout all Europe, outside Germany, and the collecting of the amounts due,
was done by employees of the SIMC Company.
A fee was paid to SIMC for this work by the Tabulating Machine
Company. TMC maintained no bank account
in Paris or France. The payments for rentals by customers in Europe, outside of
Germany, were made out in US dollars, and sent to Paris. They were then sent by
registered mail to New York. The Company paid no taxes of any kind in France. I
was assured by the late Mr. Jennings that this arrangement was entirely legal.
One of the employees of SIMC, for reasons of
personal spite, denounced the TMC to the French Treasury Department in 1933.
The result was that two officers of the French Treasury Department appeared in
my office one day and demanded full information in regards to the operation of
the TMC, from the date of its inception.
As this looked to be serious business, I stalled the agents and made an
appointment with them for the following day. I went down to see Mr. Marion, our
solicitor, and reviewed the case with him. Mr. Marion stated that in his
opinion the French tax authorities had grounds to impose a tax, and its size
depended upon the nature of our defense. He offered his assistance, but I had
found from contact with him that he lacked force as a negotiator and besides,
his attitude showed that he had already prejudiced the case. I then got in
touch with New York and asked that Mr. M.G. Connaly be sent to Paris to assist
in the defense of the Company's interests.
In the meantime the agents, armed with the authority
of the French law, conducted a cursory investigation. During this preliminary
investigation I got as much information out of them as possible in order to get
a line on the scope of, and pertinent facts by which they hoped to prove their
case. When they presented their initial findings, they had arrived at a tax of
between 50 and 60 million francs. They were very decent however, and when I
explained that a representative from New York was coming over to go in to the
matter in greater detail with them, they agreed to hold off making an arbitrary
tax demand until the representative arrived. As a result of Mr. Connaly's very
proficient presentation of our case, together with whatever assistance I was
able to provide, the tax was reduced to about 2,300,000 francs. This sum
included all penalties.
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The Valtat Wrongful Dismissal Suit
When I arrived in Paris in
1930, I was told by Mr. Jennings of the Valtat suit.
Valtat was an EAM salesman who had been dismissed by
SIMC. He promptly brought suit against the French Company for unjust dismissal,
claiming two or three hundred thousand francs damages. Jennings then brought
suit against Valtat for one million francs on the grounds that he had perfected
his process of card printing on the Company's time and property and in
violation of his contractual agreement, he had failed to turn his invention
over to the Company.
Before the case was tried, I went with Mr. Delcour
to interview our attorney, a Mr. Garcier. Mr. Garcier explained to us that
while he had not actually read the files, he would do so an hour or so before
the court opened and, in his own words, "Soyez tranquille. I will win the
case. Valtat's lawyer is young and inexperienced and anyway, I know the judge
who will hear the case." His unjustified optimism was rudely upset
however, when the judge listening to the pleadings of the two attorneys did not
even send it to a jury. Instead, he rendered a fast decision in favour of Valtat,
costs and damages against us. Valtat had been illegally discharged and he had
not been paid the full indemnity allowed under French law.
M. Garcier immediately appealed the case and then
asked me for instructions. I consulted with Mr. Porter, an American solicitor
living in France. Mr. Porter advised us not to press the suit against Valtat, but to negotiate directly
with him.
Valtat seemed to be a fairly decent Frenchman. His
story, later confirmed, was to the effect that he had worked as a salesman for
SIMC. During that time he had had a good territory, sold more than any other
salesman and had made good commissions. He said that he had been quite
satisfied with his relationship with the Company. On a Monday morning he
received a letter signed by Mr. Delcour, telling him that his territory was
reduced and that his commission rate was reduced, effective the first of the
next month. He protested to Delcour and was fired.
I had several interviews with Valtat and finally
convinced him to withdraw his suit for a settlement of 50,000 francs. This left
him in a friendly mood for the negotiations that subsequently took place in New
York where the Company brought the rights to his punch card printing process in
all countries except France.
I am still convinced that
his process has merit.
Alone and with small capital he was able to devise a
process to stick two pieces of wrapping paper together, cut and print them and
call it a tabulating cad. His card worked and he sold them for less money than
our card and our competitor's card and still made money. It was free from
carbon specks and slime holes, did not warp and withstood humidity as well or
better than our cards.
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French
Government Graft
The following illustrates the mentality of a certain
type of French government official, and their attitude towards what is commonly
known as 'graft'.
One day in 1932 I received a phone call from Mr.
Lawrence, a salesman of SIMC, our French Company. He wanted me to authorize a
payment of 30,000 francs to a French government official. Lawrence told me that this payment would
secure an order for six complete installations in six different departments of
the French government. This one order
would provide us with an annual income of 30 million francs. Lawrence further
stated that once the order was signed, we would also be required to make a
one-time payment of 3 million francs - to be divided amongst the higher-ups. My
reply to Lawrence was "Not one centime!" Not surprisingly, the order
went to a competitor.
In due course, a million and a half dollars worth of
competitor's equipment arrived at LeHavre. It was unloaded and placed in a
warehouse. The French government refused to accept delivery. The equipment remained in storage for a couple
of years at which time our competitor tried to sell it throughout Europe for
half price.
Graft was very flagrant and open in the Balkan
countries - no doubt a hang-over from the days of Turkish domination. Graft was
even carried to the point where a Government official would give an order to a
company for goods which the Government had no intention of buying. The contract
would carry stiff penalties for contract cancellation. When the official
cancelled the order, the penalty would be paid by the government and divvied up
amongst the interested parties.
When I arrived in Paris, the late Mr. Jennings
explained to me that all tabulating machine price lists for the Balkan
countries were 10 per cent higher than
the rest of Europe. This 10 per cent
represented the amount of money that we would return to the 'interested
parties.' He even had a rubber stamp made up for Balkan price lists which said
simply "10% of prices added."
When I became European Manger, I countermanded these
instructions. I gave orders that EAM prices were to be the same in the Balkans
as in the rest of Europe and no orders to be accepted on which the Company was
required to pay anything other than the salesman's regular commission.
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The Block Brun Company - Warsaw
The Tabulating Machine Company agent in Poland was
the firm of Block Brun Company, appointed by the late Andrew Jennings in 1927
or 1928. The principals were highly respected and wealthy, third generations
Moscow Jews. The headquarters of the firm was still in Moscow. The Warsaw
branch was managed by Stefan Brun, one of the partners who looked after the EAM
business.
Mr. Jennings was quite frank in stating one
particularity about Block Brun. The firm were our agents for EAM equipment. At
the same time, they were the agents for typewriters and adding machines of a competing
company. This was rather disturbing news to me and I made an early trip to
Warsaw to see how they operated. My investigation convinced me that the two
agencies were run by separate organizations of Block Brun. I was also convinced that they were
honorable in every respect to their obligations to the two companies.
The following is an example of just how square they
were. I was acting as chairman of a
German banquet at the Hotel Adlon in 1933 when a messenger brought in a note
from Stefan Brun saying that he had to see me at once on urgent business.
I excused myself to Mr. Rottke. Mr. Brun told me
that while he was waiting in an anteroom of the competitor's office, he
overheard their managers and patent attorneys discussing their plans to bring a
patent suit against Dehomag. The facts were passed on to Heidinger and Rottke
and a quick investigation was made by Dehomag. After an interview was held
between Dehomag attorneys and the competitor's attorneys, the proposed suit was
shelved. Brun had nothing to gain from
this personally, but his actions portrayed his loyalty. It is to be hoped that
he and his family were able to get back to Moscow before the German holocaust.
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German Vindictiveness
The following illustrates
the vindictive streak in certain types of Germans.
Kaun, manager of the Sindelfingen Scale plant in
Germany had been very leniently treated by Mr. Watson. However, matters finally
came to a head and he was let go. Under German law, Kaun was entitled to a full
year's salary and undisputed right to continue living in the house he occupied
on the Company's property. When he vacated the house at the expiry of a year,
it was wrecked from attic to cellar. He used axes, saws and hammers to destroy
the plumbing, the fixtures, the wiring, the stairways - even the plaster on the
walls.
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Saving
Men - Saving Materials
The Company believes in the salvage of men and
materials. The following incident bears out the wisdom of this approach.
Ferrara, of Italian parents, was brought from
Brooklyn to Milan to strengthen the EAM division of the Italian Company.
Vuccino, Manager, assigned him to a territory in Milan. For some reason or
another, he did not do well. After four or five months, Vuccino wrote to me to
say that he was letting Ferraro go. I wired to him to hold off until my next
visit to Milan.
When I got to Milan a week or two later I found that
people in the Italian organization were hostile to Ferraro because he came from
the States. I arranged for him to be transferred to Genoa as a full time
salesman with a period of six months to show his mettle. In less than four
months he had secured a large contract from Standard Oil and was on his way. I
met him a few years ago in New York and he was still with the Company.
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The Company in Canada
The Canadian Tabulating Machine Company came into
being as follows. St. George Bond, a Canadian from Toronto who lived in
Philadelphia, obtained the Philadelphia franchise from Dr.. Hollerith prior to
1910. But in a year or so it went bust, to the tune of 15 or 20 thousand
dollars. As a gesture, and more or less out of sympathy, Dr. Hollerith gave
Bond a license to operate in Canada in 1910 and Bond then formed the Canadian
Company. The terms of the contract
called for a 20 per cent royalty payment on all rental revenues. The machines
wee to be supplied by Hollerith at cost and second hand machines were to be
shipped at nominal value. Larry Hubbard, who had received his training with
Hollerith in Washington was engaged to run the Company. The first order he took
was from Mr. Fletcher of the Library Bureau and the machine was installed in
Toronto in December of 1910.
Hubbard then set up an office in Montreal on St.
James Street. In 1911 he wrote one contract, in 1912 four, in 1913 three - all
of these are still users. By 1918 he had 41 customers with an annual rental of
about $60,000.
As I recall, prior to 1914 Canada was operated from
the United States as part of the territory of the Rochester agency of the ITR
Company of New York. From time to time, James, the Rochester manager, sent
salesman up to Canada to get business. The late Jack Barry perhaps spent more
time in Canada than any other IBM salesman. Mr. Barry later became Sales
Manager of the ITR division and when he died in 1929, had become the Sales Manager
for the entire Heavy Duty scale division. In 1914, when Mr. Mutton was placed
in charge of the ITR Company, the representation from Rochester was
discontinued and Mr. Mutton bought his time recorders directly from the parent
Company in Endicott. Later, when the Scale Company was also placed under Mr.
Mutton, it was recommended to Mr. Watson to get out of the plant on Royco and
Campbell Avenue and build a new one.
Mr. Mutton presented a plan to Mr. Watson of adding another story to the
plant. Mr. Watson accepted Mr. Mutton's
advice and it was only after a period of 20 years or so that the present plant
began to outgrow its usefulness.
In 1915 and 1916, and even before, competition
between the dial recorder and the time recorder was tough and considered a
serious factor in Canada. The dial
recorder was a sturdy and satisfactory machine. I found this out in spades when
I tried to trade 50 of them out of the Angus Shops of the CPR for new machines
of ours. Some of them had been in use for over 35 years and were still going
strong. The dial recorders were manufactured by the W.A. Wood Company of
Montreal. Mr. Mooser, later factory manager in Toronto built them. Mr. Mutton,
who was an astute and shrewd businessman, made strong recommendation to Mr.
Watson that the Company buy out the Wood Company factory and patents. This was
done in 1917.
During about five months of 1918, St. George Bond,
who has since died, acted as sales manager of the Tabulating Machine Division
under the late Mr. Frank Mutton. Mr. Mutton was appointed Vice President and
General Manager of the three divisions of the CTR Company of Canada and the ITR
in the summer of 1918. It was then called the Computing Tabulating and
Recording Company Limited of Canada, a name later changed to International
Business Machines Co. Limited.
To go back a year or so, by December of 1917 the
Tabulating Machine Company of Canada was unable to meet its payments for the
purchase of machines. While Mr. Watson had given Mr. Bond ample time to arrange
his finances to meet his obligations, he was unable to do so and some form of
relief had to be sought.
Mr. Watson then engineered the plan of forming a
Stock Company in Canada. This company would acquire majority rights in St. George Bond's interests in the Tabulating
Machine Company of Canada and the Davidson rights in the Computing Scale
Company of Canada for cash/stock in a new company. This was done in the summer
of 1918. During these meetings, several
amusing incidents occurred. Once, in the middle of the lawyers wrangling about
values and amounts claimed by interested parties, Mr. Mutton demanded that the
people representing the New York interests, Mr. Rogers and Mr. Houston, meet
with him outside the room on a matter of great importance. Rogers and Houston found
Mr. Mutton at the end of the corridor, seated on a radiator with his legs
crossed. His important question involved the advisability of having his name
placed on the letterhead as the General Manager of the new Company.
In 1926 and 1927, all of the stock owned by the
public was bought up by the corporation. Rogers and St. George Bond were the
agents acting on behalf of the corporation in this transaction. Since that
date, the Canadian Company as been 100 per cent owned by the International
Business Machines Corporation of New York.
Between 1935 and 1939 the income and profits of the
Canadian Company increased 70 per cent. From 1935 to 1943 the income and
profits increased 800 per cent. While it is true that this remarkable growth
has taken place during the war years, it should not be overlooked that the
extreme confidence, both on the part of business and the Government in Ottawa,
led them to place their orders with our Company.
This confidence was based upon the performance of
the machines, as well as the character and ability of the personnel in the
Canadian organization. These people, through lean years and good years have
worked conscientiously in the building of the good name of IBM in the minds of
customers and prospects. It may also be
said that the Government, in searching for the mechanical means to fill its
needs during the war for accounting and statistical requirements has, with one
exception, considered only our Company as a source of supply.
The prestige of the Company was greatly increased by
Mr. Watson's visits to Canada prior to and following 1937. In 1937, as each
year thereafter he met the most prominent men in Canada, commercial,
educational and governmental. He also made many public addresses. On September
2nd of 1941 he took the entire executive staff of the IBM Corporation to the
Canadian National Exhibition. The Company was being honoured at the CNE's
International Day. That evening Lily Pons and Lawrence Tibbett gave a concert
at the Band Shell in front of some 60,000 people. This large audience was addressed by Mr. Watson, Mrs. August
Belmont and myself. At that concert, a generous donation of $10,000 went from the Company to the Canadian Red
Cross to help in the war effort. While this large sum was given without
publicity, the kind comments of the officer and directors of the Red Cross
would have been heart warming to any IBM executives, could they have heard
them.
During Mr. Watson's visits many changes were made to
the form and conduct of the business. In the latter part of 1937 he purchased
the property on King Street. The executive offices were separated from the
factory and IBM executives could be at the heart of the city's financial
district.
In the very early days, there were only three
employees of the Company, all located in an office at 15 Alice Street. I
believe that Alice Street became Teraulay Street and the original site is now a
parking lot. In December of 1938 Mr. Watson purchased the Beaver Hall property
and the office building erected on this site is considered to be the most
modern of its kind in Canada. Having one of the Company's executives living in
Ottawa where he could mix it up with the various government departments and
personnel from 1935 onwards also helped the Company build up its business in Canada.
Another factor which had a lot to do with the
welding of the Company personnel into a
united team was Mr. Watson's authorization for the purchase of a country club.
This property, purchased in 1942, consists of 100 acres just outside the city
limits. It's fully equipped and has a play house and playgrounds so that the
entire family can enjoy themselves. Mr. Watson authorized the purchase of an
additional 100 acres adjacent to the Country Club. This property crosses the
main feeder line for the CNR and will make a suitable site for a manufacturing
plant as and when needed in the future. It is cheap land at the price and is
currently being farmed by the farmer who sold it to us, on an annual rental
basis.
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The
Story of the British War Orphans
Following the German invasion of France in May and
June of 1940, when England was in great danger, Mr. Watson, with characteristic
thoughtfulness for others, cabled
Stafford Howard, Managing Director of the ITR in London, inviting the
wives and children of employees to take refuge in Canada at the Company's
expense.
In response, nine mothers and nineteen children
arrived in Toronto on July 5th 1940. This first group was followed by a second group of three mothers
and four children on October 9th of the same year. They were
temporarily housed at the Sisters of St. John the Devine hostel at 49 Brunswick
Street in Toronto.
Mr. Watson then authorized the purchase of lake
frontage at Bronte, about 28 miles west of Toronto. This property consisted of
eight acres, including fruit and market garden and two fine houses. When Mr.
Watson and Mr. Nichol visited Toronto on July 15th, 1940 to inspect
the property, and make the necessary arrangements, certain reservations on the
part of some of the evacuees caused him to abandon his plan - and the property
was sold without loss.
The evacuees were the lodged in boarding houses in
the west end of Toronto and suitable arrangements were made for schooling etc. Now that return permits
are being granted by the British government, some of our families have returned
home and there will no doubt be others in the near future.
The policy inaugurated by Mr. Watson to encourage
employees to mix in community affairs and join business and trade associations
has had much to do with establishing the prestige and reputation of our Company, as well as the development of
the individual. The Company's employees represent a standard of intelligence
and character which fits them all for such a roll. The very nature of the
business permits and demands constant development along business lines. This is
characteristic of the successful IBM man and stamps him with qualities of
leadership, both in public speaking and leadership. He attracts attention
wherever businessmen gather.
In the United States and Canada you will find IBM
men in the forefront of sales executives' clubs chambers of commerce,
manufacturers associations and boards of trade. Honours and preferments seem to
come to them naturally. This is the natural product of the educational system fostered
and promoted by Mr. Watson. The Company is no place for the bounder or the
philanderer. We have had some in the business, but they don't stick.
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The
Company in 1914
At the time when Mr. Watson took over the management
of the CTR Company in 1914, it is safe to say that every member of the sales
force of the CTR thought that the Company was on the upswing of an unending
period of growth, and the equipment consisting of the No. 15 Key Punch, hard
punch, vertical sorter and the non-automatic, non-lister tabulator would do the
trick.
As a matter of fact, the initial impetus given the
business when Dr. Hollerith installed the large machines with the Railway and
Insurance companies, was petering out and the Company was running into shallow
waters. The progress made in the book
keeping, adding and listing machines, and the improvements made by a competitor
with a similar machine, was bidding fair to eliminate us as a serious
competitor in the office specialty field.
The Company was going down hill instead of up and if
it had not been for the new machines which the Engineering and research
Departments had developed under Mr. Watson, the Company would have been limited
to certain kinds of statistical work. These new machines such as the Horizontal
high speed sorter, Printing Tabulator with Automatic Group Control, Electric
Key Punches and many other devices, have made possible the growth of the
Company.
An early
combined tabulator/sorter
Concurrently with the improved machines, the sales
department was increased. All salesmen participated in a comprehensive
educational system on our products. A refresher course for the older salesmen
was also developed.
The Company had a new birth and was ready for larger
service to the business world, beyond the dreams of the original founders of
the Company.
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The
Story of Tauschek in Europe
The advent of Tauschek into the electrical
accounting field makes interesting reading.
Tauschek, a young Austrian living in Vienna, was a
clerk in a bank in Vienna in 1926 or 1927 or perhaps earlier. One of the
clients of the bank was the Powers Accounting Company. One of Tauschek's duties
at the bank was to scrutinize cheques, including those from the Powers
Accounting Company. In the case of the Powers Company, two signatures were
required.
On one occasion, Tauschek failed to note that only
signature was on a cheque destined for New York. The cheque came back and Tauschek took it over to the Power's
office to have it signed. Tauschek had never seen Power's accounting machines and
he asked the company manager explain to the machines to him.
Tauschek made
one or two visits to get additional information, and in the course of
conversation, he found that the mechanical tabulating machines were being sold
in Europe for between $15,000 - $20,000. Tauschek decided that the price was
too high and that a cheaper machine could be built which would do the same
work.
He then got in touch with patent offices in Germany,
Great Britain and the United States. Tauschek had copies of all patents which
had been issued concerning tabulating machines sent to him. He then took a
course in English so that he could read and comprehend all the material.
As a result of investigations, research and model
building, he secured patents from German, Great Britain and the United States
in and around existing patents. He then manufactured a model key punching
machine, a sorter and a tabulating machine, the principles of which were
slightly different from the existing types.
With this beginning, Tauschek entered into a
contract with the Rhein Metalls Company to develop his patents and build the
machines for commercial use. This contract was entered into around 1929.
Dehomag, our German subsidiary, was somewhat
disturbed by Tauschek as a potential competitor and was in favour of
negotiating with him.
During a trip to Europe in 1929, Mr. Watson had
Rottke (of Dehomag) and Tauschek come to London, to meet with himself, Mr. Jennings and myself (as
the newly appointed European General Manager).
The negotiations were held in Grosvenor House in London. After a week of
negotiating the IBM Company bought out
Tauschek's patents, and the models he had developed, with the exception of one
set of machines which Tauschek presented to the Vienna museum. As well, Tauschek secured five years of
employment with IBM, seven months of each year to be spent at the IBM labs in
the United States. As additional consideration, Tauschek also agreed to
unreservedly convey all his ideas and patents with regards to electric
accounting machines.
At about the time of the end of his contract with
IBM, it was discovered that he had proceeded with certain patents secretly
concerning the development of an electric eye principle. He had not turned this
work over to IBM, as per the terms of his agreement with us. Tauschek was
brought sharply to task by the Company but it began to look as if the only way
the Company could get redress would have been through the courts. In the midst
of negotiations, he fled, returning illegally to Germany. The rumour was that
he had been called back to Germany to complete work on a new type of machine
gun that he had developed for the German government.
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German
Capital Structure
There are a number of reasons which led up to the
increase of the capital structure and the consolidation of the three companies
in Germany: Dehomag, Ingemag (the scale company) and the Sindelfingen Scale
Factory. The capital of these companies
was nominal. I think that Dehomag's amounted to something like 300,000 marks.
We had kept the capital of the companies low on purpose, because the German
government taxed on capital stock. In fact, the two scale companies had never
shown a profit. Dehomag was different though and in 1932 and 1933 its profits
soared to four and five times its capitalization. The German Treasury began
careful scrutiny of firms such ours and of course this scrutiny was aided by
supplementary information provided by Nazi observers. The observers were
assigned by party leaders to all industrial plants throughout Germany. There
was always one observer keeping track of things and in some cases two or three,
depending on the size of the plant.
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Dancing
With the Devil - Nazis On Staff
At Dehomag we had a young Nazi by the name of
Fredericks who was on staff as an 'observer'.
I learned that Fredericks was one of the party of six Nazis who broke
into General Von Schleicher's residence during the infamous June, 1934 "Night of the Long Knives" purge
of Ernst Rohm and others.
General Von Schleicher
Fredericks and the others executed Von Schleicher
and his wife in cold blood.
The fact that Dehomag was paying out annual
dividends many times the amount of its capital had resulted in certain
questions being asked by the German Treasury. At the same time, the Dehomag
Company had been made the target of abuse and criticism from the Nazi
controlled press throughout Germany on the grounds that the use of Dehomag
electric accounting machines threw clerks out of work. In government offices in
Hanover in 1932 civil service employees went on a bit of a rampage and
partially destroyed their newly installed Dehomag machines. This incident
received widespread publicity.
About this time our agent in Munich, a Mr.
Pappenburg had caused Rottke and Heidinger some concern due to reports coming
in to the Munich office concerning Pappenburg's unexplained absences from
work. They asked me if it would be all
right if they put a 'tail' on Pappenburg. As they seemed quite worried, I
agreed to their request. The reports we got back showed that Pappenburg was a
very active Nazi and that his absences were due to his attendance at various
conferences and meetings of the Nazi party. This gave Mr. Heidinger the idea of
using Pappenburg to meet Hitler at Hitler's Nazi headquarters. He wanted to
establish friendly relations with Hitler and the Nazi party so that the party
would discontinue its attacks on Dehomag. It is my understanding that Heidinger
became a Nazi party member at the meeting.
The result of this meeting relieved the Company from
further investigation by the German government and hostile criticism of the
Company by the Nazi controlled press stopped. In addition, the capitalization
of the German companies was increased to 7,000,000 marks. All the losses at the
Sindelfingen plant and at Ingomag were also capitalized. Over the next period of time, Dehomag and
the Sindelfingen plant became the only active units in Germany. The Small Scale
Factory (Ingomag) gradually folded. Interestingly, in 1934 the output of the
Sindelfingen plant was 85 per cent weaving machines - most of which were sold
to the Russian and German armies for the making of military uniforms.
Mr. Rottke did not become a Nazi until 1933. In the
fall of that year I called a meeting in Paris of all European managers which
Mr.Rottke attended. During the meeting Mr. Rottke took me to one side and said
that a demand had been served on him by the Nazi Party to become a member. He
wanted my advice and he showed me the letter and stamped self addressed
envelope that the Nazis had given him. He told me that he had been given 24
hours in which to answer their demands. From his manner, I surmised that he was
hoping that I would advise him not to join. But this was clearly a matter for
Rottke and his family to decide, on their own. I understand that he mailed his
application to join the Nazi Party the next morning.
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Bill
Collecting In New York
Collecting delinquent ITR and EAM accounts was a bit
different from collecting delinquent accounts in other businesses due to the
close and continuing relationship that existed between the Company and its
customers. Instead of pressure letters and calls from lawyers representing the
interests of head office, it was customary to have the EAM Manager or salesman
assume the role of bill collector when an account was past due.
This often placed our representatives in a difficult
position and frequent dunning calls to collect the money did not tend to
improve his standing with his customers.
Coming out of the twenties, there were a great
number of EAM customers who were delinquent. In addition, the accounts with the
government in Washington had become hopelessly in arrears for a number of
reasons, one of which was the failure of the billing department to put in
sufficient information to allow proper accounting to be made for the public
monies expended. Something had to be
done and it was decided to make a change.
The late W. C. Sieberg, who was the General
Bookkeeper of the EAM Division, was given the job. His first task was to
straighten out the Washington situation and then he was to move on and clean up
the rest of the accounts throughout the country. Mr. Sieberg spent about four months in Washington and got the
Government accounts up to date. At the same time that Mr. Sieberg was chasing
down delinquent customers, we brought
in Mr. Brown to do Sieberg's old job. Brown had been an accountant at a factory
and we brought him in so that he would gain a thorough knowledge of head office
accounting, which he could then take
back to the factory.
By way of commentary, it is my opinion that a good
EAM accountant, of broad commercial training, should always work as the liaison
man for the collection of delinquent accounts, rather than depending on the
salesman to do the collecting. The Company has ever, to my knowledge prosecuted
a customer for the non-payment of an account. Hence, it becomes a matter of how
and when to make a compromise agreement or settlement with a customer.
To an ingenious negotiator, it is almost always
possible to effect some form of agreement to protect the Company's interests,
and to ensure that the customer does not disregard his obligations to pay. In
certain cases, treasury stock or bonds have been accepted. I cite the case of a
Canadian aircraft company who was in arrears for over 18 months in 1936 and
1937. I interviewed the Treasurer of the company and we reached an agreement
whereby they would pay us monthly installation charges and the balance would be
held in suspense until they were able to make payments on the old balance. Any payments
made by the company were applied against the oldest balances. Within two and a
half years the account was brought up to date and it has not been delinquent
since.
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A
Historical Note on the Bull Company
It would seem proper to have some reference in the
historical data about the development of the Bull machine. The following is a
very sketchy outline and it should be supplemented by more accurate and
detailed information.
Dr. Fredrik Rosing Bull, a Norwegian, developed the
machines. When he died, he left his plans, his notes and diaries and the
machine's specifications
Dr. Bull
and whatever patents he had, to the University of
Oslo where they lay dormant for a number of years.
Emile
Genon, who later became our agent for Belgium, had been in the office specialty
business for years as a Belgian reseller of Elliott-Fisher and Underwood
calculators. In the course of his travels, he found out about Dr. Bull's
machines and that the University of Oslo had done nothing with them. Genon saw
possibilities. He got a group of interested investors together in Paris.
Members of this group included the auditor for the French Railway (a large
customer of ours) and general in the French army. Genon got enough money together to purchase all rights pertaining
to the Bull machines (except for Scandanavia) from the University of Oslo. As I
recall, Genon told me that he was able to buy these rights for $10,000.
The models were shipped to Paris, and under the
General's supervision, a limited number were built and installed in customer's
offices. According to all reports, they worked quite well. The Sorter was of the horizontal type and
was unusually light, in fact, about half the weight of our machine. The
Tabulator-Printer had a speed of about 230 cards per minute for listing and
adding. The type bar was of the rotary
principle. Under Genon's management, the Bull Company bid fair to make inroads
on the established business of the
Company.
At my suggestion, Dehomag sent two of their
representatives to investigate the machines. These representatives reported to
Heidinger and Rottke that the machines had considerable merit. The Bull
machines were demonstrated at the Paris Exposition in 1931 and attracted
considerable attention.
With this background, when Mr. Braitmayer visited
Europe in 1933, arrangements were made for him to meet with the Bull group in
Paris, and certain tentative negotiations were carried on in a regard to a
possible acquisition by our Company of the Bull Company
Genon
was later employed by our Company as our representative in Belgium. In November
of 1935 IBM Mr. Watson proposed to buy
all Bull assets for 2.8MF (including patents). In December of 1935 Emile Genon transferred 86% of Bull AG to IBM.
The next day, the Callies family proposed a new stock subscription of 6MF,
approved by Marcel Bassot, to avoid an IBM take over.
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Costs
and Profitability During the War
On March 2, 1943 the Canadian Company was asked by
the Department of Munitions and Supply to submit a statement of income, costs
and profit on any installations that might be considered war business with the
Department. This request was later broadened to include all government business
which could be classified as war business. The object of the inquiry was to
renegotiate our contracts with all government departments to establish fair and
reasonable profits on installations arising out of the war and to arrive at the
portion of the profit to be refunded.
At that time, the Canadian Company purchased EAM
equipment from the Parent Company on the basis of flat factory cost. We
therefore brought to the attention of Department officials that we were unable
to submit an accurate statement of costs. This flat factory cost did not
include administrative overhead, the costs of engineering, patents, development
or research. The Department indicated that it would be perfectly reasonable to
include any such items in our estimate of our costs and that the Department
wold have the right to scrutinize such items to determine whether they were
fair and reasonable.
On June 4, 1943 our Controller, A. L. Williams,
furnished a statement that showed the amount of such expenses, applicable to
the Canadian Company, expressed in terms of per cent, would approximate 5 per
cent of the total revenue of the Canadian Company for the year 1942.
The increase in cost of the over-all picture of the
Canadian Company, had the expense been included, would have amounted to
$167,687 (Gross Canadian income - $3,563,917) of which about $50,000 would be
the amount to be added to the cost of our war installations with the
Government. (Government installations in round figures, $1,000,000 per year or
approximately 25 per cent of total installations).
In view of the known losses we would sustain when
the war ended by discontinuances and cancellations, plus the unamortized value
of the machines which would be returned to us, I did not consider that the
figures being presented were fair for the Company. It was not enough for us
just to build up our cost figures.
I therefore decided to fight for the inclusion in
our costs of the 25 per cent royalty paid by other subsidiary companies. We were finally able to convince Department
officials to agree to the inclusion of this 25 per cent fee and an agreement
was reached by May of this year (1944).
On $1,000,000 of revenue, the royalty cost will amount to $250,000 as
against $50,000 had we decided to include IBM Corporation overhead as an item
of cost.
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Historical
Data - Census Machines
Perforated papers and cards were used to select and
control patterns in the weaving industry in the eighteenth century. This
principle was improved by Joseph-Marie Jacquard, a French inventor of Lyons
prior to 1806. The introduction of these 'Jacquard Looms' caused riots against
the replacement of people by machines.
Babbage
It remained for Charles Babbage, an English
mechanic/mathematician to experiment with the principle of punched holes in
relation to a calculating machine. Babbage got government support for his
machine in 1822, but his 'Difference Machine' was never completed.
In the 1850's and 1860's, the development and use of
punched holes in paper for player pianos and organs was a great commercial
success.
It is perhaps with some of this background in mind
that Dr. Hollerith seriously considered adapting the principle of punch cards
for the compilation of the US census of 1860, from a chance remark made to him
by a young woman. He had been called to Washington in the early '80s to act as
a special agent in the Census Department. During a pleasure cruise on the
Potomac with Census Department co-workers, a young woman asked Hollerith:
"Why don't some of you men devise a card for the census work by punching
holes into it and making a machine do the rest of the work?"
By 1889 Dr. Hollerith had perfected and patented a
card with 12 rows of 20 positions for holes, to be punched on a Pantagraph
Keyboard Punch. His tabulator was similar to a printing press with the cards
being fed by hand and a handle which operated the press, thus allowing the pins
to press through the card. Wherever these pins went through the hole in the
card, electrical contact was made in a mercury cell below. The result was
registered in one of forty different counters. An attached sorting machine
consisted of a horizontal box with two rows of thirteen compartments, Each
compartment had a lid controlled by a magnet. This machine was controlled by
wires from the tabulator. To prepare for the next sort, the operator removed
the card from the tabulator and dropped the card into the compartment through
which the tabulator had just sent an impulse to cause the lid to open. The
compartment lid was then closed by the operator.
In April of 1889 a Commission was formed to advise
Mr. Porter, Superintendent of the US Census, as to the methods to adopt of
tabulating census data. To this Commission, three schemes were presented. Mr.
Hunt's scheme proposed to transfer the details given on the census enumerator's
schedules to cards, distinctions being made in part by the color of ink, and in
part by written notations, the results being reached afterwards by hand sorting
and counting. Mr. Pidgin proposed a scheme whereby chips would be used. These
chips could then be duly sorted and counted by hand. Mr. Herman Hollerith then
made his presentation, described above.
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Census
Slips and Chips
The three proposals were then put to the test in
four enumeration districts in St. Louis. It was found that the time occupied in
transcribing the enumerator's work (10,491 inhabitants) by the Hollerith method
was 72 hours and 27 minutes. The Hunt method took 144 hours and 25 minutes, Mr.
Pidgin's plan took 110 hours 56 minutes. He time occupied in tabulating was
found to be as follows:
·
Hollerith's
electrical counters - 5 hours 28 minutes
·
Hunt's
slips - 55 hours, 22 minutes
·
Pidgin's
chips - 44 hours, 41 minutes.
That settled it. Hollerith got the contact. The
Commission also estimated that based on America's population of 65,000,000, the
savings with the Hollerith machines wold amount to over $600,000. As a matter
for the record, that estimate was based on an average of 500 cards punched per
day, while 700 per day turned out to be the average - the savings were 40 per
cent more than expected. By way of
contrast, the work of tabulating the 1890 census was finished in ten months.
The previous census, undertaken in 1880, still was not fully tabulated when the
1890 census began. In fact, some of the data from the 1880 census was never
tabulated - this despite a workforce of
47,950 women tabulators working in the daytime and 32,935 men tabulators
working at night (figures from "Electrical Engineer", November 11,
1891 pp. 522).
Dr. Hollerith's connection with the U.S. Census
Department did not continue very much longer after the completion of the 1890
census. The relations were broken, as I understand it, through differences that
arose between himself and government officials or official. He withdrew and the
department started to build its own machines, incorporating the Hollerith
principles in the machines that they built. James Powers, a foreman in the
Census Department, developed a key punch which the Department adopted. Mr.
Powers, of Jewish origin, continued his developments and research work with the
result that he developed a horizontal sorter and printer-tabulator, both
mechanical, on which no patents had been taken out by Dr. Hollerith. Dr.
Hollerith had considered three methods for a power supply when he perfected his
machine; electrical, mechanical and compressed air. He took his patents out on
the electrical method - leaving others the option of developing machines with
compressed air or mechanical power.
This was the start of the Powers accounting machine.
Dr. Hollerith went on to assist in the census
processing for many countries around the world. The company he founded,
Hollerith Tabulating Company, eventually became one of the three that composed
the Calculating-Tabulating-Recording (C-T-R) company in 1914, and eventually
was renamed IBM in 1924.
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Thomas
Watson - A Model Employer?
New York, December 8, 1922
Mr. T.J. Watson
President
Computing Tabulating Recording Co.
New York.
Dear Mr. Watson:
I would like to take this opportunity to thank you for
the leave of absence granted me to bring my mother home from England and also
to express my regret that I was out after my passports when you wished to see
me.
My mother is upwards of 80 years of age and you can
imagine the joy it will be for her to have me to have me to look after her on
the homeward trip. I am looking forward
to the pleasure of seeing you on my return from England. I received Mr.
Braitmayer's message relative to seeing Mr. Stafford Steward of the I.T.R.
Company and will make a point of doing so when I am in London. Again thanking
you Mr. Watson, I am,
Sincerely yours,
Walter Jones
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Working
Through HR Issues in Paris
November 12, 1933
PERSONAL
Mr.
Walter Jones, European General Manager
Societe
Internationale de Machines Commerciales
29
Boulevard Malesherbes,
Paris,
France
Dear
Mr. Jones:
When
you first talked to me in Paris about Mr. Packard I was under the impression
that he had made a very serious mistake in his letter to Mr. Rottke requesting
certain information. Since my return, I find that Mr. Packard was simply
carrying out Mr. Nichol's instructions. Even if those instructions may be debatable
it is very unfair of us to criticize Mr. Packard for carrying them out, as we
was simply doing his duty.
I
could not help but sense a feeling that you and Mr. Packard were not
co-operating; because at the time I was under the impression that Mr. Packard
had made trouble with the German organization on his own initiative I did not
give the serious thought to his side of the case that I have since learning
that he was merely carrying out instructions.
Frankly
I worry about the lack of espirit de corps on the part of the organization in
Paris. It does not seem to measure up to Berlin or London. We sent Mr. Packard
to Europe to assist you at considerable sacrifice to the American organization,
and, of course, Mr.Packard made some personal sacrifice in moving a very young
baby, and then to find himself in an atmosphere, which I cannot help but feel
must worry him, it does not seem fair or in keeping with the IBM family spirit.
I
greatly admired Mr. Packard's attitude while I was there, especially when he
pleaded for an opportunity to go to Berlin and meet the men face to face who
had criticized him. As I observed the meetings in Berlin and in London it
seemed to me that Mr. Packard is well able to gain the friendship of all men.
It
is hard for me to write this letter, because what I am saying is based largely
upon what I sensed in connecting with the general atmosphere. Knowing that you
want to be fair at all times with your associates I am asking you to put
yourself in Mr. Packard's place and
review with yourself his experiences since his arrival in Europe and if you
feel that you have not been giving Mr. Packard the exact kind of treatment you
would expect, were you in his position, I will sure you will take him into your
confidence and put him in the right light in the eyes of all members of the
European organization, and get out of him his best efforts in assisting you to
do the big job which is before us.
With
kindest personal regards, I remain
Sincerely
yours,
Thomas
J. Watson, President
TJW:BW
Paris, December 5, 1933
Mr.
Thos. J. Watson, President
International
Business Machines Corp.
270
Broadway,
New
York City
Dear
Mr. Watson:
Thank
you very much for your letter of November 22nd which I have taken
seriously to heart.
It
has always been my desire to help and assist in the development of men in the
interest of the business and I will do everything in my power to cooperate with
Mr.Packard to this end. I have had this intention and desire since the moment
he landed in Europe.
He
has much in his favor. I find him keen and interested in every phase of the
business and anxious to accomplish the results that you count upon us to do.
You
are right. The Paris organization has not yet acquired the same espirit de
corps of Berlin or London. During my stay in Paris I have tried in every way to
improve it. Meetings, reunions at my house etc. have found it difficult to get the French organization to pull
together as a team. You can do a lot with them individually but our
organization in the past seemed incapable of the true IBM spirit.
M.
Virgile is bringing into the business men of a higher grade and when you see
the organization on your visit next year, I am confident you will see a big
improvement.
In
regard to the American representatives, we would be much better able to handle
the continental work if we were working together as a detached unit rather than
attached to the French organization. I believe as soon as it is possible to
establish a headquarters apart from them, after M. Virgile is able to handle
the responsibility, that there would be much better morale and better results.
Here
is nothing that I desire more than to weld continental Europe together in
accordance with the strong and sound organization lines laid down by you, and I
will work to this end to the limit of my ability.
Thanking
you sincerely for your letter,
I
remain,
Yours
very truly,
W.D.
Jones
Paris, December 1st, 1933
Dear
Mr. Watson:
I
sincerely regret having to advise you that after several weeks' silence Mr.
Jones simply notified me that I had to go and accept his proposal about taking
over a territory. It is a matter of great concern to me to see that several
younger men with much less service stay with the Company in executive positions
and I am sent away after almost 30 years. It is my firm belief that my services
and experience in the Paris office, if properly recognized and made use of,
would have been of some value to the business and I would willingly have made a
financial sacrifice to stay.
However,
I have no other alternative and must accept my definite removal from this
office to go out on the road and build up a sales organization at my own
expense. The twelve months salary awarded to me will have to serve for that
purpose.
With
the coming holidays in mind, I wish to thank you once again for the numerous
proofs of your kind interest in me and for the great kindliness you so often
and still recently showed me. I wish you and Mrs. Watson and your children a
Merry Christmas and a Happy New Year and I hope that 1934 will bring health and
happiness to all of us.
Meanwhile
I beg to remain, with many respectful regards,
yours very sincerely, (unknown
signature)
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Walter
Dickson Jones (1878 - 1963)
Breconridge -
W.D. Jones' farm just north of Toronto. Early 1950's.
Walter Dickson Jones (born 1878) entered the employ
of the CTR Company in 1912 as a salesman of tabulating machines in Cleveland.
In 1917 he was made Assistant-Treasurer of the Tabulating Machine Company, the
Chief Subsidiary of the IBM Corporation. In February 1922 he was made manager
of the Cleveland office of the Tabulating Machine Company and was promoted in
1923 to be IBM Manager for the Eastern District, having charge of all
subsidiary companies - including the Tabulating Machine Company, The International
Time Recording Company and the Dayton Scale Company. Mr. Jones was made Assistant Comptroller of the IBM Company in
1924 and in 1927 became Treasurer and Comptroller as well as Director of the
corporation. In 1930 he was made Manager for Europe with headquarters in Paris
in which position he remained until 1934. In 1934 he assumed the Vice
Presidency of the Canadian organization of the IBM Company. In 1938 he was made
Chairman of the Board of Directors of IBM Canada. He passed away in 1963.
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Family
Photos - W.D. Jones
. 
Rhoda, Muriel
and Francis Jones in 1916
W.D.'s bride. Rhoda
Wallace Haskell (1887 - 1960)
The Jones girls and their mother ca. 1937:
from left, Rhoda, Francis, Rhoda, Muriel and Catherine.
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MARCH ON WITH IBM
Verse:
The fame of IBM
Spreads across the seven seas,
Our standards fly aloft,
Proudly waving in the breeze,
With T.J. Watson guiding us
we lead throughout the world,
For peace and trade our
banners are unfurled - unfurled.
Chorus:
March on with IBM
We lead the way,
Onward we'll ever go,
In strong array;
Our thousands to the fore,
Nothing can stem,
Our march forevermore,
With IBM.
March on with IBM
Work hand in hand,
Stout hearted men go forth,
In every land;
Our flags on every shore,
We march with them,
On high forevermore,
For IBM.
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