Father, Son & Co.

by Thomas J. Watson

  Dad probably shouldn’t have been surprised. The way he described Patterson, it was hard to imagine a more arbitrary and eccentric boss. Patterson managed his people by pressure and fear. Once, when he thought the men weren’t paying attention during a long sales meeting, Patterson grabbed a fire ax and chopped a cash register to pieces onstage. Executives who were his favorites got extravagant rewards, but on the other hand, Patterson punished people he didn’t like, sometimes with real cruelty. Dad told the story of an executive who showed up for work one morning not knowing Mr. Patterson was angry with him. On the grass in front of the Cash he found his desk and the contents of his office, soaked with kerosene and set on fire. He left without ever going into the building. Even though Dad later became famous for his autocratic style at IBM, compared to Patterson he was mild.

  Patterson was always firing his best men. He owned almost all of National Cash Register’s stock, but he was irrationally afraid that an employee would somehow take the company away from him. The end came for Dad after a vice president named Edward Deeds whispered to Patterson that my father was developing quite a following among the rank and file. In 1913, as Dad addressed a sales convention, Patterson went to the podium and interrupted the speech. He began lavishly praising the other people present, and ignored Dad completely. Dad’s desk never got set on fire, but after a time he was no longer invited to meetings or consulted on important decisions. He felt devastated, and after a few months he resigned. Oddly, Dad never complained of this treatment and revered Patterson until the day he died. He used to say, “Nearly everything I know about building a business comes from Mr. Patterson.” The man Father hated was Deeds, for setting him up. He encountered Deeds later on several occasions, but he never spoke to him again.

  The winter of early 1914 must have been pretty grim for my father, although he was far from broke. After pushing him out, Patterson had given him a massive fifty thousand dollar severance payment, and also let him keep his Pierce-Arrow car. But Dad’s carefully built-up security was gone. He was out of work and about to turn forty. He had a new wife and son to support and no place to live—the house in Dayton belonged to Patterson. There was no other job for Dad in town, and he took Mother and me with him to New York in order to hunt for work.

  I’ve always been impressed with how picky he was about what he’d do next. He once explained this by saying he was sure he’d find a job because he had a reputation for being able to sell almost anything. Quickly he rejected offers from the Electric Boat Company, a maker of submarines for the navy, and Remington Arms. With war coming in Europe these would have been very lucrative positions, but Dad figured that both firms would shrink as soon as the fighting stopped. He rejected a job at Dodge Motor because the Dodge brothers would not give him the sort of contract he was after—he wanted to be an entrepreneur like Patterson, with a share in the company’s profits, and not simply a hired manager. Yet he had no capital to buy his own firm and no promising ideas of his own to commercialize.

  Eventually Dad might have gotten anxious, but before even two months had passed, he met Charles R. Flint, the founder of what was to become IBM. In those days Flint was known as the hottest financier on Wall Street. They called him the Trust King. He was a little man with a goatee and sideburns, about sixty-five years old. He’d played a key role in the creation of the United States Rubber Company, had investments in the automobile and the airplane, and had made and lost fortunes trading arms. During the Russo-Japanese War of 1904, he had been a purchasing agent for the Czar.

  Flint recruited my father to manage the Computing-Tabulating-Recording Company, or CTR, a little conglomerate he had assembled in 1911. It sold a grab-bag of products that Flint saw as roughly “allied”: scales, time clocks, and tabulating machines. The concept of the business was sound, but Flint had loaded the balance sheet with so much debt that the company was in danger of collapse. Its twelve hundred employees were confused and demoralized, and the board of directors was talking grimly about liquidation. Flint, who was also on the board, decided to step in and find a manager who could turn CTR around, or at least enable the stockholders to salvage a few cents on their dollars.

  What intrigued my father about CTR was the products that did the work of clerks. This meant the time clock and, in particular, the tabulating machine. An engineer named Herman Hollerith had invented the tabulator to help tally the results of the 1890 U.S. Census. By the turn of the century a few primitive Hollerith machines had made their way into the accounting departments of railroads and insurance companies. Father saw ways to improve the machine and he imagined broad commercial possibilities. American industry was growing to unprecedented size, and if huge corporations were to keep from drowning in their own paperwork, they had to find ways to automate their record keeping and accounting.

  One of Dad’s first moves at CTR was to call on the Guaranty Trust Company, the company’s biggest creditor, and ask for an additional loan of forty thousand dollars to pay for research and development. When the banker pointed out CTR already owed the Guaranty Trust four million dollars and that the condition of the business did not justify further loans, Dad said, “Balance sheets reveal the past. This loan is for the future.” It was one of his greatest sales pitches. The Guaranty Trust coughed up the money, and the resulting improvements on the tabulating machine enabled CTR to greatly expand its market.

  Dad used some of Patterson’s techniques to light a fire under CTR’s ragged work force. He created CTR slogans and CTR songs, a CTR newspaper and a CTR school, all modeled on those of the Cash. Whatever seemed good about Patterson’s way of doing business, Dad copied; whatever seemed bad, he boldly reversed. His code of discipline for CTR employees was just as rigid as that of the Cash, but his philosophy of management was far more humane. Patterson loved to make heads roll, but when Dad arrived at CTR he made a point of firing no one. He told the men that he was going to depend on them, and that his job would be to build them up. Since he’d worked hard to pull himself up from the farm, Dad knew that the way to win a man’s loyalty is by bolstering his self-respect. When I joined IBM many years later, the company was famous for high pay, generous benefits, and the intense devotion of the employees to Dad. But back at the beginning, when there was hardly any money, Dad gained their loyalty with words.

  My father loved to recall his and Flint’s discussion of compensation on the day Flint offered him the job. He said to Flint, “I want a gentleman’s salary, so that I can support my family. And I want a percentage of the profits that remain after the stockholders get their dividend.” Flint went right to the heart of it and said, “I understand. You want a peck of the corn you harvest.” When Flint presented this arrangement to the other directors they were incredulous, because it was hard to imagine that there would ever be surplus profits to divvy up. But by the time I was in college, a version of the formula they agreed to would make Dad the highest-paid man in America.

  Late in his life my father would take a pencil and do scratch calculations of his own fortunes, toting up his net worth. He carried these scraps of paper around. Sometimes I’d find them and throw them away; sometimes I’d keep them. They show that not until the mid-1930s was he in a position to stop worrying about debts. He was sixty years old by the time he was really on Easy Street.

  The chances he took with money are amazing to me. For the first eight years of his married life, he was pretty much on a shoestring. At any point he probably owed at least one hundred thousand dollars. He never accumulated any capital. The first two summers he took us to Europe, in 1922 and 1924, we traveled on borrowed funds as he planted the seeds of the IBM World Trade Company.

  As soon as he’d get a little cash, he would buy CTR stock. He felt it was a damn good buy. He bought on margin in the beginning—those were the days when you only had to put up ten percent of the stock price. As the stock went up, his broker friends would say, “Tom, you ought to take some profits.” And he’d come home indignant that someone was suggesting he sho
uld sell. More than once this investment strategy, if it can be called that, looked like a big mistake. CTR nearly went broke in the recession of 1921 because Dad had expanded too rapidly. Only by heavy borrowing did he manage to keep the company and himself afloat. He had another close call during the Depression. The company, by then known as IBM, weathered the initial stock crash in 1929 relatively well, but by 1932 the stock had fallen more than two hundred points and Dad had to borrow on everything to keep up his margin payments. He told me that if the stock had gone down just another three or four dollars, he would have been wiped out. There just wasn’t any place left to go for money.

  Though he never owned more than about five percent of the company, virtually his entire fortune was in IBM. If the company failed, he failed too. His only hedge was a farm in Indiana that he bought in the late 1930s when war seemed likely. He thought it was remotely possible that some unforeseen catastrophe might wreck IBM, and he told me he wanted our family to be able to return to the land. Other than this, he had absolutely no impulse to hoard or even worry about money. He wanted to rise in the world, so he knew he had to spend. He never panicked when the money was low; I think it never occurred to him that he couldn’t make more. If it came in, it went out, and that was fine with him. Father used money purely as a tool—to express his generosity, to cement his family and company, and to ease his passage upward in society.

  My mother wasn’t necessarily cut out to be married to a socially ambitious businessman. In spite of her upbringing and her boarding-school education, she was strong on prairie virtues that were unusual in Short Hills. She was so frugal that at home she’d walk down two flights of stairs to turn off a single light, and so unpretentious that she didn’t care much for the Paris dresses Dad insisted on buying her. I have a photograph from the 1920s that shows her looking lovely and regal in a Short Hills community play. But the way I remember her is as an overworked mother, trying to raise four little kids and manage that big gabled house the way Father wanted it run. She struggled constantly to keep peace among the help and play hostess to all the guests Dad would bring home. But she was very game. One night a stuffy businessman from Switzerland stayed at our house and left his shoes outside the guest room door. “He thinks this is a palace!” Mother said. Then she laughed and polished the shoes herself.

  My father owed her a great deal. By the time they met, he had already learned how to dress and how to give a speech, but the nuances of gentle living sometimes escaped him. She helped greatly with that. When we were young, she’d correct Dad’s English, watch his table manners, and caution him not to lose his temper. Her lessons to him could be pretty brisk. After he was making a lot of money in the 1930s, he came home one day and proudly gave her a big diamond ring. It was the first expensive piece of jewelry he’d ever bought—not a really good diamond, just big, as big as an aspirin. It must have weighed two carats. Mother pointed out that it was flawed and that she would have preferred a smaller diamond that was perfect rather than a larger diamond that wasn’t. This stung Dad. He took the ring back and some years later produced one that was equally large, but perfect. It must have cost a fortune.

  Mother was short, maybe five feet four, and fairly thin; and she always kept her gray-brown hair long and pulled back into a bun. Her hands were naturally calloused; to make them soft she worked on them every night with a pumice stone. She had a gentle mouth, appealing eyes, and a straight, interesting nose. Even though Dad often overshadowed her, we children always knew she had a powerful streak of fun. When the Charleston was popular, around 1925, she invited some of her friends and had a dance instructor teach the Charleston in our cellar. There were clotheslines strung along the ceilings that Mother and her friends held on to to steady themselves as they practiced.

  Because she was more handy than Dad, Mother did many of the “man’s” chores around the house. When a fuse blew, she changed it; when coal needed to be shoveled, she did that too. Much later she told me that this arrangement started soon after they got married. They were going to bed one night and she said, “You ought to go look at the furnace.”

  Dad said, “Why?”

  “Because my father always looks at the furnace before he goes to bed.”

  That must have rubbed Dad the wrong way. He was still a little profane in those days and he said, “The hell with the furnace I” So Mother went downstairs and checked the furnace herself, not knowing what she was looking for. Later that week she had someone come in to teach her all about it.

  Our worst family disaster happened on a cold February night in 1919 when this division of labor between my parents didn’t stick and Dad burned down the house. He was trying to break in a new houseman and said to Mother, “Carlo doesn’t know how to build a fire. I’ll show him.” So he piled the fireplace high with kindling and wood and touched it off. An hour or so later I started wailing upstairs. I was only five and often cried after being put to bed, so Dad said, “Now, Mother, I’ll settle that young man.” He started up the stairs and heard me yelling, “I see a funny light in my room!” The fire was right outside the window: sparks from the chimney had set the whole shingle roof on fire. Mother never blamed Dad for that, even though the fire burned up all her heirlooms from Dayton.

  Until I went to boarding school when I was fifteen, Mother was the biggest presence in my life. She was much more accessible than Father, and always made us feel protected and loved and wanted. I think she understood that at the root of my odd and mischievous behavior was a lack of self-esteem, because she was forever inventing ways to get me involved and interested in the world. When I joined the Boy Scouts, earning merit badges gave me a boost, and Mother was pretty deft at capitalizing on this civilizing influence. For instance, one day I decided to go for a cooking merit badge and she went with me out to the vegetable garden. I built a fire, got a couple of potatoes, and threw them in. She stayed right there with me, watching the whole procedure. It takes an hour, so we walked around a bit. Finally I took a black, charred potato out of the fire and broke it open. I didn’t even have a spoon; I used a stick. Potatoes taste quite sweet baked that way. I gave her a piece. “Oh” she said, “Tom, it’s wonderful.” That was the beginning of my love of cooking.

  The closer I got to my mother, the more upset I was at the way I thought Dad treated her. This was when IBM was at a critical stage, demanding a lot of Dad’s attention. In his office he could press the button on his desk, a fellow would come in, Dad would say, “Send a letter,” and boom, it would happen. When he wasn’t thinking, he expected Mother to obey him in the same way. She found that hard to put up with, so in the years when Dad was most intense about his work, there was enormous tension in our household. I remember incessant arguments between them. The door to their bedroom would be closed but my brother and sisters and I would hear angry, muffled voices rising and falling. Father would be rude to her, and then half an hour later he’d give us a lecture about how we ought to be good to our mother. I never had the guts to say, “Then why aren’t you?”

  Father would sometimes act as though he’d completely forgotten how much he had depended on Mother in the early days of their marriage. He’d call from the city and say, “Now, Jeannette, I’ve asked all the district managers to come out tonight for a little supper.” That would mean eight guests, and this news would be delivered at three in the afternoon. Mother, who didn’t have nearly his stamina to begin with, would get physically fagged. He was also becoming active on the social scene in New York, and often pressed her to go with him to dinners or the opera. Another big source of strain was money. It was torture for Mother, as frugal as she was, to see the style in which they were living and the debts he was running up.

  Then, after about ten years of strife, around the time I was fourteen and the other children scaled down to nine, Mother suddenly seemed to capitulate. This shocked me—I thought she’d stopped standing up for herself. But many years later she confided that, in fact, she had asked Dad for a divorce. “I told him I couldn
’t stand it any longer,” she said.

  This was terribly poignant for me to hear. I said, “What happened?”

  “Tom, he looked so shocked, so upset, that I realized how deeply he loved me—and I never brought it up again.”

  After she made that conscious decision to preserve the marriage, she never complained. When a crowd of guests would suddenly arrive and she had no one to help in the kitchen, she’d simply smile and say, “The cook is off today, but we have some sandwiches and fruit.”

  Everybody seemed to get along better when we were away from Short Hills. Father and Mother were constantly rounding us up, along with any friends or cousins who might want to come, for trips to Washington, to the seashore, to great exhibitions. Often we’d travel in a two- or three-car caravan, and descend like a wild tribe on relatives or IBM managers along the route. On weekends we’d drive out to Dad’s Oldwick farm, and in summer we’d go to the Pocono Mountains or Maine, where Dad would join us on weekends. Being on the road gave Mother freedom that she lacked at home, and she loved it. As for Dad, he had started out as a traveling man and never really stopped. Throughout his life the simple motion of a car or train calmed him down and made him less demanding.

  In spite of the hundreds of thousands of miles they covered, my parents chose to leave the pioneering of air travel in our family to me. My lifelong passion for flying began before I was even old enough to ride a bicycle. I used to love our visits to Mother’s family in Dayton, because Dayton was the home of the Wright brothers and the Army Air Corps had an airfield there. In that area, airplanes were almost as common a sight as cars. I have an old newspaper photograph of Mother and her sister that bears the heading “The First Aerial Callers.” It shows the Kittredge girls posed not far from their country house with two spindly-legged army aviators who are lolling against the framework of a stick-and-canvas contraption called a Wright Flyer. Aunt Helen was being courted by an aviator named Major Kirby. They never got married, but I thought he was tremendous because he talked airplanes.