Father, Son & Co.

by Thomas J. Watson

  By this time I was considering a major change of plans. My IBM training was due to start in the fall, but Peter was making arrangements to go on to India after we finished in Tokyo, and I decided I wanted to go too. I wrote to my father asking his permission to extend my tour. His reply practically scorched the telegraph wires:

  From standpoint of future you cannot afford to consider trip. Company rule [requires] fall school. You would not want a special ruling to cover your case.… Your own judgment will tell you to return with Mr. Houston as planned. Do not handicap your future or disappoint me. Dad.

  I didn’t have the nerve to challenge him any further—at least not directly. So I did my work, and after three weeks in the Far East, when Houston told us we’d be free during our remaining time in Japan, I looked for a way to end the trip with a bang. The Japanese had just captured Peking, and I suggested to Peter that we go there to look up a couple of English girls we’d met on the Trans-Siberian. We talked Houston into helping us arrange official permission to visit China for two weeks.

  I don’t think we really understood that Peking was a war zone. My father certainly did: when Houston informed him where we’d gone Dad was furious and poor Houston bore the brunt of it. Our situation first became clear to me when we got to the Tokyo station and found it jammed with soldiers and their relatives. Watching the ritualistic way those families said good-bye to their sons really opened my eyes to Japan’s militarism. They came down to the station about an hour before the train was due to leave, got the boys on safely, and then for maybe fifteen minutes everyone shouted “Banzai!” continuously. They were all waving miniature Japanese flags. Then, just as they were getting hoarse, someone started a song. The singing went on for another fifteen minutes. Then they gave three cheers over and over again. In the last few minutes before the train pulled out there was delirious shouting on both sides. Everyone looked exhausted by the time we left.

  The trip to Peking took five days. Once we crossed the Chinese border there were signs of war everywhere—soldiers with machine guns on top of the station houses, wrecked equipment, shell craters, and trenches. Instead of being scared I was excited. It took all night to cover the short distance between Tientsin and Peking on the last leg of the trip, but I barely noticed because I was surrounded by so many exotic characters. There was a company of soldiers in the car, a Tibetan prince with his wife and small children, and a beautiful White Russian woman on her way to join her husband in Peking. One of the soldiers watched me closely for a while, then came over, pointed to himself, and said, “Sing in English!” He’d been to missionary school and knew the old spiritual “Massa’s in de Cold Ground.” Afterward he sang some Kabuki opera songs which were quite beautiful.

  We checked into the Grand Hotel de Pekin and looked up our English friends from third class on the Trans-Siberian. One girl I met was living with a guy, a Marine officer from the U.S. embassy, which was a new idea to me. No bones about it—they just lived together. Everybody was doing it in Peking, which was a hedonistic place, like no city I’d ever seen. You didn’t need much money to live an enchanted existence there. A good servant cost ten dollars a month, a rickshaw and boy a dollar eighty a week, and everything else was comparably cheap. Because of this, Peking attracted many Westerners, including dregs from nearly every country. At one dinner party I found myself sitting with a debutante from New York at one elbow and a French heroin addict at the other. The Japanese occupation of Peking hadn’t slowed the social scene at all. One of the most popular night spots was the rooftop bar at the Grand Hotel. You could order a gin gimlet, sit back, and watch the artillery flashes to the west of the city, where the war was going on.

  Peter and I got to know two brothers named Faunstock, who were from Long Island and really knew their way around. Peking was full of war rumors, and one night the Faunstocks proposed that we go and see for ourselves what was happening on the city’s outskirts. Early the next morning they hired a car and driver, got a large American flag and draped it over the hood, and off we went. First we visited a place where two hundred Chinese had been ambushed and massacred by the Japanese two weeks before. Each side of the road was covered with graves, and the smell of death was overpowering.

  Then, at my urging, we went to the airport. To our surprise we were able to drive right up to the edge of the field without being challenged. We watched Japanese bombers returning from their missions. The planes were old and looked ready to fall apart—I guessed that the Japanese weren’t using their best equipment for this war, and I felt sorry for the pilots because the field had been bombed and craters in the runways made landing dangerous. I decided to take a few pictures and got out of the car with my camera. Then I heard something go clank, clank behind me. I turned around. A Japanese sentry had just charged his machine gun and was pointing it squarely at my chest. Up until then it had never occurred to me that the American flag was no guarantee of total protection. The incident rattled us all. I jumped into the car and we headed back into town meekly.

  The rest of my time in Peking was spent constructively—in the shops. I love to buy things. I started out with four hundred dollars in my pocket, and after a week I ended up practically broke, with two trunks full of all kinds of stuff. I bought antique Mandarin skirts for my sisters, brocaded silk bathrobes with the wool of unborn lambs inside, and countless carvings of jade and lapis lazuli. I was so popular with the merchants that on the morning I left, several of them sent their sons or shop boys to the train station with small gifts to see me off. The ride into Peking had been an adventure, but the ride out was harrowing. Japan’s invasion had bogged down in Shanghai, and the Japanese I met along the way were tense. Near me sat two soldiers solemnly carrying the ashes of their general back to Tokyo. The custom was to cremate men killed in battle and put the remains in a labeled box, which was then carried home in a cloth ritually folded to make a kind of sling. The box sat on the table in front of these two men for the entire trip.

  At the border of Korea, an official insisted my visa wasn’t valid and demanded a hundred dollars. When I refused to pay, he shouted “No argument!” and called in two soldiers. They came up and pointed bayonets at my stomach. I paid right away. I was angry and afraid, and I brooded for the rest of the day. I decided, “These bastards really are ready to make war!” and it suddenly seemed to me shameful that the United States and Great Britain hadn’t intervened on the side of China. On the way out of Tientsin, I’d seen the Navy destroyer U.S.S. Ford in the harbor. The ship was there to pick up Americans who were leaving Peking, and it had certainly looked good to me, with American flags painted all over it. Now I wished I’d been aboard.

  When I got to IBM’s sales school in Endicott, New York, I was hoping that people would treat me like any other Joe Blow just starting out. How I could think that was possible, I don’t know. Dad was such a tremendous force in that town that as I walked down the street with my books under my arm, people would point and say, “Mr. Watson’s son.” During the first week I caused a stir by going into a bar after school to get a drink. The bartender said, “Doesn’t your father have a big policy about liquor?” I started to explain that the rule only applied to drinking on the job or on IBM property, but there was no point. I stopped going into the bars after that and began to think Endicott was a very unpleasant place.

  Even though IBM headquarters was in Manhattan, the company’s soul was there in Endicott. That was where IBM built its punch-card machines, showed customers how they were used, and taught recruits like me how to sell them. Endicott is a little river town in the western part of New York State, not far from where Dad got his start selling sewing machines. In winter the weather is perpetually gray and damp, and whenever the wind blew over the tannery of the giant Endicott-Johnson Shoe Company, all of Endicott stank. Yet I think to Dad it was the most beautiful place on earth.

  I spent two miserable winters there in 1937 and 1938. IBM in those days trained salesmen in two steps. New recruits would come to Endicott
in October for machine school, where they learned the ins and outs of the product line. They’d spend the following spring and summer as junior salesmen helping veterans in the field. Then it was back to Endicott for another winter, to learn sales techniques. Finally they’d become salesmen with territories of their own and the chance to make a respectable living. In salary and commissions Dad paid the average salesman about forty-four hundred dollars a year—which is like earning thirty-eight thousand today—and top salesmen made several times that. The men in my class were an impressive group, mostly college graduates. We lived and ate at a crude old wooden hotel called the Frederick, which catered to IBM. Each morning we’d grab our books and walk three blocks up the main street of town, turn right onto North Street, and enter Dad’s world.

  I have to admit he had a lot to be proud of. When he first came to Endicott in the spring of 1914, all CTR had there was a small factory manufacturing time clocks. The rest of North Street was lined with bars and greasy spoons. By 1937, thanks to IBM’s success, that end of town was totally transformed. Dad had bought up those greasy spoons and replaced them with modern white air-conditioned factories and an imposing research and development center with colonial pillars across the front. There was tremendous company spirit and vitality that anyone could feel just by walking through the plant. IBM’s employees earned well above the national average, and they worked in clean shops with spotless machinery and polished hardwood floors. In the hills behind the factory there were signs that Dad was giving employees the best benefits he could think of. He had bought an old speakeasy and turned it into a country club—liquor-free, of course—with two golf courses and a shooting range. Any employee could join for a dollar a year. Three nights a week the country club served dinner to give IBM wives a break from cooking. Dad also provided free concerts and libraries, as well as night courses to show employees how to get promoted. He believed in management by generosity and he was right: morale and productivity at Endicott were high, and in that great era of industrial unionization, IBM employees never found any need to organize.

  Some of this Dad created himself, but many of his ideas came from a legendary businessman named George F. Johnson, the founder of the Endicott-Johnson Shoe Company. Long before Dad arrived, Johnson was a towering figure in Endicott. He had started out as an uneducated boy making boots in a factory near Boston, and he became famous as one of the most progressive businessmen in history. When his business boomed at the turn of the century, Johnson set out to make Endicott a model of what he called “industrial democracy.” He built the town center, a school, parks, athletic fields, swimming pools, a library, and a golf course, and donated them all to the town. He built stone arches on the highway leading in and out of Endicott, carved with the words “Home of the Square Deal.” He paid employees’ medical bills and offered them low-interest loans and good land near town so they could build their own houses. Johnson built his own modest house right in their midst. Even though he employed twenty thousand people in that valley, Johnson always thought of himself as a working man, the same way Dad always thought of himself as a salesman.

  Johnson took Dad under his wing from the very beginning, welcoming him to Endicott and encouraging him to build up the CTR operation there. He taught Dad as much about employee welfare as John H. Patterson had about running a sales force. But in 1937 the Depression was causing Johnson’s magic to fade. The shoe business went bad, and he didn’t have enough cash flow to cushion his workers from the downturn. He had to lay off thousands of people. Meanwhile IBM kept getting stronger, and many of the sons and daughters of Endicott-Johnson families went to work for Dad. But my old man never lost his admiration for Johnson and used to visit him even after Johnson was very old and confined to bed. On one of these visits Dad took my brother, who was then going to Yale. Johnson, the great old progressive, took one look at Dick, the perfectly tailored undergraduate, and then he rose up from his pillow and hollered, “Well, what are you going to do about it?” Meaning, the world.

  The IBM School House sat on North Street in the midst of Dad’s enterprise. Not many companies had real schools in those days; Dad copied the idea from the Cash and improved upon it greatly. The school’s aim was to produce future officers of the company, and Dad always talked to us trainees as if we were colleagues. Everything about the school was meant to inspire loyalty, enthusiasm, and high ideals, which IBM held out as the way to achieve success. The front door had the motto “THINK” written over it in two-foot-high brass letters. Just inside was a granite staircase that was supposed to put students in an aspiring frame of mind as they stepped up to the day’s classes. Engraved on the risers were the words:

  THINK

  OBSERVE

  DISCUSS

  LISTEN

  READ

  In class the first thing we did each morning was to stand up and sing IBM songs. We actually had a songbook, Songs of the I.B.M. It opened with “The Star-Spangled Banner,” and on the facing page was IBM’s own anthem, “Ever Onward.” There were dozens of songs in praise of Dad or other executives, set to tunes everybody knew. One of my favorites was to Fred Nichol, who started out as Dad’s secretary at the Cash, came with him to IBM, and most recently had been promoted to vice president and general manager. Making rousing speeches in praise of my father was one of Nichol’s specialties, and his success showed how far loyalty could carry a man at IBM. The song was sung to the tune of “Tramp, Tramp, Tramp, the Boys Are Marching”:

  V. P. Nichol is a leader,

  Working for the I.B.M.

  Years ago he started low

  Up the ladder he did go

  What an inspiration he is to our men!

  A lot of outsiders thought our singing custom was odd, but the man in charge of our class didn’t make a big deal out of it. He said, “We have these company songs. We think they build morale. Here is the way they go. Mr. O’Flaherty here at the piano will sing it through for you first and then you’ll all sing it.”

  The teachers were veteran company men, all dressed, as we were, in regulation IBM clothes—dark business suits and white shirts with stiff collars. Dad believed that if you wanted to sell to a businessman, you had to look like one. There was a big picture of Dad looking watchful on the wall behind the lectern. The rest of the classroom was decorated with his slogans, and, as in every office of IBM, there was a “THINK” sign prominently displayed. Magazine cartoonists used to make fun of these signs, and IBM’s critics thought they were ridiculous: how could anybody really think in a company that was such a one-man show? But to everybody inside, the message was crystal clear: you would sell more machines, and advance faster, if you used your head.

  I used to marvel at how willingly new employees embraced the company spirit. As far as I could tell, nobody made fun of the slogans and songs. Times were different then, and I suppose being earnest didn’t seem as corny in 1937 as it does today. And, of course, jobs were awfully hard to come by in the 1930s, so people would put up with a lot. As for me, I was pretty used to the IBM culture because I’d grown up at the source. It only bothered me when Dad let things get out of hand—as in 1936, when he commissioned an IBM symphony.

  They gave us twelve weeks to learn everything about the products. We didn’t have to worry about scales or meat slicers, because Dad had sold off that division while I was at Brown. In its place he had bought a small company that was trying, without much success, to pioneer the electric typewriter. We studied those and the whole line of time clocks. But the bulk of our course work was on punch-card machines, which were in great demand and already accounted for more than 85 percent of the revenue of the company.

  At first I was thrilled to get my hands on punch-card machines. I’d grown up around those things, and the basic concept fired my imagination just as it did Dad’s. In the history of industrialization, punch-card machines belong right up there with the Jacquard loom, the cotton gin, and the locomotive. Before punch cards, accounting and record keeping were clumsy operat
ions that had to be done manually by clerks. Punch-card systems took away a lot of the drudgery—such as copying ledger entries and writing bills—and they did the work cheaply, reliably, and rapidly. This obviously was the wave of the future, and IBM was starting to attract high-caliber people because the machines were exciting to work with.

  My father always said that those punch cards were what attracted him to IBM when Charles Flint approached him with the job. He had seen his first punch-card installation while he was still selling cash registers in 1904. A friend of his was using Hollerith machines at Eastman Kodak to keep track of the company’s salesmen. The way this worked was pretty simple. Each time a sale was made, all the information about it would get punched onto a single card. Those cards would be sorted and tabulated once a month to yield all sorts of information: what each man had sold, which products were selling best in which regions, and so on. Dad used to make a wonderful sales talk about the punch-card concept. He’d hold one up and say, “You can put a hole in this card representing one dollar—a dollar of sales, perhaps, or a dollar you owe someone. From that point on, you have a permanent record. It can never be erased, and you never have to enter it again. It can be added, subtracted, and multiplied. It can be filed, accumulated, and printed, all automatically.” Dad believed that here was the world’s answer to problems of accounting. All he had to do was keep developing this thing and IBM would revolutionize business. Whenever someone would use the term “punch cards” he would say, “These are IBM cards!”

  Punch-card machines had become pretty sophisticated by the time I got to Endicott. They could sort four hundred cards a minute, print out paychecks and address labels, and duplicate, at very high speed, all of the accounting functions that companies were still doing by hand. I liked the idea that one set of cards enabled a customer to use the same data ten or twelve different ways, and I was pretty sure I’d be able to sell that. However, I quickly found out there was more to IBM school than appreciating what a punch card was. Everybody had to learn how to program the machines to do specific tasks. This involved arranging wires on a “plugboard,” which looked something like an old-fashioned telephone switchboard. We each had a plugboard to work with, and it soon became obvious that I was much better at understanding the potential of the machines than at actually plugging them up. After only two weeks I had to be assigned a tutor so I wouldn’t fail. I spent many nights with that guy in the deserted schoolhouse, trying to learn to hook up those little wires.