Father, Son & Co.

by Thomas J. Watson

  Khrushchev started out on the East Coast and went on to Los Angeles. I followed all the TV and newspaper reports and wondered what I was getting us into. He traded insults with the press corps in Washington, was rude to Eleanor Roosevelt at her home, and almost caused an international incident when the mayor of Los Angeles told him that he couldn’t go to Disneyland because of the security risk. According to the papers Khrushchev pounded on a banquet table and said, “Why not? Do you have rocket-launching pads there? Is there an epidemic of cholera or something? Have gangsters taken hold of the place? The situation is inconceivable! I cannot find words to explain this to my people!” I began to worry that he’d use IBM as a platform for denouncing the American way of life. Day and night I imagined situations in which Khrushchev would say something insulting and I’d have to find the proper diplomatic response. But after Los Angeles there was an amazing shift of tone. Somehow he and the Americans warmed to one another. Khrushchev’s message stayed the same, but suddenly his manner changed: he was all smiles. He checked into a San Francisco hotel and a huge crowd cheered when he came to the window and waved. The next morning, on the way to see us, he caused bedlam by making a spur-of-the-moment visit to a San Francisco supermarket, and then stopped off unannounced at a hiring hall for the longshoremen’s union.

  Finally it was our turn. His motorcade pulled in just before lunch and there was the premier, a funny little round man in a rumpled tan suit. He had on a bright white longshoreman’s cap that he’d just swapped his own hat for at the hiring hall. His official escort was Henry Cabot Lodge, the U.S. ambassador to the United Nations, whom I knew slightly. With them were dozens of officials from both sides and a crush of newsmen. Olive and I came forward to say hello to him—Mrs. Khrushchev had stayed in San Francisco to do some shopping—and we escorted him into the plant.

  Khrushchev loved to eat, and what broke the ice was the fact that we’d arranged things so that lunch came first. Earlier that week I’d carefully instructed the caterer who ran our cafeteria, “We want to show Khrushchev a typical day at the plant. No special arrangements. Serve an average lunch.” The caterer stuck to the usual menu, but somehow he produced the damnedest cafeteria meal I’d ever seen—beautiful California salads and an array of cold meats that would have graced the Waldorf. I gave Khrushchev a tray, took one for myself, and we went through the self-service line. The practice there was to restrict the quantity you could take from the buffet by using plates and bowls that were pretty small. That didn’t stop Khrushchev. As we went along I noticed he was heaping his bowl with more and more food. I was determined not to smile because there were photographers all around and I thought it would make a horribly embarrassing picture, me laughing at him. But Khrushchev must have been reading my mind. He got his bowl piled three or four inches high and then glanced up at me and gave a pert little smile, which caused me to burst out laughing. Of course the New York Times clicked it and we made the paper the following day.

  Lunch seemed to put the premier in a happy mood. “You are well versed in psychology,” he said to me. “You started off our acquaintance by taking me to this dining room.” His interpreter, Viktor Sukhodrev, was so much better than the guy I’d brought in from the United Nations that the UN guy couldn’t get a word in edgewise. I didn’t mind because it was obvious that Sukhodrev was giving faithful translations. Later on, when we toured the plant, Khrushchev said, “We have plants like this in the Soviet Union.” Then he looked a little puzzled and said, half to himself, “We must have plants like this in the Soviet Union.” Why Sukhodrev didn’t leave that one untranslated I never knew.

  Khrushchev was constantly putting his hands on people. In the brief time he spent walking through the plant he managed to make a personal impression on every employee there. My father was the only other man I ever knew who could affect a large crowd that way. We had the entire tour precisely scheduled and choreographed, but Khrushchev broke away in the middle of the factory floor and went up to a couple of workers. “What type of work do you do?” he asked each man. “What is your salary? How much do you spend for groceries? Is this a typical wage here?” The Russians had launched a successful moon probe called Lunik, and Khrushchev started pinning Lunik medals on people. After he went by you would see the workers pulling those medals off and looking at them. Some of them put their medals back on, and some of them said, “That s.o.b.,” and pitched them in the ashcan.

  We stepped up in front of microphones and Khrushchev thanked us for the warm welcome we’d given him. Then he made what were widely reported as the most amicable remarks of his U.S. stay, saying that Russia wanted to be friends with the American people and the American government, and that he drew no line of distinction between the two. There was only one insinuation in his speech that I didn’t like. He said, “Whenever we meet with businessmen, we have no conflicts with each another. But often when I meet, for instance, with trade union leaders or some politicians, it turns out that matters are not so smooth.” I thought this was a veiled insult to Eisenhower, who had just put him through three days of tough talks at Camp David on the subject of Berlin. Much as I wanted to be a good host, I couldn’t let that ride. So after he finished I said, “Ladies and gentlemen, the chairman attributed to me a peaceful tone, but this tone was set by President Eisenhower, not me.” To my great relief, Khrushchev didn’t pursue the matter further, so there was no sequel in the IBM cafeteria to Nixon’s Kitchen Debate.

  I was intrigued at the thought of becoming a prominent figure on the national scene. Not that I was looking for a political career—I wasn’t, at least not then—but I wanted to be known as a citizen who could come to Washington and do a job for the government just as successfully as I ran IBM. Government service was an opportunity to go beyond what my father had accomplished. Although he’d been close to Roosevelt and helped organize the Business Advisory Council, Dad was generally so busy with IBM and the International Chamber of Commerce that he restricted his government activity to ceremonial jobs. I, on the other hand, liked the prospect of getting actively involved and going to Washington regularly, and I wasn’t bothered by another consideration that may have held Dad back. When a businessman, even a very successful businessman at the peak of his career, steps out of his company and takes on a task for the government, he gives up much of his power and becomes a novice all over again. That would have had no appeal to Dad, who above everything else loved to rule the roost at IBM. But I was still quite a young man, and didn’t mind being seen as an amateur as long as I could learn.

  As one of the few liberals in the business community in the late ’50s, I was often surprised by the amount of controversy I stirred up—and I enjoyed it. Two months after Khrushchev’s visit, for example, I gave a speech to the National Association of Manufacturers at the Waldorf and shocked them with a call for higher taxes. I pointed out that more money was probably essential if we expected to stay ahead of the Soviets.

  We must realize that some sacrifice is necessary. We can’t do all the things necessary for the United States to do—in this country and abroad—and still proceed on the “business as usual” basis. One of our first sacrifices must be a willingness to accept higher taxes, if necessary, in order to accomplish our purpose of keeping America ahead of the world on all counts.

  I had arranged to leave right after the speech without ever going back into the audience. I stepped down from the podium, went out the back door, into a waiting car, and was off on a trip to Europe immediately. It wasn’t until later that I found out what an uproar my speech caused. The next morning there were front-page stories in the Times and Herald Tribune:

  N.A.M. Tax Stand Hit by Watson

  Assails “Business as Usual” View

  The president of the organization even called a press conference where he claimed that I’d meant the opposite of what I’d said. The official National Association of Manufacturers position, of course, was that Congress should indeed try to increase federal revenues—by spurring the eco
nomy with lower taxes.

  I was trying to set an example for all our managers. It hadn’t been so many years since the McCarthy hearings, and I urged them to participate in the democratic process. “Your rank at IBM gives you a platform in the community,” I’d tell them. “Stand on it and try to influence the country for good as you see it.” This was the twilight of the Eisenhower era, and prominent people from America’s universities and businesses and labor unions were beginning to think about the future in an exciting new way. In his last year in office, Eisenhower put together a Commission on National Goals under Henry Wriston, the president emeritus of Brown University. Eisenhower gave it a huge job: to chart a direction for the United States in the 1960s in critical areas such as civil rights, foreign policy, unemployment, and urban decay. Over a hundred people participated, from George Meany of the AFL-CIO to Crawford Greenewalt, the head of Du Pont. I played a role as the head of a panel on technological change. It consisted of Walter Reuther, the United Auto Workers leader, George Shultz, then a young economics professor, Charles Percy, then still president of Bell & Howell, and IBM’s own Manny Piore.

  Even though the members of the commission were Eisenhower appointees, what they produced was practically a map for Kennedy’s New Frontier. They reached a bipartisan consensus on dozens of issues, ranging from national support of the arts to the use of federal power, if necessary, to enforce voting rights. When the final report came out a few days after Kennedy got elected, I remember CBS commentator Howard K. Smith saying, “If there were not abundant evidence Senator Kennedy has been fully occupied with other things lately, one would swear he wrote the document.”

  Kennedy’s victory transformed my status in the business world in the same way that Roosevelt transformed Dad’s. Before Kennedy, most businessmen saw me as a character on the liberal fringe, and more or less tolerated my opinions because of IBM’s success. Now all of a sudden I had a chance to become a much bigger fish. The Business Advisory Council, for instance, advanced me from oblivion to the office of vice chairman, and I soon found myself trying to be a peacemaker between big business and the White House.

  The Kennedy family had first come into my life years before, on a train platform in Switzerland in 1952. Olive and I were changing trains on our way to Davos, and noticed a large pile of expensive-looking baggage. Olive checked the tags and said “The Kennedys!” Then Jean and Pat Kennedy ran up and gave her a big embrace. They were on their way to Davos too, and we saw a lot of them for a week. We went out together at night and they were full of fun. When the week ended they had to hustle home to give tea parties for Jack, who was running for the Senate for the first time.

  Various Kennedys began to come to Stowe frequently. They didn’t stay at our house, but it was often a gathering place in the evenings. Pat would show up with my close friend Bill MacDougall, the Pan Am pilot she was dating at the time, and Bobby and Ethel would bring a carload of kids. We could seat maybe twenty-five kids in the lodge, up and down the stairs and across a catwalk on one side of the room, and we’d show movies. Their kids were all full of beans but nice. When we had a party the Kennedys loved the same foolish funny games we did.

  I didn’t meet Jack Kennedy until 1958, when we ran into each other on the air shuttle to Washington. I introduced myself and we chatted about his family and mine. Over the years I’d heard Jack praised so much by my wife and his sisters that I felt some resistance to him, but any reservations I had evaporated very fast when I saw him debate Nixon on television. After the second debate I was sure he was going to win the election. I wrote him a letter that said, “I am for you.” One of his aides called to ask if I would declare my support to the press. Since I was chairman of a corporation that did a lot of business with both Democrats and Republicans, I said no. But I told the Kennedy people I’d make no secret of who I was voting for and if they wanted to spread the word, they could. I worked hard for Kennedy’s election by making gifts, writing letters, and personally trying to drum up support. He was so unpopular in the corporate world that the business people who learned what I was doing thought I had lost my mind. Before election day, Olive and I went to a meeting of the Business Advisory Council and found it difficult even to engage anyone in conversation, they were so put out.

  I was delighted when he won, and got a little carried away in my enthusiasm when I addressed the Hundred Percent Club that winter. “I had to hold my tongue prior to the election,” I told our salesmen, “but now that Kennedy is president of all the people, I’m free to speak. I think you will agree that we should congratulate ourselves, because we have elected a terrific president.” This remark produced dozens of complaints from young Hundred Percenters, who invited me to keep my political views to myself. Somehow I’d lost sight of a basic fact of human nature. If a fellow starts out poor, works his way through college, and quickly makes a lot of money, he turns ultra-conservative. A bright young IBM salesman could earn twenty-five thousand dollars a year within five years of starting out—big money in those days. I was fooling myself to think I was head of a corporation of liberals. I realized that if I wanted to be in politics, I might as well quit, and if I wanted to be chairman of IBM, I had to button my lip. There was never any question about where I stood politically, but I didn’t make any more public statements about it.

  Olive and I started getting invitations to the White House as though we lived next door. Some of the social occasions we went to were historic—I remember the dinner where Pablo Casals performed. It was his first formal recital in the United States since the Spanish civil war. Olive and I also were invited to private dinner dances at the White House, including one for Kennedy’s brother-in-law Steve Smith where the dancing went on until 5:00 A.M. My wife was seated on the president’s right that night, which alone was sufficient to make the evening a permanent part of our family’s lore.

  During the Kennedy years I had my chance to learn my way around Washington. I worked on a half dozen of his committees and commissions, including the Advisory Committee on Labor-Management Policy and the steering committee for the Peace Corps. I was pleased and proud to serve the president in any way I could, but I didn’t delude myself that I was playing that important a role, or that I was a real political animal. Mainly I was a witness.

  Most big businessmen opposed Kennedy, of course. He hadn’t even been in the White House six months when the Business Council broke off its formal relationship with the government. I got involved in that fight, which destroyed an arrangement that had existed since Roosevelt. The Council consisted of sixty-five of the most powerful businessmen in America. Its official purpose was to advise the Secretary of Commerce on economic issues, but its real usefulness had been in times of crisis. When America joined World War II, for example, the Business Council had the War Production Board staffed within a matter of days. In peacetime there wasn’t that much for the Business Council to do, and it became more of an old boys’ club.

  Kennedy’s secretary of commerce was Luther Hodges, the former governor of North Carolina, a genial liberal twenty years older than the president. When he was first appointed, everybody figured Hodges would appeal to both businessmen and Congress, but underneath that charming exterior was a real stubborn old coot. Hodges decided big business and the government had gotten too cozy under Eisenhower, and that he was going to put a stop to it. He told the Business Council chairman that he didn’t think the organization was truly representative of American business. That shocked everybody. Then he forbade us to hold closed-door sessions with federal officials and demanded that representatives from small business be made members. Before long a lot of ill will was building up.

  I was by no means entirely in love with the Business Council. Members would go to those meetings at Hot Springs with a list of five deals they wanted to discuss. There would be golf games all afternoon, a perfect forum for cooking up business deals. And when it came to questions of government, they all thought alike: they were against any federal control. But in spite
of all this I thought it was foolish to destroy an organization that was so important in emergencies, and I couldn’t see why Hodges would want to alienate the business community when he was supposed to speak for it.

  With the Berlin Wall crisis developing in 1961, I’m sure Luther Hodges was far from the most pressing problem on the president’s mind. All the same, I went to see Kennedy when the Business Council started talking about ending its affiliation with the Commerce Department. “I don’t think it’s particularly detrimental to you,” I said. “But you might want to take an active hand rather than just let it happen.” Kennedy called in Ralph Dungan, one of his special assistants, and said, “I had no idea this thing had gone so far. Get into it with Tom and get it stopped.” Dungan tried in every way to get Hodges to change his position, but he wouldn’t. So on July 6 the Business Council called a press conference and divorced itself from the government.

  The only thing the Business Council ever did for Kennedy was to supply volunteers for his foreign aid program. I organized the recruiting effort, which was nicknamed Operation Tycoon. The United States was giving away a great deal of money abroad in those days, and Kennedy wanted business people manning the foreign aid posts. The idea was to get fifty companies to provide their best young vice presidents and managers for a year’s service abroad—a kind of executive Peace Corps. I used the Business Council to do the job, lining up four chief executives as regional vice chairmen, including Carter Burgess of AMF and Steve Bechtel Sr. They recruited some very talented men, and then we had to wrestle with State Department bureaucrats who were insisting that, to avoid conflicts of interest, the volunteers had to resign from their corporate jobs before they could go. But the spirit of the times was so compelling that thirty-five people agreed, at some risk to their careers. I remember that the younger brother of Bob Ingersoll, head of Borg-Warner, went to the Philippines; Bill Lawless of IBM, who had been Al Williams’s assistant, went to Zaire, and another fellow from IBM named Stan McElroy managed the whole operation for me.