IBM and the Holocaust (7 page)

Hollerith withdrew as an active manager.
³⁵
The commercial extension of his ingenuity and turbulent persona was now in the hands of a more skilled supranational manipulator, Charles Flint. Hollerith was willing to make millions, but only on his terms. Flint wanted millions—on any terms. Moreover, Flint wanted CTR's helm to be captained by a businessman, not a technocrat. For that, he chose one of America's up and coming business scoundrels, Thomas J. Watson.

CARVED AMONG
the densely wooded hills, winding, dusty back roads connected even the remotest farm to the small villages and towns that comprised the Finger Lakes region of New York State in the 1890s. Gray and rutted, crackling from burnt orange maple leaves in the fall and yielding short clouds of dust in the summer beneath the hoof and wheel of Thomas J. Watson's bright yellow horse-drawn organ wagon, these lonely yet intriguing by-ways seemed almost magical. Pastoral vistas of folding green hills veined with streams lay beyond every bend and dip. But even more alluring was the sheer adventure of selling that awaited Watson. Back then, it was just pianos and sewing machines.
³⁶
But it took all-day tenacity and unending self-confidence to travel these dirt roads just for the opportunity—not the certainty, only the opportunity—to make a sale.

Yet "making the sale," that calculating one-on-one wizardry that ends as an exhilarating confirmation of one's mind over another's motivation, this was the finesse—the power—that came naturally to Watson. Tall, lanky, handsome, and intelligent, he understood people. He knew when to listen and when to speak. He had mastered the art of persuasion and possessed an uncanny ability to overcome intense opposition and "close the deal."

All born salesmen know that the addicting excitement of a sales victory is short-lived. No matter how great the sale, it is never enough. Selling, for such people, becomes not an occupation, but a lifestyle.

Any salesman can sell anything. Every salesman alive knows these words are true. But they also know that not all salesmen can go further. Few of them can
conquer.

Watson was a conqueror. From simple merchandise inauspiciously sold to farmers and townsfolk in rural west-central New York, Watson would go on to command a global company consumed not with mere customers, but with territories, nations, and entire populations. He would identify corporate enemies to overcome and strategies to deploy. Like any conqueror, he would vanquish all in his way, and then demand the spoils. Salesmanship under Watson would elevate from one man's personal elixir to a veritable cult of commercial conquest. By virtue of his extraordinary skills, Watson would be delivered from his humble beginnings as a late-nineteenth-century horse-and-buggy back road peddler, to corporate scoundrel, to legendary tycoon, to international statesman, and finally to regal American icon—all in less than four decades.

Although born into a clan of tough Scottish Watsons, the future captain of industry was actually born Thomas J. "Wasson." His Protestant father, a brawling, scowling lumberman of little religious tolerance, was so opposed to having Catholic in-laws in the family, he changed his name to Wasson, just to disassociate. Eventually, the family let the protest drop and re-adopted the Watson name. Thus, young Tom could be a genuine Watson.
³⁷

Growing up in the Finger Lakes town of Painted Post offered few choices to the ambitious, young Watson. To escape a life of working the family farm and running horse teams pulling river barges, Watson declared early he would become a teacher. He even obtained his teaching certificate. But after just one day on the job, the impatient Watson confessed, "That settles my teaching career. I can't go into a schoolroom with a bunch of children at nine o'clock in the morning and stay until four."
³⁸

Watson wanted to dive into commerce. He began by peddling sewing machines and pianos on the road for a store in town. He had to provide his own horse. When his more experienced road partner drifted away, Watson took over—and did better. Even when economic times hardened, Watson learned to find lodging with befriended farmers, barter goods, and push on despite rain-flooded roads and every other adversity. Despite his admirable results, Watson's salary was generally $10 per week. Before long, he quit and looked elsewhere.
³⁹

Quickly, Watson learned that some sales positions offered something called a
commission,
that is, a cut. He joined a building and loan association in Buffalo where he sold shares up and down the populated roads south of the city. Watson's deal was straight commission. His manager was a slick and dapper operator who taught Watson how to smoothly sell stock in saloons, and how to always dress the role of a successful Gay Nineties businessman. Nothing drives glibness like a commission-only job. Watson excelled—and the feeling was invigorating. He loved to sell.
⁴⁰

In 1895, at age twenty-one, Watson bumped into John J. Range, the manager of the Buffalo office of one of the most rapacious companies of the day, the National Cash Register Company. Nicknamed "The Cash," NCR was the personal empire of the ruthless and belligerent tycoon, John Patterson. Patterson had created a sales manual designed to rigidly standardize all pitches and practices, and even mold the thought processes of selling. No deviation was allowed. Patterson's way was the only way. Range was one of Patterson's most successful sales supervisors, brutalizing and humiliating his underlings until they achieved their quotas. Range became a mentor to Watson. In no time,
The Cash
converted Watson into a youthful commercial mercenary.
⁴¹

Within months, Watson was the territory's leading salesman, outearning Range himself, eventually becoming among the best
Cash
salesmen along the East Coast. His commissions reached as high as $100 per week. Patterson took notice, transferring Watson and his impressive skills to the undesirable Rochester office, one of the worst performing of
The Cash's
160 branch offices. Watson worked his magic immediately. On his very first day, while tying his horse to the hitching post in front of the National Cash Register office, Watson encountered the angry saloonkeeper next door. The irate neighbor complained that
The Cash
enjoyed a dismal reputation and the prior sales agent was often too drunk to perform his job. Within minutes, Watson had somehow convinced the disenchanted man to buy a new cash register. Watson sold a second cash register while riding out to another complaining prospect.
⁴²

Patterson realized that Watson was good enough to go beyond simple sales. He was good enough to destroy the main competition in Rochester, the Hallwood Company, which also marketed a cash register. Adopting the brutal, anything-goes techniques of Patterson and Range, and adding a few devi-ous tricks of his own, Watson began the systematic annihilation of Hallwood, its sales, and its customer base. Tactics included lurking near the Hallwood office to spy on its salesmen and customers. Watson would report the prospective clients so "intimidation squads" could pounce. The squads would threaten the prospect with tall tales of patent infringement suits by NCR against Hallwood, falsely claiming such suits would eventually include anyone who purchased Hallwood machines. The frightened customer would then be offered an NCR machine at a discount.
⁴³

Watson never missed an opening. A Hallwood salesman whom Watson had befriended one day mentioned that he was calling on a prospect the next day. In the morning, the Hallwood salesman arrived at the merchant's location just as Watson's horse and buggy was riding off, the sale in hand. Watson had risen at dawn and driven twenty miles to steal the account. Watson enjoyed the triumph so thoroughly, he bragged about the incident for years to come. Within a few years, Watson had virtually driven Hallwood out of Rochester. Later, Watson bragged that he had made Rochester "one of the best organized and cleanest territories."
⁴⁴

Patterson liked Watson's style. The unscrupulous NCR president had learned to use frivolous libel and patent suits to drive his competition into submission. Watson could add a whole new dimension to the war against anyone other than Patterson who dared buy or sell cash registers—even second-hand NCR cash registers. John Patterson believed that cash registers were his God-granted domain and no one else's. Watson would be the instrument of his hegemony.
⁴⁵

In 1903, Watson was called to Patterson's office and instructed to destroy second-hand dealers across the country. Although he had become a star in the Rochester office, Watson was still relatively unknown elsewhere. Patterson planted him in New York City, handed him a million-dollar budget, and asked him to create a fake business called Watson's Cash Register and Second Hand Exchange. His mission was to join the community of second-hand dealers, learn their business, set up shop nearby, dramatically undersell, quietly steal their accounts, intimidate their customers, and otherwise disrupt their viability. Watson's fake company never needed to make a profit—only spend money to decimate unsuspecting dealers of used registers. Eventually, they would either be driven out of business or sell out to Watson with a draconian non-compete clause. Funneled money from NCR was used for operations since Watson had no capital of his own.
⁴⁶

The mission was so secretive even the NCR sales force in Manhattan believed that Watson had simply defected from the Rochester office to set up his own shop. He reported directly to Patterson and his staff. It took years, but the enemy—second-hand dealers—was ruthlessly conquered.
⁴⁷

The victim list was long. Fred Brainin's second-hand business was on 14th Street in Manhattan—Watson bought him out with a proviso that Brainin would stay out of cash registers. Silas Lacey of Philadelphia merged into Watson's new front. The East Coast was easy. So Watson moved on to a real challenge: Chicago.
⁴⁸

One of the biggest Chicago dealers was Amos Thomas, located on Ran-dolph Street in the Loop, just a few steps from the Elevated. Watson's fake company moved in across the street. Thomas remembered, "Watson . . . tried to get me to put a price on my business. He wanted to control the second-hand business. I told him I would not sell." But Watson and his cohorts, which now included his old supervisor John Range, would come by three or four times each day to press the man.
⁴⁹

Still, Thomas would not sell. So Watson opened a second competing store near Thomas. NCR had secretly acquired control of American Cash Register Company, the successor to Hallwood. Watson's second front, called American Second Hand Cash Register Company, only squeezed Thomas further. Weakened, Thomas finally offered a buy-out price of $20,000. But that was just too high for Watson.
⁵⁰

By now, it was clear to Thomas that Watson was fronting for Patterson's NCR.
The Cash
didn't care if Thomas knew or not. To prove it, they invited Thomas to NCR headquarters in Dayton, Ohio, where he was first treated to a splendid dinner and then "handled" by a Patterson executive. Unless Thomas sold out for a "reasonable price," Thomas was told, NCR would rent yet another store near his and continue to undersell until his trade was entirely wrecked. Buckling under, Thomas at last agreed to sell for $15,875 plus $500 in cash. A battered and broken Thomas pleaded with Watson, as the new owner of his company, to be kind to a long-time devoted employee. Amos Thomas had been conquered.
⁵¹

Patterson's school for scoundrels was unparalleled in American business history. A Watson aide once testified that Patterson would scream for merciless destruction of all competitors. "Kill them! . . . crush them," Patterson would yell at sales conferences. The vanquished included Cuckoo, Globe, Hallwood, Metropolitan, Simplex, Toledo, Union, and scores of other struggling cash register companies.
⁵²

NCR salesmen wore dark suits, the corporation innovated a One Hundred Point Club for agents who met their quota, and
The Cash
stressed "clean living" as a virtue for commercial success. One day during a pep rally to the troops, Watson scrawled the word THINK on a piece of paper. Patterson saw the note and ordered THINK signs distributed throughout the company. Watson embraced many of Patterson's regimenting techniques as indispensable doctrine for good sales. What he learned at NCR would stay with him forever.
⁵³

NCR's war tactics were limitless. Bribes, knock-off machines at preda-tory prices, threats of litigation, and even smashed store windows were alleged. The federal government finally stepped in. On February 22, 1912, Patterson, Watson, and several dozen other
Cash
executives were indicted for criminal conspiracy to restrain trade and construct a monopoly. Prosecutors called the conduct the most uncivilized business behavior ever seen and likened Watson and company to "Mexican bandits."
⁵⁴