Authors: James Essinger
During the early
1930
s, IBM developed its ‘
400
’ series of punched-card machines. IBM liked to brand its machines by numbers rather than names. At first the numbers had some connection with the number of prototypes that had gone into making the machine that was finally released to market. Eventually the numbers were merely used because they were a scientific-sounding branding. The numbering system was also convenient because different models in the same overall series could be numbered successively onwards. To give a more professional and systematic appearance, the numbering usually went up in steps of five or ten.
The most commercially successful machine of the
400
-series was the model
405
Electric Accounting Machine, in its day by far the most advanced automatic tabulation machine in the world.
IBM was soon manufacturing
1500
of these machines every year.
Indeed, the
400
-series actually continued to be manufactured late into the
1960
s, when punched-card machines were finally superseded by computers.
With the advent of the
400
-series machines, tabulators could count and sort punched cards at prodigious speeds. The fastest could handle
30 000
cards an hour, or about eight a second. This level of performance was continually improved until the final generation of punched-card machines of the
1960
s was capable of handling about
50 000
cards every hour. The mechanical engineering that had delivered this level of performance was no less remarkable because it had stemmed from 198
The Thomas Watson phenomenon
teams of highly trained engineers rather than from one gifted individual inventor.
By
1935
IBM had attained a dominating market share of eighty-five per cent of the US market for tabulation machines. Watson’s organization had also established a significant presence in most economically developed foreign countries, and in several nations that we would nowadays refer to as developing countries.
Thomas Watson’s salary for the year
1934
was $
364 432
—worth at least $
5
million at today’s prices.
Nobody doubted that Watson deserved his success. With his vision of the need for technical excellence complementing his genius for inspiring and leading thousands of the best salesmen in America, he was not only running IBM but also inspiring millions of businesspeople throughout the world. Along with NCR’s John Patterson, Watson played a key role in creating the cult of the salesman as the ambassador not only of a corporation and its products but also of a country.
What is particularly remarkable about Watson’s success is that he achieved it during a decade of severe economic depression that had disastrous economic and political implications for so many other countries, particularly, of course, Germany.
The drastic downturn in the US economy that started with the Wall Street Crash of
1929
and which only really ended with the huge surge in production of World War II, posed the fundamental question of whether capitalism really worked at all.
President Roosevelt’s New Deal, implemented between
1933
and
1939
, eventually helped to revitalize the economy by putting into practice what was at the time radical economic thinking. This abandoned
laissez-faire
economic attitudes and instead acknowledged that governments had a major role to play in invigorating a depressed economy by taking decisive and vigorous proactive measures.
199
Jacquard’s Web
In particular, the New Deal provided for the US Government to embark on public works programmes to reduce unemployment and to boost the country’s infrastructure. Watson wholeheartedly supported Roosevelt and his New Deal. He had always believed in the company as a benevolent parent looking after its employees; for him it was a small step conceptually from
‘big company’ policies to ‘big government’ ones.
During the first five years of the
1930
s, business machine manufacturers suffered an average decline in sales of about fifty per cent. IBM suffered along with the rest, but its punched-card sales and rental income provided it with a significant cushion.
Despite the successful launch of the
400
-series of machines, IBM
had to be content with a significantly lower turnover while the national economy was depressed.
Responding to the crisis—one unprecedented in IBM’s otherwise highly successful history—its Board of Directors recommended that the corporation drastically reduce its workforce to cut costs. The Board also recommended completely abandoning the continued production of tabulation machines while there were fewer customers to buy them.
But Watson, by now IBM’s president, was the one in charge.
He had carefully arranged matters so that his powers extended even to the point that he could veto a recommendation issued by the Board. He assured his fellow directors that there was bound to be an economic upturn sooner or later. Meanwhile, he insisted that the correct strategy was to continue to produce tabulators so that when the upturn came IBM would have the stock to meet the inevitably increased demand.
It was a fabulously audacious gamble, even given the fact that IBM had built up the financial muscle from its good years to be able to afford to take this level of risk. With hindsight, Watson’s conviction looks wonderfully visionary and courageous. At the time, though, with IBM fauceting money every week on keeping its factories operating while revenue was dramatically reduced, it must have taken enormous courage for Watson to come to the 200
The Thomas Watson phenomenon
decision he reached and to stick to it. After all, he had no evidence that there ever would be an upswing in the economy, apart from the general experience that economic events usually followed a cyclical pattern. With millions of Americans having to queue at soup kitchens and owning literally nothing but the clothes they stood up in, Watson’s decision seemed to many like the act of a madman, or that of an emperor whose power had finally gone to his head. But Watson had the final say and the Board had no choice but to go along with him. And so IBM held on to its expensively trained workforce, building an enormous stockpile of machines in readiness for the upturn—assuming one came.
For IBM, this was its finest hour. During the worst economic crisis in America’s history, Watson’s confidence made him a hero of legendary proportions both within IBM and in the world beyond. Here was a man who practised what he preached, a business leader who had promised employees that their corporation would be loyal to them if they were loyal to it, and who had delivered on that promise even when he might have been expected to renege on it. Watson’s decision also made him a hero with the general public, for he gave them hope that better times might be around the corner. And Watson acquired a heroic stature among America’s politicians, who saw him as a beacon of hope during hopeless times. In recognition of his contribution to US business morale, Watson was voted to the presidency of the American Chamber of Commerce. He subsequently became an adviser and friend to President Roosevelt, one of the few men in the country of even higher calibre than Watson.
When the recovery did arrive, IBM’s gamble paid off in spades. One of the many new legislative measures introduced as part of the New Deal was the Social Security Act of
1935
. This laid the foundations for providing old age and widows’ benefits, unemployment compensation, and disability insurance. In order to implement the Act, it was necessary for the US Federal Government to automate the employment records of the entire 201
Jacquard’s Web
working population of the nation. IBM, with its stockpile of state-of-the-art tabulators and its factories that were already in full production, was perfectly placed to meet the Government’s needs. It was a clear illustration of the principle that confidence in business, as in so many other things, often becomes a self-fulfilling prophecy. The question of the extent to which Watson’s close government contacts helped IBM to win the contract has never been fully resolved, but here, as elsewhere in his career, Watson was ruthless in seeing an opportunity and exploiting it. If ever there was a man who believed that in life one creates one’s own luck, that man was Thomas Watson.
In October
1936
the Federal Government took delivery from IBM of nearly
500
tabulation machines: a significant proportion of IBM’s inventory. This enormous piece of government business represented a fabulous vindication of Thomas Watson’s confidence. Between
1936
and
1940
, IBM’s sales in the US
increased from $
26
.
2
million to $
46
.
2
million. During the same period, the number of people working for IBM in the US rose to close to
13 000
. Information technology was becoming an enormous industry.
At this stage in their technological evolution, IBM’s tabulators—those endlessly clicking, endlessly efficient Jacquard looms that wove information—were strictly electromechanical devices only. That is, they only made use of electrical circuitry and machinery. They did not use the technology of
electronics
, which would not come into prominence for another decade. But in some respects it is the very fact that the tabulators were purely electromechanical that made them so remarkable and wonderful to watch operating. The way they worked was much more obvious and transparent than is the case with the computers of today. Modern computers process raw data invisibly because everything happens at an electronic level.
But there was nothing invisible about the data processing carried out by IBM’s tabulators. Weaving information from punched cards was what they did, and a tabulator’s operation—
202
The Thomas Watson phenomenon
with the noise and the blurred speed of the cards as the card-pile shrunk in the hopper, as the cards were shot along conveyors to where in the tabulator they were needed, and as the printers fired out hundreds of results onto the paper rolls every minute—
was a wonder of
1930
s technology.
What a pity that Charles Babbage and Ada Lovelace never had a chance to see it.
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I have often admired the mystical way of Pythagoras, and the secret magic of numbers.
Sir Thomas Browne,
Religio Medici
,
1643
IBM’s tabulators were busy handling more and more of the world’s information, but Babbage’s dream of giving the world a mechanical brain was still unfulfilled.
In fact, the need for a fast and reliable way of producing mathematical tables and performing a broad range of complex calculations with total accuracy was more pressing than ever.
Even now, no reliable mechanical way of doing this automatically had been found, but a number of moderately effective calculation aids had been invented that took the edge off the difficulty while not solving it.
In fact, the calculation machine inventors who came after Babbage did not start out with his high ambitions to produce
automatic
calculators. Many computer historians, including the 205
Jacquard’s Web
Babbage expert Doron Swade, believe that Babbage’s failure to produce a working example of his inventions rather queered the pitch, leading would-be pioneers to conclude that such a project was doomed to end in disappointment. And so, instead of trying to build automatic calculators, they aimed for the more modest objective of constructing strictly manual machines that would provide reliable results to arithmetical calculations too difficult to be done easily in one’s head.
Back in the
1820
s, a French businessman named Thomas de Colmar had invented a primitive version of a machine that would eventually turn out to be the first reasonably successful manual calculator. It became known in England as an ‘arithmometer’.
The arithmometer retained a low profile until the Great Exhibition of
1851
, which brought it to the attention of a wider public.
The arithmometer was designed to assist with the kind of calculations necessary in offices. It was operated by ‘dialling’ the numbers that formed the calculation onto a set of cogwheels using a stylus and then turning a handle to carry out the calculation. In offices where calculations involving very large numbers were necessary—insurance companies and engineering firms for example—the arithmometer could be useful. But in the vast majority of offices, where book-keeping rarely involved very large numbers, the arithmometer did not provide much extra benefit.
Book-keepers of the
1880
s were routinely trained to add up or even multiply four-figure numbers in their heads, or with some use of scrap paper for arduous calculations. Most bookkeepers were adept at mental arithmetic and, being cheap to employ, their employers had no reason to look for a better solution. The result was that even in the
1870
s, there was no other mechanical aid available than the arithmometer.