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Charles R. Flint (Founder, financier ) George W. Fairchild ( Chairman
Chairman
) Thomas J. Watson Sr. ( President
President
1915-1924)

The COMPUTING-TABULATING-RECORDING COMPANY (CTR) was a holding company of manufacturers of record-keeping and measuring systems subsequently known as IBM
IBM
.

In 1911 financier and noted trust organizer, "Father of Trusts", Charles R. Flint amalgamated (via stock acquisition) four companies: The Tabulating Machine Company, International Time Recording Company, Computing Scale Company of America, and the Bundy Manufacturing Company ; creating a fifth company - The Computing-Tabulating-Recording Company. Located in Endicott, New York it was renamed International Business Machines (IBM) in 1924.

The individual companies of CTR continued to operate using their established names until the businesses were integrated in 1933 and the holding company eliminated. They manufactured a wide range of products, including employee time-keeping systems , weighing scales , automatic meat slicers , and punched card equipment .

CONTENTS

* 1 Companies amalgamated

* 1.1 Tabulating Machine Company * 1.2 Computing Scale Company of America * 1.3 Bundy Manufacturing Company * 1.4 International Time Recording Company

* 2 Amalgamation

* 3 Organization and leadership

* 3.1 Early Watson era

* 4 Watson\'s strategies * 5 Organizational change and strategies * 6 See also * 7 Further reading * 8 Notes and references * 9 External links

COMPANIES AMALGAMATED

TABULATING MACHINE COMPANY

Hollerith's plant in 1893.

Herman Hollerith initially did business under his own name, as _The Hollerith Electric Tabulating System_, specializing in punched card data processing equipment . In 1896 he incorporated as the _Tabulating Machine Company_ and in 1905 reincorporated as _The Tabulating Machine Company_. Hollerith's series of patents on tabulating machine technology, first applied for in 1884, drew on his work at the U.S. Census Bureau
U.S. Census Bureau
from 1879 to 82. Hollerith was initially trying to reduce the time and complexity needed to tabulate the 1890 Census. His development of punched cards in 1886 set the industry standard for the next 80 years of tabulating and computing data input.

In 1896 the Tabulating Machine Company leased some machines to a railway company but quickly focused on the challenges of the largest statistical endeavor of its day – the 1900 US Census . After winning the government contract and completing the project, Hollerith was faced with the challenge of sustaining the company in non-Census years. He returned to targeting private businesses both in the United States and abroad, attempting to identify industry applications for his semiautomatic punching, tabulating and sorting machines. Flint bought the business for $2.3 million (of which Hollerith got $1.2 million) in 1911.

COMPUTING SCALE COMPANY OF AMERICA

The Computing Scale Company of America was a holding company, organized in 1901 and amalgamating as subsidiary companies The Computing Scale Company, Dayton, Ohio; The Moneyweight Scale Company, Chicago, Illinois; The W.F. Simpson Company of Detroit, Michigan; and The Stimpson Computing Scale Company of Elkhart, Indiana. In 1891, Edward Canby and Orange O. Ozias, two businessmen from Dayton, Ohio, purchased the patents for the newly invented computing scale and incorporated the Computing Scale Company for the production of commercial scales.

BUNDY MANUFACTURING COMPANY

Main article: Bundy Manufacturing Company Front cover of a January 1920 sales catalog showing clocks, scales and tabulating equipment)

The first time clock was invented on November 20, 1888, by Willard Bundy, a jeweler in Auburn, New York . A year later his brother, Harlow Bundy, organized the Bundy Manufacturing Company , and began mass-producing time clocks.

In 1900, Bundy Manufacturing sold its time recording business to a new company, the International Time Recording Company. Bundy Manufacturing went on to produce adding machines.

In 1906 Harlow Bundy moved his business into a new three-story brick building in Endicott, New York.

INTERNATIONAL TIME RECORDING COMPANY

In 1894, J. L. Willard and F. A. Frick of Rochester, New York , formed the Willard & Frick Manufacturing Company as the first time card recorder company in the world.

In 1900 George W. Fairchild , an investor and director of the Bundy Manufacturing Company, led the formation in Jersey City, New Jersey, of the International Time Recording Company (ITR) which consolidated the time recording business of Bundy with the Willard in 1935 IBM renamed the magazine _Think_ .

AMALGAMATION

Charles Ranlett Flint
Charles Ranlett Flint
had already created a number of successful consolidations, including creating industrial giant U.S. Rubber

Flint amalgamated the four companies into the new CTR holding company. CTR had a bonded indebtedness of $6.5 million, three times its current assets, of which $4 million was borrowed from the Guaranty Trust Company. Flint assigned it a value of $17.5 million, while its tangible assets only added up to $1 million. Flint stated that the various manufacturers produced _similar but not identical products_ and that the

..."allied consolidation", instead of being dependent for earnings upon a single industry, would own three separate and distinct lines of business, so that in normal times the interest and sinking funds on its bonds could be earned by any one of these independent lines, while in abnormal times the consolidation would have three chances instead of one to meet its obligations and pay dividends.

CTR's 1911 stock prospectus reported net earnings, from May 1, 1910 to April 30, 1911, of $950,000 for the four companies .

ORGANIZATION AND LEADERSHIP

CTR and the four amalgamated companies had 1,300 employees and offices and plants in Endicott and Binghamton, New York; Dayton, Ohio; Detroit, Michigan; Washington, D.C.; and Toronto, Ontario. CTR was located in Endicott. The chairman was George Winthrop Fairchild , who, having been a member of Congress since 1906, was not expected to take an active part in management. When the first president left after just one month, however, Fairchild took over and ran CTR until 1912, when Frank N. Kandolf, formerly CEO of the International Time Recording subsidiary, took over. Flint was a member of the board of CTR (and later IBM) until his retirement in 1930. Hollerith, then 51, joined the CTR board and served as a consulting engineer until he retired ten years later.

EARLY WATSON ERA

Thomas J. Watson 1917 Organizational Chart This style of chart, pyramids dividing into five parts, was required by Patterson. One of the many things Watson brought from NCR to CTR.

Thomas J. Watson Sr. , along with 29 other NCR officials, had been convicted in 1913 of various antitrust violations for their roles in a widespread National Cash Register scheme to run used cash register retailers out of business (see NCR Corporation § Expansion ). Watson's own extortionate writings were used as evidence against him. That lesson taught Watson to thereafter keep very little in writing. In 1914, having been fired from NCR Corporation and with a prison sentence threatening his future, Thomas J. Watson approached Flint, a leading financier, for assistance in finding a similar job. Despite his apparently perilous situation he was still very clear as to the type of job he wanted. He had already turned down a number of offers. He wanted control of the business for himself, and to be able to earn a share of the profits. Flint offered him CTR. Flint was, as described earlier, a great promoter of trusts and was presumably less worried about Watson's impending jail sentence. The other members of the CTR board were less sanguine, asking who was to run the company while he was in prison. As a result, they only gave him the title of general manager. After Watson had been at CTR for 11 months, the Appeals Court ordered a retrial. Although he refused to sign a Consent Decree, a new trial never took place, and he was duly promoted by the board of CTR to the position of president. Among the many things Watson brought to CTR from NCR was the motto _THINK _.

WATSON\'S STRATEGIES

Surprisingly, in view of his past record at NCR and his later colossal influence on IBM, Watson initially maintained a very low profile (almost tantamount to seeking obscurity) for the next decade until 1924, when the chairman George W. Fairchild died and he finally took over sole control. For the whole of the previous decade, in some ways uncharacteristically, he consistently deferred to Flint, Fairchild and Hollerith. IBM
IBM
song books with THINK signs in several languages and punched cards .

In the meantime he took personal charge of 400 demoralized and poorly-supervised salesmen. His stated objective was to produce a sales force in the NCR mold, as well as advanced machines that would be superior to any of the competitors' machines. In a series of small meetings he presented his 'competitive proposition' to the sales force. Despite the aggressive-sounding title, right from these beginnings there was as much emphasis on the ethics and philosophies of the business as there was on sales techniques. In particular he stressed sincerity, integrity and loyalty, saying that they should do nothing that could be construed as 'unfair competition' and should conduct themselves in an 'honest, fair and square way' -- something which would be radical even today. Musical events, even IBM
IBM
songs, were introduced to improve and maintain employee morale.

The other philosophies that motivated CTR and IBM
IBM
for the next three-quarters of a century were also evident. The company motto was to be 'We sell and deliver service'; CTR was to be in the business of genuinely assisting its customers. Watson strongly believed that when a sale was made both sides came out ahead.

ORGANIZATIONAL CHANGE AND STRATEGIES

CTR was a company with three separate elements:

- Computing Scale interested Watson the least and the largest element of this (Dayton Scale) was eventually sold off in 1933, to Hobart Manufacturing . After the sale the company, to Watson's chagrin, began making money.

- Time Recording was at first the main revenue earner, and was used by Watson as a vehicle for diversification, though none of these was great success.

- The tabulating business most interested Watson, perhaps because it was closest to his NCR experience. This was where he directed much of his attention and by the early 1930s this had indeed become the largest piece of CTR.

In 1920s, while still under Fairchild's domination, Watson focused on achieving a significant degree of growth. Revenue grew from $4.2 million in 1914, when he took over, to the peak of $16 million in 1920. The price of this, however, was a precarious cash position. In 1921, sales fell to $10.6 million and Watson faced a cash-flow crisis. Once again CTR was to be funded, and rescued, by Guaranty Trust. Watson was forced to cut costs across the board, including reducing R ">

Hollerith, beginning with the 1890 census, had rented his machines so that his company could provide the maintenance necessary to assure reliable operation. Watson recognized other benefits including the idea that renting equipment was inherently more stable, since the income continued when equipment orders would otherwise have dried up. Less obviously, it forced sales personnel, aware that they might lose the rental, to maintain regular contact with customers, thus ensuring — even as early as the 1930s — that customer relationships were well-managed. This approach became central to IBM's activities.

Thereafter, Watson deliberately lagged on the introduction of new products, though but not on research. Even after competitors launched new products he still waited until the market was ripe for large scale development. Watson recognized the importance of sound R&D, appointing James W. Bryce in 1922 to manage this (moving him from its Time Recording Division, which he had joined in 1915). However, Watson continued to be personally involved R Meredith, Suzanne M. (2005). _ IBM
IBM
in Endicott_. Arcadia. * Engelbourg, Saul (1954). _International Business Machines: A Business History_ (Ph.D.). Columbia University. p. 385. Reprinted by Arno Press, 1976, _from the best available copy_. Some text is illegible. * IBM
IBM
Archives: Reference / FAQ / Predecessor Companies. * IBM
IBM
Archives: CTR product ad (1911).

NOTES AND REFERENCES

* ^ _A_ _B_ Certificate of Incorporation of Computing-Tabulating-Recording-Co, 14th day of June 1911 * ^ IBM
IBM
Archives: Computing-Tabulating-Recording Company (1911–1924). * ^ NY Times June 10, 1911 _Tabulating Concerns Unite: Flint & Co. Bring Four Together with $19,000,000 capital_ * ^ Flint uses _allied consolidation_. See Flint, Memories of an Active Life, Putnam's, 1923, p.312 * ^ Certificate of Incorporation of Computing-Tabulating-Recording-Co ... Fifth. The location of the principal business office is to be in the Town of Endicott, County of Broome, and State of New York. * ^ IBM
IBM
Archives _These companies had 1,300 employees._ * ^ For example, the last page of The Inventory Simplified, published in 1923, states by the "The Tabulating Machine Company - Division of - International Business Machines Corporation. * ^ Rodgers, Williams (1969). _THINK_. Stein and Day. p. 83. * ^ _A_ _B_ Campbell-Kelly, Martin; Aspray, William (2004). _Computer: A history of the information machine_ (2nd ed.). Boulder, Colo.: Westview Press. pp. 37–39. ISBN 978-0-8133-4264-1 . * ^ (Austrian, 1982, p.153) * ^ (Engelbourg, 1954, p.52) * ^ Officemuseum.com – early Hollerith history, with good photographs of period equipment * ^ Austrian, Geoffrey D.; _Herman Hollerith: Forgotten Giant of Information Processing_ Columbia University Press NY NY ISBN 0-231-05146-8 , p. 138. * ^ Brooks, Frederick P.; Iverson, Kenneth E. (1963). _Automatic Data Processing_. Wiley. p. 94 "semiautomatic". * ^ _A_ _B_ Bennett, Frank P.; Company (17 June 1911). _United States Investor_. 22, Part 2. p. 1298 (26). * ^ IBM
IBM
Archives: Computing Scale Company. * ^ IBM
IBM
Archives: Computing Scale Company scale. * ^ IBM
IBM
Archives: Dayton Computing Scale. * ^ IBM
IBM
Archives: Dayton meat choppers. * ^ " IBM
IBM
Archives: Bundy Manufacturing Co.". _www-03.ibm.com_. 23 January 2003. * ^ IBM
IBM
Archives: George W. Fairchild. * ^ North Street, Endicott. * ^ IBM
IBM
Archives: 1894. * ^ "American Machinist". 23 (14). American Machinist Press. 19 April 1900: 45. * ^ IBM
IBM
Archives: 1900. * ^ IBM
IBM
Archives: 1901. * ^ IBM
IBM
Archives: 1880. * ^ IBM
IBM
Archives: 1907. * ^ IBM
IBM
Archives: 1908. * ^ "International Time Recording Catalog, 1935" (PDF). * ^ Aswad (2005) p.18 * ^ Flint, Charles R. (1923). _Memories of an Active Life: Men, and Ships, and Sealing Wax_. G.P. Putnam's Sons. p. 312. * ^ Since the 1960s or earlier, IBM
IBM
has described its formation as a merger of three companies: The Tabulating Machine Company (1880s origin in Washington, DC), the International Time Recording Company (ITR; 1900, Endicott), and the Computing Scale Company of America (1901, Dayton, Ohio).(Austrian, 1982, p.312) (Belden, 1961) (IBM Archives). However there was no merger, it was an amalgamation, and an amalgamation of four, not three, companies. The 1911 CTR stock prospectus states that the Bundy Manufacturing Company was also included. While ITR had acquired its time recording business in 1900, Bundy had remained a separate entity producing an adding machine and other wares (see Early Office Museum) * ^ " IBM
IBM
Archives: Computing-Tabulating-Recording Company (1911-1924)". * ^ Flint (1923) p.312-313 * ^ Flint (1923) p.312 * ^ Bennett, Frank P.; Company (17 June 1911). _United States Investor_. 22, Part 2. p. 1298 (26). * ^ " IBM
IBM
Archives: Charles R. Flint". * ^ IBM
IBM
Archives: 1910s. * ^ O'Connor, J.J.; Robertson, E.F. "Herman Hollerith". _The MacTutor History of Mathematics Archive_. School of Mathematics and Statistics, University of St Andrews, Scotland. Retrieved 2 Feb 2014. * ^ Crowther, Samuel (undated). _John H. Paterson - The Romance of Business_, Geoffrey Bliss * ^ (Austrian, 1982, p.329) * ^ IBM
IBM
Archives: Thomas J. Watson, Sr. CTR\'s general manager, in 1914. * ^ IBM
IBM
Archives: Thomas Watson Comments on _THINK_. * ^ IBM
IBM
Archives: Thomas Watson & George Fairchild. * ^ IBM
IBM
Archives: IBM
IBM
Music On a happy note. * ^ Pugh, Emerson W., _Building IBM_,MIT, 1995, p.28 * ^ (Belden, 1962, p.107) * ^ Austrian, G.D. (1982). _Herman Hollerith: The Forgotten Giant of Information Processing_. Columbia. p. 53. ISBN 0-231-05146-8 . * ^ Belden, 1962, p.125 * ^ Maney, Kevin (2003) _The Maverick and His Machine_, Wiley, p.89 * ^ (Ro