Erik Visits an American Grave, Part 1,502
By This is the grave of Thomas Watson.
Born in 1874 in Campbell, New York, Watson grew up in reasonable circumstances. His father owned a little timber operation near Corning and the family had a farm. Nothing special there. Watson went to the public schools. This was still the era when in rural America you could walk out of high school and get a teaching job. That was Watson’s plan until he got a job. He lasted one day. He did a bunch of jobs over the next several years–traveling piano salesman, bookkeeper, hardware store. He eventually moved to Buffalo and was selling sewing machines in the road. But one day, he had a few drinks at a saloon and while he was in there, someone stole his wagon and all the supplies. To say the least, he was fired.
So this is no bright young man with a real future here. In 1896, he was working in a butcher shop. A new firm called National Cash Register just sold Watson’s employer a new register that was all fancy. So Watson contacted the guy who sold the register and asked to work for him instead. After a few conversations, they agreed. Watson rose quickly in this company. He proved to be a quick learner and that was especially because this company was really awful and awfulness in capitalism is what makes fortunes. Watson came to dominate the cash register market in Rochester because, among other things, he would destroy competitor’s machines. That tactic got him called to NCR headquarters in Dayton, not to punish him, but to reward him. He soon was a top executive at NCR. NCR’s whole methods was to screw everyone else over. It was so bad that Watson and 27 other NCR executives were not only convicted of violating the Sherman Anti-Trust Act in 1912, and this is in a time when this law was rarely actually used against corporations, but they were all sentenced to a year in prison for their gross violations of many laws. Of course they fought this. Woodrow Wilson refused to hear their case, as he was president when the case finally concluded. But they got the convictions overturned on a technicality in 1914.
So with these fine sales methods, Watson was hired by Charles Flint to work for the Computing-Tabulating-Recording Company in 1914. Watson was the general manager. He got promoted to president after it was clear he was not going to serve time in prison for his previous crimes. Now he could commit new crimes! In 1924, Watson, now basically running the company, changed the name to International Business Machines and IBM of course remains around today.
Now, Watson was a Democrat and he had ties to Franklin Delano Roosevelt. In fact, FDR used him as a sort of liaison to the world of New York capitalists who largely hated him. But Watson was in love with something a whole lot more important to him than the New Deal. That was money. Anything was worth a buck. That included the Nazis. Watson basically embraced Hitler because he thought he could make money in the German economy. IBM’s German operations were its more profitable outside the U.S. in the 1930s. So who provided the Nazis with the punch-card system it would use to classify and document its extermination of the Jews? Yep, it was Watson and IBM. Watson was personally involved, approving explicitly his company working with the Nazi government. In fact, some of the IBM punch cards are displayed in the Holocaust Museum. For his services, Hitler granted Watson the Order of the German Eagle. Now, was Watson a Nazi? It does seem so. It seems he was a combination of greedy and naive. At the same 1937 conference where he got the medal, which was the meeting of the International Chamber of Commerce in Berlin, he gave the keynote that was titled “World Peace Through World Trade.” This was the kind of thing that has influenced analysis such as Tom Friedman’s notorious “Two Nations With McDonald’s Have Never Got to War With Each Other,” which has since been proven stupid on multiple occasions. As for Watson, it seems that he got pretty nervous shortly after getting the award about what this meant and wanted to return it, but Cordell Hull told him this would be bad for foreign policy if he did so. But then in 1940, he did so anyway. This put the German subsidiary in a difficult position. German shareholders took it over and behind the scenes, IBM was still providing the Nazis everything they wanted through the war.
Well then….Watson of course got super wealthy when IBM became such an important contributor to not only the rise of the Nazis, but the needs of the American government in World War II and then in the Cold War. IBM began experimenting with analog computers and of course it would be in computing that the company would reach its fantastic heights in the postwar period. Watson, desperate to prove his bona fides given the history with Germany, announced at the beginning of the war that IBM would only accept 1% profit off all sales to the military. Few companies went along with this. This cost IBM a lot of money in the short term and made the company lots of money in the long term.
After the war, Watson and IBM started their own college, which today is SUNY-Binghamton. It’s engineering school is named Thomas J. Watson College of Engineering and Applied Science. I will have to ask my wife’s nephew who graduated from said college from said university how much he knows about the Nazi roots.
Watson still loved his trusts and his shanking the competition. In 1952, the government launched an anti-trust suit against IBM. It’s not surprising, as IBM held over 90 percent of the market for such machines at the time. But the government wasn’t going to go too hard here. After all, it really needed IBM, in the way that the government today can’t go too hard against Elon Musk because there are so many government contracts with him. Good job all.
Perhaps Watson’s greatest crime was making his salespeople attend corporate sing-a-longs that required participation.
Watson retired in 1956 and died shortly after. He was 82 years old. Of course, IBM’s rise in computing mostly came after his death and there are some possibly apocryphal statements attributed to Watson that the world really didn’t need computers, but this seems a bit dicey and who really cares anyway.
Thomas Watson is buried in Sleepy Hollow Cemetery, Sleepy Hollow, New York.
If you would like this series to visit other mid-twentieth century capitalists, you can donate to cover the required expenses here. Alfred Sloan from GM is in Laurel Hollow, New York and U.S. Steel chief Benjamin Franklin Fairless is in Rector, Pennsylvania. Previous posts in this series are archived here and here.