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Mark Simonson

November 16, 2013

IBM thrived in region during Great Depression


From “Think: A Biography of the Watsons and IBM” by William Rodgers, Thomas J. Watson believed that, “There was not, in fact, much wrong that better salesmanship and more straight thinking couldn’t repair. The dance of the millions, he said, was over, and a reliance on the old virtues, harder work, and rugged individualism was called for.”

With the conditions of the Great Depression lurking nearly everywhere, Watson and many of his salesmen went on a tour of Europe, “where his men were spared the ‘handicap’ of melancholy conditions. There was ‘more gloom in New York than anywhere else,’ and the IBM sales convention in the ancient city of Florence renewed his enthusiasm.”

When Watson and staff returned from Europe, he reported IBM was doing well. “As for the Depression, he said it ‘had nothing to do with our business; we have no right to talk or think pessimism, because the first eight months of this year have been better than the corresponding period of any year in the history of the business.’”

“Yet the pull of the depression was inexorable,” Rodgers wrote, “so great that in spite of IBM’s expanding sales, and in contradiction to general conditions, its stock rode downward with the bears, totaling a fall of 202 points by 1932, the lowest in eleven years.”

“Watson was, virtually from the time of (President) Hoover’s departure, a devoted supporter of Roosevelt and the New Deal. With the passage of the National Recovery Act and social security legislation, American business was swamped with mandated bookkeeping and data-recording operations. IBM machines were leased to government agencies in increasing volume, and to business and industrial companies who required them to comply with federal demands for information on which welfare, NRA codes, and public projects were dependent.”

IBM did more than survive in the worst years of the Depression; it thrived. By 1934, IBM factory employees were placed on salary, eliminating piecework and providing employees with an added degree of economic stability. A group life insurance plan was also initiated for employees, marking the beginning of IBM’s pioneering employee benefits programs. Paid holidays and vacations began in 1937.

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Mark Simonson

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