ISBN-10:
0226238059
ISBN-13:
9780226238050
Pub. Date:
12/01/2004
Publisher:
University of Chicago Press
Sloan Rules: Alfred P. Sloan and the Triumph of General Motors / Edition 1

Sloan Rules: Alfred P. Sloan and the Triumph of General Motors / Edition 1

by David Farber

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Product Details

ISBN-13: 9780226238050
Publisher: University of Chicago Press
Publication date: 12/01/2004
Edition description: 1
Pages: 299
Sales rank: 767,031
Product dimensions: 6.00(w) x 9.00(h) x 1.10(d)

About the Author


David Farber is a professor of history at the University of New Mexico. His books include Chicago '68, also published by the University of Chicago Press.

Read an Excerpt

Sloan Rules

Alfred P. Sloan and the Triumph of General Motors
By David R. Farber

University of Chicago Press

Copyright © 2005 David R. Farber
All right reserved.

ISBN: 9780226238050

1 - SLOAN'S WORK
Self-forgetfulness is what is required.
—Early twentieth-century engineer on being a corporate employee
Being a child held little interest for Alfred Sloan. Even before his youth had ended, he strained to begin his work. The eldest of five children, Sloan was born in New Haven, Connecticut, on May 23, 1875. His father, Alfred P. Sloan Sr., was then twenty-five, his mother twenty-three. They were originally from upstate New York, where their respective families were "old" and respectable, but not well-to-do. Mrs. Sloan's father had been a Methodist Episcopal minister (the Sloans, but not their eldest son, maintained a close association with the denomination until their deaths). Sloan Sr.'s father had been a private school master. But when his father sickened, Alfred Sr. was forced to leave school early and make his way in the world. This he did; by the time Alfred Jr. was born, his father was already a successful merchant, purveying tea, cigars, and coffee. Primarily, he imported coffee beans, which he roasted, ground, and blended, and then sold them wholesale.
By the time young Alfred was eleven years of age, Bennett, Sloan, and Company was a two-story concern located at 100 Hudson Street in lower Manhattan. The success of the business founded in New Haven had brought Sloan Sr. and his partner to New York City in 1885. The company prospered and Sloan grew up in a large brownstone at 240 Garfield Place in a relatively fashionable part of Brooklyn.
Soon after moving to Brooklyn, Alfred began attending the Brooklyn Polytechnic Institute, which educated boys in what was then called "mechanics," or the practical sciences, much to young Alfred's delight. He was an outstanding student who relished book learning. Most of the boys in his neighborhood spent their afternoons out on the streets, teasing the iceman's horse or playing ball, "flipping" on and off wagons or hustling nickels sellingnewspapers (in 1890, two-thirds of newspapers were sold by newsboys—and a few newsgirls, as well—in the late afternoon). In his own accounts of his youth, Sloan states that he went straight home from school and spent his after-school hours avidly working through his text books.
While Sloan would never display any nostalgic interest in his Brooklyn youth—or ever mention any particular feelings he may have had about moving from New Haven to New York—he did retain throughout his life a distinct Brooklyn accent, which others often found surprising on first hearing. He had a somewhat reedy, tenor voice and his speech was marked with such Brooklynese as "foist" for first and "woik" for work. Since neither of his parents were Brooklyn natives, the heaviness of Sloan's accent suggests that he spent more time than he later admitted outside his home playing with other children and exploring his neighborhood.
In the only published photograph from Alfred Sloan's boyhood he sits astride a high-wheel bicycle, probably an 1886 Columbia Light Roadster. Sloan, in later life, always carefully crafted his self-image for public consumption and it is likely that he provided the photo himself, first published in a 1938 Fortune magazine profile, to reveal his early interest in the wheeled technology that directly contributed to his own industrial career: the photo was captioned "Young Alfred, astride the mechanical marvel of his age, had already chosen his career." Whatever Sloan's intent, the photo of a cocksure boy high atop his spectacular bicycle—if it was a Columbia bicycle it cost upwards of $120 at a time when the U.S. per capita income was under $200—reveals that he was never as one-dimensional a figure as his own accounts, even of his boyhood, always suggested.
Whether or not Alfred was a more playful child than he later wished others to know, by the time he was a teenager he was clearly eager to move forward and put childhood behind him. Sloan had decided that he wanted to be an engineer, a profession of relatively recent vintage. At age seventeen, he attempted to enroll at the Columbia University School of Mines. Despite easily passing the entrance exams, he was told he was too young to matriculate. Probably after some independent investigation, he turned to the more distant Massachusetts Institute of Technology, in Cambridge, which saw his age as no impediment. His father had the money to send Sloan to MIT and support him there.
In 1891, the year before Sloan matriculated at MIT, and only thirty years after the school's establishment, the institute's president Francis Amasa Walker had told his fellow educators that "in the schools of applied science and technology is to be found the perfection of education for young men."
Sloan wanted just such an education. He expected the work to be difficult and he intended to devote himself to it with a singular dedication. Further, he decided early on that he would compound the challenge of MIT's program of studies by completing the four-year program in three years. Sloan saw his university days as a training ground for professional activities, not as some adventure in self-discovery or youthful pleasures. As Sloan remembered almost a half a century later, "I had been a grind. I had worked every possible minute, so that I might be graduated a year ahead, with the class of 1895." Sloan succeeded. He graduated from, arguably, the finest technology program in the nation in just three years. He had led his class in calculus, receiving a perfect score of 100 in his freshman year. He had also excelled in thermodynamics, in which he received a near perfect semester average of 98. Not all went so well for Sloan during his MIT days. In his courses in literature and history, which the school required, he did far worse; receiving three D's and two C's. Many decades later, Sloan forgot, or more likely chose to ignore at least temporarily, that he had ever taken such frustrating courses. He told an associate, "When I went to M.I.T. I did not have a single course in English, to say nothing of a single course in literature. I did not have a course in economics or in sociology or in history, to say nothing of broader courses than that." Sloan concluded: "I had a very narrow technical education.. . . For that reason and probably for inherent reasons, I am a very narrow man."
MIT's president in the 1890s, Francis Amasa Walker, would have been disappointed with Sloan's harsh self-assessment (and of his recollection of what courses he had actually taken). President Walker had hoped that requiring humanities courses, with "their liberalizing tendencies," would combine with "the work of the sciences in making the pupils exact and strong." Undoubtedly, Sloan believed he had achieved exactitude in his studies, and even a certain kind of mental strength. Cultural interests, however, did not stem naturally from his exposure to them. To go for the moment far ahead in this unfolding story, throughout his long life Alfred Sloan nearly never read for pleasure or voluntarily attended cultural performances of any kind. The MIT curriculum, whatever Sloan chose to remember or say in retrospect, was not to blame for this antipathy to works of literature or the creative arts.
Sloan received a bachelor of science in electricity, a field of study added to the curriculum at MIT only in 1882 but which was by the mid-1890s the most popular major at the school. Electrical engineering was, then, still in its infancy. Sloan worked on equipment donated by Thomas Edison just before his arrival. Like Edison, Sloan did not see himself as a lone genius preparing for a lifetime of creative breakthroughs. He would be a scientifically trained technical problem solver prepared for coordinated work on practical concerns. Alfred Sloan had become an electrical engineer, like most of his cohort, to take a corporate position in America's world-leading industrial sector. The MIT classes of the 1890s were memorable ones. By the early 1920s, institute alumni ran General Motors, General Electric, Goodyear, and Du Pont. The engineering mind—disciplined, logical, and methodical—fit perfectly the needs of America's evolving business corporations.
When he graduated in 1895, Sloan expected that his training would afford him the opportunity to take a respectable place in an industrial enterprise. At the end of the nineteenth century, in the United States as elsewhere in the world that mattered to Alfred Sloan, it was in industry that opportunity for achievement lay. A position within an industrial enterprise, he believed, would allow him to demonstrate his abilities, make his way, and advance rapidly. The meaning and nature of that success were subjects about which Sloan made no internal queries; his mind, at least as he and others have revealed it, did not turn in those sorts of direction. Sloan, just twenty years of age when he left MIT, was already a man of some certainties.
The Great Depression, the era that will figure so centrally in this story, could not have been a huge shock to Alfred Sloan Jr. He had been born just after the horrendous Panic of 1873, and when he graduated from MIT in 1895, the American economy was still reeling from the 1893 depression, the worst the nation had yet suffered. As the economy contracted in 1893, some six hundred banks and more than fifteen thousand businesses dissolved. Farmers were hit especially hard, and for the first time in the nation's history tens of thousands of tramps, most of them farm laborers, wandered the countryside in search of food. In the urban industrial centers, employers had to let go as many as one quarter of all unskilled, industrial workers.
Sloan followed the effects of the struggling economy in the Boston newspapers. He knew and almost certainly disapproved of William Jennings Bryant's inflationary demands for the coinage of silver to increase the money supply and so ease farmers' perilous economic plight. And he read with interest the daily press reports tracking the progress of the so-called Coxey's Army of unemployed men, which made its way by rail and road to Washington, D.C. to wage the first national political campaign against unemployment. In 1894, about ten thousand of the unemployed, most of them in small groups from the far Northwest, California, New England, the Middle West, and the Rocky Mountain states marched on the nation's capital to present a "petition in boots." They wanted Congress to provide a national public works program until private employment again became possible. The largest group, perhaps a thousand men, called themselves "Coxey's Army" after their radical leader Jacob Coxey, a successful Ohio businessman, who insisted that a humanitarian concern for the less fortunate and the new industrial order could be reconciled through government action. The marchers succeeded in capturing the nation's interest but received no hearing from Congress. Coxey was jailed for twenty days for "illegally carrying banners" and for walking on the grass. In the mid-1890s the federal government provided the general citizenry with less than $5 million a year for all social welfare, health, and security programs. The business cycle, while little analyzed, was understood by most men of the capitalist class to be an unfortunate but regular part of the workings of the modern economy.
For Sloan, this downward turn was not merely a story in the newspapers. He could not find a job. He spent a few months after his graduation working with one of his professors on engineering projects but nothing developed from it. When he began looking in earnest for a regular position in late 1895, Alfred Sloan, who had graduated MIT in three years, was turned down by every employer he contacted. Many industrial firms still distrusted university-educated men—few of the older generation of industrialists had received a higher education—and engineering positions of any kind, following the 1893 downturn, were in short supply. In Sloan's understated way he once allowed that the year after he graduated college was an unhappy time for him, "the most discouraging point of my whole life." He was forced to look inward and ask himself, "Where did I fit into the American economy, what could I do?"
Sloan, remember, was only twenty years old when he finished with MIT, the youngest member of his graduating class. Forced leisure did not, however, encourage in him some desire to travel or to pursue adventure. Like most young, professional men of his time, he had no interest in fostering his personality through some course of self-discovery. Such emphasis on the rewards of personal development would not become commonplace for another quarter of a century. Sloan wished only to find opportunity for the talent and training he had developed at MIT. A favorite adage (like many American businessmen—from Benjamin Franklin through the present day—Sloan did produce and adhere to certain adages) expressed his outlook and goal: "Everyone of us has a certain talent in a certain direction and in other directions we may be completely devoid of talent." It is essential, he would say, to figure out your talent, for "that way work becomes a pleasure and not a drudgery." That Sloan would simply assume that any talent worthy of being so described would be work-directed indicates a fundamental aspect of his social outlook. Sloan's talent, so well proven at MIT, was in mastering, and even exceeding, the demands of institutional structures.
Sloan needed a position, a place in an organization from which he could direct his immense capacity for focused work in problem solving. Without such an organization, he was without purpose. In another rare allowance of personal feeling, Sloan would note, "as I was naturally of a serious turn of mind, I suppose I was more than ordinarily troubled when I failed to find work at any of the places where I applied." No evidence exists suggesting that Sloan's inability to find a position despite his superior qualifications during a time of market contraction caused him to regard the free enterprise system with any disfavor. In the account of his employment troubles, just quoted, which was written at the end of the Great Depression, Sloan managed to interject the first-person pronoun five times in one sentence to make it clear that he blames no one and nothing for his difficulties except himself, emphasizing: "I failed to find work." Whether or not Sloan accurately recalls what he felt at the time, he does admit to being deeply depressed in late 1895. The damaged economy thwarted him and he did not know what to do.
After some months of this unhappiness, his father, finally, was able to help. Sloan Sr. was well acquainted with one of Brooklyn's richest men, John E. Searles of the American Sugar Refining Company. Their friendship extended back to the beginnings of their respective business pursuits in New Haven and had been renewed at the Methodist Episcopal Church in Brooklyn, where both men played an active role. Searles agreed to meet Sloan's son and see what he could do for him.
The meeting was brief. Sloan was shy at first, as was his nature, but was soon put at ease by Searles' kind and courteous demeanor. Searles, whose business made him an experienced judge of character and ability, recognized what youngAlfred had to offer. Sloan left the meeting with a position in one of Searles' smaller companies. His career was launched.
Sloan never, in later years, pretended his entrance into the business world to be anything other than it was. He was of a new breed. He was born not into great wealth, nor was he a "self-made man." His was no Horatio Alger story. (Sloan would later use the term "Alger-boy" to refer to the self-made.) He came from a respectable, upper-middle-class, white, Anglo-Saxon Protestant family. His father's connections, coupled to his excellent education and obvious talent, proved out over time. Sloan's "hardest problem," finding out where he "fit into the American economy," had been solved and his time—in retrospect, a very brief time—of great disappointment had come to a close.
Sloan's career did not, at first, seem to be on a meteoric course. The position that Searles had provided for him was the relatively humble post of draftsman. Young Alfred probably did not mention to Searles that the worst grade he had received at MIT—an F—had been in drawing. Sloan was employed at a small factory, the Hyatt Roller Bearing Company, a fledgling company in which Searles had the major interest. Hyatt was, itself, a humble concern, which moved from gritty Newark to the even less glamorous Harrison, New Jersey shortly after Sloan began work. Its operations were composed of a single building: a dirty, shack-like structure. Its nearest neighbor was a sprawling junkyard filled with rusting, obsolete machinery. Indicative of its status, Hyatt was sited on low ground, so that when it rained the unpaved grounds surrounding the factory became a sea of mud.
Hyatt manufactured a new sort of antifriction roller bearing. This bearing served to increase energy efficiency and thus decrease energy expenditures by reducing the frictional pressures on the line shafting that still turned most of the industrial machines then in use in the United States— this being just prior to the use of electric motors in such machinery. (One can still view how industrial machinery was turned by line shafting at the textile factories preserved as museums in the old mill towns of Lowell and Lawrence, Massachusetts.) The bearing had been first used in Searles' sugar grinders.
The Hyatt roller bearing had been invented by John Wesley Hyatt, an old-school inventor, largely self-taught and unsophisticated in scientific methods and theory. Despite his formal shortcomings, Hyatt was one of the most productive independent inventors of the nineteenth century. His breakthrough had come in 1869 when a shortage of elephant tusks had induced a New York City billiard ball manufacturer to offer a prize of ten thousand dollars for a synthetic billiard ball. Hyatt had combined pyroxylin (a volatile nitrocellulose substance) with camphor to make his plastine ball. In a small shop, Hyatt churned out other ingenious materials including a much improved, hardened wood for golf club heads. The roller bearing that bore its inventor's name (developed from the same lathe that Hyatt had invented to produce the synthetic billiard balls) had a decided advantage over competitive products for one simple reason: it was made of coiled steel tubing that gave it a springy quality and thus, as Sloan wrote some years later, "yielded to irregularities caused by poor manufacture, thus making automatic adjustments between housing and bearing."
It is worth emphasizing, given Sloan's subsequent career, that the Hyatt bearing was needed because machined parts in the late nineteenth century had not yet, as a matter of course, been engineered to fine tolerances. As a result, the flexibility of the Hyatt roller bearing made it an excellent product for the time. But as Sloan understood almost immediately, despite his lowly position and youth, the company was poorly run and so incapable of capitalizing its opportunities. At best, the company, with its twenty-five or so employees, was averaging two thousand dollars a month in sales. Sloan was paid fifty dollars monthly and he quickly observed that the payroll was quite often being met only because Mr. Searles subsidized it. The business was a money loser.
Sloan became friendly with the company's young bookkeeper, a Norwegian immigrant named Peter Steenstrup. Over lunches at the nearest eatery, they discussed the means by which Hyatt could be made into a profitable business. The talk was idle as no one in authority had the least interest in their viewpoint. Sloan was frustrated. His talents were being wasted and he was impatient to move forward in the world. He desired to be married to a women he had been courting since his days at MIT, Irene Jackson of Roxbury, Massachusetts (although where he found the time to meet and then court Miss Jackson remains a great mystery given his work habits both in college and on the job). In Sloan's mind, marriage was impossible until he had achieved a more respectable economic status.
In 1897, Sloan left Hyatt. In a rare but not unique move, he took a gamble on an unproven invention, an electric refrigeration unit being developed by Lieutenant Michael E. Wood of the U.S. Navy. Wood, no longer a young man, was an inveterate inventor, trained some years earlier at the Naval Academy, one of the nation's first institutions to professionally educate engineers. He was sure he had finally come up with a winning technology and his enthusiasm was contagious. Wood had started a company to manufacture and install his refrigeration units in large apartment houses and hotels. As he explained to Sloan, the main refrigeration machinery would be located in a building's basement. Cold brine would then be pumped to individual boxes lined with copper coils that in turn would chill the box's contents and, incredibly, also supply icy-cold running water. A rich Bostonian had provided the start-up capital.
Sloan was charged with designing the system's circulating system and with managing sales. That the shy Sloan, completely unsuited to backslapping and glad-handing, had been given salesman duties, indicates how shaky were the enterprise's foundations. Wood called his brainchild the Hygienic Refrigeration Company. As Sloan recalled many years later, "I was a kid, infected with Lieutenant Wood's blind faith." Sloan was just twenty-two years old. From his experiences with the Hygienic Refrigeration Company, he would learn to trust even more in his dispassionate nature.
Like so many other new, technology-based companies, then and now, the business was not a success. Many were interested in the idea but the system was quite expensive. Worse, it frequently broke down. Even so, Sloan threw himself into the work. The enterprise was exciting, demanding of his talents, and provided, at first, a good income.
Based on his faulty expectations of a reasonable economic future with Hygienic, Sloan married Irene Jackson on September 28, 1898. We do not know if the couple were giddy with love or as sober in private as they always appeared in their relatively rare public appearances in later years. Separated as they were for nearly three years, one assumes they corresponded, and perhaps they phoned one another despite the cost and the relatively poor quality of long distance transmissions. No record exists. Images of the courting Sloan, the young man in love, died with him.
All that remains of the Sloans from their first year of marriage is a single photograph made sometime during the spring or early summer of 1899. Like so much else that Sloan left for others to ponder, it is a conventionalized image. The newlyweds are pictured with Alfred's family. Alfred Sr. is at the center of the family arrangement, holding his youngest child Raymond in his lap. He maintains the six year old's attention with a picture book. Alfred Jr. sits at his father's right hand, looking quite composed in a cane-backed rocking chair. He stares, as was his way all through life, with a fixed, unemotional gaze at the camera—a typical pose for a young man of his status at the end of the nineteenth century (the camera's slow shutter speed contributed to such stiff-looking poses). The only person standing in the family photo is Irene. She is all in white, positioned behind her husband, her arm on his chair but not touching him. Perhaps it is a not the best picture of her; she appears to have a very long nose on a small face. Her dark hair is neatly tied behind her head in a bun. Like her mother-in-law, she hints at a smile.
We know, at the very least, that Sloan did love his bride, at least in his own reserved way. In the same year of her death in 1956, Sloan would break down before the man, Warren Weaver, he wished to appoint to the presidency of the Sloan Foundation. Weaver had just told Sloan that he would seriously consider the presidency of the foundation but only if he not be asked to make extensive business travels. He explained that in his previous position with the Rockefeller Foundation he had been forced to spend too much time away from his wife. The eighty-one-year-old Sloan responded: "If I ever ask you to do anything that limits your companionship with your wife, you just tell me to go to hell. I understand completely. For many years I was too completely absorbed in my business. I always said that I would cut down on this, and spend more time with my wife. But Warren, I waited too long." At this point, Sloan, a man who, aside from the perfunctory and brief handshake, almost never physically touched anyone, at least in public, put his arm across Weaver's shoulders as tears rolled down his cheeks. Sloan undoubtedly loved Irene, even if he chose not to show that affection publicly and rarely found the time to demonstrate it privately.
Sloan would remain married to Irene Jackson Sloan for the next fifty-eight years. According to one late-in-life acquaintance, Mr. and Mrs. Sloan wished to have children but they were unable to do so. Whether they considered adopting a son or a daughter is unknown. No child would ever be theirs. Sloan's longlife would not be colored by children or childish ways, though Sloan did have a great affection for his youngest brother, Raymond, his junior by eighteen years. Family life, as a rule, did not much touch the inner life or daily routine of Alfred Sloan. Though the available evidence indicates that he believed himself to be in love with his wife, even that union, as Sloan confessed, had little impact on his devotion to his work commitments. In 1941, Sloan dedicated his publicity driven autobiography, in which his personal life figures almost not at all, to "I.J.S. My partner in the enterprise." It was for Sloan a rare touch of the ironic that only highlighted the obvious—Irene had nothing at all to do with the enterprise that consumed Sloan's time and energies. For Sloan, work would always come first.
Soon after his marriage, the Hygienic Refrigeration Company dissolved. Wood had died. Sloan, by this time less than pleased with the com-pany's founding genius, seems not to have been moved by his demise. Luckily, even as the refrigeration enterprise went under, an opportunity had arisen. John Searles, the man who had given Sloan his start, was fed up with the Hyatt Roller Bearing Company. Facing some personal financial difficulties—he was soon to go broke, not unusual for backers of new technologies—he wished to sell the money-losing enterprise.
At the younger Alfred's urging, Alfred Sloan Sr. and an associate agreed to buy Searles out for five thousand dollars. Sloan Sr. further agreed to supply capital, at least for a period of six months, until the business was profitable. He clearly made this investment for his son: just twenty-three years old, Alfred Sloan Jr. was put in charge of the Hyatt Roller Bearing Company. Over time, he would accumulate a large equity interest in the business. His right-hand man was Peter Steenstrup. The lunchtime discussions the two had enjoyed little more than a year earlier were to be put to the test.
Within six months, the company was turned around. While Steenstrup relentlessly pursued new sales opportunities, Sloan completely reorganized production to achieve far greater cost efficiency and product reliability. Sloan spent the first four years working at least ten hours a day, six days a week, week after week after week. He took no vacations. For the next eighteen years, Sloan ran the company. Under his direction, Hyatt became an extraordinary success, quickly outgrowing its one, shacklike building to become an expansive, modern industrial complex. This success was due to Sloan's correct assessment that Hyatt should direct its efforts toward integrating its products with the nascent auto industry.
The auto industry at the end of the nineteenth century was pure flux and partial whimsy. It was hundreds of men tinkering in barns, garages, and dirt-floored machine shops. Carriage makers, buggy builders, bicycle mechanics, wagon wheel manufacturers, machine parts makers, and an exotic melange of undercapitalized entrepreneurs wrestled with the possibilities of manufacturing an auto-mobile, a self-propelled vehicle, a machine that moved itself under the control of its human operator.
It was a time of technological and cultural free play in which a machine and basic ways of living, working, playing, and courting were on the verge of being integrated in unanticipated ways. In terms of its sociohistorical development, the United States had entered a liminal zone, a threshold between two cultural landscapes. The English language itself—with much borrowing from the French (chassis, limousine, garage, chauffeur, automobile)—would have to be squeezed and reshaped in order to build a vocabulary that could incorporate the construction of a way of being in the world—riding in an auto—anticipated by other modes of transport but fully realized by none other. Given the right kind of imagination, it was a fantastic historic moment.
In the year 1900, few in the United States envisioned a mass market for the gasoline-powered road car. Only about fifteen hundred such cars were produced that year (whereas Manhattan alone had over 130,000 horses working the streets; or, put another way, more than ten times as many horses died in New York City as there were new autos with internal combustion engines built in the entire country). Wealthy sports, most of them urbanites, drove the tiny automobile market (though increasingly, rural doctors were buying cars as well). The high-priced machines were amusingly, if at times painfully, unreliable. Still, an aura surrounded this technological phenomena. The aura glistened green. Money, possibly a great deal of money, could be made in this new world. Few, of course, saw this opportunity. Horse manure still seemed a more likely growth industry (one more equine fact to ponder: New York City horses excreted roughly one million pounds of manure a day). As a result, the industry for the most part was not developed by major corporations, which generally were unwilling to take on the high risks associated with technological experimentation unrelated to their ongoing businesses. Instead auto enthusiasts, small-time investors, and a mixed bagof mechanically gifted men willing to gamble in exchange for the main chance, struggled to make automobiles. Scores of workshops and small companies hammered out the parts and accessories that would be painstakingly assembled into a working vehicle by dozens of competing automakers, each of whom fought off creditors and cash flow problems in the furious rush to manufacture a breakthrough machine.
Sloan did not in a leap of imagination picture the possibilities created by the small-time automakers. He was approached by them. At least that is how Sloan, in his self-deprecating manner, tells the story, though he alludes to the fact that he and his associate, Mr. Steenstrup, were aggressively looking for new markets for their product. They knew that roller bearings for machine line shafting, due to the increasingly common use of electric engines, were about to become technologically obsolete. Hyatt bearings, or at least some manufacturer's bearings, were needed by the automakers to make car wheels turn efficiently on their axles.
Hyatt was first approached about supplying auto wheel bearings in 1899 by Elwood Haynes, producer of Haynes Apperson cars in Kokomo, Indiana. Haynes, as Sloan described him some years later, was the quintessential rube, sophisticated about nothing but the possibilities of the automobile. Sloan also seems to have found it quite amusing that Haynes and his nascent auto works was based in the booming, alliterative metropolis of Kokomo, Indiana. In fact, Haynes was an extraordinarily accomplished American engineer, with degrees from both Worcester Polytechnic Institute and Johns Hopkins University, who had mastered German in order to follow the pathbreaking automotive work of Gottfried Daimler and Karl Benz. Sloan was a New Yorker, and despite Haynes's first-rate East Coast education, technical training, linguistic gifts, and proven talents, the Kokomo-based Haynes might well have appeared to Sloan as a provincial yokel. Or more likely, in his post–New Deal, 1941 description of Haynes and the advent of the auto industry, Sloan aimed to make a point about the low-cost entry, free-market creativity at work in those first days of the auto business.
While Sloan himself would soon enough do his best to ensure that the auto industry itself would become a very high-cost entry business, he took pains in his own account of his early years to tell his tale of Elwood Haynes of Kokomo, and other "rather simple people," to convince the democratic citizenry that the free market enables economic creativity in the most unexpected places by the most unexpected people. It was Alfred P. Sloan's firm belief, one which he wanted all Americans to fully appreciate, that no government planner could ever anticipate the vitality of individual Americans free to pursue their dreams of profitable accomplishment. Of course, such thoughts were, in the early years of the twentieth century, not yet in Sloan's ken. It would take the political turmoil of the 1930s to turn his mind in such an unwelcome direction.
In the first years of the automobile age, Sloan and his Hyatt associate, Peter Steenstrup, became industry fixtures. Steenstrup was the field man. He visited every manufacturer and set up shop at every trade show. Steen-strup's mission was simple, but as any sales representative knows, not easy. His responsibility was to identify and to win the trust of the many men in the highly volatile auto business who had the responsibility for buying parts for their company's machines. Steenstrup had to be the hail-fellow-well-met who got Hyatt in the door. Sloan, then, would figure out how to design Hyatt bearings into the auto manufacturer's assemblage.
Through trade show excursions and factory visits, Sloan, too, met most everyone of significance in the auto industry. In his own recollections of those early days in the auto parts business, Sloan credited many individuals with providing him with life-long business lessons. One of the first and most important of these lessons came from Henry Leland, general manager of Cadillac, then an independent automaker. Sloan received this lesson firsthand after Leland rejected the first shipment of bearings Hyatt had sent Cadillac. The contract was vitally important to Hyatt's short-term profitability and even more essential to the company's reputation for reliability in the infant auto industry. Sloan rushed by train from New York to Detroit in an attempt to salvage the contract. In his office, Leland, a large, bearded gentleman of Old Testament rages, showed Sloan the facts. Bearings in hand and his anger still on call, Leland demonstrated that the Hyatt product, despite salesman Steenstrup's assurances, did not meet Cadillac's required parameters: accuracy within a thousandth of an inch. Sloan, though speaking "as softly" as he could, did at first attempt to explain away the difficulty. After Leland angrily interrupted him, however, Sloan stopped defending his company and listened. Leland explained the necessity of manufacturing precisely engineered interchangeable parts. "Mr. Sloan," he roared, "Cadillacs are made to run, not just to sell." Sloan understood. He agreed. He asked Leland's advice. From then on, he would do better: "I was determined to be as fanatical as he in obtaining precision in our work. An entirely different standard had been established for Hyatt Roller Bearings."
One of Sloan's many strengths was his ability to hear others out dispassionately. If the facts, as he understood them, bore out he could and did shift his perspective. Given his later political difficulties, it is worth emphasizing the other side of this character trait. If Sloan did not believe the facts bore out or if facts, as he perceived them, were not being given their due, Sloan could become quite recalcitrant and even emotionally explosive. Such times were rare. Leland spoke in a language Sloan understood and Sloan's postgraduate work in manufacturing advanced significantly as a result.
One other character trait worth noting is revealed in the Leland anecdote. Sloan, as both a young man and a man of middle age, was skilled at working with men older than himself as well as with men of his own generation. This ability was amply demonstrated in his first years with Hyatt when he had sought out old John Wesley Hyatt, in his inventor's shop, and plied him with questions about roller ball bearings. Leland, too, was a man of an altogether different generation and set of experiences (including, Leland believed, a personal visitation from God), but Sloan developed a strong working relationship with him. Leland was an engineer of the old school of practical experience; he had received his start as a toolmaker for a federal arsenal during the Civil War. In Sloan's eyes, however, Leland was always "an elder, not only in age but in engineering wisdom."
Sloan had a gift that is rare in young men: the ability to learn from one's elders and to seek their counsel. In establishing such relations, Sloan also bore out an old organizational adage to the effect that seeking help and counsel from those one admires generally brings support and concern from the sought after for the seeker. For Sloan, later in his life, a major problem would be the lack of anyone from whom he felt he could learn. In the world he respected, few people seemed to be his equal, let alone his superior. He would retain his gift for listening to the facts and admitting his own mistaken viewpoints, but what he lost was his ability to rethink fundamentals based on advice or instruction from others.
Sloan was a regular at the yearly auto shows which began in 1900 (five, in fact, were held that year, all claiming to be the first). By the 1906 auto show, Hyatt passed out brochures advertising the "Hyatt Improved Self Oiling Self Contained Bearing with Removable Inside and Outside Casings." Sloan wrote the copy for the brochure, which reveals something of the state of advertising in the first decade of the twentieth century as well as of the directions Sloan's talents did and did not point: "The prospective purchaser of a motor car must be satisfied upon three vital points before he can possibly be induced to invest.. . . The car must have all the power that is required: it must be built so that it may easily be taken care of; and it must be constructed in such a manner that the driver may be reasonably sure of getting back home." Any humor found in this ad is wholly the work of the reader, not the writer of the copy.
During the auto shows, Steenstrup would rope in the multitudes of car enthusiasts, master auto mechanics, and pioneering adventurers in the motor business and herd them over to the Hyatt booth. Sloan waited for them there. Henry Ford and Alfred Sloan first met at the Hyatt booth, probably in 1901, when Ford was working on the racing car that would soon thereafter bring him his first fame. Ford and Sloan, we only know, watched together from the gallery of Madison Square Garden as the earliest American auto manufacturers ran their cars—often one-of-a-kind models—around a track set up on the floor of the hall.




Continues...

Excerpted from Sloan Rules by David R. Farber Copyright © 2005 by David R. Farber. Excerpted by permission.
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Table of Contents


Prologue
1. Sloan's Work
2. Sloan the Executive
3. Sloan Navigates a New Course
4. Sloan in Control
5. Sloan Enters Society
6. Mr. Sloan Goes to Washington
7. Sloan and the New Deal
8. Sloan at War
9. Sloan Rules
Afterword
Acknowledgments
Notes
Index

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