The following is the text of "Herman Hollerith: Data Processing Pioneer," an article by William R. Aul, published on pp. 22-24 of the November 1972 edition of Think, IBM's employee publication.
Can a mining engineer who got poor grades in bookeeping find success in the data procesing industry? Herman Hollerith did--he invented the industry.
Herman Hollerith was born in Buffalo, N.Y., of German immigrant parents, on February 29, 1860. An unusual day and an unusual man.
He liked good cigars, fine wine, Guernsey cows, and money. And he ended up with a lot of each.
He disliked property taxes, and hard-driving salesmen.
He despised spelling. Enough to jump out a grade-school window to escape it. With that, he also jumped out of the New York City school system. A private tutor, though, helped him learn enough to permit his entrance into Columbia College when he was just sixteen.
He graduated three years later as a mining engineer, with low marks only in bookkeeping and machines. He ignored this setback and went on to invent the first punched card electrical tabulating machines.
A chicken salad supper at the home of Dr. John Shaw Billings is said to have led to his landmark inventions. Hollerith and Dr. Billings both were then working at the U.S. Census Office, so naturally they talked about the upcoming 1880 census. Dr. Billings suggested that there ought to be a way to mechanize the census tabulation to save time and reduce errors. That set Hollerith thinking—and working—on the problem.
It took years of hard, patient work to complete the job. He joined the Census Office in 1879, but didn't file his first patent until 1884. He first put his machines to work in 1887 in Baltimore—just about the time the Census Office was limping through the final stages of manually tabulating the 1880 census.
At that rate, the 1890 census would be out of date by the time it was completed. The population was growing about 25 percent a decade, to more than 60 million in 1890. And more information was needed on each of those 60 million people.
So Hollerith timed his invention just right, although he needed more than patents and practical experience to win the day.
He also had competition—from tabulating systems devised by Charles F. Pidgin and William C. Hunt. The Census Office [wanted a comparison] of the three systems before choosing one. So they tested all three, using a selected set of data obtained in the 1880 census.
Hollerith won, hands down. With his equipment, clerks transcribed data from census forms to punched cards and tabulated data twice as fast as they did with the Pidgin system—and three times faster than with the Hunt system.
The Hollerith system really proved itself in the real census of 1890. Complete results were available two years sooner than the previous census. The data was more thoroughly analyzed, too, and at less cost—an estimated $5 million less than manual tabulation, nearly ten times greater than the predicted savings.
Was everybody happy about that? No. A lot of people couldn't believe that this great growing nation contained only 63 million people. They wanted it to be 65. So the machines had to be at fault. In the trumpeting words of The New York Herald:
SLIPSHOD WORK HAS SPOILED
MISMANAGEMENT THE RULE
Speed Everything, Accuracy Nothing!
But the Census Office stuck by Hollerith and the results. And the count and the system proved out in the censuses of 1890 and 1900.
Hollerith later commented, ". . . it was indeed a brave act on the part of Mr. Porter (superintendent of the Census Office in 1890) to award me a contract for the use of the machines in compiling the census. Where would he have been had I failed?"
Indeed, where would Hollerith have been. He built on this initial success and later supplied equipment for the Russian census of 1897, several European censuses and the 1900 census in the United States. Gradually, business applications of his machines were developed, too.
But Hollerith always thought of his machines as statistical machines and himself as a statistical engineer.
When asked in the middle 1890's why he did not apply his machines to railroad accounting, he responded: "One good reason and that was that I did not know the first damned thing about railroad accounts." His first business application was on the New York Central Railroad. He went on to install systems in utilities, a department store, and other railroads; and these led to development of more business applications.
Hollerith also resisted new ideas for operation of his machines. And that led to trouble: first, with his best customer, the U.S. government, and later with Thomas J. Watson, Sr.
About 1905, the U.S. Census Bureau gave him an ultimatum: improve the machines and cut the rentals (which each year about equaled his total manufacturing cost). To this Hollerith said, No. The Census Bureau said: Then we'll make them ourselves and improve them ourselves. Which they did, using former Hollerith employees to run the operation.
Herman wrote irate letters to newspapers and to the President. He sued the government for infringing his patents. But he finally lost the legal argument in 1912 after seven years of litigation and lost business.
By that time, he already had sold his company, and in 1912 it was part of the Computer-Tabulating-Recording Company,* one of the nation's first conglomerates.
Hollerith remained chief consulting engineer to CTR and a major stockholder, which led inexorably to a classic confrontation between the brilliant engineer, Hollerith, and the brilliant salesman, Thomas J. Watson, Sr.
CTR was in deep trouble when Watson joined the company in 1914. Competition's tabulating machines by then performed better and rented for less than Hollerith's, and CTR salesmen were either hucksters who knew little about their products or repairmen who knew little and cared less about salesmanship. Some changes were needed.
Watson set out immediately to make them. He assigned Clair Lake and Frank Carroll the task of producing an improved machine that would print results automatically. Hollerith refused to have anything to do with the resulting machine, which was a modification of his, or the men who designed it.
Next, Watson revamped the sales force. "Sell applications, new applications," he said. "Sell aggressively. Sell results. And sell honestly." But any selling that a machine didn't do for itself, Hollerith didn't seem to approve.
He stayed with the company until 1921, but he participated in its activities less and less, while its success grew and grew. He avoided Watson as much as possible, and devoted most of his time to the life of a gentleman farmer on Chesapeake Bay. He seemed to be more interested in boating, farming, and raising Guernsey cattle than in running a business.
In 1920 he wrote: "My entire life has been devoted to matters very far removed from farming, in fact mechanical, but I have never been so intensely interested in anything as I have in Guernseys . . ."
There was a hint of this ambivalence about business as far back as 1895. Then, in a lonely hotel room in Berne, Switzerland, after more than 12 hours of hard business bargaining with Russia, he wrote a long affectionate letter to his wife. In it, he commented, "It is a mean piece of business all around (the negotiations) and I sometimes wish I could keep a corner grocery store and stay quietly at home with my wife and children."
In 1921, he finally realized that long-lost wish to escape the "mean business." He left CTR not for a grocery store but for his beloved farm. From then until his death in 1929, his time, as he said, was "fully occupied with boats, bulls, and butter." Meanwhile, others added to and expanded his basic tabulating machine concepts to build the beginnings of today's data processing industry.* The Computer-Tabulating Recording Company was the result of the merger, in 1911, of three companies: the International Time Recording Company, The Tabulating Machine Company, and the Computing Scale Company. The new company (CTR) came under single management for the first time in 1914, when the company had 1,300 employees. It was in that year the late Thomas J. Watson, Sr., joined the firm as general manager, and soon became its president. In 1924, the name International Business Machines Corporation was adopted.