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Computer History page 2 In the latter part of the nineteenth century, the United States was experiencing unprecedented population growth. The management of the U.S. Census Bureau became aware that the traditional methods of counting heads would no longer be economically feasible. Using a contest as a motivating factor, the Bureau challenged its employees to find a more efficient method to tabulate population data.
In 1890, Hollerith succeeded in producing the machine that Babbage and Lovelace dreamed up more than half a century earlier. The machine allowed the user to input census data using punch cards, stored the census data, processed the incoming data to arrive at the required subtotals and grand total, and output the data on a series of gauges. Hollerith's punch card tabulating machine was an instant success. The Bureau of the Census in London immediately ordered one, and Hollerith sensed a ready market for his invention. In 1896, Hollerith quit his job at the Census Bureau and formed the Hollerith Tabulating Machine Company.
In an effort to turn the company around, CTR turned to Thomas J. Watson for help. Watson, the top salesman for the National Cash Register Co. (NCR), had managed to work his way up to the vice presidency at NCR. Unfortunately, Watson found himself increasingly at odds with his boss. Watson relished the opportunity to reshape CTR, and eagerly accepted the offer of a management role with Hollerith's struggling company. Watson proved to be a very effective leader. In a concerted effort to boost employee morale and sales, Watson instituted a no-layoff policy, generously increased sales commissions, and provided his employees with life insurance and paid vacations. In return, he demanded absolute loyalty from his employees. In an effort to get the employees to work as a team, he instituted a strict dress code, created sports leagues, organized weekend outings, and led the workers in rousing renditions of the company song. He exhorted his employees to THINK, making them fully aware that he valued their input. He asked his employees to cater to the customer's needs, believing that his company's success depended solely on the success of his customers. Under Watson's capable leadership, sales soared. By 1924, the company had expanded into Europe and Asia, and Watson changed the name of the company once again--this time to IBM (International Business Machines).
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Herman Hollerith, a Census Bureau statistician, rose to the challenge. As he was riding the train to work one cold morning, he found his inspiration. Watching the conductor repeatedly punch holes in tickets, Hollerith envisioned an army of census takers armed not with pencil and paper, but with punch cards. Instead of scribbling statistical data onto paper forms, the census workers would simply punch holes in the cards. Hollerith would then build a machine not unlike a player piano--a machine that would "read" census data using electric probes that could sense holes in the cards. This machine would then simultaneously store, accumulate, and display the data encoded on the punch cards.
Hollerith's company survived many years of ups and downs, and eventually merged with two other companies. After the merger, Hollerith's company became known as CTR (the Computing, Tabulating, and Recording Company). Hollerith's team had difficulty managing the combined companies, and many of CTR's top employees left. By 1914, layoffs were common, employee morale was at an all-time low, and sales were lagging.
During the Great Depression, Watson honored the promise he made to his employees. He kept them busy building machines, even though there was little demand for the equipment. The massive inventory that resulted helped IBM win a government contract with FDR's nascent Social Security Administration in 1935. IBM won the right to maintain employment records for 26 million people, a project that was called "the biggest accounting operation of all time." IBM did such a good job that other U.S. government agencies and large corporations soon clamored for Watson's services and equipment. By the end of the depression, IBM had managed to capture 90% of the market for business machines.