Header Graphic
Golden Rule of Business

This article appeared in  Success magazine, January 14, 1899 issue


The Golden Rule” in Business

How the National Cash Register Company Has Solved the Problem of Reconciling Capital with Labor—

An Experiment of World-Wide Interest at Dayton, Ohio


 “Hard work and thoughtful consideration of the suggestions of others,” was the answer of one of the most successful manufacturers of the country, to a request for the secret of his success and the success of his factory, often called “the model factory of the world.” The speaker was John H. Patterson, the young energetic and enthusiastic president of the National Cash Register Company, of Dayton, Ohio. “My brother and I never knew anything but steady, honest work in the old days when the place where this factory stands was only a cornfield.  Hence, when it came to the pull for a place in the business world, we were prepared, by training, for it.”


A Foundation of Health, Education, and Industry

     President Patterson often recalls, with pleasure, his early training on a farm.  He had a good education, but was not allowed to be idle during the holidays and vacations.  His parents taught him to be industrious by example as well as by precept.  One of his early lessons in leadership was learned when, with two hired men, he cultivated corn on his father’s farm where the great factory now stands.  Being the youngest, and only a boy, he would frequently rest with these men at the ends of the rows.  He soon found that they would not work unless he did, and so he would jump down from the fence and begin his new row, to be followed by the others. Young Patterson and his brothers learned to earn money by selling the surplus products of the farm, so that all had, from the beginning, their own lessons in finance.  John entered college, going first to Miami University and then to Dartmouth.  Coming out of college with no special training for business, he began life without anything definite before him.  He became a clerk in a canal office.  On one occasion, he made a suggestion to his employer regarding the improvement of certain methods, and was plainly told to mind his own business.  The sting of the reproof led the young clerk to determine that, if he ever became an employer, he would encourage suggestions from his employees in every way possible.

     Mr. Patterson, by frugality and industry, gradually saved money and pushed ahead until he became manager of a coal mine.  He noticed that the income from the stores with which the miners had their dealings was not proportionate to the business.  He heard of the cash register, then recently invented, and promptly telegraphed for two of them.  With his brother, who was with him in the coal-mine enterprise, he became interested in the cash register, and bought the patent.


Difficulties Met and Mastered

     Then the Pattersons commenced to manufacture the cash register.  They were not, at first, successful.   One of the stockholders sold to Mr. Patterson and his brother a considerable amount of the stock, and the next day refused $2,000 offered by the buyers to cancel the sale.  When the early difficulties had been overcome, the business grew so rapidly that by 1888, a large building was necessary.  It was determined to build a new factory in one of the southern suburbs of Dayton.  The building was like thousands of others devoted to mechanical purposes, and the system was that usual in factories intended wholly to obtain the greatest product with the least expenditure of money, and with little thought for the comfort of the employees.  The greatest difficulties which the Pattersons had to contend with, at this time, were a lack of sympathy among their wage-earners, and the inability to get thoroughly skilled workmen.  In 1894, after ten years of effort, with a market fairly open before them, and success ahead, if the machine could be made to work perfectly, they were confronted by the complete failure of a new invention, and the return from England of a carload of broken machines, instead of the draft for $30,000 which had been expected.

     Nothing daunted, and determined to learn the causes of the difficulties in the works, the president and secretary moved their desks into the factory.  Observation convinced them that the best way to obtain success was to revolutionize the usual business methods, and to adopt a system which was, in many respects, completely different from that in other places.  Recalling his own experience as a clerk, the president resolved that the officers and working force should be on the best of terms; that the assistance of every employee, from the lowest to the highest, should be deserved, if not won, by kindness; that more money could be made by giving careful thought to the condition of the workers, enabling them to labor under the most favorable circumstances, and thus increasing their output while decreasing the cost;  and that a proper division of responsibility, as well as of labor, would release the heads of the company, so that they could give time and thought to expansion and questions of business policy.

     Thus was begun, in 1894, a new departure in modern manufacturing methods, and the organization of a system which has made the name of Patterson, and the fame of the company of its factory, known everywhere.  The individuality of the concern, as much as the excellence of its product, has given the National Cash Register Company its world-wide reputation.  Having determined upon a revolution in their system, the president and his associates brought to bear all their former training and experience, and all that could be learned from the experience of others.  President Patterson would have been a successful schoolmaster, had he chosen teaching for his profession, or a great general, had he preferred to be a soldier, for his factory plans show an intuitive appreciation of the best in education and of the strategic value of a thorough organization.  But it is in suggesting new ideas in business, in looking far ahead for the best methods of presenting his work and winning men, and in surrounding himself with strong men for special work, that Mr. Patterson, with his brother’s cooperation, has shown his power.


A Liberal Policy Brings a Golden Reward

      The  change determined upon resulted, first, in the substitution of the committee system for the superintendent and manager, the members of the committee being chosen from the best in the ranks; secondly, in encouraging assistance from all classes, by offering prizes for the best suggestions regarding every feature of every department of the business; thirdly, in systematizing plans for training and educating the employees, in order that the highest intelligence might be developed among the workmen, and applied to the manufacture of the product; fourthly, in providing for the physical comfort and mental and moral training of all employees at work and in their homes.  To make clear these objects, as well as to win the intelligent cooperation of all the workmen, frequent meetings of all departments were planned, where there could be an exchange of opinion and presentation of complaints, with both sides heard.  Then came conventions of officers, workmen, and salesmen, resulting in the admirable gatherings, now an annual feature, which bring together, for an entire week, hundreds of agents, and the large office and factory force.  A semi-monthly magazine was established, and afterwards other periodicals.  “The more we talked face to face, and the more we published through the printed page, the better we understood each other, the less trouble we had, and the more good suggestions we got for our business,” explained Mr. Patterson.


Prizes for Suggestions

     Thus deliberately, year by year, these ideas have been developed and applied to improved conditions; and it is here as much as in the direct business plans that these brothers show their remarkable foresight as well as genuine love for their fellowmen.  Each year $1,200 in prizes are offered for suggestions, the offers being open to all employees except heads of departments and their assistants.  Everyone, from messenger boy upward, is eager to join in the competition and help to build up the business.  Autographic registers in every department afford immediate means for making the suggestions.  Of the 4,000 suggestions made last year, 1,087 were adopted for use.  The semi-annual presentation of prizes is a great occasion, and brings together several thousand people in a delightful “family gathering.”

     Lectures and entertainments are frequently prepared and given.  Over 6,000 beautifully colored lantern slides of the finest kind have been made upon all topics, including travel, health, business organization, education, history, science, and art, for use in this instruction.  No more intelligent company of men and women can be found in any establishment than these 1,500 workmen.

     “Comfort in shop and at home is essential to exact work and high skill,” is the guiding principle throughout this factory.  Hence the buildings are models of neatness and cleanliness, the workroom having as much attention as the office.  Free baths are provided in every building, and each employee is entitled to twenty minutes of the company’s time each week.  Special systems of ventilation, large windows, and cheerful rooms decorated with palms during the winter, make work a pleasure.  As an illustration of the attention to the details of comfort, the visitor will notice the convenient bicycle houses, and the provision to easily inflating the tires by power.

     The company employs over two hundred women, and one of the most noticeable things in the entire organization is the chivalry shown to them by their fellow-workers.  In all the rooms are supplied chairs with backs and foot-rests, instead of the usual form of stools.  White aprons with sleeves are provided, and kept in order at the company’s expense.  Toilet rooms with every provision for convenience and comfort are arranged on each floor.  Noting one day the discomfort attending cold lunches, the president immediately ordered arrangements made for providing warm lunches for the women.  This resulted in the fitting up of a refreshment room on the fourth floor, to which the elevator carries the employees, and there, in a most attractive apartment, a warm lunch is served each day, at the company’s expense, to every woman employee.  The result of this was seen at once in the increased output of the departments, so that the company realized immediately a profit of at least twenty-five per cent, on the cost of the lunches.


Encouraging Home Life

     To encourage home life and comforts, the hours of work were reduced for men from ten to nine and one-half hours, and for women from ten to eight hours, while the rate of wages remains as on a basis of ten hours.  In addition to this the young women have ten minutes’ recess, morning and afternoon, and they come an hour after the men in the morning, and leave ten minutes before them in the evening.  Saturday half-holidays for all employees have been the rule during the past year.  A kindergarten for the little children and a cooking school for the older girls and young women have been provided at the company’s expense.  No effort is spared to cultivate a high standard of social life among all connected with the company.  On these occasions, all distinction of position is forgotten, and there is a kindly mingling of the men and women and their families, including all from the president down.

     These evidences of interest on the part of the company have been responded to by the employees, not only in increased loyalty and enthusiasm, but also in the development of independent thought and action.  The young women are organized in an excellent women’s club, the “Century,” which is a member of the State and National federations, and which each year carries out a programme that would do credit to any club in the country.  The men have a “Progress Club” for the discussion of the many topics of the day.  A large club has been organized for night study in drawing, mathematics, and other subjects of value in the factory.  A choral society, a relief association, which includes in its membership a large majority of the employees, and which provides for help in time of sickness, a bicycle club, and other societies give evidence of the interest of the people themselves.

     Nor have President Patterson and his associates been satisfied with limiting their efforts to their employees.  They believe that the factory should be a helpful influence in its neighborhood and even in the entire city.  Hence, the advantages offered to employees are extended to the suburb in which the factory is situated.  Their first effort in this direction was the beautifying of the company’s grounds, which are to-day among the most delightful garden spots in the world.  This was followed by the offering of prizes for the prettiest home grounds, front yards, back yards, vine planting, window-boxes, etc., in South Park.  Through the Improvement Association, the appearance of this portion of the city has been changed.


Elevating Social Influences

     Through the “N. C. R. House,” a pretty cottage presided over by a devoted deaconess, which is really a small social settlement house supported by the company, the moral, social, and intellectual life of the entire suburb is influenced.  Contrary to the common rule, the houses facing the factory bring the highest rents, and the street adjoining it is said to be the most beautiful street in the world, considering the size of the lots and the cost of the houses, averaging eighteen hundred dollars each.  For the children of the neighborhood are provided a kindergarten, boy’s clubs, girls’ clubs, sewing and cooking schools, a millinery school, and the boys’ prize vegetable gardens.  These last, growing out of the early experience of the owners in the value of work, have been remarkably successful.  A Sunday-school, held in the large hall of the factory, has an attendance of over five hundred, and supplies a delightful Sunday afternoon’s instruction and pleasure for the neighborhood.   A mother’s guild, a kindergarten association, a branch library with several hundred well-selected volumes, and all the leading magazines, open to all employees and the neighborhood alike, attest the mutual sympathy of the company and those living near.

     Summing up the work and its guiding principles, President Patterson said; “Labor does not want to be under obligations, hence, when well treated, it will return the treatment.  The quickest way to reach working people is found to be through the kindergarten, lunches for the daughters, shorter hours, and everything that shows consideration, even though it does not cost much.  Everything is done that we can afford to do.  Perhaps one-fourth of our  people misconstrued our intentions, and did not appreciate what was done, hence we separated.  Now nearly all are loyally seconding every effort.”