My father went from rags to riches, but what impressed me was how close he came to staying in rags. He was the only son of an immigrant Scots-Irishman who made a meager living cutting lumber and farming in New York State, which was still quite primitive in the 1880s when Dad was a boy. Dad had four sisters, all older than he, and the family lived in a cramped four-room cabin with no running water near the town of Painted Post. Dad’s first job, at age seventeen, was selling pianos, organs, and sewing machines to farm families off the back of a wagon. Salesmanship was his ticket into the world, and he loved talking about those early days as a peddler. “Everything starts with a sale,” he’d say. “If there’s no sale, there’s no commerce in the whole of America.” As a salesman Dad wasn’t a back-slapper; he had a thoughtful manner that people responded to. You’d be attracted by his good looks, his slightly reserved way of speaking, his attentiveness—and before long you’d find yourself sold.

His first boss took advantage of him. Dad worked for a local hardware dealer named W. F. Bronson, who loaned him a wagon and paid him twelve dollars a week. Dad thought this was a stupendous amount—he was making more than the cashier at the Painted Post bank, for example—until one day a sales agent for the organ company said, “You’re certainly selling a lot of instruments. What’s your pay?” When Dad proudly told him, he said, “That’s awful!” He explained that salesmen usually earn commissions, not salaries, and that on a commission basis Bronson ought to be paying Dad around sixty-five dollars a week. Dad quit the next day. From then on, he always wanted to be paid by commission, so he could be sure of getting his just reward.

My father used to say his ambition grew in stages. The more he saw of the world, the more he wanted to achieve. He could remember standing on a muddy roadside as a boy and watching Amory Houghton Jr., the founder of the Corning Glass Works, ride past in his carriage, which made Dad want a team and rig of his own. Dad got another glimpse of wealth after he had moved up several notches and was selling cash registers: a Chicago lawyer he had met invited my father to his grand house on the shore of Lake Michigan. The lawyer remarked that he, too, had started out on a farm, so Dad raised his sights again.

For the first several years he seemed predestined to fail. He went to the city of Buffalo to find work when he was nineteen, but selling sewing machines to farmers wasn’t very good preparation for what he encountered. Buffalo in the 1890s was a sprawling, rough, unfriendly place in the middle of a recession. Jobs were scarce and soon Dad was hard up. He told me that at one point he was reduced to sleeping on a pile of sponges in the basement of a drugstore. He had only one suit to his name, and when he could afford to get it pressed he had to wait in the back of the tailor shop in his underwear until it was ready.

The first man in Buffalo to recognize his talent was a salesman named C. B. Barron, who took Dad on as his assistant. Barron, unfortunately, was a flamboyant city slicker who sold stock in the Northern New York State Building and Loan Association up and down the shores of Lake Erie. Dad thought Barron was the most worldly and charming fellow he’d ever met; he was too naive to see that the guy was a crook. When Barron came into a town he’d rent the finest room at the local hotel and then say to the bell captain, “I’m C. B. Barron. I want to be paged three times during dinner. I have reasons for it, not important to you. Here are a couple of dollars.” Soon word would get around that there was an important stranger in town who had come to sell shares in the Building and Loan. The stock itself was legitimate; investors paid for it in installments, like a savings plan. Barron would keep the first payment as his commission, which enabled him to live pretty high.

A photo of Dad from that period shows Barron’s influence. My father is sitting on a stump and looks like a caricature of the turn-of-the-century traveling man, with his silk hat, frock coat, high-button shoes, striped socks, and ridiculous handlebar mustache. His share of the building-and-loan commissions amounted to more money than he’d ever seen, and Dad decided to go into business for himself on the side. He opened a butcher shop in Buffalo, intending to use future proceeds from his work with Barron to start more and more stores. Chain stores were just beginning to spread around America then, and the idea of running a retail empire appealed to my father. But in less than a year, it all fell apart. Dad woke up one morning on a sales trip to find that Barron had taken off with their funds; since Dad had no savings to fall back on, instead of being able to open his second butcher shop, he had to sell the first.

My father had the ability to overcome setbacks that would have sent other young men back to the farm. Later on this optimism came out in slogans that everybody in IBM had to learn—“Make Things Happen,” “Ever Onward,” “Beat Your Best,” and so on. He knew how to find opportunity where none seemed to be, such as in the remnants of his butcher shop business. He had bought a cash register for the store on the installment plan, and when he went downtown to transfer responsibility for the payments to the new owner, he used the occasion to talk his way into a job with the National Cash Register Company. That was the lucky break that made his career. The Cash, as it was called, was one of America’s best-known companies. It belonged to John Henry Patterson, a fierce little tycoon from Dayton who was on a campaign to make the cash register an indispensable fixture in every modern store. Having used a cash register himself, my father thought he could convince other store owners of its virtues and he was right—he soon became one of the top salesmen at the Cash.

Patterson, who shows up in business histories as “the father of modern salesmanship,” was in effect my business grandfather. Dad worked for him for eighteen years and learned from him many of the ideas that built IBM. Patterson’s genius was to figure out how to take crude, partly educated, ambitious commercial travelers like Dad and mold them into America’s first national sales force. He made his salesmen memorize and use standardized sales pitches, inspired them with revival-like meetings, and challenged and bullied them into hitting sales quotas that were sky-high. One of his innovations was to break up each sales region into exclusive territories, so no salesman had to worry about others from the company stealing his prospects. Since the Cash had a virtual monopoly on the cash register business, these territories were valuable indeed. Patterson paid extraordinarily well—it wasn’t unusual for a man with only a few years’ experience to make one hundred dollars a week, which had the buying power of fifteen hundred dollars today. Being a salesman at the turn of the century was an ignoble job, but under Patterson it became almost a profession.

My father rose through the ranks at the Cash Register company, and by the time he and Mother met sixteen years later, he was Patterson’s second-in-command. Tall, handsome, and well-turned-out, Dad was also Dayton’s most eligible bachelor. He could be seen driving around town in a fine Pierce-Arrow automobile given to him by Mr. Patterson. He had plenty of money—enough so that when his father developed diabetes and died, Dad was able to take over as head of the family and support his mother and sisters in style. He set them up in a fine stone house in Rochester, New York, where he’d run a sales office, and he found successful salesmen for my aunts to marry. But he put off getting married himself, he explained to me, because he had seen successful men who married without much thought of the future and then found themselves burdened with wives who couldn’t keep up as they rose in the world. Such men would suffer their wives or get divorced. He’d had girlfriends before Mother—he said he’d thought of marrying one who was an opera singer in Philadelphia—but he wanted a real lifetime partner. So he waited until he could find someone who would provide both an intellectual and a social boost.

Dad liked to tell the employees at IBM that convincing Jeannette Kittredge to be his wife was the finest sale he’d ever made. Mother’s family was prominent in Dayton. Her father headed the Barney and Smith Railroad Car Company, a maker of railroad passenger cars, and Mother told stories from her girlhood of riding in beautiful new cars with varnished interiors. She used to say she first noticed Father at a country club dinner, when she looked down the table and saw that he was the only guest besides herself who had left his wineglass untouched. Her father was a strict, teetotaling Presbyterian, and she knew she’d need his consent for any mate she picked. Mother was capable of making great leaps of sentiment and she immediately thought, “That’s the man I’m going to marry.” Her father approved of the match, and so did Mr. Patterson, who always liked the idea of his employees’ gaining status in Dayton society. When my parents came back from their honeymoon—a combination sightseeing and business trip to the West Coast—Patterson surprised them with the keys to a house he’d put up for them near his own. Dad’s life finally seemed to be turning out the way he dreamed. But the following year, just after I was born, my parents were forced to leave Dayton under painful circumstances. After building my father up for so many years, Patterson turned around and pushed him out of the cash register company.

Dad probably shouldn’t have been surprised. The way he described Patterson, it was hard to imagine a more arbitrary and eccentric boss. Patterson managed his people by pressure and fear. Once, when he thought the men weren’t paying attention during a long sales meeting, Patterson grabbed a fire ax and chopped a cash register to pieces onstage. Executives who were his favorites got extravagant rewards, but on the other hand, Patterson punished people he didn’t like, sometimes with real cruelty. Dad told the story of an executive who showed up for work one morning not knowing Mr. Patterson was angry with him. On the grass in front of the Cash he found his desk and the contents of his office, soaked with kerosene and set on fire. He left without ever going into the building. Even though Dad later became famous for his autocratic style at IBM, compared to Patterson he was mild.

Patterson was always firing his best men. He owned almost all of National Cash Register’s stock, but he was irrationally afraid that an employee would somehow take the company away from him. The end came for Dad after a vice president named Edward Deeds whispered to Patterson that my father was developing quite a following among the rank and file. In 1913, as Dad addressed a sales convention, Patterson went to the podium and interrupted the speech. He began lavishly praising the other people present, and ignored Dad completely. Dad’s desk never got set on fire, but after a time he was no longer invited to meetings or consulted on important decisions. He felt devastated, and after a few months he resigned. Oddly, Dad never complained of this treatment and revered Patterson until the day he died. He used to say, “Nearly everything I know about building a business comes from Mr. Patterson.” The man Father hated was Deeds, for setting him up. He encountered Deeds later on several occasions, but he never spoke to him again.

The winter of early 1914 must have been pretty grim for my father, although he was far from broke. After pushing him out, Patterson had given him a massive fifty thousand dollar severance payment, and also let him keep his Pierce-Arrow car. But Dad’s carefully built-up security was gone. He was out of work and about to turn forty. He had a new wife and son to support and no place to live—the house in Dayton belonged to Patterson. There was no other job for Dad in town, and he took Mother and me with him to New York in order to hunt for work.

I’ve always been impressed with how picky he was about what he’d do next. He once explained this by saying he was sure he’d find a job because he had a reputation for being able to sell almost anything. Quickly he rejected offers from the Electric Boat Company, a maker of submarines for the navy, and Remington Arms. With war coming in Europe these would have been very lucrative positions, but Dad figured that both firms would shrink as soon as the fighting stopped. He rejected a job at Dodge Motor because the Dodge brothers would not give him the sort of contract he was after—he wanted to be an entrepreneur like Patterson, with a share in the company’s profits, and not simply a hired manager. Yet he had no capital to buy his own firm and no promising ideas of his own to commercialize.

Eventually Dad might have gotten anxious, but before even two months had passed, he met Charles R. Flint, the founder of what was to become IBM. In those days Flint was known as the hottest financier on Wall Street. They called him the Trust King. He was a little man with a goatee and sideburns, about sixty-five years old. He’d played a key role in the creation of the United States Rubber Company, had investments in the automobile and the airplane, and had made and lost fortunes trading arms. During the Russo-Japanese War of 1904, he had been a purchasing agent for the Czar.

Flint recruited my father to manage the Computing-Tabulating-Recording Company, or CTR, a little conglomerate he had assembled in 1911. It sold a grab-bag of products that Flint saw as roughly “allied”: scales, time clocks, and tabulating machines. The concept of the business was sound, but Flint had loaded the balance sheet with so much debt that the company was in danger of collapse. Its twelve hundred employees were confused and demoralized, and the board of directors was talking grimly about liquidation. Flint, who was also on the board, decided to step in and find a manager who could turn CTR around, or at least enable the stockholders to salvage a few cents on their dollars.

What intrigued my father about CTR was the products that did the work of clerks. This meant the time clock and, in particular, the tabulating machine. An engineer named Herman Hollerith had invented the tabulator to help tally the results of the 1890 U.S. Census. By the turn of the century a few primitive Hollerith machines had made their way into the accounting departments of railroads and insurance companies. Father saw ways to improve the machine and he imagined broad commercial possibilities. American industry was growing to unprecedented size, and if huge corporations were to keep from drowning in their own paperwork, they had to find ways to automate their record keeping and accounting.

One of Dad’s first moves at CTR was to call on the Guaranty Trust Company, the company’s biggest creditor, and ask for an additional loan of forty thousand dollars to pay for research and development. When the banker pointed out CTR already owed the Guaranty Trust four million dollars and that the condition of the business did not justify further loans, Dad said, “Balance sheets reveal the past. This loan is for the future.” It was one of his greatest sales pitches. The Guaranty Trust coughed up the money, and the resulting improvements on the tabulating machine enabled CTR to greatly expand its market.

Dad used some of Patterson’s techniques to light a fire under CTR’s ragged work force. He created CTR slogans and CTR songs, a CTR newspaper and a CTR school, all modeled on those of the Cash. Whatever seemed good about Patterson’s way of doing business, Dad copied; whatever seemed bad, he boldly reversed. His code of discipline for CTR employees was just as rigid as that of the Cash, but his philosophy of management was far more humane. Patterson loved to make heads roll, but when Dad arrived at CTR he made a point of firing no one. He told the men that he was going to depend on them, and that his job would be to build them up. Since he’d worked hard to pull himself up from the farm, Dad knew that the way to win a man’s loyalty is by bolstering his self-respect. When I joined IBM many years later, the company was famous for high pay, generous benefits, and the intense devotion of the employees to Dad. But back at the beginning, when there was hardly any money, Dad gained their loyalty with words.

My father loved to recall his and Flint’s discussion of compensation on the day Flint offered him the job. He said to Flint, “I want a gentleman’s salary, so that I can support my family. And I want a percentage of the profits that remain after the stockholders get their dividend.” Flint went right to the heart of it and said, “I understand. You want a peck of the corn you harvest.” When Flint presented this arrangement to the other directors they were incredulous, because it was hard to imagine that there would ever be surplus profits to divvy up. But by the time I was in college, a version of the formula they agreed to would make Dad the highest-paid man in America.

Late in his life my father would take a pencil and do scratch calculations of his own fortunes, toting up his net worth. He carried these scraps of paper around. Sometimes I’d find them and throw them away; sometimes I’d keep them. They show that not until the mid-1930s was he in a position to stop worrying about debts. He was sixty years old by the time he was really on Easy Street.

The chances he took with money are amazing to me. For the first eight years of his married life, he was pretty much on a shoestring. At any point he probably owed at least one hundred thousand dollars. He never accumulated any capital. The first two summers he took us to Europe, in 1922 and 1924, we traveled on borrowed funds as he planted the seeds of the IBM World Trade Company.

As soon as he’d get a little cash, he would buy CTR stock. He felt it was a damn good buy. He bought on margin in the beginning—those were the days when you only had to put up ten percent of the stock price. As the stock went up, his broker friends would say, “Tom, you ought to take some profits.” And he’d come home indignant that someone was suggesting he should sell. More than once this investment strategy, if it can be called that, looked like a big mistake. CTR nearly went broke in the recession of 1921 because Dad had expanded too rapidly. Only by heavy borrowing did he manage to keep the company and himself afloat. He had another close call during the Depression. The company, by then known as IBM, weathered the initial stock crash in 1929 relatively well, but by 1932 the stock had fallen more than two hundred points and Dad had to borrow on everything to keep up his margin payments. He told me that if the stock had gone down just another three or four dollars, he would have been wiped out. There just wasn’t any place left to go for money.

Though he never owned more than about five percent of the company, virtually his entire fortune was in IBM. If the company failed, he failed too. His only hedge was a farm in Indiana that he bought in the late 1930s when war seemed likely. He thought it was remotely possible that some unforeseen catastrophe might wreck IBM, and he told me he wanted our family to be able to return to the land. Other than this, he had absolutely no impulse to hoard or even worry about money. He wanted to rise in the world, so he knew he had to spend. He never panicked when the money was low; I think it never occurred to him that he couldn’t make more. If it came in, it went out, and that was fine with him. Father used money purely as a tool—to express his generosity, to cement his family and company, and to ease his passage upward in society.