Monday, March 29, 2010

Was Cleveland Always America’s Most Miserable City? The City in 1900 vs. 2000

In 1903, the innovative Group Plan created the Burnham Mall in downtown Cleveland as an outdoor room surrounded by neoclassical government administrative buildings and the convention center. Just a few years into the new century, Cleveland had employed the preeminent architect of the day to appropriately launch the city into a century of progress, creating a first-in-America planned public space for a major city. Now, just over 100 years later, the physical Group Plan landscape largely remains, but without the excitement of Clevelander facing a new century with zest.

In 1900, the population of the city of Cleveland was just over 380,000 people, doubling by 1920 and then reaching a peak at just under 900,000 people by the middle of the century. By 2000, the city’s population had dropped by almost half, to approximately 475,000. Although the current annual Census figures will not be released for some time, population estimates show a roughly 20% population drop in the first ten years of the 21st century.

From the seventh largest city in 1900, Cleveland is now listed as the 40th ranked city today. What city is the seventh largest today? San Antonio, Texas, with 1.3 million residents. Cleveland does have a number one ranking, however, as Forbes Magazine just named Cleveland as “America’s Most Miserable City”.

What happened?

Cleveland in 1900

After the industrial revolution of the late 1800’s, Cleveland entered the 20th Century well positioned for success with a vibrant heavy industry base. Located halfway between the iron ore fields of the upper Midwest and coal from the South, Cleveland had became a major rail hub, as well as a major water transport route, to the population centers of the East Coast.

The steel and iron industry was well-established in Cleveland by the mid-1880s, with companies such as Cleveland-Cliffs Inc and the Cleveland Rolling Mill Company. Related industries flourished, including manufacturers of railroad track, boilers, hardware and general machinery. Cleveland even boasted advanced manufacturing companies like White Sewing Machine.

With a concentration of metal-related industries, Cleveland soon became the home to a very strong machine tool industry. Firms like Warner & Swasey Inc., National Acme Screw Manufacturing Company and Cleveland Twist Drill Company called the city home, attracting other machine tool firms. In addition, tertiary industries sprung up as well, such as a garment industry which utilized the locally-produced White sewing machines.

Understanding this interconnection of industries is vital to understanding the vibrancy of Cleveland in 1900. Since iron ore came to Cleveland, steel and iron products were then produced in the city. Since machine tools allow the manufacture of complex items like sewing machines, both industries located in Cleveland. And then the commercial users of the manufactured products also were attracted to Cleveland, creating, among others, a garment industry.

And, with this conflux of industry, innovation naturally follows. One example, the revolutionary Hulett Ore Unloader was invented in Cleveland, cutting down the time to unload an ore ship from a whole week to half a day.

Further, Cleveland was home to emerging industries, such as the petroleum industry and, later, industries which used petroleum in their products. Most famously, Cleveland was the home to Standard Oil, but also to chemical firms like the Grasselli Chemical Company. A later outgrowth of the chemical industry was paint and varnish firms like the Sherwin-Williams Company and the Glidden Varnish Company.

The Automobile

Filled with steel, machine tool, chemical and other related industries, Cleveland was poised to become a major manufacturing center for the automobile, which was invented just a few years prior to 1900. In fact, the local Winton Motor Car Company was the first automotive company in the United States to produce a standardized product line and then sell each vehicle to a customer, rather than build a vehicle only to an existing order.

In the early days of the automotive revolution, gasoline, battery and steam power were all being developed simultaneously as vehicle power plants. And Cleveland quickly boasted major automotive manufacturers for each type of locomotion. Winton, with a 2 cylinder gas engine, was joined by Baker with a battery-powered electric car and White, maker of a well-respected steam car that was second only to Stanley in market recognition. Later, as steam power became less desirable to consumers, White started truck production.

Although Detroit later became the center for automotive production- largely due to Henry Ford’s innovative Model T assembly line- Cleveland was very much in contention for that leadership post at the turn of the century.

Cleveland Ascends

With the confluence of industry, Cleveland was a recognized manufacturing powerhouse in 1900. With the heavy industrial base, new industries and a growing market for automobiles, Cleveland must have been an exciting, successful industrial hub at the turn of the century.

And this promise is still reflected in the downtown area. In 1903, Daniel Burnham, using a neoclassical architectural style, was launching the urban panning movement in the United States. Working with John Carrère, and Arnold Brunner that year, Burnham designed the Mall in downtown Cleveland as part of the Group Plan of 1903. The Mall was a gift to the citizens of the city, created as an outdoor room surrounded by beautiful government and administrative buildings, with a view of Lake Erie. Outside of Washington DC, Cleveland became the first major city in the US to incorporate a civic-center plan. Even the buildings around the mall were also nationally notable, as the Public Auditorium was the largest convention space in the country when it opened in 1925.

A few years after the Group Plan, Cleveland hosted the Industrial Exposition of 1909 to showcase the products of Cleveland industries. Situated in a huge temporary building connected to the Central Armory, the exposition broke existing attendance records for this type of event. The exposition also attracted new industries to Cleveland, and boosted the retail, convention and real estate industries.

Later, World War 1 provided a huge economic boost to Cleveland, as the local heavy industry manufactured products for the combatants, later to include the United States itself.

By 1920, 70% of the steel made in Cleveland was headed to automotive-related manufacturers. Euclid Road Machinery Company stated producing heavy-duty off-road trucks under their name in 1931. And Cleveland was second only to Detroit in terms of the percentage of residents employed in industry.

World War 2 also helped boost Cleveland manufacturing, and then the car buying boom of the 1950’s marked what would become the historic peak of Cleveland industry. Interestingly, the 1950s also marked the peak of Cleveland’s professional sports teams as well.

Threads of Change

Heavy industry, by its nature, favors larger operations due to the cost structure of running the plants. In the late 1800’s, smaller companies in the iron and steel industries started to merge, and then buy out rivals. Larger market share and vertical integration helped lower prices for raw materials, raised production efficiencies and lowered distribution costs. The rise of Standard Oil, US Steel and other extremely large industry players created these efficiencies. Later, the same consolidation occurred in the automotive industry too.

One of the major societal impacts of the industrial revolution of the late 1800’s was the rise of industrial employment as a viable option for many people, as opposed to the traditional agricultural-based economy. As industry grew in importance as an employer, as well as in size, the reduction in the numbers of competitive companies in the marketplace created other issues, resulting in labor unrest. In the 1880s, the Cleveland Rolling Mills Strikes, although largely unsuccessful, were a glimpse of the future. By 1900, there were 100 unions in Cleveland, some independent and some affiliated with the American Federation of Labor or the Knights of Labor.

Trade unions, as opposed to general labor unions, were the first unions to become established in Cleveland in the late 1800s, due to the presence of skilled laborers in many industries. Another reason for their earlier rise is that, although trade unions were quite strong in a number of industries, they had experienced mixed success with strikes and thus tended to take more conservative actions than most reform-minded unions. Since a strike defeat meant the end of a union in those days, early trade unions hesitated to cause labor unrest.

But that was not to say the trade unions had no power. The Brotherhood of Locomotive Engineers built several buildings in downtown Cleveland, including the Standard Building completed in 1925. And the BLE was instrumental in partnership with others in passing the Adamson Act of 1916, starting the formal establishment the “8 Hour Day” and overtime rules.

In the late 1800s, general labor unions were more active in labor unrest and reform movements. But these labor unions held less power in negotiations with the companies as the unions represented less skilled workers, who could be more easily replaced by strikebreakers. Further, the general population was not overly supportive of early union strikes, especially, as was not uncommon, if the strikes caused violence. Later, some labor union leaders were outwardly supportive of progressive, socialist or even communist goals, which also kept them from garnering wide public support.


As time passed, however, later strikes, such as the unsuccessful 1919 US Steel strike, showed the labor union was gaining momentum. In 1936, employees at the Cleveland Fisher Body Plant initiated a sit-down strike that lead to General Motor’s recognition of the United Auto Workers (UAW), a labor union which crossed trade boundaries. The same year saw the passage of the Wagner Act, institutionalizing the 8-hour day and 40-hour work week in the US. And the Little Steel Strike of 1937, against several independent steel makers in the greater regional area, led to recognition for the Congress of Industrial Organizations (CIO).

Cleveland developed a strong union history, and the city was the site of many notable union events. In 1882, Cleveland hosted the second convention of The Federation of Organized Trades and Labor Unions of the US and Canada, which later became the American Federation of Labor (AFL). This convention started the move toward union federations, which, later, combined trade and labor unions.

The Teamsters Union Local 407 was founded in Cleveland in 1912, and became the union’s largest local by 1932, in part, due to aggressively unionizing related industries and a professional internal organization.

In the post World War 2 era, the fear of communism spread across the United States, and the far-left leadership of some unions were removed from their posts. In 1949, the CIO held what became known as the “purge” convention in Cleveland, where a resolution was passed barring Communists and Fascists from holding positions of power in that union.

After the AFL-CIO merged in 1955, the founding convention was held in Cleveland’s Public Auditorium in 1958. The 2,000 delegates represented over one million union members for this important event. Today, the AFL-CIO continues to be the largest union federation in the United States.

The AFL-CIO merger roughly marked the peak of general union membership in the United States. For example, in 1945, almost 36% of American workers were represented by a union. Breaking that figure down further, about 9.8% of public employees were represented by unions, while 33.9% of private, non-agricultural workers had such representation.

Laws such as the National Labor Relations Act of 1934 had secured a union’s position in the workplace, and the general population viewed unions favorably now. As a strong union town with bustling industry, Cleveland workers appeared to be well-placed for the future.


At the turn of the 20th Century, progressivism was taking hold in Cleveland’s government. In the late 1800’s, Cleveland was gradually annexing neighboring communities and adding functional governing departments such as the waterworks and public parks. In 1898, the city’s form of governance was changed again, leading the election of progressive mayor Tom Johnson in 1901. The city quickly moved into providing more local services and facilities, including garbage pickup, bathhouses, a revised juvenile detention system and The Group Plan of 1903, all of which also doubled the city’s debt in two years.

In 1914, Home Rule was adopted in Cleveland, which was quickly followed by a City Manager form of government in 1921. The city manager was an appointed, non-political position intended to neutrally direct local government, and Cleveland was the only major city to institute this form of governance. However, this progressive change did not meet its goals of reducing corruption and improving city governance in the eyes of the population, and was abandoned in 1931 for a traditional mayor-council arrangement.

Cleveland, being made up of many ethnic groups and a strong two-party political machine, was a rough and tumble political playing field. And the mayoral position held the power to deeply impact the local economy, including city intervention in the Little Steel Strike of 1927. Republic Steel was flying replacement workers from an airfield in Cleveland to Niles and Warren, and Mayor Harold Burton closed the airfield to avert strike violence. Mayoral leadership helped build a municipal airport, Burke Lakefront Airport, following World War 2, and greatly expanded that airport prior to Cleveland’s economic peak in the early 1950s.

The Promise of the Post-World War 2 Era

Although Cleveland entered the 1950s with a strong economic momentum, steady changes in the world, national and local economies were causing a slow decline in the economic prospects for the heavy industry that made up the backbone of the city. American steel and iron products, especially from the older facilities prevalent in Cleveland, became less competitive in the world market. American automobiles also lost their world leadership position, further hurting Cleveland’s associated industries. Further, tertiary industries found it more difficult to remain in Cleveland, first moving to other locations in the US and, later, overseas. When Cleveland became the high-cost producer for many manufactured products, it was only a matter of time until the “next” recession required closing high-cost facilities in favor of more efficient production facilities elsewhere.

American manufacturing management, especially in the automotive industry, was not known for forward-thinking in the 1950s though the 1970s. And unions, fraught with links to organized crime in the same time period, shifted from the largely completed basic workplace gains to other gains with ever-more diminishing returns, peaking with the automotive industry’s Job Bank. At the same time, Cleveland’s government continued to fund projects like doubling the port capacity and enlarging the Cleveland Hopkins Airport, largely favoring existing industry.

As these economic changes were affecting industry, unions and government, the demographics of Cleveland were also changing. Always a city of ethnic diversity, many residents started moving out of the city to the suburbs. As heavy industry and manufacturing jobs moved out of Cleveland, more and more well-compensated blue-collar workers also moved out of the city. With the arrival of the more overt racial conflicts of the late 1960’s, more and more people voted with their feet and moved to the suburbs or to other states.

Accelerating over time, this process created a continual declining loop. As more industry closed or moved out of the region, more people moved out of the city. The unions found their membership declining as well, creating a lack of new membership from the manufacturing industry. Today, private sector union membership is approximately 7% of the workforce, with only 12% of the general workforce unionized.

Even the Ohio Historical Marker designating the creation of the “8 Hour Day” appears to be missing from its assigned location on Carnegie Avenue.

As the traditional union membership base declined, “white-collar” unions and public sector union membership grew. In the case of public sector unions, today, 36% of public workers are union members, an almost exact reversal in union demographics from Cleveland’s economic peak.

The city governance itself, still scaled up for the old peak city population levels, created an even greater drag on the economy with an out-of-date methodology. And the changing demographics of the voter base coupled with traditional Cleveland politics did not bring forth a mayoral leader with a viable vision for the future and the skills to implement that vision.

This closed-loop process became recognized on an international basis, when the City of Cleveland defaulted in its debt in 1979. City expenditures increased 45% in the early 1970s, and revenues from a declining industrial and resident population base did not increase in step with those expenditures. The golden goose had been killed, and now Cleveland became the first major city to default on its financial obligations since the Great Depression.


The default issue was solved by the election of George Voinovich as Cleveland mayor, who was also able to kick start some areas of economic revitalization. But Cleveland has still not escaped from its past, relying on old models based on an economy that died decades ago.

The suburbs provide far more attractive locations for both living and working in the greater region, proved by the City of Cleveland’s own workforce demanding the end to residency restrictions. Taxes are very high, related to the rest of the United States in terms of the level of services provided to citizens. Heavy industry and the manufacturing base continue to decline in Cleveland, especially with the easing of international hurdles to moving plants overseas. Unions, although now focused on other growth areas like civil service workers and call-center workers, have not countered their existing reputation for making Cleveland an unattractive town for locating new businesses.

In short, Cleveland has suffered from a crippling lack of leadership in industry, unions and government, which choked off the innovation engine that Cleveland was a century ago.

More proof? The largest employer today in the Cleveland metropolitan area is the Federal government, followed by the Board of County Commissioners (#3) and the Cleveland Municipal School District (#5). In 1950, the largest government employer, Cleveland Transit Company, was ranked 22nd on the same list.

Back in 1925, the facade of the Cleveland Public Auditorium was decorated with a grand statement that reads “A Monument Conceived as a Tribute to the Ideals of Cleveland. Builded by Her Citizens And Dedicated to Social Progress.”

The ideals have changed, and the result is the award for “Most Miserable City in America”.


Substantial resources drawn from The Encyclopedia of Cleveland History (

Saturday, February 27, 2010

Could William E. Telling, the Dairy King of Cleveland in 1910, be the Online King of Cleveland in 2010?

Today, the South Euclid-Lyndhurst branch of the Cuyahoga County Library is located in a 26-room mansion built by William E Telling, who worked his way up from quarry worker to operating the largest dairy and baby food empire in Ohio. A unique story? Or, just a product of the times? And, by looking at Telling’s life, can we find hints for success in today’s rapidly changing business landscape, one hundred years later?

Born in 1868, Telling started his business career selling strawberries and milk from his father’s farm. By sixteen, he was working in a stone quarry. Telling would save money from his current position, and then use those funds to bankroll his next business venture. From his quarry salary, he bought and developed several real estate lots, then later was employed as a horsecar conductor. By age 23, Telling has saved enough business capital to purchase a milk wagon and equipment and start a milk route.

This milk route was to grow into the Telling Brothers Company and later merge with the Belle Vernon Farms Dairy Company. By adding product lines such as ice cream and buying up several local competitors, the family business, now named the Telling Belle Vernon Company, became the largest dairy operation in the Cleveland area and made inroads into other areas of Ohio and West Virginia. Telling also started a new baby food formula venture, the Laboratory Products Company.

In 1928, Telling Belle Vernon was sold and became a division of the National Dairy Products Corporation, which built a new headquarters across the street. The National Dairy Products Building, voted by the Chamber of Commerce as the best small business building erected in 1935, still stands today, at 3740 Carnegie Avenue.

By this time, Telling was also director of a financial syndicate, the Standard Trust Company. Standard Trust was the result of the merger of several smaller banks and the Brotherhood of Locomotion Engineers (BLE) Cooperative National Bank of Cleveland, which was housed in the beau arts-style Standard Building, still standing today on the corner of St. Clair and Ontario Streets in downtown Cleveland.

At the peak of his lifetime wealth, Telling had an estimated net worth of around $16 million (approximately $210 million in today’s CPI adjusted dollars).

By 1929, Telling had finished building his mansion at 4645 Mayfield Road, land which had been his family’s homestead. His home was the first air-cooled residence in the area, and he could enjoy exotic birds in an aviary, a mushroom cellar and a tropical plant garden.

But he moved into his new home alone. His first wife died in 1915, his second marriage ended in 1927 and his daughters had grown into adulthood.

Two years after the Financial Crash of 1929, Standard Trust failed, with its President sent to prison for making large loans to his friends without collateral and embezzlement. Prior to the Crash, buying stocks on margin was an accepted method of speculating in the stock market. A speculator borrowed from a financial syndicate’s large pool of money, bought stocks with that money and then paid back the loan after taking all the profits from the stock’s increase in value.

Because most of the cost of the stock is paid for by this margin loan, and not the speculator’s own money, the purchase is known as a leveraged transaction. This leverage magnifies the financial gain, as the speculator contributes only a small percentage of the total investment, but reaps the entire profit.

However, this arrangement only works for the speculator’s benefit when the market continues to rise. Similar to the recent mortgage-backed derivative securities crash, once the market falls, a speculator ends up underwater, with a low-value asset and high margin loan balances. Since the underlying collateral for the loan- the financial instrument itself- is now worth less, the speculator must make up the difference from their own pocket. Thus, margin leverage works in reverse, magnifying losses in a downward market.

Standard Trust’s failure left Telling with large family debts, a situation which was compounded by Telling’s drop in net worth due to the crash in the stock market.

When Telling died in 1938, he was worth $16,000 (about $250,000 today), with just over $1 million in liabilities (about $18 million today).


Innovation was William Telling’s business mantra. When he operated his first milk route, the standard practice of the day was for the milkman to dip milk from a large container on the wagon into vessels provided by the customer. To receive these vessels, the milkman had to come into the house, take an order, and then fill it.

Instead, Telling started his day at 3 AM in order to be the first milkman of the morning and get the jump on his competitors. He also had his customers leave their written orders outside the house, so he could quickly fill the order and continue his route.

This innovation didn’t stop with the milk route. The Telling Belle Dairy Company and its successors racked up a long line of market “firsts” in the Cleveland area include using glass milk bottles (eliminating the need for a customer’s container), automatic bottle cappers and automatic bottle washers. Telling increased both quality and efficiency through vertical integration of the milk production and distribution process, including on-farm inspectors and a pasteurization improvement processes that culminated in milk being pasteurized and bottled without the presence of air or light.

A 1918 account of Telling-Belle Vernon Dairy stated that “the company’s name is synonymous with sanitary milk products in the Cleveland area.”

And, Telling was responsible for popularizing ice cream in the Cleveland area. At one time, ice cream was a very rare treat, but through production and distribution innovation, as well as local advertising, a hungry Clevelander could find ice cream at any drug store and many other locations.

And the sister company, the Laboratory Product Company, developed new and healthier baby formula compositions and production methods, its products sold under the Formulac brand.

The Man

Although he was a man of wealth a few years earlier, Telling died with only great debts and no family inheritance. According to a librarian at the Telling Mansion branch, one relative, in a fit of rage, destroyed most of Telling’s personal memorabilia. Although the heir’s frustration is understandable, his actions limit our ability to research Telling in detail today. Even the Telling-Belle Dairy Headquarters at 3821-35 Cedar Road is just another vacant lot.

However, one surviving tidbit of information is a quote from Telling. When asked to explain his success, he said his recipe for success was "just work and work and work some more; do the work of two and draw the pay of one.”

In a broader sense, the history of William Telling is the history of countless men and women who, having an idea and a strong work ethic, founded a company in the early years of the Twentieth Century. At the dawn of the American Century, with the American frontier recently conquered through manifest destiny, the demographics of the country forever changed by the industrial revolution and little government regulation, businessmen (and, at that time, the vast majority were men) were riding a wave of innovation and opportunity.

Just as the Dot Com era of a hundred years later radically changed the business landscape (and still continues to do so), the dawning the Twentieth Century presented the same opportunities to those who could understand the societal changes happening at that time.

Today, we have video on demand, whether on a television or YouTube. Then, it was ice cream, whether at the drug store or, later, in your own home. As we grow and change in today’s connected society, are we at the point where we can only find ice cream in a special retail store or have we progressed to having ice cream at home?

One way to tell is to look back into history, in the first half of the Twentieth Century. It is not a complete picture; some of those firms failed, some provided a comfortable living for one or more generations and some grew into the worldwide companies we know today.

After Telling

Telling built his company into a regional powerhouse, and then sold out to another, larger company. Although this is a very common strategy today, the nationalization of commerce in the United States was still fairly new in Telling’s time.

The firm that acquired Telling’s business, the National Dairy Products Corporation was founded by Thomas H. McInnerney in 1923. McInnerney partnered with several Wall Street firms (who joined the venture only after much internal debate if the dairy industry was dignified enough for them) and, using his Chicago-based ice cream company Hydrox Corporation, began to create a national ice cream conglomerate from the many regional ice cream makers. National Dairy purchased such now-famous names as Breakstone, Breyer’s and Kraft-Phenix, which were regional dairy operations at the time. In 1969, National Dairy was re-named Kraft, which today is Kraft Foods.

National Dairy Products introduced the Sealtest symbol- originally a franchised mark of excellence- to Telling Belle’s products. Later, the Sealtest symbol became a brand in its own right, as National Dairy consolidated its many regional brand names. Although the downtown Cleveland plant was closed in 1980, the Sealtest brand itself still survives in Canada, owned by the Agropur dairy cooperative.

And Telling’s Laboratory Products Company became the Sealtest Laboratories, and then the S.M.A. Corporation. American Home Products Corporation (now Wyeth) purchased S.M.A in 1938. The innovative Formulac baby food brand name appears to have survived through 1948, but later was used on dog and cat formula. The Formulac brand name is now owned by a small feed manufacturer in Paris, Illinois.

On one hand, Telling’s era of unbridled free market capitalism radically changed the United States business landscape, and created many of the brands and companies we still know today. On the other hand, this time period also created the labor movement as a needed check against the free reign those businessmen had over their employees.

One hundred year later, the business environment is changing again. Many large businesses and labor unions have lost touch with their marketplace, as has the much more intrusive and ineffectual government. Is now the time for the rise of the independent professional contractor and location independent worker, using new ideas and new technology to change the world again?

Check back in a hundred years for that answer…


Sunday, January 24, 2010

Successful Communism in the Village of Zoar, Ohio?

The Society of Separatists established a flourishing communal village at Zoar, on the banks of the Tuscarawas River, in the early 19th Century. Were their decades of success due to their communistic form of governance or were other factors at play? And how we can apply the history lessons of Zoar to today’s business world?

The History of Zoar, Ohio

Zoar was settled in 1817 by German immigrants fleeing religious persecution in Southern Germany. Having previously renounced the official religion of Germany, Lutheranism, the Separatists suffered confiscation of their properties, imprisonment and flogging, leading to their immigration to Philadelphia, Pennsylvania.

Arriving with few resources, the Separatists were aided by the local Quaker population, who housed the immigrants and loaned them $1,500 to purchase 5,500 acres in the Ohio wilderness of Tuscarawas County. Ohio, which had become a state in 1803, was still lightly populated and portions of the state were still owned under military land grants.

Several separatists traveled to Ohio in the fall of 1817 to establish the settlement, while the remaining immigrants following in the spring of 1818. During this time, the settlement was named Zoar, after the biblical town that Lot fled to after leaving Sodom.

Approximately 200 Separatists, now also called Zoarites, settled in Zoar. In addition to building houses and establishing their farms, the Zoarites worked to create an income to repay the Quaker loans. However, the Separatists were largely unskilled in the trades of the day, and their number included many older people. During the first winter, many Separatists were forced to hire themselves out to neighboring farmers to learn the trade and to earn an income to pay for their land loan. Some Zoarites even remained in Philadelphia, in order to apprentice and learn a trade.

Originally, each member family of the group was given their own share of the land, and then expected to pay back their share of the Quaker loan. By early 1819, the inequality in age and ability prevented some Zoarites from being able to pay their share, while others were much more successful. Further, a number of Separatists were living off-site, working outside of Zoar in order to be able to pay their share. To head off failure of the community, the Separatists decided to pool their personal resources and create the Society of Separatists of Zoar, a communal society.

The Zoarites Articles of Association required each person to donate their personal possessions to the Society. In return, the Society, through its elected directors, would take care of each person. Women were equal participants in the Society, with a vote and the ability to hold office (although no woman ever held an office). Later, in 1833, the Society incorporated under Ohio law, and also adopted a full constitution detailing duties and membership requirements.

Now working together as a group, the Society worked to indentify goods that they could produce and sell to neighboring communities so as to raise funds to repay the Quaker loans. And, the Zoarites also continued to clear and improve their communal land.

However, their initial efforts at communal living were not a success, as the reorganization had not solved the lack of productive ability among the settlers.

In 1821, salvation arrived with the Ohio and Erie Canal. The State of Ohio purchased a right-of-way through the Zoarite land, and, a few years later, paid the Zoarites $21,000 to dig the canal. This stroke of fortune allowed the Zoarites to not only repay their loans, but also establish a local industry capable of providing agricultural and industrial goods for the world outside the Society. In fact, at its zenith in 1853, the Society owned several canal boats, operated many businesses and expanded their land holdings, worth a million dollars in aggregate.

However, in 1853, the charismatic leader of the Zoarites, Joseph Bimeler died. Bimeler was elected leader of the Separatists as they were leaving Germany, and held that position until his death. Also the spiritual leader, Bimeler taught that industry and thrift was the way to heaven, to which every Zoarite aspired as the “chosen ones”.

Although the society weathered the storm of Bimeler’s passing, it did not fare as well with the industrial revolution. Stuck in pre-industrial revolution communal thinking, the various industries become less competitive in the marketplace by producing only old-style hand-manufactured goods. By 1898, the Society, now much less prosperous, divided their common property and disbanded.


In some ways, the life cycle of the Society of Zoar mirrors other communal societies in America, such as the Shakers. Prior to the 20th Century, local livelihood opportunities outside of the commune were limited and communal societies formed a welfare safety-net. A widow with children could join a communal society and be assured of food, shelter and a livelihood.

But, although outside converts bolstered the Shakers’ numbers well into the 20th Century, outside converts were rare at Zoar.

Religious communes were not unusual in the 19th Century, as many religious groups immigrated to America together. Certainly, gaining the full commitment of everyone in your organization was vitally important to a successful community, especially as these communities tended to be located close to the frontier and, thus, were required to be somewhat self-sufficient. In addition to being shunned by other society members, a lazy Zoarite might be destined for eternal damnation. This common religious belief system cannot be under-estimated as a factor in the success of Zoar.

But how was their form of Communism successful for so long?

First, the Zoarites practiced small “c” communism. Directors were publically elected every year as part of a great annual meeting. All members of the society had a voice, and could run for office. So, the Society ran as a democracy in terms of political oversight.

Second, here again in history, the work of a single person greatly influenced the success of the Society: Joseph Bimeler

By all accounts, Bimeler was an honest, plain man with a natural talent for leadership. He not only led the Separatists to Zoar, but also led them to prosperity. The original settlers and their immediate successors not only shared a deep religious conviction but also remembered the persecution of their homeland and the years of struggle to create Zoar. Bimeler, somewhat of a Moses figure, earned the life-long title as agent-general, directing the business of the commune, as a direct result of that success.

In addition to supervising the Society, Bimeler was also the chief religious leader. As such, he was no doubt able to mold and direct the community’s thinking. Although he never wrote a sermon, saying he preferred to come to the pulpit with an empty mind to be filled by God with a sermon, he held powerful sway on the community.

One example of this sway was his preaching in opposition to marriage in the first decade of the Society. Although marriage was accepted in Zoar, it was not encouraged as a general practice until about 1830. This radical change was brought on by Bimeler’s own marriage to a young woman who had caught his eye in 1828.

Another example of his unique position in the Society was his home, which was the grandest home in Zoar. Considered as fine a home that could be found on the Western frontier at the time it was built in the 1830’s, Bimeler lived in the grand home with his wife until his death.

When Bimeler died in 1853, the Society at Zoar was a thriving business town, with businesses and property worth approximately $29 million in today’s dollar. By the end of the century, The Society of Zoar was divided up, with a rough total worth of $8 million in today’s dollars.

Why the decline?

When Bimeler died, there was no one who could take his place as both the administrative and the spiritual leader of the Society. As the early Zoarites died, the newer generations did not relate to the suffering of the early Separatists, nor did they find powerful spiritual leadership to motivate them in their daily lives.

Further, the Zoar business model at Bimeler’s death was based on the canal economy of the day, which included small-scale handmade manufacturing industries. While the early, struggling Zoarites embraced the new canal-based economy, the later- and wealthier- Zoarites did not embrace the industrial revolution of the later 19th Century.

Zoar became stagnant, both spiritually and economically. And, in an interesting turn of fate, Joseph Bimeler’s grandson, Levi, was the loudest voice in support of dissolution of the Society in the 1890’s. In 1898, every member received land, a house and cash, in order to make it on their own in the new century.

Lessons for Today

In today’s business world, replacing a charismatic founder is a very difficult task, in some cases an impossible task. Does anyone believe that Berkshire Hathaway would be nearly as enticing without Warren Buffet? Or, that Gordon Ramsay’s restaurants would be as good without the founder? The personality drives the business.

Certainly, the arrival of the Ohio and Erie Canal saved the Society at Zoar, but, then again, luck plays a part in business today, especially in new industries. Why did Google become Google, but other search engines fail? Partially, at least, luck played a role.

When a charismatic founder leaves the business, through choice or by death, the business cannot remain in a time capsule. Rather than stick to all the old ways, it must grow, and change and find its new business “mojo”. This does not mean rejecting the past, but rather building on it to meet the future. The daily “religion” of that business must be new and fresh to those who come along after the founder has left the business.

The founders, like Bimeler, take risks and grow the business in the early days. Later, the founders tend to stick to the status quo, partially due to human nature and partially due to past and current success. But a business must change and grow, or else it will eventually die like Zoar.

And there are lessons for today’s business teams, since charismatic team members affect internal business operations too. A successful salesperson, a fabulous operations manager or a highly efficient administrative assistant are difficult to replace successfully. Again, that team needs to grow and change in certain ways to both allow the new arrival to successfully integrate into the team and also to keep the team moving forward. At the team level, it might not even be the official team leader, but rather the unofficial leaders whose leaving causes problems.

People are not cogs in a wheel. Everyone has their own strengths, experiences and weaknesses. Why think that a team or business, which is made up of individuals, should be exactly the same forever, no matter who is in the leadership role?

Sounds simple, but such narrow thinking happens all the time in business today.

More than any form of government, Joseph Bimeler established the success of the Society of Separatists at Zoar. Through his own leadership ability, the benefits of a strong religious tradition and the arrival of the Ohio and Erie Canal, he was able to create the foundations for success. After his death, the Society lacked the inner mojo to adapt to the future and slowly faded away, like so many businesses founded by a charismatic leader.

History of the Zoar Society, by E. O. Randall, Second Edition, 1900, Published by the Press of Fred Heer, Columbus, Ohio via Google books.

Tuesday, December 29, 2009

Portrait of a Leader Alone – Fort Laurens during the Ohio Winter of 1778-1779

One hundred and fifty men huddled in the only American fort built in the Ohio Country during the Revolutionary War. The cold, snow and hunger were their constant companions, while raiding British troops and their Indian allies were an ever-present threat. Deep in the wilderness of the day, on a poorly planned and executed mission, the men of Fort Laurens were doomed to failure. But the reasons why Fort Laurens was abandoned in less than a year hold valuable lessons for us in today’s business world, especially the contrast in leadership styles of the two commanding officers.

Genesis of Fort Laurens

The British held Fort Detroit, in present day Detroit, while the closest American fort was Fort Pitt, in present day Pittsburgh. Early in the war, the Americans decided to attack Fort Detroit as part of their Western Campaign. The Ohio Country that lay between the two forts held few white settlers, but many different Indian tribes. Although separate Indian nations were seldom a monolithic political block, the vast majority of Ohio Indian tribes were allied with the British. The British had enacted laws in the pre-revolutionary era that prevented westward expansion of the colonies, so this alliance was the due to self-interest on the part of the Indians. The British also managed to provide many supplies to various Indian nations to help keep this alliance intact.

In the Ohio Country, only several clans of the Delaware Indian nation were friendly to the Americans. These clans had been converted to Christianity by Moravian missionaries, and negotiated a treaty with the officers at Fort Pitt to allow the Americans to cross their land. Since the Delaware were surrounded by the Seneca, Mingo, Shawnee and Tuscarora tribes, all allies of the British, the Americans committed to providing protection for the Delawares.

Although the British staffed Fort Detroit with regular army troops, they also relied on the local Indian population and a few white frontiersmen for operations away from the fort. The Americans stationed some Continental Army troops at Fort Pitt, but also staffed that fort with militiamen. The local militiamen, although knowledgeable in the ways of the frontier, had a looser interpretation of military discipline than the regular troops and had little incentive to travel too far from home.

Border Dispute between Virginia and Pennsylvania

The Ohio Country was claimed by both Pennsylvania and Virginia, so troops raised to fight on the Western frontier were raised from these states. With a mix of these troops at Fort Pitt, General George Washington, at the Continental Congress’s request, appointed Georgia native General Lachlan McIntosh to assume command of Fort Pitt and the organize the planned attack on Fort Detroit.

Washington was a strong supporter of McIntosh based on his performance as a military officer in the regular army, where he was known as a strong disciplinarian. And, by appointing a native Georgian, neither the Pennsylvania nor the Virginia troops would feel they were be slighted by the other’s commanding officer. McIntosh and his expedition troops marched from Valley Forge and arrived at Fort Pitt in August 1778.

Once at Fort Pitt, McIntosh set about acquiring supplies for the expedition to Fort Detroit. With a limited number of settlers in the area and a general disinterest toward selling to the military, McIntosh was forced to delay the start of the expedition due to a significant shortage of supplies. This lack of material was to dog McIntosh for his entire western frontier career, undermining his plans and setting the stage for the resulting failure at Fort Laurens.

Although rarely does an army have a perfect supply system, contemporary accounts point to the supply problem being quite extreme on the frontier. For example, the pack horses acquired by Fort Pitt were so poor in quality that they could only carry a fraction of the usual weight load and for greatly limited distance. Although McIntosh communicated this problem to General Washington, the problem was never satisfactorily addressed.

Onward to Ohio

The expedition to Fort Detroit left Fort Pitt in late October 1778, Their first action was to build a supply fort on the Ohio river, near present day Beaver, Pennsylvania. This fort was named Fort McIntosh, and was just a couple of days march from Fort Pitt.

On November 4, having completed Fort McIntosh, the American force of 1,200 men crossed into the Ohio Country. In four days, the column arrived at the Tuscarawas River, near present day Bolivar. With the deteriorating weather, limited supplies and loose military discipline slowing the advance, McIntosh decided to build a new fort to both serve as the stepping-off point for the Detroit invasion the following year and to protect the Delaware settlements to the south.

The Delawares disputed the location of the new fort, saying it was too far north to protect their towns. Later events proved this to be the case, and this incident started the decline- and the eventual break- in the relationship between the Delawares and the Americans.

The Americans built a French-style timber fort, laying out a rectangle shape with palisades at each of the four corners and an extension to the river. All that remains of the fort today is the outline of the walls, seen here in the December snow:

After naming the structure Fort Laurens, in honor the then-current President of the Continental Congress, McIntosh stationed a garrison of 172 men under the command of Colonel John Gibson to winter at the fort. Contemporary accounts depict Gibson as very astute and personable commander, and his men- drawn from both Pennsylvania and Virginia outfits- were used to life on the frontier.

Life at Fort Laurens

The tenuous supply line, a six- to eight-day trip from Fort Pitt, prevented meaningful supplies from reaching Fort Laurens. In fact, Gibson faced a constant shortage of food, clothing and other material. After finishing the remaining fort construction duties, the men fell into the routine of life at Fort Laurens. The winter of 1778-1779 was unusually cold, so one of these constant duties was cutting wood for the fort.

By late December, one solider had deserted the fort and small mutiny arose. Gibson was able to quell the mutiny, an event which was never repeated. One possible reason that another mutiny was not undertaken was arrival of the news that British planned to leave Fort Detroit and attack Fort Laurens.

Today, one has to wonder what the men of Fort Laurens felt, well out into the frontier, with limited supplies and essentially no easy escape. Looking out from the fort, day after day, seeing only the bleak, dark Ohio countryside, but knowing an attack was eminent.

To prepare Fort Laurens for the attack, McIntosh sent a supply column from Fort Pitt on February 8, 1779. Indians allied with the British attacked the column, and the re-supply was unsuccessful.

Gibson and his men were all alone in the wilderness.

On February 23, the fort’s wood cutting party was ambushed outside the walls. Seventeen men were killed and scalped within sight of the fort, their bodies to remain there until after the siege lifted, and two men were captured. A British raiding party, made up mostly of Indians, had arrived the day before, and a number of Indians had lain in wait for the wood cutters.

Prior to the attack, the garrison at Fort Laurens was 172 men, with only 100 fit for duty. Now, the weakened garrison faced an unknown number of Indian raiders. As the men looked out from the fort, Indians began parading in the distance. The defenders counted well over 800 Indians. In fact, the number was closer to 180, but the attackers used a ruse to continually march the same fighters around a small bluff.

Within 3 weeks of the siege, the daily ration at the fort was 4 ounces of meat and flour per day. Later, the rations exhausted, the men started to eat roots, gathered at night from outside the fort. When two men died from eating poisonous roots, the men boiled their own moccasins and ate them. Two men were able to leave the fort and kill a deer, which was eaten raw immediately as the hunters returned to the fort.

But the British and Indian force did not fare much better in the deep winter, and they lifted the siege on March 20 after running low on supplies and with American reinforcements from Fort Pitt on the way.

The relief column not only came to lift the siege of Fort Laurens, but also to bolster the American ranks and supplies for a spring offensive. The plan to attack Fort Detroit had been replaced with a plan to attack a concentration of Indian villages in the Sandusky area.

The men of Fort Laurens, no doubt excited to finally see the relief column, fired their guns in the air. This action so frightened the green packhorses that many of them bolted into the woods with their supplies, never to been seen again. With those horses went any hope of launching an offensive against Sandusky.

Gibson and his men were relieved of duty and marched back to Fort Pitt. During the late winter, McIntosh had requested to be transferred to the South, which was granted by General Washington.

The Second Attack

The British were re-equipping for another attack on Fort Laurens, planning on returning with cannon. Since Fort Laurens was of wooden palisade construction, the cannon would have no trouble breaking down the walls.

But, as the British were preparing to launch their attack, Colonial John Bowman and his Virginian troops moved north from Kentucky to attack Shawee towns in Ohio. The gathered Indians returned to defend their villages, and, thus, there was no second attack on Fort Laurens.

Although Bowman’s campaign saved Fort Laurens from the second attack, Bowman’s expedition had another, unintended consequence. As a Shawnee youth, Tecumsah no doubt was deeply influenced by this attack on his people and their lands. In the history of the American Westward expansion, no Native American came as close to uniting the Indian nations and stopping the white settlers as Tecumsah.

With the change in American leadership on the western frontier, the attack on Sandusky was cancelled. Fort Laurens, no longer needed for the attack and too far north to protect the Delawares, was abandoned on August 2, 1779.

Lessons for Today

Certainly, the American expedition into the Ohio Country suffered several setbacks due to plain bad luck. And, the general lack of supplies and resources stymied the expedition as well. Even today, cut off supplies and resources to a business expedition, and it will fail. You can’t boil a fax machine and make it into laptop computer, like the men of Fort Laurens made food by boiling their shoes.

But the most important reason pointing to failure… McIntosh.

I can’t help but think that, being from Georgia, McIntosh had no idea how an Ohio winter would affect his troops. As a strong disciplinarian from outside the region, he seems to have had trouble relating to the local men under his command. Rightly or wrongly, the standards of the trained Continental Army did not apply to the frontier militiamen. Whether due to his command presence or just his personality, McIntosh was unable to earn respect from his soldiers and, more importantly, his officers. McIntosh believed there was a cabal of senior officers working against him in Fort Pitt, and contemporary accounts suggest this may have been true.

Although the business world has less chance of the hostilities that occur in warfare, it does have expeditions. A new product launch, the acquisition of another company or a sales goal well above organic growth is a business expedition. And one of the key determinates of success is the leadership team, especially the chief executive or team leader.

McIntosh was originally chosen because of his solid military career in the traditional army and because, as a Georgian, he was impartial in the Pennsylvania and Virginia border dispute. At first glance, he seemed like the perfect choice. However, as he was unused to operations on the frontier, he made and stuck with some bad decisions surrounding his relationships with his officers and men.

He, as a Georgian, also did not account for the severity of the Ohio winter. Although we have no historical record, I’m sure that he was warned by his subordinates- who lived on the frontier- that an expedition into Ohio late October was foolhardy.

These types of problems are common today in the business world. A stellar team leader choice fails in a new assignment, as their magic formula for success does not apply to this new situation. Or, think of the number of CEOs who discover that, just because they ran one company extremely well, that success doesn’t mean their skill sets apply to every company.

Another example is Katie Couric. She excelled at the morning television show format but is underperforming in the evening news format. Most likely, she could return to the morning show format and re-gain her past success. By all accounts, McIntosh had a successful career in the American South after leaving Fort Pitt.

Of course, in war as in business, incompetent leaders can destroy an expedition pretty quickly. However, that is separate (and very rich) topic.

As the pressure for success builds, a business leader can become more internally-focused, preparing to drive the company to success though sheer will. In fact, that leader should be doing just the opposite at that exact moment, looking outward to their team, working to have others buy into their vision for success. As the business leader becomes more and more distant from their team, they lose the respect and admiration of their people, leading to the exact opposite of the success they crave.

During the original invasion of Ohio, McIntosh was unable to move his troop columns prior to early afternoon. This daily delay was due to rounding up the pack animals and packing up the overnight camp, so daily marches were of limited distance. Although, again, we do not have a historical record, I’d imagine his troops could have move farther and faster had he been a well-respected leader.

The Personality of Leadership

To prove that idea, in a historical context, let’s examine John Gibson. Contemporary documentation indicates Gibson was a man of character and ability. He suffered from the same limited supply problem as McIntosh. In fact, if you are boiling your own shoes for food, your supply problem is pretty dire. Gibson was able to put down a mutiny in the fort and then successfully defend against a siege party thought to be eight times larger than his force of active defenders. In the end, he and his men successfully held Fort Laurens until relieved.

Prior to the American Revolution, Gibson fought in several wars on the American western frontier. In times of peace, he was a merchant based in Fort Pitt, trading with the Indians. He was well respected by the Indian tribes in the area and spoke several Indian dialects. In fact, he married a Mingo woman, who was later murdered by white settlers in 1774. After the Revolution, Gibson was one of Pennsylvania’s delegates to the Constitutional Convention of 1790 and, at an advanced age, was appointed Secretary of the Indiana Territory by President John Adams. For several years, Gibson was on the Federal official in that territory. After serving in various levels of government in the Indiana Territory, he returned to Pennsylvania when Indiana became a state many years later.

In short, Gibson was a man who could get things done. He was respected by the various tribes of the Fort Pitt area, had deep experience in frontier warfare and obviously had command presence. McIntosh’s failure would have been even greater without Gibson in place at Fort Laurens.

Applying that lesson to today’s business climate, team members like Gibson can make or break a business expedition. “Gibsons” can be a wonderful asset, with large pools of experience and original thinking to draw on to create success. However, team leaders can be wary of a Gibson, since Gibsons can appear to be a threat to fragile egos or self-aggrandizing team leaders. The wise team leader learns to support the Gibson to ensure success, while the unwise team leader treats the Gibson as a threat. In the end, the wise team leader knows that the Gibson’s success is also their success. The unwise team leader discovers, usually after the fact, that the Gibson’s failure becomes their failure.

Don’t overlook the Gibson.

In the eyes of history, Fort Laurens is a footnote in a much larger war. But, had it been a successful expedition, taking Fort Detroit from the British would have opened up the entire frontier, as well as been an enormous blow to the British relationship with their Indian allies.

As it was, the Ohio and Erie Canal dug though the eastern wall of Fort Laurens in 1832, a not uncommon example of a more successful later venture consuming the remains of a failure. In the same fashion, a failed product launch, business acquisition or sales goal creates the opportunity for someone else to use that work to their own benefit in another fashion. If your competition is focusing on a failing business acquisition, than that is the time to use the situation to your company’s advantage.

Many American companies inadvertently create this situation with their expatriate staff. An example, from when I was studying expatriate programs for a business school team consulting project, is a TRW expat. After a successful domestic career, our subject expat transferred to Australia to lead the local division. Out on the frontier, this expat learned to adapt to the local culture and worked with much fewer resources than the US-based headquarters staff. He was successful, achieving sales and market share goals, but he had to deviate from central office procedures in a different culture.

After his tour of duty, he returned to TRW headquarters. Does he have another job awaiting his even more valuable skills? No, he’s relegated to whiling away his days in Human Resources, waiting for something to open up for him. I don’t know what happened to that particular executive, but most leave their company to take their expat skills to another company that rewards their pioneering spirit.

Or, in another way of saying it, he most likely went to another company that appreciates a Gibson.

Remember Tecumsah? He was stopped, in large part, by…you guessed it…John Gibson, in his role as Secretary of the Indiana Territory, many years after the winter at Fort Laurens.

Don’t overlook the Gibson.


Personal Site Visit, December 2009.

Fort Laurens: The Revolutionary War in Ohio 1778-79, by Thomas I. Pieper and James B. Gidney, Published 1976 by Kent State University Press

Wednesday, November 18, 2009

Business Lessons from a Ghost Town - Pithole, Pennsylvania

Just off a dirt road in the Western Pennsylvania mountains is a large, slightly overgrown field alongside Pithole Creek. Today, it could be mistaken for any old, out-of-use field. But 150 years ago, a city of 15,000 sprang up on this farmer’s field, and then largely died out within a year’s time. Events of that year, in this city known as Pithole, still affect our daily lives today, including the genesis of one of the world’s largest companies. Can we apply these lessons to today’s social media boom?

Economic History of Pithole

Pithole, Pennsylvania doesn’t sound like an enticing locale, but it is one of the best examples of an economic boom town created by a new technology, in this case the discovery of oil at the dawn of the oil age. Due to its exceptionally rapid rise and fall, Pithole provides a window into how people of the era adapted- or failed to adapt- to rapid economic, industrial and societal change.

After Colonel Drake and “Uncle Billy” Smith sunk the first successful drilled oil well in 1859 in the Crawford and Venango County area of Western Pennsylvania, the local farmers started to drill for oil on their own properties. In January 1865, one farmer discovered oil on his land near Pithole Creek, with the first well producing 250 barrels of oil a day. With the rapid influx of drillers into the surrounding area, oil wells started to sprout up all around Pithole.

By April 1865, 3,000 Teamsters, using horses and wagons, were hauling oil barrels out of the valley. By May 1865, Colonel AP Duncan and George Prather purchased the land around Pithole creek from the farmer landowner for $25,000, and then laid out the 500-lot city of Pithole. By September, Pithole was home to 15,000 people, along with 57 hotels, a newspaper and the third-busiest post office in Pennsylvania.

At its peak, Pithole area oil production was 6,000 barrels a day. Soon, a 1,000 seat theater was built and featured a constant retinue of sold-out shows performed around the clock. Saloons, stores, brothels and a Methodist church were all hastily established in the town.

But the increasing number of closely-spaced wells drained the oil reserves very quickly, and by January 1866, there were only 4,000 residents of Pithole. From a farm field, to a city, and then back to a town, all in one year.

After fires consumed much of the poorly-constructed buildings in town and with new wells being discovered in adjacent areas, Pithole’s population declined to 2,000 people by December 1866. By 1870, only 281 people still lived in Pithole, and it ceased to exist by 1877, being purchased by the county government for $4.37.

Why did Pithole disappear so quickly?

Today, Pithole, reached by driving down a small and winding country road, reveals only the rough outline of streets and foundations.

But by looking over the fields, walking down the still-visible outlines of the streets and studying the historical markers, a snapshot of industrial history emerges…and many business-related questions spring to mind.

Beyond the shear fascination of exploring a unique site that sprang from nothing to a full-fledged city and back to a field in a surprisingly short period of time, what about the people who came to find fortune, either by drilling wells or selling items or services to the drillers and others in the burgeoning population?

Interestingly, town “fathers” Duncan and Prather did not sell the land lots in Pithole, but rather leased them for only a few years. At the end of the lease, the land and whatever improvements were left at that time reverted to Duncan and Prather. As a result, period photos of Pithole show a ramshackle combination of hastily-assembled wooden buildings, towering oil wells and very muddy streets.

The main street featured the banks, the higher-end hotels and other proper businesses, while streets higher up the hill featured lower-end hotels, boarding houses, saloons and thinly-disguised whorehouses. The water reservoir was nearby, and was quickly overwhelmed by the population growth. It was said that, in Pithole, whiskey was both cheaper and cleaner than the local water.

This rental land market, with the resulting lack of motivation to improve the buildings and property, attached very few Pithole residents to the town. Further, the lack of a scalable town infrastructure created less-than-desirable living conditions, increasing the incentives to move on to the next oil discovery. And, when a fire burned down much the shoddily-constructed town, there was no incentive to rebuild.

On a societal level, the rule of law was not firmly established, with a committee of vigilance melting out a skewed form of justice and sometimes violent business conflicts.

Why did Pithole rise and disappear so quickly? On one hand, the lack of basic society-reinforcing elements such as land ownership, rule of law and abuse of the “commons” structurally doomed Pithole’s future. But, on the other hand, the flow of people from well discovery to well discovery created an economic incentive to maximize the wealth-creation from the transient population, which would move along quickly in many cases.

Of course, the most important reason for the fast decline of Pithole was the decline in oil production. But many other towns in the region continue to exist to this day, so the lack of societal building elements certainly played a role.

Pithole Innovations That Still Affect Our Lives

Another striking characteristic of Pithole was the intense competition to both drill for oil and transport the oil. The Teamsters originally hauled the 42 gallon leaky wooden barrels of oil over the mountains for $1 a barrel, with a 25 cent return fee. This soon rose to $3 a barrel as the standard 6 barrel load quickly broke down the livestock hauling the wagons.

Previously, oil discoveries were fairly close to established towns, rivers or railroad lines. Pithole was the first oil field that was located far from standard transportation routes.

Seeing a new market in moving oil over rough terrain, several groups started to build oil pipelines to Pithole from established towns or rail depots. Samuel Van Syckel solved the technical problems by lap-welding a 2” cast iron pipeline, using pressure-tested joints to keep the oil from leaking. By adding steam-powered pumps, his line could efficiently move 2,000 barrels of oil a day over the five miles to the Miller’s Ferry railroad station.

Since the pipeline charged only $1 a barrel for transport and could transport 81 barrels of oil in an hour, the Teamsters were quickly forced out of business. Almost as quickly, the oil pipeline started to suffer mysterious calamities. Soon, armed men patrolled the oil pipeline by day and night. This dynamic played out on the other oil pipelines which quickly sprung up in the region to take advantage of the new technology.

The oil pipeline right-a-way soon carried a telegraph, to both help with documentation of oil volumes from specific clients and a means of emergency communications. And, since the railroads were no longer transporting oil only in wooden barrels, they quickly developed the oil tank car.

One remnant of the old wooden oil barrels of the Teamster era is that, in the US, a barrel of oil is still a 42 gallon measurement.

Many of the new oil pipelines of the day ran into financial difficulty, but the new concept of oil pipeline transport was proven at Pithole. This created the impetus for improved industrial communications and accounting methods, as well as creating a new method of transport for the railroads and, later, in competition with the railroads.

One man was studying these developments at the time. He decided that transporting the oil, a constant business, was preferable to drilling for the oil, a boom-and-bust business. By using the new technology of the day, he founded The American Transfer Company in 1874, which later became The National Transit Company. He also ran a better-known company, Standard Oil. His name was John D Rockefeller. The National Transit Company building, built in 1890, still stands in nearby Oil City.

Fast forward to today, was the Dot Com boom of the late 1990’s setting the stage for an entirely new form of distribution? Not oil distribution through pipelines, but rather information distribution through the online pipeline of social media? And, just as Standard Oil grew out of the ashes of the oil boom, is Google on its way to becoming the next Standard Oil?

Looking over the cold, scrubby hillside at Pithole and reading the worn historical displays, it’s hard to imagine the radical industrial economic changes that emanated from this boomtown, changes that continue to impact the world we live in today. But, even though industrial history sites tend to be overlooked today, a little digging reveals that their impact still resonates through the years.

Personal Site Visit, October 2009,_Pennsylvania
Titan: The Life of John D Rockefeller Sr, Ron Chernow, Published 1998