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…



  1. Thanks for the great story. I am the great-grand-daughter of William and named after his daughter, Gwendolyn. The rest of the story still goes on to this day. I call it a tragedy but it is what it is.

  2. Great story. good to find some history on Telling. My grandfather used to deliver the news paper to Telling at his mansion in South Euclid.

  3. A very nice chronology and report of William Tellings' achievements. I am a great-niece of his and am very troubled that they plan on moving the library out of this beautiful structure. Would it be acceptable to you if I link to your article in some pleas to the county to keep and use this building?