The Brain Builders

(See Cover)

"At last I came under a huge archway and beheld the Grand Lunar exalted on his throne in a blaze of incandescent blue . . . The quintessential brain looked very much like an opaque, featureless bladder with dim, undulating ghosts of convolutions writhing visibly within . . . Tiers of attendants were busy spraying that great brain with a cooling spray, and patting and sustaining it . . ."

--H. G. Wells, The First Men in the Moon

Last week, in a pastel blue and grey room on the fifth floor of a St. Louis office building, the newest Wellsian brain in the earthly world was enthroned. This quintessential brain looked like nothing more than a collection of filing cases, stretching in a 60-ft. semicircle about the room. From within the grey metal cases came a faint humming sound; along the light-studded metallic face were scores of twinkling orange sparks, rippling like waves of thought. As in the Grand Lunar's palace, a blaze of light flooded over the pale walls and pillars of rosy pink. Air conditioning filtered out the dust, kept the temperature at an even 75DEG. Along one end of the chamber was a gleaming plate-glass observation window, through which mere humans--attendants and sightseers --could watch and marvel.

The brain was the newest electronic calculator, developed by International Business Machines Corp. and installed in Monsanto Chemical Co.'s St. Louis headquarters. To IBM, it was the "Model 702 Electronic Data Processing Machine." To Monsanto and awed visitors, it was simply "the giant brain." Seated at its control console, a man has at his command the computing ability of 25,000 trained mathematicians.

New Horizons. On each of its reels of magnetic tape, the brain can remember enough information to fill a 1,836-page Manhattan telephone book--any figure, word, chemical or mathematical symbol--and work the information at the rate of 7,200 unerringly logical operations per second. In its vast computing units (2,500 electronic tubes, three miles of wire) it can multiply a pair of 127-digit numbers and arrive at a 254-digit answer in one-third of a second. In a second it can add 4,000 five-digit figures or do 160 equally complicated long divisions. And at the end, it can produce its answers in any of four ways--flash them on a TV-like screen, punch them on cards, print them on paper, or store them away on rolls of magnetic tape at the rate of 15,000 characters every second.

To Monsanto, the great brain will mean unprecedented speed, accuracy and economy in every phase of its manifold chemical business. In just twelve machine-hours the brain will do 1,200 cost reports that normally take 1,800 man-hours; in barely two hours it will complete a financial statement that takes a staff of accountants 320 hours. For Monsanto's chemists it will open up new horizons by rapidly working out complex equations to help discover new products, improve old ones, find out which of dozens of technically "correct" answers' to problems are the best.

"THINK." IBM's new brain is a logical extension of the company's famed slogan, "THINK." In the age of giant electronic brains, IBM's President Thomas J. Watson Jr. is applying to machines the slogan which his father, IBM's Board Chairman Thomas J. Watson Sr., applied only to men. President Watson hopes to mechanize hundreds of processes which require the drab, repetitive "thought" of everyday business. Thus liberated from grinding routine, man can put his own brain to work on problems requiring a function beyond the capabilities of the machine: creative thought. Says Watson: "Our job is to make automatic a lot of things now done by slow and laborious human drudgery. A hundred years ago there was an industrial revolution in which seven to ten horsepower was put behind each pair of industrial hands in America. Today we're beginning to put horsepower behind office hands, electric energy in the place of brain power."

IBM is not the only company with the idea of automating U.S. offices. In the fast-growing business equipment industry, such big firms as National Cash Register, Burroughs Corp. and Remington Rand are busy making everything from adding machines to the new electronic computers. But IBM is the biggest of all with 25% of the two billion dollar industry.

IBM, with orders for 14 of its Model 702 electronic computers (renting at $20,000 a month), has already delivered 19 giant computers of an earlier model--the 701. Almost no job under the industrial sun is too tough for IBM's electronic brains if the problem can be reduced to a formula. The Atomic Energy Commission has three 701 computers, uses them to figure out incredibly complex problems on its nuclear production line. The Navy has a 701 keeping track of inventories and shipments, calculating when to reorder thousands of different items and how much to buy. IBM has just delivered a new NORC computer (TIME, Dec. 13) to the Navy; it cost $2,500,000 to build, can do one billion calculations daily.

Even bigger electronic brains are being readied for the Air Force's supersecret "Project Lincoln." These computers will one day direct the defense of North America by calculating the course, speed and altitude of approaching enemy planes, then firing guided missiles to intercept them. A 701 has gone to work for the Weather Bureau, and will attempt to make weather forecasting an exact science. Weathermen will feed into it hundreds of reports on rainfall, temperature, humidity, expect that the brain will be able to predict accurate weather for any place in the U.S. 48 hours in advance.

On the West Coast, almost every aircraft company has at least one big IBM computer. At Lockheed, for example, a brain is given all the characteristics of a plane, e.g., weight, wing stress, etc., then "flown" at imaginary speeds, put into dives, etc. Swiftly and accurately, the brain tells what would happen in real flight. In its spare time, the brain solves production problems by coordinating thousands of workers with thousands of parts flowing into plane assembly lines.

The Automatic Factory. Businessmen already envision a day when the brains will be used not only for paperwork problems, but to operate factories, to run auto production lines or any plant where a process can be reduced to a preset, repetitive system. Swiftly and obediently, the big robot will start and stop production lines, supervise all the machines, correct faulty workmanship, inspect the finished product, package it and ship it out to U.S. consumers.

The mere vision of such total automation for industry has touched off a siren of alarm among U.S. labor unions; they fear that the already swift spread toward automation will throw thousands of workers out of jobs. Before a congressional committee investigating the stock market last week (see WALL STREET), General Motors President Harlow H. Curtice took special care to debunk the bugaboo. Said he: "Automation is the making of tools to produce more efficiently . . . It's progress."

In such progress, some workers may indeed be displaced by machines. But for every job lost, a dozen more interesting, better-paying jobs will open up in the making and servicing of machines. Says Tom Watson Sr.: "Automation will develop as all other forms of power. Primitive man had only his hands, then animal power, then wind power--windmills and sailing ships--then came steam and electric power, and gasoline and oil power, and now, atomic power. Not one of these powers ever canceled out the powers we already .had. In every development we made, the original power--manpower--became more valuable than ever. Never in history has man gotten higher rates of pay for his work than he is getting today."

The Perennial Fallacy. Nowhere is the fallacy of unemployment from automation more evident than in offices. There, automation has made its greatest strides, helped along by dozens of whirring, clicking machines. Yet the number of office workers has actually risen from 5,100,000 to 8,100,000 in the last ten years. Only the new machines have made it possible for U.S. businessmen to keep up with the increasing flood of paper work. There are automatic time clocks, electric typewriters, card punchers, sorters, analyzers, tabulating machines and accounting machines. They do everything from keeping records to servicing bank accounts and writing checks. The U.S. Government alone uses 23,150 tabulating machines (more than 90% made by IBM).

To fill new needs, IBM has just brought out a "Cardatype" machine, which can do a complete accounting job, has electric typewriters type out the finished accounts from punched cards, all automatically. They can do and type as many as five separate accounts simultaneously. IBM also has a new super-time-clock system, in which one master clock regulates all lights, air conditioning, heating, doors and vaults in a plant. For example, a few minutes before 9 o'clock each morning, the machine can open the doors, flick on lights, turn on heat or the air conditioner; at closing time it shuts up shop without human help.

The Big Shift. IBM's success in office automation was built on machines of cogs and gears; its swift tabulating machine was basically only a mechanical improvement on the first one built by Blaise Pascal in 1640, which in turn was an improvement on the ancient Chinese abacus. But in the last few years there has been a profound change in the business. The mechanical cogs and gears have given way to electronic circuits, cathode-ray tubes and transistors. For IBM the change could not have come at a better time. Tom Watson Sr.. who had improved his machines close to their mechanical limits, was ready to step up from president to chairman. His son, who took over the president's chair in 1952. was quick to see the new electronic age adawning. Almost singlehanded, he fought his ideas through, persuaded everyone that IBM had to learn to make electronic circuits do the work of old-fashioned cogs and wheels.

As it was, Remington Rand hit the electronic computer market first, with its $1,125,000 UNIVAC in 1951. cleaned up the early contracts. Today Remington Rand has 26 big UNIVACs in various models around the U.S., orders for eleven more. But spurred by President Watson, IBM now has orders for 129 giant electronic calculators; 109 of the orders are for the new 704 and 705, which are bigger and faster than the current Model 702. The big computers will cost IBM more than $1,000,000 each to build, but they will bring the company a whopping income of nearly $50 million each year in rental fees from U.S. industry.

Cash & Collars. IBM was created by Thomas John Watson Sr., who built it into the 37th ranking U.S. manufacturing corporation, and in so doing, carved out an American business legend for himself. Watson, who believes that "nobody really gets started until he's 40." worked for Dayton's National Cash Register Co. until 1914. Then at 41, he suddenly pulled up stakes. Going East to Manhattan, he went to work for the Computing-Tabulaing-Recording-Co., which in 1911 had begun making new kinds of time clocks, butcher's scales and accounting machines.

With his kindly, canny Scots face and fluent speech.Watson was his own best salesman. Carefully he designed new machines to fit each customer's needs, and within a year he was president of CTR: Two years later, the company paid out its first $3 dividend and Watson was on his way. He conjured up so many new ideas that he still holds in his own name more than a dozen patents for machines. Wherever he went, he drove his staff to do more, learn more--above all, to THINK more.

By 1924 C-T-R had three plants in the, U.S., had expanded abroad with branches in France, Great Britain, Canada and Germany, "developing Europe," as Watson called it. He changed the company's name to International Business Machines, expanded still more. His high, stiff collars, his aversion to smoking and drinking, his vast store of aphorisms became trademarks of IBM to the outside world. Inside his company, he operated like a benign patriarch. IBM's workers were among the best paid in industry, had other benefits that few companies had. At company banquets, Watson liked to lead his employees in singing company songs such as his Hail to IBM* anthem. Every executive, both big and little, became a polished speechmaker, and all dressed like Watson. He wanted them to look neat.

Through the '20s and '30s, no fewer than 45 new business machines appeared under the new IBM label. While other companies cut payrolls through the Depression, Watson refused to lay off men. IBM stored away what it could not sell, against better days. In 1933 Watson bought up Electromatic Typewriters, Inc., a Rochester (N.Y.) firm which had the first completely electric typewriter, and put the first such mass-produced machine into U.S. business offices.

Today the IBM empire spreads to every corner of the world, selling or renting business machines at the rate of $461 million in 1954. In the U.S. alone, IBM employs 34,000 workers; at six plants (Endicott, Poughkeepsie and Kingston, N.Y.; Washington, D.C.; Greencastle, Ind.; San Jose, Calif.) it makes 5,960 different models of business machines which it sells or rents through 188 U.S. offices. Overseas, IBM's World Trade Corp., run by 35-year-old Arthur Watson, Tom Jr.'s younger brother, employs 16,500 more workers in 17 smaller plants, 227 offices in 79 nations.

IBM has never had a union; it never needed one. Besides high wages ($2.25 an hour for production employees, $10,000 and up for salesmen), IBM puts large chunks of its payroll (24% in 1954) into employee benefits such as free country clubs, bowling alleys, 52 extracurricular activities with 656 instructors, teaching everything from psychology to home repairs. And for IBM's stockholders, Watson has not missed a dividend in 39 years. A man who bought 100 shares of IBM stock in 1914 would have paid out $2,750 for his original stock, sp.ent another $3,614 to take advantage of all options. Today he would own 3,893 shares worth $1,492,965.

At Work at Five. Tom Watson was not content just to build an empire; he also carefully trained Tom Jr. to take it over. The training started as soon as Junior was old enough to toddle. At the age of five, he went on his first inspection tour of an IBM plant; four years later he went to Europe with his father on the first tour of the new overseas division. IBM executives were frequent guests at the big, rambling Watson mansion in Short Hills, N.J. and at the 1,000-acre farm 30 miles away in the rolling Jersey hills near Oldwick. Tom Jr. got to know them all, and through them, IBM.

When he was twelve, he even made a speech before IBM's 100% Club of star salesmen. It was a "very good, short speech," his father happily recalls. For Tom Jr., his father set strict standards and never relaxed them. When Tom, an ardent boy scout, failed to make his Eagle badge, his father refused to send him on a gala seven-week trip to Europe, which he was financing for other Short Hills scouts.

Young Tom Watson was no ball of fire in his studies in school. He went to private schools in Short Hills, barely managed to scrape through Hun School in Princeton. After graduation from Brown University, he joined IBM. Starting at the bottom as a salesman in Manhattan's financial district, young Tom soon proved that he was his father's son. In an area where previous IBM salesmen had never made 100% of quota, he hit 231% and hung up a record. Says his father: "That was the only right way. He had to make his own records. Otherwise, people might feel that he had some special help, which he did not have."

Churchill & the Desk. When World War II came, Salesman Tom Watson Jr. enlisted and spent the next 5 1/2 years as a transport pilot in the Army Air Forces. Right after Pearl Harbor he married Olive Field Cawley, then started shuttling between Russia and the Middle East on staff missions. In his B-24 he once flew escort for Britain's Prime Minister Churchill on a long flight from Moscow to Teheran. When he got out in 1946, he was a lieutenant colonel with 2,000 hours of flight time, the Air Medal, and senior pilot's wings.

IBM's executives hardly recognized him when he got back. Tom Watson Jr. had grown up in the Army. His first job was as assistant to Charles Kirk, IBM's vice president in charge of sales. "He had a large desk," says Tom Watson Jr., "and I simply had a chair pulled up at the edge of the desk, alongside him, and saw 90% of what he did." When Kirk was away, Tom Watson Jr. had to make the decisions. He made them so well that when Kirk died suddenly in the summer of 1947, Tom Jr. took over the job, moved up to executive vice president in 1949.

Three years later, his father called him into his 17th floor office at IBM's Manhattan World Headquarters, told him that he was IBM's new president. Says Tom: "It was the most moving experience of my life. I was completely disarmed."

Today, after three years as president, there is little doubt who is running the company, though his father is still active in IBM and outside as well,* likes to be informed of everything, and takes part in most high policy decisions. Tom Watson Jr. makes no bones about the fact that his father was able to put him in the president's chair largely because of his position in the company and the fact that the Watson family holds 6% of IBM's 4,098,471 shares. But Tom Watson Jr. is proving that the choice was a good one.

Phones & Time Clocks. Tall and rangy (6 ft. 3 in., 190 Ibs.), prematurely grey at 41, Tom Watson Jr. is much like his father at IBM. He does not smoke, except for a few weeks at Christmastime, never drinks. He used to do both, but when he took over the president's chair, he gave them up in deference to his father. He usually wears the traditional IBM uniform --dark suit, quiet tie, white shirt with stiff, detachable paper collar--punches a time clock along with the lowliest employee. But he is a more relaxed executive than his father. He likes to be called Tom, delegates responsibility. Nine times out of ten, he answers his own phone in his office atop IBM's Manhattan World Headquarters. He gives orders in a quiet, assured voice, never expects to be told that they have been accomplished. Much of the time he is off on inspection trips in a company plane (often doing the piloting himself), and, like all IBM executives, is a good public speaker.

He lives in a big colonial brick house in Greenwich, Conn., with his pretty wife and their five children--Tom III, 11 , Jeannette, 9, Olive, 7, Lucinda, 5, Susan, 2--and tries to lead the happy, solid life of a normal, 9-to-5 commuter. He is as hard-muscled as a 25-year-old, loves to ski and sail. Whenever he can, he sails his 47-ft. racing yawl Palawan on Long Island Sound, has taken it on two Newport-to-Bermuda races.

In measuring his success, IBM's new president must stack himself up against his father's impressive record. Since 1929, IBM sales have jumped an average of 14% each year. On his personal score card, Tom Watson Jr. has done even better, with an average gain of 19% for his three years. It is estimated that IBM's gross this year will hit $500 million, and profits will climb to $56 million.

To the Justice Department, International Business Machines is already too big, too successful. It has had a suit pending against the company since 1952, charging it with a 90% monopoly of the tabulating-machine industry; the Government charges that IBM restrains trade through its 1,500 patents and by the fact that it leases its accounting machines instead of selling them. Nevertheless, President Tom Watson Jr. intends to keep on expanding at top speed. By 1960 he confidently expects IBM's sales to climb over the magic $1 billion figure.

The Roads Ahead. In the coming age of automation, unlimited areas for electronic machines will open up for IBM. For office work alone, Tom Watson Jr. sees a vast new field in swift baby computers for small companies. He envisions them in airline and train stations to handle the repetitive job of reservations, in offices to write business letters by drawing on prewritten paragraphs stored away in the brain's memory units.

Beyond office paper work, the entire horizon of factory automation is beginning to open up for electronics. While U.S. industry has always had automatic machines, a whole new family of "feedback" controls is growing up which not only run the machines, but also correct their mistakes, order the machines to rework defective parts until they are perfect. Such feedback controls are the forerunner of real automation. Linked together, they will make automated production lines. A form of the new automation is already at work making telephone relays for Western Electric, acetylene gas and carbide for the National Carbide division of Air Reduction Co., aircraft engines at Curtiss-Wright. Other firms, such as American Smelting & Refining, General Mills, Dunlop Tire & Rubber, have turned to automatic controls to produce everything from bronze castings to printed circuits and foam-rubber mattresses. In the oil industry, automation has advanced to the point where a handful of technicians can run an entire $40 million plant by remote control from a panel of instruments. In some of the newer refineries now under construction, there will even be controls to watch the instruments, run the cracking processes from start to finish without human help. Among the new developments:

P: Detroit's $250,000 "transfer" machines operated by Ford, Oldsmobile, Chevrolet and Packard, which can turn out a complete engine block on an automated line 100 yds. long and carry it through 500 separate processes. Whenever any part of the machine makes a mistake, a special sensing device halts all work until the mistake is corrected.

P: A West Coast aircraft company's $1,128,000 contour milling machine, which will soon be built to work any known metal into as many as 18 shapes automatically, correct itself with a feedback control keyed to magnetic tape.

P: The Army's ordnance plant at Parsons, Kans., which turns out 2,400 shell fuses each hour on a production line run by automatic controls. As each part flows onto the assembly line, special controls check the part to see that it is positioned perfectly, then send it on for automatic assembly of the parts into shell fuses.

The Golden Age. Total automation is a long step away. But the prospects for mankind are truly dazzling. Automation of industry will mean new reaches of leisure, new wealth, new dignity for the laboring man. The coalpit worker, the steel puddler, and those who do many maintenance jobs on an assembly line can surrender to self-controlled electronic machines the hazards and dullness of backbreaking menial work. Thus liberated, the world's laboring man can find a new pleasure and culture in life.

Actually, automation is not a threat against jobs, but a real necessity for an expanding economy. Despite the progress towards office automation, businessmen must move even faster to keep up with the mountain of paper work growing out of the increasing complexity of production and industry. To date, only 5% of office work is done by automatic machines. There is no reason in IBM's mind why businessmen could not mechanize more than 35% of their office work. This would not only speed it up but save billions of dollars.

In the same way, industry must speed up automation in factories. By 1965, if the standard of living is to keep on rising, the U.S. will require at least a 50% increase in gross national product. By then, the U.S. population will hit 190 million, but since much of it will consist of school-age children and oldsters, there will actually be relatively fewer effective workers in the labor force. To keep up with production requirements, U.S. industry must rely on more automation. Can the breach be filled? IBM and its team of Watsons have no doubt it will be. Says Tom Watson Sr.: "In the next 40 years we will accomplish so much more than in the past 40 that people will wonder why we didn't do more in the first 40."

*Sample Lines: With hearts and hands to you devoted, And inspiration ever new; . . . We will toast a name that lives forever, Hail to the IBM.

*Among his 168 activities: trustee of Columbia University and Lafayette College, International Commissioner of the Boy Scouts, member of the Carnegie Fund, National Foundation for Infantile Paralysis, Y.M.C.A., a director of three other corporations.

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