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Updated 8th July 2004

Geoff Stuart

The
Branding
of Business

Tracing the extraordinary history of the World’s Greatest


Entrepreneurs, Companies, Corporations and Brands.

INTRODUCTION

Michael, my son started pointing out the window as we were driving and saying “ ee ai,
ee ai”, and repeating the sounds. He was less than a year old.

At first I couldn’t work it out. “ Ee ai”, what was that? There he was sitting in the back
seat of the car in his baby seat, saying “ ee ai”, not “Dad”, “Daddy”, “Da, Da ”, or
even “Mummy”!

It wasn’t just a gurgle, it was a definite word and he was pointing!

And then I got it!

There was a McDonalds sign, and he was pointing right at it! He had connected the
Nursery Rhyme “Old McDonald had a Farm, ee ai, ee ai, oh “ to
McDonalds Restaurants!
His very first word was McDonalds, all be it said in Baby talk!

Luckily his vocabulary has expanded a lot since then, but his very first word was a
brand!

As a father I felt cheated that he was saying “McDonalds” before I got a mention, but as
a Marketing person, I took it as a sign that brands could have enormous cut through, not
just as words but as images as well.

So, what was it that made him connect to “McDonalds”? Was it the ads on TV, the
Golden Arches, Ronald McDonald or McDonalds colours or combinations of all of these
or simply the connection with the word McDonalds from the Nursery Rhyme? Whatever it
was, the brand image was very powerful.

After all, I had been giving him intensive coaching on the word “ Dad eee”. It hadn’t left
an impression!

McDonalds had hit the nerve- all be it the desire for food, the toy, or the chance to meet
Ronald McDonald!

I consoled myself with the thought that he seemed to recognize me pretty fast when I
came near him, and he seemed to like me a lot, particularly when I fed him!

Maybe I should put a McDonalds sign on my forehead!

After all, brands have always had a fascination to me.

As a child growing up in the 1950’s, I collected match boxes and cigarette packets, even
though I never took up smoking, and I had build up quite a large collection of cigarette
packs that I glued into a book. There were brands like Ardath, Capston, Craven A, Peter
Stuyvesant, Players Navy Cut, Benson & Hedges and sophisticated overseas brands like
Perillys, Black Sobranies and the Cocktail Sobranies which used coloured papers on its
cigarettes … plus a host of others. I even had people collecting for me!

I discovered New York through the sophisticated international smoking pleasure of Peter
Stuyvesant, and the same time the charm of England through Benson & Hedges and later
The House of Dunhill.

At the same time, brands like Kellogg’s Corn Flakes had plastic toys inside their packs,
and as soon as the new Corn Flake pack arrived, we would dig deep inside to find the toy
first. The cereal took second place!

My early interest in branding led me eventually into marketing, and later into design, and
it is this interest in branding which has encouraged me to write this book on branding
and the history of its development.
Brands are universally developed by companies, individuals and organizations that see
the need for a product or service, and seek to develop it at a particular point of time.
Over time these brands have changed just as much as the needs of people.

Organization of people, money, resources, other companies, and the huge impact of
Government have all been factors determining the development of brands and the
companies involved.

In order to understand this more fully, I have spent a considerable time researching the
history of trade, and the impact of Governments, laws and finance on the way companies
develop. Wars have had a huge impact on the development of business over the centuries.

While it is impossible to discuss every company, and every business, we have tried to
cover many of the larger companies and consumer brands as possible.

Until the advent of the Internet, this book and its content would have been impossible to
research. Only now that companies are publishing details on their websites about
themselves for general release has it become possible.

Public libraries, even the biggest have never kept information about companies and
brands in any detail, other than a few annual reports. Company information has also
traditionally been just a set of accounts, and details of share movements.

Similarly, when people think of history, they think in terms of politics. There has been
little discussion about business, yet business, in all its various forms has been the engine
room to drive development, employ people, and provide the money to enable people and
politicians to prosper.

The history of business and brands is a fascinating one. I hope that you enjoy it.

Geoff Stuart

Chapter One – Introduction


Chapter Two – Understanding the Dynamics of Branding
Chapter Three – How did Branding happen?
Chapter Four – The Branding Revolution
Chapter Five – The Evolution of World Trade
Chapter Six – Discovering the New World – how new was it?
Chapter Seven – The Development of Money.
Chapter Eight – The Industrial Revolution
Chapter Nine – Banking and Insurance
Chapter Ten – Counting the money – the history of Accountancy and the Law
Chapter Eleven – From candles to Power
Chapter Twelve – The tobacco trust
Chapter Thirteen – Communications
Chapter Fourteen – From candles to kerosene, gaslight to gasoline…Penny farthings
to cars
Chapter Fifteen – Developing the American car
Chapter Sixteen – Detroit, Coventry, Stuttgart – a tale of three cities
Chapter Seventeen – The World takes flight
Chapter Eighteen – Time for a drink
Chapter Nineteen – The Twentieth Century – the world changes
Chapter Twenty – A flute of champagne, a nip of whisky – a schooner of beer, or a
Cognac?
Chapter Twenty-one – Off to the movies
Chapter Twenty-two – The age of Television
Chapter Twenty-three – A healthy life
Chapter Twenty-four – Changes on the High Street
Chapter Twenty-five – From war to baby boomers
Chapter Twenty-six – The age of computers
Chapter Twenty-seven – The Final chapter – looking to the future

CHAPTER ONE
INTRODUCTION

Over the last twenty years, as a Design and Marketing Consultant in Europe, Asia and
Australia, I have worked with some of many of the world’s great brands, as well as the
companies that market them. I have also worked with many smaller brands.

In this position I have been able to work across many brands, at the point where they are
in the process of change - entering new markets, developing line extensions, being
repositioned to meet new market trends, or being revitalized to build their own sales
potential.

As such, I have been privileged to work with a large number of marketing people, and a
diverse range of companies – companies that have been marketing everything from
racehorses, real estate, medical diagnostic equipment, computer software, cars and a huge
array of different consumer and industrial products.

No matter what product or service is being sold, I have yet to see any that could not be
improved through better branding. Branding is certainly one of the keys to a company’s
success.

So, what makes a brand successful?

Certainly, there are brands that last through generations. There are also brands that create
markets, ones that are a huge hit one year, and disappear the next.
Some have huge advertising budgets to launch them, and some are launched with almost
no advertising support.

While branding is certainly one of the key factors involved in successful marketing, it is
not the only one. There are certainly many products and services sold successfully
without branding. There are others, which have such poor branding that no one other than
owner of the product, or service being sold knows that the brand exists!

Many restaurants may have a name, but because there are so many restaurants to choose
from, as consumers, we may not even be bothered finding out or remembering the name.
We buy simply on the restaurant’s convenience at the time, the look, feel, and
presentation of the restaurant, as we perceive it. We may also decide to enter or not based
on a menu displayed on the outside, and on the basis that there are people inside, so “it
must be good”. All of these factors will influence our decision to enter. These are all parts
of the identity, and therefore part of the brand image that is being presented to us, even
though we are not interested in finding out the name itself.

Certain discos, brothels or illicit casinos may purposely go out of their way not to be
identified in an identity sense, and this “hole in the wall”- entry by invitation only also
becomes part of the brand identity of these establishments. Their identity may be revealed
through a coloured light, or number on a door or simply the look of the door itself, which
is known only to those wanting to find it.

What was the name of the last fruit shop you visited, or taxi you hailed? What is the
brand of bread, or oranges you just bought? Do you still remember the hotel you stayed
in last year?

The reality is that many of the products and services we buy are in fact unbranded, and
we purchase many of these products simply on the basis of their personal convenience to
us.

There are many businesses like this, and many that are successful without branding in the
conventional sense.

In almost all cases however the more the shop, business or enterprise is identifiable in
some way- by the quality of its merchandise, or easy accessibility, availability of parking,
hours of opening, variety of merchandise sold or the cheapness of its pricing, then the
more success it enjoys.

These ‘factors’, become reasons for success, and these factors are also part of branding,
even though they don’t directly connect to a ‘brand’ word.

In my view, branding is not simply the use of a word, though many people see it this
way.
Branding is a means of identifying the business or enterprise from all others. How this is
done, and how it connects with others is the basis of this book.

Without doubt, the use of a word or words, being the brand name, is the passport to
enable a brand to travel beyond its local area. The brand name is a key word that becomes
the means of encapsulating the totality of a brand in all its dimensions. When we see this
word, we then attach to it various brand values, real or imagined, that we associate with
this word or brand.

Brands may well be extremely localized – known only to a few people, and sold in a
defined market area, but they also may also travel around the world, and be seen by
billions of people as identifying the goods and services of a particular product or service.

This amazing diversity of size, influence, and power of brands is intriguing. Why is that a
simple product like hamburgers can branded as McDonalds, or Burger King; Hotels as
Hyatt or Hilton; or that baby products can be branded as Johnson &Johnson, and be
recognized by millions of people worldwide, while other brands selling the same
products or services never get beyond their home street?

Such is the power of brands!

CHAPTER TWO

UNDERSTANDING THE DYNAMICS OF BRANDING

Is it simply a word, or is there more to it?

According to the dictionary, a brand is a mark indicating identity or ownership, yet


although brands are used everyday by people all over the world, the actual brand names
themselves aren’t in the dictionary!

The word Coca-Cola may seem like an English word, yet that same set of words are used
in French, German, Lithuanian, and virtually all other languages. They may appear in
different scripts in China or Thai, and the word itself may even be translated to make it
easier to say in Chinese or Japanese, but it is still referred to by the vast majority of
people as Coca-Cola, with a recognized lettering style and other distinguishing features.
These features stay the same no matter what the language, all be it with different
pronunciations! Where a different script is used in Thai or Chinese, it will in most cases
appear in two languages – Thai and English, or Chinese and English.

This in fact means that some of the world’s biggest brand names are used more often then
the most common word in many languages, because those common usage words need to
be translated before they can take on a meaning in another language! The word ‘dog’ for
instance becomes ‘chien’ in French, ‘pero’ in Spanish, ‘hund’ in Swedish, ‘anjing’ in
Bahasa, and ‘kaw’ in Cantonese. A product like ‘tea’ when translated into other
languages becomes variously Tcha, Cha, Tay, Shai, Ja, Tee, Tề, Teja, Ta, Thay, Thea, Ja
and other words unique to each language.

Words, be they nouns, verbs, adjectives or adverbs become a completely different word
in every language, and while they need to be translated in order to be understood, brands
are simply used as they are. No translation is needed.

Brands like Sony, Mercedes Benz, IBM, Nokia, Kleenex, Microsoft, Nescafe, Colgate,
Moet and Chandon may all come from different corporations in different parts of the
Globe. The difference is that they are not translated into every language, they are simply
used, forming part of the local language, even though they were a foreign word to begin
with. They may however take on a meaning of their own within the particular country
and its language. The brand’s image, eg Hilton Hotels or Coca-Cola however may well
be the same throughout the world, all be it with various changes or adaptations to suit the
local country where it is represented.

Brand names are the language of the world. They are the shorthand links to products and
services that are bought every day around the world. They are some of the few, if not
only words in the world that do not need a translation in order to be understood in
multiple languages.

When the words “Coca-Cola” are said in Turkish or Spanish, people know that it refers to
a particular drink. Similarly when people say the words “ BMW”, they know that it refers
to a car and or a motorbike of a particular shape and look.

The “brand name” itself distinguishes the goods of one organization from that of another.
It becomes the short form way to both distinguish the goods or services, but the
psychology behind branding also goes beyond this.

Once a brand name is accepted, it starts to take on different values, which are established
by people using the brand. This will also be enhanced or exagerated by people selling the
brand, who recognize that certain sales features have a ‘consumer’ appeal. What that
consumer appeal is may well be different in different countries, and it will also change as
time goes on,

The brand, both as a word in the language, and also as a brand name used by consumers,
will have changes in meaning. Just like all words, the brand is part of a living language.
The brand IBM (International Business Machines) may have represented Business
Machines and Typewriters in its earlier history with one of its most famous products
being the IBM Golfball typewriter launched in the mid 1970’s. This product
revolutionized the typewriter at the time. Within a few short years, the Golfball was
however junked, as computers took over its role. IBM led this change, and by the mid
1980’s the IBM brand had come to represent computer mainframes and hardware. It was
very much aimed at the business market, and in the early years when the emphasis was
on large central mainframes, rather than decentralized networks, IBM became a
juggernaut.

When the market moved to PC’s (Personal Computers), and then added portability to
these PC’s, through the development of portable Laptops, IBM took a long time to catch
up with the changes, and had to virtually reinvent itself each time in the process.

If IBM had continued to market the Golfball while other companies moved into
computers, then it is extremely doubtful that IBM would have survived that transition.
The fact that IBM had to reinvent itself again, and again, within a few years, shows how
fast the computer market was evolving. Many brands failed to make the change, and
became casualties in the process. Traditional brands of typewriters like Remington Rand,
Royal, Adler, Underwood and others which were wiped out by the Golfball, never
recovered, and could not make the transition into computers.

The investment to keep up, but more importantly the management, technical and
marketing skill to stay in front of the competition had not occurred, and the brands
became simply a part of history.

Traditional office machines like Telex machines, and duplicating equipment – Spirit
Fordigraphs, and Gestetner machines, as well as products like Carbon paper, and even
carbonless paper became redundant.
No where was this transition more apparent than in the Accounting area, where giant
ledger books, beautifully hand written using pens with their nibs dipped in black Swann
or Schaeffer ink would reveal the sales or costs of the business.

Where the Chinese used an abacus to make calculations, mechanical calculators, such as
the Odhner Calculator gradually replaced manual arithmetic as a means of keeping tabs
on sales and expenditures.

Companies like NCR, which stood for National Cash Register, and ICL were born, and
calculation machines later moved from mechanical operations to electronic, with the size
of machines, and their cost falling dramatically during the process.

Today calculators are everywhere, and now also form adjuncts to other products such as
watches, desk sets, phones, computers, diaries and toys.

This evolution of the brand from one form of product into another, means that the brand
itself takes on new values, which are promoted by the sellers through their marketing,
advertising and promotion and either accepted or rejected by consumers.

Just because a brand has been well accepted by consumers and promoted by sellers in one
market, does not mean that the brand’s values are simply transferable to any or all
products manufactured by the seller.
Would IBM ‘brand values’ be translatable to the manufacture of a car, or a box of
tissues? Certainly from a competency viewpoint a car or tissues manufactured by IBM
may well be manufactured very well, and have all the right product performance
characteristics, but would the consumer response be? Would consumers think, “IBM
make great computer hardware, and therefore they are sure to make great tissues and cars
too”, or would consumers think “What are IBM doing making tissues and cars? I don’t
understand”.

Even a seemingly small move such as moving into computer software as opposed to
computer hardware may cause ‘perception’ problems.

Still, brands can certainly take on new attributes and be successful, and even work
together in new ways. The ‘Smart’ car was a car developed jointly by Mercedes Benz and
Swatch watches – innovative, new, exciting, and different in concept and branding.
Swatch however sold its shareholding in 2002 to Mercedes Benz, but the ‘Smart’ car
brand remains.

The Virgin Brand has come to be associated with everything from Airlines to Cosmetics
(Virgin VIE) and beyond. Has it defied the normal rules associated with brands
representing only a particular product or service, or does it reflect a single ‘attitude’ as
opposed to a single product category?

Could British Airways brand become a music company, sell insurance, cosmetics and
Cola like the Virgin Brand?

In the past there have been many brands that have moved across multiple categories –
brands like Singer, which at one time was synonymous with sewing machines, in the
1950’s was used as a brand on a car (The Singer Gazelle), and has since been used on
whitewoods, like washing machines and brown goods like TV’s.

Then there are brands like Yamaha, that are used on musical instruments and also
motorbikes; Suzuki on Motor bikes and cars; and brands like GE which have moved
across product areas as diverse as household white goods, medical technology, defense,
aviation products and Finance. Perhaps this is logical given that technology can be
applied in many different ways, and all products, be they consumer goods, business or
government contracts must be financed in one way or another. It therefore becomes an
easier step to move the brand into a new area, if the sale of one product goes hand in hand
with another.

What then of brands like Caterpillar which is famous for its bulldozers and heavy earth
moving equipment, but as a brand has also moved through brand licensing into shoes and
clothing?

What has been licensed is the use of the name. The reason why the name has a ‘value’ is
that it represents certain values that are perceived to have a value in the shoe and clothing
markets. This ‘brand image’ is all-important. Just as Caterpillar represents tough, rugged,
powerful and earthy qualities in the Earth Moving Equipment market, these same values
or image qualities are sought in the ‘urban jungle’ of shoe marketing.

The likelihood of a Caterpillar shoe buyer, buying a bulldozer is totally remote, almost as
remote as the Japanese karaoke cowboy becoming a Nevada Rancher.

The fact is Brand Imaging, while it might be completely translucent, with no actual
reality, will become real through imagination.

In Economics much of the theories are based around the ‘single product’ firm, whereas in
the real world, companies all have multiple products that they market, and will move in
and out of these markets as the market moves and demand changes. Such theories as
price elasticity, based on a perfect supply and demand equation, simply do not exist in the
real world. Nothing is ever perfect, and brands distort this picture even further.

Price and profitability are certainly factors which will influence a decision to move into
or out of a market, but the decision will be based on a much more complex set of factors
– one of the key factors being the strength of the ‘brand’ or brands, and the strength or
weakness of competitive brands in the marketplace. This strength or weakness will create
a barrier to entry, just as much as the ability or non-ability to manufacture or supply a
particular product or service. This barrier to entry may involve technology advantages,
patent protection, cost of investment, time to recoup investment return, cost of labour in a
particular country, lack of resources or management commitment, or company focus on
other product areas.

The barrier to entry may be also due to lack of distribution networks, or partners.
Newspapers, Magazines, Confectionery and Soft drinks are examples where distribution
is an incredibly important factor in determining the success or likely success of a venture.

Even if a Publisher could produce a metropolitan or regional newspaper, or magazine, if


they don’t have the network to distribute it to the places where people will buy it, they
will fail to achieve their market potential. Similarly alcoholic, carbonated drinks, candy
and chocolates rely heavily on their ability to get to their markets – everywhere from the
largest stores to the smallest. This distribution all costs money and time to set up,
maintain and grow.

If a soft drink or milk company for example doesn’t invest in Retail Fridges, and their
opposition does, then it is highly likely that they simply won’t get distribution in the
critical area of cold, ready to drink, highly visible drinks for the consumer to buy.

Distribution is incredibly important, and probably one of the most critical factors to
determine market success of failure.

Governments too play an incredibly important role in certain markets. Airlines, Bus
companies, Ferry lines, Taxis, TV stations, Gambling Casinos, Banks, Insurance
companies and many other businesses all rely on obtaining various permits, licences and
authorities to operate. Some of these can be very highly priced, or heavily restricted in
the number of licences issued, such that the incumbents are protected from new entrants
by the government bureaucracy. There may be very legitimate reasons for this to “protect
the public interest”, but there may also be ‘personality’, ‘corruption’, or other reasons
too.

Airlines for example, must get ‘slots’ to bring their plane to a particular airport passenger
terminal, and such things as ‘safety issues’ can be used very effectively to make sure that
an airline doesn’t fly.

While the traditional view is that is purely ‘profitability’ that determines the growth and
development of business, there are clearly many other factors involved.

What companies are doing in all situations, is using the ‘currency’, meaning worth,
consumer awareness, and value of their brands, both in relation to their end consumer and
also their distributors, to enable them to move into new products, services and markets.

Brands become the ‘passport’!

Companies and other organizations, including many government departments and


agencies are looking at their brands as essentially a passport to enable them to market
new products using their existing known brands as their means of gaining attention, and
attracting an immediate value to their new product.

If a biscuit manufacturer wants to move into muesli bars, what they will do at an early
stage is conduct Research studies to determine the consumer reaction towards their brand
being used on Muesli Bars. There may well be positives, but there might also be
negatives too.

If the biscuit brand is known for its sweetness and not its health connotations, will the
brand be able to provide the necessary credibility in a health category? Even if it known
for its sweetness, is this a negative, or can it be used as a positive, and, if so, in what
way?

This introduces the notion of ‘brand positioning’ – the idea that consumers have a ‘brain
slot’ pegged out neatly for each brand that they encounter, and will judge each brand in
relation to all others that are immediately available to them. This ‘brand positioning’,
which marketing people write up as a ‘brand positioning statement’, is essentially a
statement of claim, or intended claim over a particular ‘consumer viewpoint’ or brand
attitude.

In Consumer Research studies, consumers will be able to group brands by the way they
perceive them. For example, if they were given a whole range of corn chip brands, they
could lay them out on the table, according to the way they judge their quality, and their
level of interest in buying. Their judgment will be based on a mixture of attitudes built up
through their own purchase behavior, their brand knowledge, awareness, and inclination
to purchase. This will be a mixture of both rational and non-rational emotional responses.
There will usually be brands that they have purchased in the past, and are therefore
familiar with, and ones that they have no experience with.

With these unknown brands, they will largely judge them on the basis of a brand
expectation, built upon the limited knowledge that they have. This will come for
expectations established from the package form, graphics, country of origin, photography
on the pack, and descriptions, as well as advertising messages that they recall - all
seeming pieces of the puzzle, which they will piece together to make a brand judgment.
They will also rationalize their brand response, based on their own initial reactions to
what they see, and will also listen to the comments of others before making their
judgment. If someone in his or her group enthuses over the product, or gives some
additional insight into the brand’s qualities, then it is likely that the person’s reaction to
the brand will change accordingly.

The best form of advertising by far, is a personal recommendation from one friend to
another. If the friend is believable, trustworthy and also has some insight into what their
friend likes, then the brand will immediately take on positive brand values. There are
many examples of this.

Recognizing this factor has enabled the Network marketing companies to flourish.
Companies like Amway, Avon, Tupperware, Nutrimetics (A Sara Lee Company) and
others use ‘Party Plans’ to sell their products, and everything from household goods,
educational products, books, vitamins, cosmetics, and health, fitness and lifestyle
products are sold this way.

Many companies have recognized that it is essential to get a product into someone’s hand
first to get a sale. Cars are given away for a “weekend test drive” – “bring it back in few
day’s time” trials and “try before you buy” propositions.

Consumer companies use free samples – in store, and as shopper bonuses, as


demonstrated product, as sachets of free product in magazines, delivered to your
letterbox, and as gift attachments to another sale item to get people to ‘try’. New mothers
will often bring home a box of “special trial samples” as well as their baby, and Medical
Doctors are constantly given free samples of the latest drugs, creams and ointments to
trial themselves with their patients. Hopefully this sampling will lead to the doctor
prescribing the sampled product to their patients.

There is a fine balance of ethics between what is given for information purposes to a
doctor, and keeping the doctor current with the latest treatments and what is simply an
enticement to switch brands.

The brand’s ‘purchase intent’ will very quickly be established through these means. If
however we throw in ‘prices’, this could either reconfirm the intended purchase behavior,
or change it completely.
The drug companies profit hugely from the drugs they develop are under patent
protection, and are approved by the FDA (Federal Drug Agency in the USA), but lose
when the drugs lose their patent protection, or when they are sued when something goes
wrong with a drug or device and it has side effects.

In consumer groups, with peer pressure, and the desire not to offend, or feel pressured,
people are more likely to say that they will purchase the more expensive brands over the
cheaper ones, which will often contrast with the reality in-store!

Just as everyone desires a ‘sports car’, and not a ‘regular family sedan or wagon’, this
attitude doesn’t necessarily translate to sales. Standard sedans and wagons, far outsell the
number of sports cars sold.

The intended purchase of a sports car may also be changed once the cost of insurance is
known. These ‘secondary factors’ may completely change purchase behavior. In some
countries, road taxes and registration costs may be biased in favour of lightweight
vehicles, locally manufactured vehicles or vehicles with smaller engines. These factors
will directly affect the purchase numbers of a particular model as they will directly affect
the cost of purchase or its running cost.

Brand attitudes, are thus formulated on the basis of real life experiences, and particularly
cost expectations but also an expectation or desire to upscale our hoped for purchase
behavior. Our Brand Attitudes relate to what we do and also don’t purchase, and also may
well be different to the reality of our actual purchase decisions.

If you think for a moment about Rolls Royce as a brand, we may feel that the brand is a
great brand. We base this belief however on very little information. We may never have
been in a Rolls Royce car, nor know anyone who owns one, nor have any thought at all
that we might purchase a Rolls Royce in the future, yet we feel we know the brand, and
have a judgment about it. If however we were to be a position of having enough money to
purchase a Rolls Royce, would we in fact go ahead with it? We know the brand, we have
a good positive attitude towards the brand, and we have the money. Would this translate
to a sale?

The answer lies in our own psyche – how we feel about ourselves and the purchase we
are making; how we think others will judge the purchase we have made, and whether we
feel we can part with the money this way – or have masses of guilt, thinking we could
have spent the money in some way which would have given us more pleasure – rationally
or emotionally, or not embarrassed us in front of our friends.

In a marketing sense, knowing how people will judge brands, both in a Research situation
and also in the field, will largely determine how the brands will be marketed.

Marketing itself certainly splits into a number of areas, but core to the marketing
discipline are ‘brands’ and the consumer purchase psychology around them. In almost all
cases, it is not just the consumer’s reaction to a brand, but also all the people involved in
bringing this product or service to market. This may include distributors, retailers, sales
people, as well as everyone who is in some way involved in the product’s manufacture,
sales, distribution or promotion.

Never under estimate the importance of such people as distributors in making a brand
successful. A company may well have the very best toaster or rice in the market, but
unless it has good distribution, the brand will never have the sales exposure to make it a
success.

Products like Coca-Cola are successful for many reasons, but certainly the fact that the
brand has massive distribution, is one of the central reasons for its success.

The product is also adjusted to suit each distribution channel – be it a supermarket,


convenience store, service station, nightclub, or vending machine. The price per can or
bottle will also reflect these different selling situations, as will the packaging form, and
the advertising. You will never see a Barcardi and Coke on sale and advertised in a
Service Station, just as you will never see the 24 pack on sale in a disco!

The ‘selling environment’ therefore plays a very important part in the creation of an end
sale, and there are products within the Coca Cola range that are aimed at each market
channel. Large bottles are aimed at the take home market, post mix to the fast food
market, small bottles at route trade, and cans sold as individual packs through Vending,
and as 12’s and 24 can packs through service stations.

The convenience of each packaging form will directly relate to the consumer, and their
need at the time. No one would want to carry a 24 pack around a football game, but
neither would they want to take a small single bottle back for the family. Price will also
vary greatly from one venue, or sales environment to another, and consumers will pay for
this.

The selling environment has a great influence over the sale, and in a later chapter we will
talk about this in some detail in the chapter on Retailing.

CHAPTER THREE

HOW DID BRANDING HAPPEN?

Marketing as a concept and career has only been in existence since the mid sixties, yet
the principles of marketing go back well before that, to the beginnings of civilization as
we know it. The wheel was an early invention, but then marketing took it from being an
idea into a reality. How many forms of wheels are there in the world today?
Branding has a similar history, with the most prolific growth of commercial brands being
in the 20th century. As a concept to signify both ownership and to distinguish the goods of
one person or company from those of another, branding however goes back well before
this.

Basically every person on Earth is given a name at birth by his or her parents at the time.
This name is determined based on the like and dislikes of the parents, and it is usual to
have one, two or three names given to the child, usually taking part of the parent’s name.
Usually this will involve using the parent’s surname and adding another name (Christian
name or names) to distinguish the child's name from the name of its parents, sisters and
brothers. In western societies the name will be chosen based on the sex of the child, what
are popular names at the time, and possibly the influence of relatives, friends of the
family, religion, tradition or society values at the time.

Essentially, your name is a brand, and it will say quite a lot about you, simply through its
choice. For example if your name were John Smith, we would think, without ever
meeting you that you were male, and probably English or have at least an Anglo
background. If we saw your name listed in an American telephone book, we would
(rightly or wrongly) assume that you were a white American male. You may well be a
black female, but the name, rightly or wrongly suggests otherwise. If your name were
Pierre Joubert, we would assume you were French; Wolfgang or Dieter – German; Xu
Hua Chun – Chinese, and so on.

These “names” are a way of distinguishing one person to the next, so that we have a
means of isolating one person from another, and not confusing one person with someone
else. Even though there may be thousand's of people with the same first, second or last
name, we hopefully won’t confuse one person with another. Even twins and triplets, who
may look physically identical, are given separate names to distinguish them. What
distinguishes the twins is that they have different personalities, and as time goes on they
will also have different life experiences that will further distinguish them.

This means that while the twins may look identical in a physical sense, they are in fact
different. We also give them these separate names as both an expectation that they will
become more and more different as time goes on, and also in the belief that they will
assume their own identity. There is no legal constraint to say that the two twins must
have separate names, but it certainly makes it easier to distinguish the two apart.

The naming of people is as old as time, but so too is the naming of things around us. The
names of a river, a mountain, a road, a town, a tribe, a country, are used as a shorthand (a
generic term born out of the brand Pitman’s Shorthand) means for us to recognize where
and what they are, and communicate with others using the same identification words, so
that we all identify them in the same way.

If, rather than purely seeing the name “John Brown” listed in a Telephone Directory, we
actually meet him and see that he is tall, with Blue eyes and Blond hair, and is in his late
teens – then we have a great deal more knowledge about him, then we did when we only
had a name to go by. If we then speak, and find out that John Brown comes from the
suburb of Highgate in London, and has three sisters, and is studying English Literature at
Cambridge University, we are now really starting to get a lot more information about
John Brown, and form an opinion about him.

The more we know about him, and also the longer we know him, the more we gain an
understanding of his personality. This is much the same with commercial brands. Just as
we like and dislike particular people - find some people attract us while others repel, the
more we understand, and relate to that person, or retreat from them, the more likely we
are to become trusting, rely upon, respect, and involve ourselves with that person.

Brands have names. They also have personalities, and as our experience with a brand
grows, they also become a part of our lives. This is not to say that we fall in love with a
loaf of bread that is branded; yet theoretically this could happen. It could mean however,
depending on our level of involvement, that we could well fall in love with a particular
brand of makeup, football club or car brand! Certainly, if we think of Movie stars, or
particular bands, or singers – which are again identified as a Brand – Madonna, Michael
Jackson, Mel Gibson, Kylie Minogue, the Beatles – then the brand adulation or
involvement can reach fever pitch.

The involvement may be huge at the time when the band, actor or singer has just
introduced a new hit or movie, but will also languish when the band, actor or singer fades
from memory as time goes on. While some Bands (think brands) may continue to deliver
new hits for years on end, others may well be one-hit wonders. They, like all brands, need
to maintain the relationship with their fans (buyers) if their brand status is to be
maintained.

Young fans become parents, and later grandparents as time goes on, and their taste may
well change. The band, or star as a brand, may well continue to provide those same fans
with music or movies that appeal to this same group of fans, or they may also try to
maintain their appeal to a particular teen audience, in which case their music (product)
will change to accommodate the needs of the new market.

Will Mick Jagger as a gyrating 20 year old appealing to 20 year olds, have the same
appeal as a gyrating 60 year old to a new group of 20 year olds, or is he more likely to
appeal to the 20 year olds, who have now turned 60?

There are certainly movie stars and singers who have been able to maintain their stardom
throughout their life, and there are also ones who grow even more famous as they get
older. There are even stars who are bigger stars after they dead, or been assumed dead!
Elvis Presley is perhaps the most famous example of this.

Elvis Presley will always live on as ‘The King of Rock & Roll’ forever young, because
he died before he aged! The Brand Image will therefore be much stronger, and more
enduring.
The way a brand is launched, developed, maintained and also grows or dies are marketing
issues that are all involving – as is the psychology and reasons why these things happen.
There are many brands that have phenomenal success stories, but there are equally brands
that have disappeared within a year of being launched. Every brand has its own story, just
as every person does.

CHAPTER FOUR

THE BRAND REVOLUTION

When the industrial revolution (roughly 1760 – 1830) took place, brands in the modern
sense were essentially unknown, although there were individual people and businesses
that had a reputation for particular goods and or services.

There may have been particularly good cheese maker, for example, and they would
usually be identified by their own name, or the village or locale from which they came –
eg Cheshire Cheese from the area known as Cheshire.

Roquefort cheese, for example is made in Roquefort-sur-Soulzon in France, and its


production dates back to at least the 13th century. In 1411 there was a Royal Charter
signed by King Charles V1 to protect Roquefort cheese against other inferior cheeses!
The famous blue cheese is still made in Roquefort using Lacaune Sheep’s milk!

Likewise the cheese, Parmigiano Reggiano (Parmesan) that comes from Palma in Central
Italy.

Many agricultural products such as cheeses, wines, olive oils, dates and smoked or
preserved meats date back centuries, based on them being specialties of their particular
area or village.

Similarly, farmers would distinguish their cattle from those of another by use of a various
devices to distinguish them. In Switzerland, they have used wooden and metal cowbells –
each different in sound to the others, so that the sound distinguishes each cow to its
owner. Change the bells, and the cows themselves become upset, because of the different
sound.

In Britain, America, Australia and elsewhere they burnt ‘a brand’ into the hide of the
animal using a hot branding iron. The Brands would be often be very simple marks,
letters or combinations of these – circles, letters, initials and crosses – which would be
easy to recognize and be visible to all. Look at an old Cowboy Western to see the trouble
they went to in order to protect their brands!
The branding of cattle in fact goes back to around 3000 BC in Egypt, and branding using
a hot iron to imprint letters or symbols have been used on cattle as well as humans –
including slaves, runaways, people who have committed crimes, and even certain races of
people who were being subjugated by another. Tattoos have also been used this way.

In America, the first recognized cattle brand was the ‘Holy Trinity’ brand, using three
crosses. The Explorer Rancher, Hernando Cortes, first used it in 1513 in Mexico. There
were many brands set up by the Spanish Missions, and later when Texas moved from
Mexican ownership to American, the Texans established new brands.

In America’s Wild West, ownership of cattle was determined by the brand on the cattle’s
hide, and Cattle rustling became a major source of disputes. Cattle Rustlers would steal
cattle and either slaughter them before they could be found, or change their brand using
‘running brands’ which would enable them to modify the lettering of an existing brand
into that of the rustlers.

When cattle were driven across country, they would be “road branded” using pine tar, or
paint to identify them. The great cattle drives after the Civil War, along trails like the
‘Chisholm Trail’ and the ‘Goodnight-Loving Trail’ saw herds of cattle driven from the
South to the North, created a great chapter in the history of America.

Cattle ranchers and farmers now also use vegetable dyes in place of the hot branding iron,
so that the hide is not damaged, as well as things like ear attachments, and microchips
implanted under the skin.

In most countries it is not possible to sell cattle without them being branded. The idea of
using branding as a distinctive mark on the animal was and continues to be a means of
distinguishing one person’s cattle from those of others.

The Industrial Revolution, and the century to follow, created a massive range of new
products and techniques for manufacturing them, and by and large, businesses took on
the identity of their place of manufacture – for example Manchester cotton, Worcester
Porcelain or Sheffield steel in England. As time went on and as many businesses set up
making steel in Sheffield, or cotton in Manchester, they wished to further distinguish
their own goods from those of their opposition. They therefore began to use their own
Surnames as a means of establishing a separate identity to their goods, so that there was
no confusion with those of another maker.

The same was true in Europe with cities like Meisen and Dresden in Germany, and
Sevres in France becoming famous for their china. The evolution of china itself is
extremely interesting, as it shows the evolution of branding as it relates to product
development.

When archaeologists dig up the remnants of ancient European settlements, they unearth
pottery – unglazed or glazed cups, plates and other pieces made from clay. Porcelain
itself however, the much harder and smoother pottery, which has a glass like touch was
first brought to Europe by the Venetian explorer, Marco Polo in the 12th century, after
visiting the court of the Mongol Emperor, Kublai Khan – hence the name ‘China’.

In China itself, porcelain can be dated back to the Tang Dynasty (AD 618 – 906).

While individual centres like Ching-te-Cheng near Nanking, the old imperial capital
before Peking (now called Beijing) were famous for their China, the china itself was
identified by its link to the dynasty of the time. Dynasties can be dated back as far as BC
2205-1766 (the Hsia Dynasty), but the most significant Dynasty for the development of
Porcelain was the Ming Dynasty (AD 1368 – 1644).

It was not until 1700 that the secret processes used by the Chinese to make porcelain
were brought to Europe. At first these processes were kept secret, but gradually the
techniques spread throughout Europe.

Names such as “Ming China”, “Sevres” (famous for Vases), “Delft” china (the Blue and
White china from Holland), “Wedgwood” (named after Josiah Wedgwood in England)
and others like Royal Doulton appeared, all still brands that we recognize today.

In the horse and buggy days, a whole group of names developed to describe different
types of vehicles – drays, buggies, stagecoaches, carriages, broughams, carts, etc, but
while some of the coachbuilders moved from the manufacture of coaches to the
manufacture of horseless buggies, their brands have essentially disappeared, other than
the ‘brands’ of a small number of transport companies like Wells Fargo in the USA, and
Cobb &Co.

The first cars began similarly as descriptions of their function – “horseless buggies”, and
then evolved into names associated with their makers – Henry Ford, Karl Benz,
Ferdinand Porsche, Herbert Austin, Owen Bentley, Vincenzo Lancia, Gottlieb Daimler,
being just a few of them. These makers then began to abbreviate their names using their
own surname as a badge of identity.

Names like Ford were initially seen as simply a badge of identity, but they took on the
role of brands, and are certainly seen to be brands in the modern sense now. So successful
were these surnames as brands, that many people would not know that these brands are in
fact the surnames of their founders. They have simply become part of our language of
Brands.

With various mergers and acquisitions, many of these brands became stronger, while
others like Hudson, Wolseley, Riley, Studibaker, and others have largely disappeared
from memory.

As certain manufacturers prospered, they created different models, and so that people
would not confuse one model with another, they created identities for these models such
as the Model T Ford.
The idea of a ‘corporate brand, like ‘Ford’, and individual product brands or ‘sub-brands’
like ‘Model T’ was thus created. This was based on the simple logic that particular
models or products needed to be distinguished from other models or products, while at
the same time being identified with the main company, or what we would now call the
“Corporate Brand”.

When Henri Nestle, Dr William Kellogg, Thomas Lipton and Henry John Heinz needed
to distinguish their milk, cereals, tea and horseradish from those of others, they too
logically used their surnames to create what we now regard as ‘brands’.

Today there are thousands, if not millions of brands and companies named after their
founders, and some of these have been brands that have histories dating back many
hundreds of years.

For example, D.O.M Benedictine can trace its history back to the year 1510, when the
monk, DOM Bernardo Vincelli devised the recipe combining more than 27 plants and
herbs to create the formula. If the 19th century was the age of the Industrial Revolution,
then the 20th century was the age of branding.

Everything and everything that could be branded was! From sewing machines, to shoes,
shops, toys, bicycles, beer, fruit juices, energy drinks, railways, to anything and
everything that could be bought in a store – be it a clothing store, chemist or drug store,
garage, shoe shinery, or grocery shop – products and services became known by their
brand.

Colgate Toothpaste, Dunlop tyres, Lever’s soap, Shell oils, American Express cards,
Metro Goldwyn movies, de Beer’s diamonds, Cadbury chocolate, Chanel perfume,
Christian Dior clothing, RCA records, Johnson & Johnson baby powder, Coca Cola and
Pepsi Cola drinks, Triumph brassieres, The New York Times newspaper and Harley
Davidson motor bikes – anything that could be sold to a consumer and even some that
couldn’t were branded.

The Trade Mark and Patents offices in the United States, Britain and elsewhere were
inundated with applications from individuals and companies to register their particular
“name” as a Trademark.

In time Trade Marks, Patents and Designs became known as intellectual property.

Property has traditionally been associated with physical property – land, as well as
anything that is built on them, and other possessions that are considered to have a value.

Intellectual property is a creation of the mind, and may or may not have a physical
presence – an invention, or a name that can be attached to goods, a drawing that is
different to all others, or an individual name. If these were new, unique in concept or
application, then they could be registered.
As a new invention, or a new Trade mark, the value may be very little, but as these
Patents, Registered Designs or Trade Marks begin to be used commercially, they attain a
value which relates to their value in the marketplace, determined by the sales, potential
sales and profitability of goods or services sold using that intellectual property.

Copyright attaches to any drawing or words that are written that are the work of a
particular person. This book, for example is copyright, not because the words themselves
are unique, but because those words have been written and published in a particular
sequence and order, in phraseology which is unique to the writer.

In contrast, ideas, even though they may be novel or new, cannot be registered. I may
have an idea that I want to ‘fly to the moon on a Persian carpet”. I can’t register this idea,
and essentially anyone can use it, without having to seek permission, or be licensed to do
so, or infringing anyone’s rights.

In a later chapter we will discuss in more detail the differences between these various
forms of intellectual property.

In the early part of the twentieth century, the number of names grew larger, trade marks
needed to be distinguished not just through the use of the “name” itself, but also
according to their use, application and the way they were portrayed visually. Artists
would therefore draw at times simple and other times elaborate embellishments to the
name in order to further distinguish their “Trade mark” from those of other makers. In
turn the Trade Marks office created a whole range of “ Classes for Goods” initially and
then later in the century to “Goods and Services” attaching a number to each class, to fit
in all the different Trade Marks. A list of these classes is appended at the end of this
book.

No longer able or content to simply use a ‘surname’ to distinguish goods, companies


started to invent names that had some connotation or positive association with the goods
in question. ‘Healthy Life’ cigarettes, ‘Lucky Strike’ cigarettes, Tiger Beer, Leopard
Beer, Lion Beer, 4711 perfume, Monopoly (the game invented in the USA using London
Street and Railway Station names) – brands could be anything and everything from the
names of animals, to exagerated claims to health, beauty, and a good life! The central
theme however was that they were distinctive, and were able to distinguish the goods of
one maker from those of another.

The brands, and their sub-brands were able to convey through their naming, typefaces,
colours and graphics exciting features and benefits of the product being sold. They
became a shorthand means of being able to convey everything from prestige, to sporting
prowess, power, capability, sophistication, excitement, luxury, value – capturing in just a
few short words all of these “feel good” attributes that people were seeking from their
purchase.

No longer was a car simply transport, it was a way to tell the world at large that the
purchaser was a person of impeccable taste, financially superior and worldly wise!
As the new owner of the Morris Minor 1000 deluxe, or the Chrysler Royal with
PowerFlite transmission you had obviously arrived! There was no simpler or more direct
way to tell the neighbours, and you didn’t have to utter a word! So much respect from
such little effort!

Branding was the king, and the manufacturers were in their heyday!

As transport and distribution improved, no longer were brands simply confined to their
local areas. Kellogg’s may well have been born in Battle Creek USA, and 3M in
Minneapolis, but that didn’t mean they couldn’t move interstate, or indeed move across
country or even into new countries altogether.

The British Empire that had been established over the preceding 200 years, stretched
around the globe, and wherever Britain went, British Brands went too! The Americans,
even though they didn’t have an empire, were not far behind, and by the 1940’s following
the Second World War, they were able to take their brands to the world - American cars,
cigarettes, toothpaste, records, movies, film, colas, and comics. The world markets were
there for the taking.

While the French marketed Cognac and Champagne, the Germans were marketing their
engineering skill, and the Japanese their radios and later electronics and cars. Each
country, but particularly the industrialized ones had brands that were able to cross borders
and establish themselves in markets around the world.

No matter which country the products were sourced from, they had brands to go with
them, and it was these brands that pushed their way into the language of the world,
becoming famous at the same time.

The list is almost endless.

Mercedes Benz, Audi, Volkswagen or in its abbreviated form VW, Audi, Porsche, NSU
(Now gone) were all brands of cars, which came from Germany. Equally famous but in
very different fields were other German brands like Siemens, Pfizer and Bayer.

These brands also became a matter of national pride. To be French meant smoking
Gauloises, drinking Remy Martin Cognac, and driving either a Citroen or Peugeot car.

While the Dutch had Philips and Royal Dutch Shell, the Swedish had Volvos and Saabs,
and the Danish their Carlsberg beer.

Over the channel, the Scots had their Scotch Whisky brands (Whisky spelt without an
‘e’), brands like Glenfiddich (1887), and Johnnie Walker (1820) while the Irish had their
Jameson Whiskey (1780), Guinness Beer and Waterford Crystal.
Britain in the early part of the twentieth century took enormous pride in the products it
manufactured, proudly proclaiming the fact that products were “Made in Britain”, and
stamping this statement onto the products they manufactured. The pinnacle of all that was
British was a Rolls Royce car – made for Royalty as well as the very wealthy. At the
same time products like Reckitt’s Starch kept British shirts and collars stiff and well
pressed throughout the Empire, while Gordon’s Gin (founded by Alexander Gordon in
1769), made an excellent drink with the addition of a little Schweppes tonic water –
manufactured in Drury Lane in London, under Royal Warrant.

In the USA, Detroit was building cars, and movies were being made in Hollywood.

Brands like MGM (Metro Goldwyn Mayer), and Walt Disney, named after its founder,
with characters (which became part of the brand stable of Walt Disney) like Mickey
Mouse, Minnie Mouse, Donald Duck, and Goofy became household words, not just in
America, but also around the world.

It is interesting to try and establish at what point Mickey Mouse changed from being a
Character into a brand.

In the years from 1900 through to the 1940’s, brands were very much centered on
manufactured products, and the evolution of these products. While the very first car can
be traced back to 1769 (Nicholas Cunot’s 3 wheel Steam Tractor, used for pulling
cannons around Paris, and capable of reaching speeds of 2 kph), the first car to be sold to
the public was only manufactured in 1888 by Karl Benz.

There were designs for car type vehicles, using wind as their power as early as 1335,
attributed to the Italian Guido da Vigevano and a little later to Leonardo da Vinci. There
was also a time in the 1800’s when they experimented with using Gunpowder as a means
of powering an internal combustion engine. Needless to say it didn’t work!

Guglielmo Marconi, (1874-1937) an Italian engineer only invented radiotelegraphy


around 1900, receiving a Nobel Prize for his work for Physics in 1909. The first radio
broadcast beginning officially in 1921, licensed to Britain’s Post Office. The following
year the Marconi Company opened its own radio station in London. Within a year this
was merged in with other radio companies to form the BBC (British Broadcasting
Company. The first Television test broadcasts by the BBC began in 1929, and ran until
1939, when it was closed for the duration of the war. The Scottish engineer, John Baird
(1888-1946) invented Television in the 1920's. He also pioneered a lot of work in radar
and fibre optics. .

London’s first public railway opened in 1836, and P&O (The Peninsular and Oriental
Steam Navigation Company) Shipping Lines only began its life in the 1830’s.

While the proliferation of Brands really exploded in the second half of the 20th Century,
branding evolved out of commerce and trading, and can be traced back to the earliest
times of civilization.
In 2002, archaeologists in Britain unearthed a jar of Spanish “tunny fish” relish, made
from chopped fish, salted and fermented in their own juice, and proclaimed on a hand
written clay label attached to the jar, as being “excellent, top quality”. The jar was
discovered when a subway was being dug out under an old fort in North England, and
dates back to the time that Britain was part of the Roman Empire.

Trade also predates the Roman Empire, and has been a fundamental part of life in all
parts of the world, almost since time began.

CHAPTER FIVE

THE EVOLUTION OF WORLD TRADE

As much as politics – being the Kings, Queens, Knights, Presidents, Prime Ministers,
Dictators, Military Leaders, Sultans, Shahs, Emperors, Diplomats and Parliaments of the
world, have served to shape the world, it is, and always was commerce and trading,
access or denial to markets and raw materials that lay behind the politics.

Trading and commerce created much of the real reasons for wars between countries, and
forced most of the changes that have happened in the world.

Wars have caused enormous upheavals of people, both while they were happening and
also after. Millions of people have moved from one part of the globe to another, because
of war, or the consequences of wars. At the same time, wars have created reasons for
great technology advances, creating wealth as well as poverty, and driven countries both
into debt and out of it, depending upon whether they were the vanquished or the victor.
Ideas have also spread rapidly because of wars, as people saw new things in the places
they visited as sailors, soldiers or airman, and brought those new ideas back to their
homelands.

The wealthy Venetian traders of the 12th century had through their wealth established
power and influence over the courts in Venice, and the Venetians had become rich and
powerful as a result of this trade, as had the Genoese on the other side of the Italian
Peninsula.

They had all gained their wealth by trading through cities such as Constantinople (today’s
Istanbul in Turkey), the capital of the Ottoman Empire and Alexandria in Egypt and
Tripoli, which were the Arab trading Cities. The Arabs Camel Caravans had been
crossing the Sahara for centuries bringing with them riches from across the Sahara, as
well as from the trading centres that they had established in places like Ethiopia and as
far distant as India.
When Vasco Da Gama (1460-1524), with his brother Paul and 168 others set out with
four ships on his voyage of Discovery in 1497 from Portugal, he sailed initially to the
Cape Verde Islands, then on to St Helena Bay, Natal, up the Zambezi River, then to
Mozambique, Mombassa, Malindi, on to Calcutta in India, and Cochin on the southwest
coast of India, before returning to a heroes welcome home. The King of Portugal, King
John II immediately proclaimed himself “Lord of the Conquest, Navigation and
Commerce of Ethiopia, Arabia, Persia and India”.

Vasco Da Gama then set out on a second voyage back to Calcutta in 1500, this time
laying the city to siege, as retribution for an earlier attempt on his first voyage to kidnap
him. In 1503 he returned yet again, this time taking up the title of the ‘Count of
Vidigueira’. In 1502, Cochin had been colonized by the Portuguese, and becoming the
first European settlement in India.

When Vasco Da Gama returned to Portugal, he was made head of the ‘Admiralty of
India’, becoming very wealthy in the process. In 1524 he was also appointed as ‘Viceroy
in the East’, a post he held in India for just 2 months before succumbing to fever on
Christmas Eve of the same year.

When Vasco Da Gama had sailed into Mozambique, Mombasa, Malindi, and Calicut,
today’s Calcutta (where Calico fabric derives its name), he had encountered Arab traders
and their sailing ships. The Arabs had always been great traders, and influence extended
across the deserts, along the Western and Eastern coastlines of Africa, and as far distant
as India.

The Arabs had long kept their Trade Supply sources secret from the Europeans, and
‘mysterious east’ had remained a mystery to the Europeans until these early voyages
enabled them to reach the east via the ocean, around the Cape of Good Hope, rather than
crossing the land, as the Arabs had done.

Rather than traveling across land as the Arabs had done, the Europeans had sailed all the
way around Africa to reach the East Coast of Africa, and go on to Asia beyond.

During the 15th Century, the Portuguese sea route established by Vasco Da Gama through
to the Orient enabled the Portuguese to make a fortune through the trade they developed
between the Far East and Europe.

Remnants of the Portuguese Trade Post in the Far East can still be seen today in Malacca
in Malaysia, and in Macau, now part of China. In Malacca they still call a part of the
town ‘the Portuguese Settlement’, and there are a number of people who can trace their
family back to their Portuguese heritage.

Spain too had made its wealth too from its explorations, and the subsequent wealth it was
able to take from central and South America.
In 1492 Christopher Columbus (1451-1506) had landed in Cuba and Haiti, setting up a
Spanish colony there, leading to another colony being set up in Panama, from where they
were able to travel to the West Coast of the Americas. This led them to discover and then
conquer the Aztecs in Mexico under the leadership of Hernan Cortes (1485-1547).
Following this it was only a short time before he Spanish began to explore south along
the coastline from Panama, and Francisco Pizarro (1475-1541) led his conquistadors on a
series of explorations in 1524,1526-27, and a 3rd voyage in 1530.

It was on this third voyage that he captured the Incan Sun king, Atahualpa, killing 10,000
of Atahualpa’s men, and then receiving a ransom of gold, silver, jewelry and precious
items, enough to fill a room as reward for not killing him. Pizarro then set up a smelter to
melt all of the gold into ingots, destroying forever the artistry he saw before him –
creating over 11 tons of Gold in the process, and then killed Atahualpa, by garroting him
in 1533.

He was also later killed, on 26th July 1541, eight years to the day, after the murder of
Atahualpa. The wealth that flowed out to Spain from the Incan empire and South
American colonies continued for 100 years.

The Incan empire had been highly structured, with extraordinary irrigated watering
systems, which allowed water to flow down hills along vast terrace gardens, and stone
roads leading to extraordinary cities within its empire.

When Pizarro invaded the Incan civilization it had been at war between it southern and
northern sides, but what had weakened the society most was the outbreak of smallpox,
brought into the land by the Spanish invaders. It is believed that 90 million, yes 90
million Incan Indians died from it during the 1500’s, with only 10% of the population
surviving by 1600.

With the growth in wealth in Spain and Portugal, it was only a matter of time before
others would also seek to make their fortune.

In 1588, the English attacked the Spanish Armada under Sir Francis Drake, on behalf of
Queen Elizabeth the First, with England triumphing over Spain and becoming in the
process the leading sea power. The British Colonial Empire was thus born, with its first
colony being in Virginia (1607) and a little time later, in Bermuda (1609).

Wealthy merchants in the Netherlands funded their first ships to the Orient in 1595, with
the Netherlands Government setting up the VOC (Verenigde Oostindische Compagnie),
Dutch East India Company in 1602 with a total monopoly of all trade between the
Netherlands and the East.

The great sea voyages were extremely long and dangerous, with the possibility of
shipwrecks, piracy at sea, mutiny by crewmen, plus diseases on board like scurvy. There
were also mountainous seas to face around the Cape of Good Hope on the southern tip of
Africa, plus the constant threat of being fired on by rival ships from other companies and
countries, as well as Privateer vessels, owned by rich individuals, who set out to plunder
ships where they saw riches to be gained. Many great sea battles erupted over the trade,
and Spanish Galleons were rich targets as they returned from voyages to Spain’s South
American Colonies.

Wars between the European nations were also common. In the second Dutch war
between England and the Netherlands in 1665-1667 saw the Dutch lose their colony of
New Netherland, and it renamed as New York, New Jersey and Delaware. A further war
between the two countries erupted again in 1672, lasting two years.

The Dutch East India Company was set up as probably the world’s first Limited Liability
Company – protecting the merchants who invested in the company purely to their
investment and not all of their property.

The company itself had six branches or ‘chambers’, each representing a Dutch Trading
Port – Amsterdam, Rotterdam, Hoorn, Delft, and Ekhuizen, with Directors appointed to
the Heeren or Governing Body, who would issue company ordinances to run the
company.

The company built its own ships in company shipyards throughout the Dutch Republic,
and over the next 200 years it built over 1500 ships for its trade. In the Amsterdam
Shipyard alone, in the mid 1700’s, there were over a 1000 workmen employed.

The Company established its main trading port in the East on the island of Java, creating
the port city of Batavia in 1619, renamed Jakarta, with Indonesia’s independence in 1949.
Here the Company based their smaller ships that would travel around the Coastlines
buying Pepper, spices and other goods for reloading onto the company’s larger ships for
shipment back to Europe.

It also set up a refreshment station on the Cape in 1652 to provide food and provisions for
its ships traveling to the east. A number of Company Soldiers (Burghers) decided to settle
here, and the company was responsible for providing assisted passage up to 1717 for
Dutch Farmers to resettle in the Cape.

They were also given land rights, and in order to work the farms, slaves were brought in
from Angola and other parts of West Africa and also Asia. The first slave to arrive was in
1653, renamed Abraham van Batavia, with Slavery in the Cape only officially abolished
by the British in 1807. The British had taken control of the Cape for a short period in
1795, but the Dutch recaptured it in 1802, only to be taken by the British again in 1806.
Slavery continued on in the Cape until 1834, when it was again abolished, with remaining
slaves given a four-year apprenticeship, after which they were freed.

The Dutch East India Company made a massive fortune, with shareholders receiving
dividends of 3600% on their original investment. Around 1669, at the height of its power,
the company had 40 warships, 150 merchant ships and over 10,000 soldiers. It finally
collapsed however in 1798, close to bankruptcy, due largely to the losses it had suffered
through wars, and loss of territories.

The French Revolution had occurred in 1789 -99, with the French King, Louis XVI being
guillotined in 1793, followed by some 17,000 others, including Maximilien Robespierre,
who had led the “Reign of Terror”.

In 1799, Napoleon Bonaparte had taken charge, proclaiming himself as first Consul and
later becoming Emperor of France in 1807, as well as declaring himself King of Italy. He
was able to expand the French Empire rapidly throughout Europe, using his armies and
brilliant military skills becoming the dominant power on the continent. As part of his
vision to expand the ‘French Empire’, he decided to invade Russia, even though he was
fighting in Spain at the time as well. His timing was poor however, and as the Russian
winter closed in, his Grand Army all but perished in the snows, and he was forced to
make a massive retreat. This was in 1812.

He had also previously been beaten in 1805 at sea by the English, in the ‘Battle of
Trafalgar’ by Lord Nelson, when Napoleon attempted to invade England, and while he
had power on land, the oceans still continued to be dominated by the British.

With his Grand Army virtually destroyed in Russia, and losses in Spain at the hand of
Spanish Guerilla fighters, supported by the British Army as well, Napoleon was faced
with a new fight in the North. In 1813, in the famous ‘Battle of Leipzig’ in East
Germany, the French Army led by Napoleon on the field, waged a war against a coalition
of armies made up of British, Prussian, Russian, Austrian and Swedish troops. He lost
this battle too, and in 1814 he was forced to abdicate.

Napoleon was placed into exile on the island of Elba, and while the victors met at the
‘Congress of Vienna’ in 1815 to restore order, Napoleon escaped and reassembled his
army, leading an attack in Belgium in June 1815 on a British, Dutch, Belgian and
German army force led by the English Lord Arthur Wellesley, the Duke of Wellington,
supported by the Prussian Field Marshall, Gebhard von Blucher and his troops.

The great battle that ensured became known as the ‘Battle of Waterloo’, leading to
Napoleon’s final defeat, and his banishment to the island of St Helena. The French had
been beaten, and the Duke of Wellington led his troops to France, which they occupied
for the next three years.

The British East India Company had been formed in 1600, under Royal Charter from
Queen Elizabeth I, establishing various trading centres throughout India, working with
local Sultans. The French and English both vied for control of many of its cities, but India
eventually came under the control of the English Company until it was forced to hand
over control to the English Crown in 1858 following an Indian Mutiny. The British
Crown held control from then on over India and Pakistan until independence was
proclaimed in 1947 for both countries.
Under its Charter, the company was granted a monopoly of Trade in the East Indies, on
the basis that must not contest the prior trading rights of “any Christian Prince”. It was
also given a monopoly over trade with China until 1833. Its monopoly on trade with India
lasted until 1813.

The British East India Company had also established its presence in East Asia, setting up
a base on the island of Penang on the Malay Peninsula. Here under the leadership of
Thomas Raffles (1781-1826) the British were able to take control over the Malay
peninsular, including Malacca and Raffles established a British Post in Singapore on 29th
January 1819, only a very short distance away from the Dutch Trading Centre of Batavia
(Jakarta), a city that he had attacked in 1811, and controlled until 1816, at which point it
was returned to the Dutch under the ‘Peace of Vienna’ Agreement between England and
the Netherlands.

Through the 17th and 18th centuries a number of commercial enterprises had been
established in Europe to trade with the orient, particularly India and seek to bring back
fortunes to Britain and Europe.

There was also the Danish East India Company, which was first chartered by King
Frederick IV of Denmark in 1729, and lasted until 1801, when it was broken up after a
war between Britain and Denmark. It owned parts of Bengal and Tamil Nadu in India,
which Britain purchased in from it in 1845.

Jean-Baptiste Colbert, the Finance Minister for the French King Louis XVI, established
the French East India Company in 1664. It set up a Trading Post in Surat in India, and in
1676 in Pondicherry, as well as trading operations in China and Iran (Persia).

In 1719 the Company was combined with other French Trading companies, which were
involved with trade in America and Africa, becoming the ‘Compagnie des Indes’. It was
involved in Coffee Trading as well as Slave Trading between Africa and Louisiana, a
French Colony set up in 1699 and taken over by the English in 1763 to 1779, then by the
Spanish until 1783 when it was ceded into the United States, becoming part of the Union
in 1817.

Its Slave Trading finished in 1730, but it remained successful in India until 1761, when
the British took final control of Pondicherry from them.

The Compagnie des Indes was finally wound up by Royal Decree in 1769, with a new
company formed in 1785. It only lasted a few short years, until its life was cut short in
1794 during the French Revolution.

All of the East India Companies had created power, influence and wealth, and much of
the wealth of the British, French, Dutch, Spanish and Portuguese Empires had been built
through this.

Germany itself came into the Colonial race much later than the others.
The German States were each independent principalities, and a number had come under
control of Napoleon Bonaparte as the ‘Confederation of the Rhine’, and were part of his
French Empire until 1815 when he was defeated. Prussia remained outside of his control
and joined with Austria, Russia and Britain in this war with Napoleon.

When the victors met to divide up the spoils in the ‘Congress of Vienna’ Prussia was able
to gain part of Saxony as its reward.

A ‘German Confederation’ was also formed but under the control of Austria.

While discussions took place in relation to creating a unified Germany, the ruling elite
largely put them down. A free trade customs union (The Zollverein) had been formed by
Prussia in 1834, which enabled Prussia and a number of other states to trade goods with a
single tariff applied, as opposed to the multiple tariffs and taxes paid elsewhere. The
Zollverein excluded Austria and Bohemia.

Between 1850 and 1970 Prussia’s economy surged ahead as it rapidly industrialized.

In 1862 Otto von Bismarck became Chancellor, and through a series of manipulated
Wars with first Denmark, next Austria and its allied German states, then the French, all of
which the Prussians won, Germany was officially unified on January 18th 1871 under
Kaiser Wilhelm 1, with Bismarck as Chancellor of the whole of Germany.

A series of treaties with neighbouring countries followed, but by the 1890’s, with Kaiser
Wilhelm II in control and Bismarck forced to resign, Germany was set on expanding
overseas, leading to new alliances which eventually led Germany into the First World
War in 1914.

The Alliances meant that when a Serbian student assassinated the Austrian Archduke
Frances Ferdinand and his wife, the Austrians declared war on Yugoslavia, which had an
Alliance Treaty with Russia. Germany in turn had a Treaty with Austria, which meant
that if Russia came into the war, then Germany would come to Austria’s defence.
Germany also had an Alliance with Turkey.

Within months Germany and its allies were at war with Belgium, France, Russia, Britain
as well as many of the smaller European countries. By the end of the war, they were also
fighting many of empire countries, people from Australia, New Zealand, and India,
Africa and elsewhere as well as the United States which entered the war in 1918, bringing
with them initially 200,000 troops and by the end of the war, over 2 million.

The Russia Empire was controlled by the Czars, and its empire stretched all the way from
Europe to a border with China, and north to the arctic regions, with various wars fought
to control areas alongside its borders – in the south in the Crimea, west to Finland, and to
Central Asia and Manchuria in China.
The Romanov Czars controlled Russia from 1698 through to 1917, with Russia Empire
itself able to trace its history back to the Kievan and Appanage period, with the House of
Rurik controlling the Empire between the year 860 and 1698.

It was a vast empire, both in land area, and also population. In a census taken in 1897,
Russia’s population stood at 128 million people.

During the Romanov Czar period, Russia was heavily controlled under the Czars, with
Noblemen owning the land, and having serfs (white slaves) work for them, with the rest
of the population largely being classed as peasants. It was only in 1746 that non-nobles
were allowed to purchase serfs, and nobles had total control over their serfs, even being
granted to the right to exile them in 1760, if they displeased them.
It was only in 1816-19 that serfdom was abolished in the Baltic provinces, and as late as
1846 that a ban was placed on the individual sale of peasants.

Law had prohibited peasant farmers in 1767 from submitting complaints against their
landlords! The power of the aristocracy was absolute.

Its Aristocrats controlled the Russian Empire, as in the other European countries, and just
as happened in France in the French Revolution in 1789, its people too overthrew it,
although the Russian Revolution did not occur until 1917.

In America, The Boston Tea Party of 1773 had changed the course of American history.
At the time the Americans could only purchase Tea by paying Taxes on all tea purchases
to Britain. In refusing to pay these taxes, the Americans created a war with Britain, and
from then on had become independent of British control.

The English were also having problems in Ireland, with the Irish Rebellion in 1798
demanding independence from England. This was forcefully put down, with an Act of the
Union in 1800 resulting in the Irish Parliament being closed, and Irish members joining
the English and sitting in their Parliament in Westminster, in London.

The American Civil War, which followed in 1861-65, was fought over the issue of
slaves. The South had built their wealth out of cotton and tobacco, and the slaves were
brought in from Africa by Slave traders who sailed their ships to Africa to round up every
native African they could find, selling these people in Slave markets when they arrived in
America.

The slaves were then put to work in the cotton and tobacco fields to do the hard manual
labour in the field. The South thought that they could only prosper if they had the slaves
to do the work, and the more slaves they had, the more cotton they could grow.

Over 10 million Africans between the 15th and 19th centuries are believed to have been
transported and then enslaved in Europe and the Americas.
As the Europeans built factories, they needed the iron, cotton, and wool to keep making
fabrics and steel in these factories, so they had to source these raw materials from Africa,
the orient and other places.

India supplied Cotton, Tea and Spices, America also Cotton, the Caribbean Sugar,
Australia Wool, African colonies Cocoa, Malaya rubber and tin, Java spices, China silk
and tea, and Argentina beef.

These raw materials were known simply by their country of origin, rather than by brands.
They were seen as commodities, and as commodities they were bought and sold based on
supply and demand from the factories in Europe.

In History, as in life itself, there is always a reason why events, actions and activities
occur. Often however the reasons are disguised or deeply hidden or even ignored.

Looking back over this period of European history it is apparent that massive changes
were taking place in world trade and commerce, which in turn had huge ramifications in
terms of Politics.

Where in the ancient world, Greek and Roman empires had ruled over Europe and the
Middle East, and the Mongol Empire over China and beyond, the new world powers that
had emerged were initially Portugal and Spain, followed by the Dutch, French and
English.

All of these powers had achieved their status and financial strength through the extension
of their Empires beyond their own borders.

The Dutch had their hold on Dutch East Indies (today’s Indonesia), the French on various
colonies throughout Africa, as well as Indo China (today’s Vietnam), Spain over central
and South America, Portugal over Macau in China, East Timor, and Brazil, Belgium over
the Congo in Africa and the British over India, much of Africa, Asia, Australia, and
Canada, along with a variety of islands around the globe, with isolated fort cities like
Gibraltar at the tip of Spain.

The greatest loss to the British Empire was America, even though large numbers of its
people decided to emigrate there.

Empire riches were brought out of India, China, Africa, South East Asia and South
America, but there were also many colonies, or parts of the Empires that cost money
rather then made money for their owners.

In many ways, the Europeans saw themselves as Liberators to the Heathen masses,
bringing their Religion, civilization and order to the lands that they entered, which they
proclaimed as theirs in the name of their Emperor, King, Queen or Country.
Military Power also ensured their rights against any opposition they encountered, be it
from local uprisings or from their European competitors.

While it was the Arabs who invented the triangular lateen sail around the 9th Century,
which when slung fore and aft of a masthead, and could accept wind from either side, to
enable a vessel to move forward as the wind passed over it, it was the Europeans who
gained most from the invention.

The Lateen sails enabled boats and ships to move forward. This movement is actually
caused by a vacuum being formed in front of the sail as the sail billows.

Square sails, with the wind behind them, can be angled to obtain maximum thrust, but in
low or non-existent winds, or winds blowing towards them, they becalm the ship.

Using the Lateen type of sails, and combining them with Square rigged sails enabled the
Portuguese, Spanish and English to build ships with up to 3 masts with Square sails, and
Lateen sails at the front and rear which allowed them to steer and travel long distances
away from Coastlines, and begin their voyages of discovery even when winds were light.
It was only in the 18th Century that ships had Steering Wheels installed to give them a
greater level of control over their ships.

The giant Square Riggers, with protection from fast sailing Gunships, with up to three
levels of Cannons ready to fire cannonballs at the enemy, were able to ensure that their
rules were obeyed, or their opponents face certain destruction and death.

To illustrate the power of the British over the oceans at the time, it is interesting to see
where Lord Horatio Nelson sailed and fought his battles. By the age of twelve he was at
sea, sailing towards the Arctic, where he supposedly fought a Polar bear, and by the time
he was twenty he was captain of his ship. At the age of 35, he was given command of a
64 gun ship, the Agamemnon, and went on to fight in Corsica, Cape St Vincent, the
Canary Islands, and Egypt, against the Spanish, later the French and even the Danes in
the Battle of Copenhagen off the coast of Denmark.

He was shot and died in the Battle of Waterloo in 1805, dressed in his full Military
uniform as Commander of the British Fleet on board the Victory. This was the battle in
which Napoleon was defeated.

The British had developed batteries of Cannons with different gauge barrels that could
fire cannon balls of 12, 24 and 32 pound weights. On their Gun ships like the Victory,
they would have cannons lined up on up to three levels, able to fire at close distance or
long as the need arose.

The supremacy at sea was all based on Military Might.

While there were certainly many parts of the globe which were inhabited by native tribes
living lives based on hunting, fishing and gathering food to supply their own needs – as
in Africa, America, Australia, New Zealand and the Pacific island areas, there were also
areas which the Europeans invaded that had well established cities and civilizations
which pre dated many of the European ones.

Many of these had established Rulers and forms of Government, and economic trade
already in operation. Such was the case in Central and South America, with the Mayans
in Mexico, and Incas in Peru. The Spanish and Portuguese made fortunes themselves by
simply declaring what they had found to be theirs, and taking the Gold and other riches
back to Europe.

The other ancient and wealthy civilizations were in South America, India and China, as
well as Japan. All had highly developed political structures, and large populations then,
just as they do now.

Where European history tends to portray a picture of Europe bringing its civilization to
the ‘New World’, it could be argued that the New World had more to offer the Europeans
in a number of areas, and the riches the European nations gained was due to a large extent
on what they were able to derive from their Colonial empires.

To understand this more fully, it is worth gaining a better understanding of the History of
South America, China, India and Japan, as these countries played and continue to play an
incredibly important role in the development of trade, commerce, and the future of
Brands.

CHAPTER SIX

THE ‘NEW WORLD'.

How new was it?

By sailing their ships from Europe to the Americas, and around the Cape of Good Hope
to Asia and the South Seas, the Europeans had effectively bypassed the Arab Caravan
Trade Routes that had been in operation for hundreds of years.

These included the Red Sea Route through Egypt, the Northern Caravan Route through
Afghanistan, Persia, to Turkey, and the Persian Gulf Route through Iraq. When the
Europeans sailed on to China, they effectively bypassed the Silk Road as well.

The Silk Road, which linked China through Mongolia and Central Asia to Persia, then
through to Constantinople (today’s Istanbul) and on to Venice and Genoa, had been in
operation for more than 1500 years. It had always been a treacherous and dangerous
route, as it crossed deserts, with massive sand storms, high rugged mountains and
uncertain water supplies and traveled through areas where bandits and different tribal
groups would attack the caravans, steal their cargoes and murder their traders.
It was also in the winter subject to snow, ice and high winds, with avalanches in the
mountains.

Over the years the Silk Road and the areas it traveled through had come under a
succession of rulers and tribal groups.

The Road or roads, which were more trails traveled either North or South of the Takla
Makan desert through parts of present day Afghanistan, Uzbekistan and Turkmenistan,
and rather than travel from one end of the road to the other, the Camel Caravans would
trade their goods from one Caravan, trading centre or Wadi to the next and with goods
being sold or passed on from one Caravan to the next on the journey from Asia to
Europe.

On the China end, the Chinese Great Wall of China provided some protection from tribal
groups from the North, and enabled travelers to pass along its route.

Their rulers generally prohibited the Chinese themselves during the Ming Dynasty from
traveling abroad, and largely Persians and Central Asians conducted the trade along the
Silk Road.

Even their Maritime expeditions were stopped by the Ming Dynasty rulers as early as
1433. There is a lot of conjecture about the reasons for this, but it is generally felt that the
Dynasty did not want the expense of large expeditions, and had the belief that China was
the centre of the universe, and therefore had no need of anything foreign.

With a population of around 100 million people at the time, China’s population was
largely rural, and had developed its arts and philosophies over centuries already.

This decision to isolate China probably had a profound effect on the course of world
history.

Goods traded through the Silk Road tended to be such luxury items as Silk, Jade, Carpets
and Porcelain as well as precious Art objects, and as much as these goods were
important, they gave rise to the belief that there was fabulous wealth that lay beyond in
the ‘mysterious east’.

Many of the Artworks that were brought to Europe via the Silk Road ended up becoming
Museum pieces in Paris or London; such was their beauty.

The fables, stories and mystery of the East all tended to capture the imagination of the
European adventurers, so when Vasco Da Gama led his first voyage around the Cape,
opening a new way to the East, and bypassing the Silk Road altogether, it was like
discovering a ‘new Golden Road to riches’.
By the late 19th Century, the Silk Road had essentially ceased to exist, and the area of
Central Asia had fallen under the control of the Russian Empire, or Chinese, and the
whole area became essentially unknown to the world at large. The Mongol Empire was
gone, as had the Ottoman Empire.

Only now in the early part of the 21st century, with the collapse of the Russian Empire,
are the countries in Central Asia starting to emerge as part of the Global Economy, and
be recognized in their own right as individual countries.

Where the Mongolians had conquered China in the 11th and 12th centuries, under the
leadership of Genghis Khan and later Kublai Khan, establishing an empire that covered
China, Central Asia, the Middle East and as far as Europe, the Han Chinese in the Ming
Dynasty which followed (1368-1644) built an empire by the 15th Century which covered
all of today’s China, as well as Vietnam (Annan), extending to Korea in the North.

Their rule was overturned in 1644 by the Qing dynasty led by the Manchu’s, who went
on to conquer Mongolia in the late 1700’s, and in the 1800’s much of Central Asia.

Their biggest threat to China had traditionally come from their Northern borders, and in
1689 they signed a formal agreement with Russia defining the border between Siberia on
the Russian side of the Amur River, and the Manchuria on the Chinese side.

While the Chinese had been trading along the Chinese coastline for centuries, and to
areas south of China venturing as far as Ceylon to trade in Spices and other goods, under
the Qing Dynasty, they became very isolationist, taking the view that the Chinese
Civilization was superior to all others, and that no other civilizations had anything to
offer China that was worthwhile.

A Chinese Admiral, Zheng He is believed to have circumnavigated the world around


1420, with stories and charts from his voyage supposedly brought to Venice by the
Venetian merchant, Nicola da Conti.

Where envoys from foreign countries arrived in China they would be treated essentially
as foreigners paying homage to China.

While Jesuit Priests and missionaries had been coming to China since the 13th Century
seeking to convert the Chinese to Christianity, it was the Portuguese who were the first to
arrive in force, setting up their base at Macao, followed by the Spanish and later the
French and British.

The Chinese then gave out licences restricting the number of traders who could buy and
sell merchandise with China, and also restricting the ports where it could take place.

While the foreigners bought tea, silk and porcelain from China, China did not want the
manufactured goods that the British and others had to offer, and the British would sell
their industrial products into India, trading these for Opium and raw cotton, for later sale
into China.

The Opium trade flourished, and although it was a prohibited product by decree of the
Qing Dynasty, it managed to be sold readily.

In 1839 the Chinese authorities seized 20,000 chests of illegal Opium from the British,
and as a result, Britain declared war on China, resulting in a British victory and the
Treaty of Nanking, signed in 1842.

Under the treaty China signed following the ‘Opium War’, China ceded Hong King to the
British, opened 5 ports to foreign trade, granted British citizens exemption to Chinese
law, gave Britain certain trading privileges and paid Britain a heavy indemnity for the
war that had occurred.

Within a few years China had also to fight more wars, losing Cochin China and Annam
to France (Vietnam) and Cambodia, as well as Burma to the British, and Turkestan to the
Russians.

The Japanese too attacked China in a war in 1894-5, allowing Japan to set up industries
in four treaty ports, take Taiwan and the Penghu Islands, and rule over Korea.

In 1898 the British were also given the ‘New Territories’ on a 99 year lease, and in the
following year the USA demanded that China create an ‘open door’ policy to all foreign
countries that wanted to trade with it.

Over the next century, China was divided in its leadership, and after the First World War
at the Treaty of Versailles, Japan, who was on the Allied victor’s side against Germany,
was given the Shandong Province in Northern China, without conferring with the
Chinese.

The Chinese Nationals under Sun Yat-Sen (1866 -1925) and later Chiang Ka-Shek and
the opposition Communists under Mao Tse-Tung (1893-1976) led to China becoming a
republic in 1949, with the Communists in charge, and the Nationalists taking the island of
Formosa to form a separate China nation, now called Taiwan.

The Chinese mainland has never however recognized the legitimacy of this Country, and
still today proclaims it as part of ‘the motherland’.

India was even more established as a Civilization.

India can trace its history back to about the 3rd Millennium BC, and by the 1st Millennium
BC it had established 16 autonomous states.
Alexander the Great visited India around 326 BC, and Buddha, who founded the
Buddhist Religion, lived around 500BC. Universities in Nalanda and Takshasila in India
were attracting students from China and South Asia about 200BC. This compares to the
oldest university in Europe, Leiden University in Holland that was established in 1575
AD by William of Orange.

India’s Caste system began in 184 BC under the Hindu religion. Over the coming
centuries India was invaded by numbers of different rulers including the Huns, Mongols,
Mughals, Persians, and Afghanis.

The Taj Mahal in Agra was built over 18 years between 1630 and 1648.

With a mix of religions including Sikhs (est. 1707), Muslims in the North in today’s
Pakistan, a largely Hindu population in the main sub continent, and a small number of
Buddhists, India had a mixture of religions, a rigid Caste system and lots of individual
Sultans, and Governors in control of the various states.

When the Europeans arrived, in order to trade, they had to make agreements with local
Indian rulers to do so. The Portuguese, who were the first to arrive in Calcutta, formed an
agreement with the dominant Deccan kingdom, which enabled them to maintain a
monopoly over Indian Maritime trade for 100 years.

The Dutch East India Company was the first to break the monopoly in 1602, and 2 years
earlier the English Queen, Queen Elizabeth I had granted a charter to the British East
India Company to begin its operations as well.

It was not until 1612 that the English Company was able to establish its first trading post
in India at Surat on the Gulf of Khambhat, having negotiated an agreement with the
Mughar Leader, Emperor Jahangir. Before they could even establish the Post, the
Portuguese in the Gulf attacked their fleet, but the English won the Battle.

Over the coming years, the Portuguese were defeated a number of times by the English as
they fought to hold on to their trade in India. The Dutch were similarly defeated.

Within a few years the British East India Company had established its presence in Odissa
(1633), Madras (1639), Bengal (1651), Bombay (1661) which they had acquired from
Portugal, and Kolkata (1690).

The French, who had begun to operate in India about 1675, attacked and gained control
over Madras in 1746, but handed it back to the British East India Company in 1748.

The French British conflicts continued on both in India and in Europe, and between 1756
and 1763 they were engaged in a “seven year war”, which resulted in a Treaty which left
the British East India Company in control of India, and the French left with just a few
Trading Posts.
The British East India Company remained a Private Company until 1773, at which time it
became a Semi Official Agency of the British Government.

With its own Military Forces, it was able to enforce its wishes wherever it needed to, and
the Company assumed control over most of India, annexing the Territories that it desired.

When local resistance took place, this was forcefully put down, but not without
casualties. Sikh uprisings took place in 1845, 1846 and in 1848 the British suffered more
than 2500 casualties, before forcing the Sikhs to surrender in 1849.

The worst uprising occurred however in 1857, when the Indian Sepoy Troops employed
by the Company were issued with Cartridges for their Rifles said to be greased with cow
and pig fat. To the Hindus the Cow was Sacred, and the Sepoys rebelled, and set about
killing hundreds of Europeans.

The Europeans responded by killing thousands of Indians.

The ‘Indian Mutiny’ led to the British Parliament passing the Act for the Better
Government of India, and the administration of the country passed from the Company to
the British Crown. In 1876 Britain’s Queen Victoria was proclaimed ‘Empress of India’.

The British continued to rule India until independence was granted on the 15th August
1947, at which point two independent states were set up - India as a Hindu nation and
Pakistan as a Muslim nation.

Over the years leading up to independence, there were numbers of uprisings, civil
disobedience campaigns, boycotts on British products like Salt, anti British riots and
other moves aimed at gaining independence, and self government. The issues
surrounding religion, and the friction between Muslims and Hindus made this more
complicated.

While the British had brought with them their system of law, government and
administration, built railways, bridges, telegraph systems, developed agriculture and
established the Indian Postal System, they also brought with them the game of Cricket – a
game that both India and Pakistan still play with great fervour.

When the East India Company first established itself in India, it was able to trade under a
monopoly position, all be it with resistance from other Trade Nations, who in time it
drove out. Its trade monopoly lasted in India until 1813.

India made a huge contribution to English wealth, with annual dividends paid to the East
India Company being a fixed percentage on Indian Revenue of 10.5% every year.

When Britain went to war in 1914 against Germany, 1.2 million Indian troops were
involved, and when Britain declared War on Germany at the start of the Second World
War, the Viceroy of India, Victor Alexander John Hope, the Marquis of Linlithgow,
declared war in the name of India, without consulting Indian Leaders at the time, such as
Mahatma Gandhi. By the end of the war, around 1.5 million Indian troops were involved,
and India had contributed around US $ 12 billion to the war effort. Wars never come
cheap!

Japan too had a highly developed Society when the Europeans first arrived, and could
trace its history back to the 7th Century, when its first Emperor ruled the country.

The first Portuguese arrived in the late 1500’s, followed closely by the Dutch, who
arrived in April 1600 from Rotterdam on the small ship the Liefde. Of the four ships that
set out on the voyage, only the Liefde arrived with only 24 of the 110 who set out still
alive. 6 more perished within days.

By October 1600 the Dutch, who were no friends of the Portuguese, were fighting on the
side of the Japanese Daimyo (warlord) Tokugawa Ieyasu using their Ship’s cannons in
the battle against his rivals.

Tokugawa subsequently became the Shogun, ruling Japan until 1868.

Two of the Liefde’s crew, Will Adams (an Englishman) and Jan Joosten van Lodensteijn
became members of his government, and in 1609 when two ships from the Dutch East
India Company sailed into Hirado with letters addressed to the Shogun which pleased
him, he gave the Dutch access to all Japanese ports, ending the Portuguese trade
monopoly that had existed.

In 1612 and 1614 Christianity, which the Portuguese had promoted was officially
abolished, and in 1635, 280,000 Japanese who had been converted to Christianity by the
Portuguese Jesuits were killed, with the Portuguese expelled altogether in 1641, leaving
the Dutch, represented by the Dutch East India Company as the only European country to
have access to Japan.

Even the Dutch were restricted to just one trading base, this being a tiny Island named
Deshima in the bay near Nagasaki. All other countries were excluded from 1641
onwards, and this exclusion remained in place for the next 212 years.

The Dutch East India Company’s monopoly on Japanese trade allowed them to buy
Japanese Silver and sell it for great profits in Europe, until the Shogun banned its export
in 1688, but it continued to export Gold, copper, camphor, porcelain, grain and Japanese
lacquer ware, bringing to Japan Spices, European fabrics and cloth, ivory from Africa and
leather from Thailand.

A number of Dutch scientists, teachers and others brought Dutch civilization to Japan,
teaching the Japanese their language and bringing to Japan the latest information on
scientific and technical advances made there.

The Japanese had the view that Holland represented all of Europe.
In 1853 four United States warships arrived in Japan with a message from the US
President to Japan to open its doors to trade or face the consequences. This has been
labeled as “War boat Diplomacy”.

Japan’s isolation however had ended, and in a coup in 1868 the Shogun was ousted and
the Meiji Emperor restored to his position as Head of State.

Following the European lead, Japan rapidly industrialized, and within a few short years it
had also become an Imperial Power, creating its own empire by taking over Korea, and
Shandung in China.

In 1862, an English merchant, Charles Richardson, had been killed by Samurai horsemen,
with the British Government demanding that the murderers be brought to justice, but this
was refused, resulting in British Warships sinking three Japanese warships and firing on
the city of Kagoshima until it surrendered.

Under the Meiji Empire, the Japanese studied Western ways, setting up their own Navy,
and a young Japanese Naval recruit, Heihachiro Togo, was selected to train with the
British Navy. Between 1871 and 1875 he trained with the British Navy, and when the
Japanese commissioned British Shipyards to build a new Japanese Fleet, Togo stayed in
England to supervise their building.

The British also supplied British Navy instructors for Japan’s Naval College, and in 1880
it provided a 1 million pound sterling loan to the Japanese to install telegraph lines and
build railway tracks.

Following the British Shipbuilding methods, the Japanese then built their own ships,
installing such advances as Marconi communication systems, and the world’s first
torpedo tubes.

By 1905 Japan had a superior Navy and when the Russians attempted to expand their
interest to Korea, Japan broke of diplomatic relations with them, and war was declared.
In the war that followed, the Russian Fleet was brought all the way from the Baltic, a
journey that took several months, before doing battle with the Japanese navy, under the
command of Admiral Togo. In the ‘Battle of Tsushima’, the Japanese sank 34 Russian
ships with 4830 Russians dying, and 5817 Russians taken prisoner. At the same time, the
Japanese had lost just three patrol boats, and 113 sailors.

A Peace Treaty followed, negotiated by President Roosevelt from the United States.

For the first time, a new Asian country had defeated an established European Power, and
Japan had moved from its feudal past into a major world power.

In the first World War Japan joined with the Allies against Germany, but in the second
World War it attacked Pearl Harbor, and then went on to invade the territories held by the
Colonial Powers including Burma, Malaya, Singapore and the Dutch East Indies, as well
as numerous islands and territories.

It also attacked Australia bombing Darwin, attacking Australian ships and even attacking
Sydney using mini submarines to enter Sydney Harbour.

When the war finished, Japan was then occupied by the Americans from 1945 to 1952,
with America administering the country, and providing aid to rebuild the country’s
industry.

Today, Japan is one of the world’s biggest economies.

CHAPTER SEVEN

THE DEVELOPMENT OF MONEY

How much did you say you needed?

Money is almost as old as civilization, particularly in coin form, and ancient coins, made
mostly from metals were used in Central Asia, China, the Middle East, Russia,
throughout Europe, parts of Africa and in the Americas. There were also other types of
money used such as particular shells, ceramics, trading beads and other forms that were
considered precious, rare and of value in a society.

The earliest coins are believed to come from a country called Lydia in Central Asia,
which has long since disappeared, and Greek coins can be traced back as far as 700BC.

In ancient Egypt they were certainly weighing things to establish a value in ‘Shekels’,
and in the Bible you would see reference to a ‘shekel of wheat’ or ‘a shekel weight in
gold’ to declare a value of a lamb or jewellery. In Hebrew ‘shekel’ means ‘to weigh’.

Often coins were used in a localized area, and were made so that it was easy to carry –
worn as a necklace, ring or with a hole in the middle so that it could be threaded onto a
chain. It was also usually small so that it could easily be hidden, and was easy to
transport. Some coinage would however travel large distances, and would be used for
trading. Arab ceramic trading beads, all had bright distinctive colours, and would be
carried by their owners across the sands of the Sahara. People today collect these trade
beads for use as Jewellery.

Even today when Mints issue coins, they will generally stay close to their place of issue,
whereas ‘notes’, or paper money will travel all over a country, simply because they are
more portable, and have usually greater value.

Money has always been a measure of exchange, and each of the major empires, such as
the Roman, Greek, Ottoman, Mongol, Chinese, Mayan and Incan empires all had their
own coinage that they would use throughout their empires. Some also had paper money
as well.

After the fall of the Roman Empire, Europe disintegrated into individual kingdoms, and
what coinage that did exist was usually hoarded away by individuals, rather than used for
exchange.

The Feudal system which developed, meant that the lands were owned largely by
Aristocrat families (land lord, hence today’s word landlord), and known by their title
(Lord, Count, Prince, Sir, Baron, Duke, Marquis, Earl and other titles) who would then
provide for their workers by allowing them to live on the property, and give the landlord
the harvest and profits, in return for their immediate needs for food and shelter.

Money in the form of coins was minted from Gold, Copper, Bronze, Alloys and Silver,
and mints were established at many of the important trading points. Coin names like
‘Penny’, ‘Copper’ and ‘Florin’ (named after Florence) can be traced back to these early
centuries.

The earliest banks were established in the trading centres of Florence, Venice and Genoa
in Italy around the 13th Century, issuing ‘bills of exchange’ and ‘letters of credit’ to
exchange goods between traders. It was still necessary to have gold and silver to balance
the trade, and silver and gold were in great demand to satisfy the need for coins.

Mines were in established in a number of places in Eastern Europe (a huge one being at
Rammelsberg); Freiburg in Germany, initially called Silberberg, meaning ‘Silver
Mountain’, the Freiburg meaning ‘Free Mountain’. Here prospectors were allowed to
stake out a claim on the basis of paying 10% of their finds to the owner of the land,
Markgraf (Count) Otto of Meissen (‘Otto the Rich’). This was in the 13th century. There
were also mines in Bosnia, Serbia and parts of Russia, and at times huge amounts of
coinage was hoarded away by wealthy individuals who gained its control by fair or foul
means.

In the 14th century there was a great imbalance between trade between Europe and the
East, and a great shortage of silver resulted in many of the mints in northern Europe
closing down. Turkish raids on the mines in Bosnia also stopped supplies of Silver
reaching the trade centres.

For many centuries the trade imbalance was in the favour of the Arab traders, who would
only accept payment for the spices they sold, in the form of silver or gold.

By the mid 1400’s new European mines had been established using new means of
controlling ventilation and water, so that they were able to dig deeper. Some of these
mines continued in operation right through to the 1900’s.

The greatest change to occur however was when the Spanish found Gold and silver in
South America, and were able to take it from the Incas, and bring it back to Europe.
The trade imbalance with the Arabs however continued, and it was only when the
Europeans were able to establish their own trade posts in India and beyond that they were
able to bypass the Arab Traders altogether.

In order to trade in the new colonial empires, the Europeans still needed a means of
exchange, and gold and silver still formed a large role in providing this.

The value of Coinage was directly related to either its melt down gold value, or the
recognized value of the Country from which it was issued, which rose or fell in line with
the strength of the country from which it was issued.

Dutch, Spanish and Portuguese coins could be found throughout Europe, the Americas
and Asia, brought to the new port cities by trading ships.

The first coinage in Australia, a British Colony, was not pounds, shillings and pence, as
in England, but Spanish dollars imported by the British appointed Governor, Governor
Macquarie. He brought 40,000 Spanish dollars into Sydney in 1813, and then set up a
mint which proceeded to cut a centre piece from the coin, and over stamp it to create two
coins – a ‘holey dollar’ and the ‘dump’. This coinage continued in existence until 1829.

The first coins in America were also British or Spanish, which were all in short supply.
As early as 1652 the Massachusetts Colony had minted its own silver coins, and each
colony, or state started up their own coinage systems, or borrowed those of others. The
colonies also used Tobacco as a form of currency, and also Wampum, small beads made
from shells, and used by the American Indians.

The First dimes and cents were stuck in 1792, more than a century after the first
settlements, and two years later the first United States Dollar.

When Queen Victoria approved the formation of the East India Company in 1600, she
also allowed it to establish its own silver currency for use in the colonies.

Trade has always existed on the basis of exchange, with a value determined by the parties
involved. Money, where it had a recognized worth, became the means of exchange, and
Money which had a Gold or Silver content could always be used, no matter whether the
currency it was issued in had a value or not.

The great wealth of individuals and countries was based on the amount of Gold or Silver
they had accumulated.

Just as the Venetians and Genoese had become wealthy through trade, so too did the
Portuguese, Spanish and later the Dutch and English.

The Spanish in South America had been able to plunder, or steal the wealth of the Incan
and Mayan civilizations. In turn their ships carrying the gold and other valuables back to
Europe would in turn be ‘targets’ of pirates and privateers (ships privately chartered and
their crew employed for the express purpose of stealing ship cargoes, and officially
commissioned on behalf of a government). These would fly their country’s flag if
operating under official approval of their Country; a flag of convenience to suit their
purpose; or the ‘skull and crossbones’ if they were operating purely for their own gain.

The English supremacy at sea also extended to Pirating, and there were many famous or
infamous British Pirates who preyed on the Spanish Galleons and their cargos. Most of
these were based in the West Indies, and some of the famous English born pirates include
‘Black Samuel Bellamy’, ‘Blackbeard (Captain Edward Teach), William Kidd, and
Captain Henry Morgan – who was knighted, and later became Deputy Governor of
Jamaica. In the 15th century Sir Francis Drake had both been an English Admiral, a
recognized explorer, circumnavigating the world and a pirate!

The English themselves in earlier centuries had been plundered in the same way by
Viking raiders, who would exact payment (a Danegeld) from the English in the form of
‘silver pennies’.

With every war that has passed, the wealth and power has moved accordingly, and this
has happened throughout history, and has been the reason for civilizations either gaining
power and wealth or losing it.

With each war, the wealth of the loser would be taken over by the victor, and if the
wealth were readily apparent it would happen immediately, or if not apparent it would be
extracted over a period of time.

At the end of a war, generally a Treaty is signed between the warring parties, and terms
of payment agreed upon. These terms might well involve forfeiture of lands, people,
treasures, food, valuables, gold and silver, rights of all sorts. The victor is rewarded for
their win, with the economic power moving with them. ‘Reparations’ and the terms of
treaty can be very harsh, and not necessarily fair.

Wars are periods of great uncertainty for people involved. They are also expensive for all
parties involved, but great fortunes have been made through wars as well.

Money and wealth has throughout history been made and retained only when there is
stability. Once that stability is lost, the certainty of making money and conducting
business is lost too.

People also move because of war to places that are seen to offer more stability and
certainty of life. This has happened throughout history, and continues to happen today.

Religion and religious persecution have also been a predominant factor involved in the
movement of people, and this remains a major factor today, just as it did in the Crusades
in the 11th, 12th and 13th centuries.
The Jewish people, whose native language was Hebrew in the Holy land were renowned
for their business skills and over centuries had moved to cities throughout Europe to
conduct business.

Another group, the Lombard’s who were originally from Germany had moved to Italy
around 500AD creating their own kingdom around the 7th and 8th Century, before being
defeated, and their kingdom taken. Over many centuries the Lombards established
themselves as very successful moneylenders, traders and merchants, and Lombardy
derives its name from them.

Like the Jewish people they also moved to places where business could be conducted,
and in the 13th century, a group of Lombards moved to London, and it is no coincidence
that Lombard Street and the city of London became the centre of the business in Europe,
particularly after the industrial revolution.

CHAPTER EIGHT

THE INDUSTRIAL REVOLUTION

Mankind has always existed on the basis of food, clothing and shelter, and therefore the
first industries to develop were in Agriculture and the farming of animals.

Corn, wheat, barley, rice – grains of all types enabled bread to be made, or the grains to
be pulverized to create flour. Cattle, sheep, goats, deer as well as birds like chickens and
ducks became meat to eat, and their skins, hair, wool or feathers means of keeping warm.

A landed aristocracy as well as the Church throughout Europe controlled the lands and
animals, while the general population worked them.

While merchants had always existed to conduct trade – being ‘in trade’ was considered a
lower class occupation.

Symptomatic of the opinion of the upper classes was the reaction of King Frederick
William in 1848 when the new National Assembly representing the people of Germany
appointed him Emperor.

He declared that he would never accept a “crown from the Gutter”, and then cancelled the
constitution declaring himself king by “divine right”.

Besides farming, small industry had developed in the clothing trade. This was called
‘cottage industry’ on the basis of the hand sewing being undertaken in people’s homes.

Hand sewing was slow and therefore the number of garments or amount of cloth
produced was low too.
As Britain’s supremacy at sea and its empire grew, Britain was transformed through the
wealth that was created, and a number of machinery inventions in the spinning and
weaving industries around the mid 1700’s, as well as added efficiency in the Agricultural
field led to a complete industrial and social upheaval.

Merchants also became established in London, Glasgow, Bristol and other ports making
their fortunes in such things as salt, tea, pepper, sugar, wool, tobacco and other goods
imported from America and the colonial empire, and in the process created a new
mercantile class.

Agricultural and scientific research led to such things as crop rotation to regenerate soils,
rather than allowing lands to be fallowed in rotation. The seed drill had been invented by
Jethro Tull (1674-1741), which ensured was precisely placed under the soil and not on
top of it, and also the horse plough, while Lord ‘Turnip’ Townshend introduced the ideas
of crop rotation to improve yields, and Robert Bakewell (1725-1795) pioneered animal
husbandry practices to improve the quality of stock produced.

In 1733 John Kay, a weaver had built his ‘Flying Shuttle’ machine, and this was followed
by other machines such as Richard Arkwright’s ‘Water Frame’, James Hargreaves’
‘Spinning Jenny’, and Samuel Compton’s ‘Compton Mule’.

The source of power to run the machines also changed from initially water wheel power,
then steam power and around 100 years later (1873) electric power developed on from
the invention of the ‘Dynamo’ by Michael Faraday in 1831, and the development of an
electric generator using magnets by Frenchman, Hippolyte Pixii.

Where water power required the flow of water over the wheel, steam power enabled
engines to be built which could be moved to different locations, the first steam engine
being built in 1705 by Thomas Newcomen to power a vertical piston in a cylinder pump
to remove water from mines and later a reciprocal engine with a crank and flywheel was
invented in 1763 by James Watt. Over the next six years he and his industrialist partner
built more than 500 engines using his patents.

The new inventions dramatically affected the lives of the weavers and spinners with
machines being able to produce much faster than the hand workers. There was great
resentment to these new machines, and the labour ‘guilds’ formed associations to fight
the new technology, breaking into factories to smash the new equipment

In France and Europe much the same was happening.

The Industrial Revolution caused large numbers of people to move from their villages
and the farms into towns where they would find work in the new factories.

As the Wool, Cotton, Linen and Silk industries moved from waterpower to steam, there
was greater demand for coal, so coal mining grew rapidly to meet the demand, and
England built a series of canals across the country to move coal and other goods from one
city to another.

The demand for coal was increased again as Iron and Steel industries expanded and
Railways began to be built.

Initially wooden wagons were built for use in the coalmines, running on wooden tracks,
replaced by cast iron rails in 1776. Wagons were later pulled along the rail tracks by
horses, and in 1804 steam locomotives were developed for use.

By 1825 a regular passenger railway service was operating between Stockton and
Darlington and in 1829 George Stephenson with his ‘Rocket’ locomotive provided a
passenger and goods service between Manchester and Liverpool. By 1830 he and his
brother Robert had extended the service from Liverpool to London.

Over the coming century, railway tracks were built throughout Britain, with the first
underground railway opening in London in 1863; first class sleeping coaches established
in 1873; dining cars in 1879 and in 1883 Britain’s first electric railway opened. By 1936
a night ‘train- ferry’ service had opened between London and Paris.

At the height of the Railway boom in Britain there were 123 separate rail companies.
These were amalgamated into four companies under the British Railways Act in 1921.

Just as in the early days in the weaving and spinning industries, the Railways met with
opposition too from existing forms of transport, and those who ran them.

Canal boat operators and their stockholders, turnpike trusts (who charged a toll for use of
their roads), and even horse breeders whose livelihood was affected by people changing
from using horses and carriages to use of the train, all put forward opposition.

British built locomotives and carriages and also the skills and machinery to forge and
fabricate parts became a major export from the mid 1800’s onwards, particularly to
British colonies in Africa, India, Australia and Asia. Many of the European rail systems
were also developed using British Steam locomotives and also British capital.

The invention of a horizontal boring machine in 1775 by John Wilkinson, and a lathe and
improved micrometer by Henry Maudslay created tooling machinery that was highly
accurate. By 1830 Joseph Whitworth had developed a machine that could measure
accuracy to a millionth of an inch.

In the USA Eli Whitney also refined the manufacturing process, developing a milling
machine and a system for creating uniform parts, so that products could be mass
produced, rather than produced one at a time with the differences apparent from
individual manufacture. This uniformity of parts he applied to the manufacture of army
muskets for the US Army.
These same principles were later used in the USA by Henry Ford to make cars, Cyrus
McCormick to make Harvesters and later tractors, and Isaac Singer to make sewing
machines.

This was a very important step forward, as up to this time, each machined part was
manufactured individually, so that if one machine part broke down, there was no
guarantee that the replacement part would fit where the broken one had been.

The development of the Steam engine also enabled ships to be built using the new type of
engine, initially as paddle wheelers, then using propellers and rudders, and after a great
deal of experimentation and work, by the mid 1840’s there was a regular steamship
service to the United States across the Atlantic.

Sir Samuel Cunard (Cunard Line Ships) began his mail service in 1839 between
Liverpool, Halifax and Boston. The ‘penny mail’ service in England began about the
same time, and by 1871 Telegraph cables had enabled communication to be made around
the world.

In 1825 the first Photograph taken by the Frenchman, Nicephore Niepce had been taken
of a pen and ink drawing of a boy leading a horse, and in 1860 in New York, Antonio
Meucci (1808-1889), an Italian immigrant from Florence first demonstrated a prototype
of his ‘talking telegraph’ telephone he had invented. As a foreigner, he had to pay much
higher patent fees for a US Patent than a United States Citizen, and he while he was able
to take out an initial patent, he could not afford the renewal fees. In 1874 he sent details
of his invention to the Western Union Telegraph Company, but never received a reply. In
1874, Alexander Graham Bell, who had shared a laboratory with Meucci, filed an
application for his telephone and became an overnight celebrity, making a deal with the
Western Union Company.

Although Meucci sued him, the lawsuit never went to court, because Meucci died in the
meantime. It was not until 2002 that the US House of Representatives recognized
Antonio Meucci as the true inventor of the telephone.

The Industrial Revolution affected all parts of the world, changing Britain from a
predominantly agricultural country with the majority of people living on farms, to a
country where more than half the people by the mid 1800’s lived in cities.

In France, Germany and the United States the change was similarly great.

The power base across Europe shifted from a landed aristocracy to the new industrialists
who had wealth created through the factories- ‘New money’ versus ‘old money’.

In the years following the Industrial Revolution, there were massive social upheavals as
well, with appalling living and working conditions the norm for workers in the factory
towns.
Poor pay, dangerous equipment to work with, long hours, foul coal fire smoke covering
the townships, an attitude of contempt for workers, the use of children to work in mines,
and crowded housing with no sanitation often leading to disease and creating slums,
created a whole new working class.

Things were made worse in Britain by the Corn Laws, first introduced in 1804, and
modified in 1812 when British landlords passed laws in Parliament imposing high duty
on imported corn and wheat to maintain an artificially high price for British Corn and
Wheat. When a famine destroyed the British harvest in 1816, Bread prices soared, and
food riots broke out all over Britain. The Corn Laws continued in practice and were only
repealed in 1846, by which time the middle class merchants and city industrial people
had more overall voting power in Parliament than the rural Landowners, though not in
the House of Lords.

At the same time as the Industrial Revolution was taking place, another revolution was
taking place, this being a Financial and Legal Revolution, which had just as much if not
more consequences.

CHAPTER NINE

BANKING AND INSURANCE

Britain’s supremacy at sea was achieved through technical superiority, seamanship and
organization of people, money and resources.

Having ships which could sail and turn faster, and cannons set up on a number of decks,
with some able to fire at long distance and broadsides at close range, enabled the British
seamen to attack their enemy and win countless victories. The British ships were
technically superior to those of the Spanish

Following a number of attacks on Spanish ships by British privateers, the Spanish


assembled a Spanish Armada of ships to attack England in 1588. The British in turn
gathered both its Royal Navy and Private fleets together to attack the Armada and used
their superior firepower and faster ships to win a decisive victory. This victory over Spain
by Britain was a turning point in British Naval history, and over the next two centuries,
Britain commanded supremacy over the oceans.

Most of the British ships were built from Oak timber, and Britain’s ancient oak forests
were decimated as the trees were cut down to build ships. It was not until 1849 that the
first steam battleship, HMS Agamemnon, was built for the Royal Navy, with iron used
instead of timber for the first time in the Crimean War of 1854-56.
Following this war, the Royal Navy commissioned HMS Warrior in 1861, built entirely
from iron, enabling them to ram wooden ships and break them apart. Steel then replaced
iron in the 1890’s

In the early ‘voyages of discovery’ groups of wealthy individuals would come together to
fund such voyages. Societies such as Britain’s ‘Royal Society’ set up for the purpose of
scientific discovery, would fund scientific expeditions to study everything from Botany to
Astronomy, petitioning the King for royal funding for voyages such as that of James
Cook.

Captain James Cook’s (1728-1779) voyages to the South Seas, including his voyage to
New Holland (Australia – so named by the Dutch, and first encountered on the west coast
by the Dutch explorers Willem Jansz in 1606, and Dirk Hartog in 1616) were funded for
this purpose, and he had on board Botanists like Joseph Banks and Daniel Solander; an
astronomer, Charles Green, as well as artists who could draw what they saw, be it plants,
animals, people, coastlines, or the transit of the planet Venus in a solar eclipse, which
they watched in Tahiti. Photography had yet to be invented.

James Cook was also an excellent cartographer, and the maps he drew became maps for
those who followed on future journeys. The solar eclipse and astronomy were very
important as was the use of accurate times using chronometers for determining their
position at sea by the latitude and longitude. If the chronometer was slow or fast this
would make all their calculations wrong when they tried to work out their longitude.

The French, Dutch and other explorers were similarly funded through a mix of scientific
and commercial motivations.

When Cook sailed back from Botany Bay (near today’s Sydney Airport), he brought back
with him many plants, artifacts, sketches, drawings and journals from the voyage for the
‘Royal Society’ to expand upon their knowledge.

Captains of ships needed funding in order to operate their ships, purchase supplies, sails,
food and supplies and pay crews.

The journeys were also full of risk. There were no certain outcomes.

Besides the risk that the ships would return with nothing of value, there was also the risk
that they would run aground, become lost at sea, crews fall foul of diseases such as
scurvy or smallpox or their merchandise be pirated before they returned. Being subject to
the winds also meant that there was no certain time that the ship would return, and no
way to communicate with the ship once it left on its journey, other than through
dispatches, or letters passed from ship to ship, which might or might not reach their
destination.

In order to spread the risk of merchandise and ships being lost, merchants would band
together and apportion their risk between them. This ‘risk’ was also sold at a ‘premium’
to third parties who would buy the ‘risk’ on the basis of being rewarded for their risk if
the ship returned with merchandise to sell, or lose their ‘premium’ if the ship or
merchandise either did not return or the merchandise was damaged.

Gold and Silversmiths, merchants, ship’s captains and wealthy individuals in and around
the coffee shops in the port cities like London began to conduct this sort of business in
the 1600’s, becoming known as ‘underwriters’, when they took a share in policies

One of the coffee shops was owned by Edward Lloyd in Tower Street, and in 1769
Bankers and underwriters who frequented Lloyd’s Coffee shop set up the ‘Society of
Lloyd’s. Within a few years Lloyd’s of London, as it became known, with ability to write
insurance restricted to members, had become a recognized underwriting group,
incorporated in 1871 by Act of the British parliament, and moving to the ‘Royal
Exchange’ in 1774. The idea of modern day insurance was born.

It was not until 1887 that Lloyd’s of London underwrote their first non-marine policy, by
which stage the insurance industry had developed, covering everything where a risk
could be defined and a premium charged to cover it.

The idea of insurance had possibly come from the Italian Lombards, who had, as early as
1255 pooled premiums in Venice to insure against trading loss from pirates, spoilage and
pillage (theft). There are also instances of insurance that can be traced back to 3000BC in
China and about 916 BC in Rhodes.

The ‘Royal Exchange’ that opened in 1571 had been home to all sorts of traders for over
two centuries, with their trade spilling to coffee shops in and around the Exchange.

The London Metal Exchange can trace its history back to these times, and it was formally
established in 1877 as the ‘London Metal Market and Exchange Company’ in that year
forward selling contracts for delivery of particular metals at an agreed price. Their first
premises were above a hat shop in Lombard Street.

The London Metal Exchange at first dealt in Copper and Tin, based on their delivery to
the Exchange in London, but as time went on, they began to operate for other metals used
in Britain as well as those imported and exported across all of Europe.

Moneylenders had always suffered a bad name, right from Biblical times, and the idea of
charging interest for money lent (usury) was for many years considered a crime. Even
today, Islamic Banking strictly forbids the charging of interest.

Charging interest on money lend was only made legal in England in 1546 for 6 years,
then made illegal again until 1571, before being legalized again.

While most of the wealth in England had been owned by the Kings, Queens, and landed
aristocracy, the Jewish and Lombard moneylenders in and around Lombard Street in
London, had become rich selling and trading in Gold and Silver, and general traders,
bankers and merchants naturally gravitated to this part of London because of this.

The Goldsmiths had been partially ruined however when funds they had deposited in the
Exchequer, had been taken by King Charles II, a catholic, when he simply closed the
Exchequer and refused to pay back the funds! He subsequently fled to France, and a new
protestant king from Holland, Prince William of Orange was invited to by the Whig and
Tory government in 1688 to take over the throne in England. He became the new ruler,
but Parliament now also had far greater power.

In 1694 King William III was fighting a war with France against Louis XIV, and was
badly in need of extra funds. A number of schemes were proposed, and one put forward
by a wealthy Scot, William Patterson was agreed upon.

He proposed to incorporate a Private Bank, raising 1200 thousand pounds, giving a return
of 8% on the basis that it would be given the exclusive right to issue bank notes as
official English ‘legal tender’. The bank would also be given the exclusive right to be the
Government’s bank, initially lending it money for the war, but later receiving its credits.

At part of the deal, his greatest triumph was to obtain by Royal Decree, an order to stop
the Goldsmiths being able to issue receipts for Gold deposited with them, forcing all
merchants to deposit their gold with his newly formed bank. By this means the newly
formed bank was able to become the country’s central bank, and also the Government’s
debt manager – the country’s so-called ‘National Debt’ residing with it.

This bank was founded on the 27th July 1694, under the name of the ‘Bank of England’.

A year later an Englishman, John Holland, formed the ‘Bank of Scotland’! It also gained
the right to issue its own coinage and bank notes through an Act of the Scottish
Parliament in 1695, granting it a monopoly over banking in Scotland for the next 21
years. At the time Scotland was using Flemish, French, Dutch and English coinage, and
the issuing of twenty shilling, one-pound Scottish Banknotes, issued as tear off pages in a
book, and printed in black and white was pretty much a revolution. It was not until 1727
that the Royal Bank of Scotland was formed, and not until 1777 that the Bank notes were
printed in colour.

The London Stock Exchange began its operation in the coffee shops in and around the
Royal Exchange. It was actually evicted from the exchange due the rowdiness of its
members in 1760, and officially became known as the Stock Exchange in 1773.

It had been formed by members to provide a market to buy and sell shares in Joint Stock
Companies, companies set up to raise money for ventures requiring large capital
investment, or which required risk capital to develop. These members became known as
Stock Brokers, acting on behalf of share sellers or purchasers and those on the floor
becoming known as Stock Jobbers, who acted strictly on behalf of the brokers, and not
directly for the stock buyers or sellers. The term ‘job lot’ is derived from this trade, as are
the terms bull and bear pit.

The British Empire gained enormously through the establishment of the Banking, Stock
broking and Insurance businesses, with London becoming the Financial Hub of not only
Great Britain, but also Europe. Its strength grew enormously through the Industrial
Revolution, as trade expanded throughout the British Empire, Europe, America and Asia.

Some of the earliest companies to set up were the Muskovy Company set up in 1555, the
British East India Company founded in 1600, the Virginia Company and the Hudson’s
Bay Company founded in 1670.

The Muscovy Company (or Russian Company) was set up at the time when it was felt
that there must be a way to reach the Far East by traveling via a route to the North of
Europe. The company was set up to look for this envisaged ‘North East passage’, a
passage that proved impossible due to ice. Nonetheless the company was able to gain a
monopoly over trade between England and Russia, and it also financed expeditions to
Persia in search of trade. It eventually lost its monopoly over the Russian Trade in 1698,
but continued to trade until the Russian Revolution in 1917.

The British East India Company has already been documented in an earlier chapter, but
the Virginia Company and Hudson’s Bay Company have equally interesting stories.

The Virginia Company was granted a Royal Charter from James I in 1605, with London
investors buying shareholdings. The company aimed to set up a Colony in America at a
place they named Jamestown on James River, also named in honour of the King. The
company hoped to find riches like the Spanish had found in South America.

Instead of riches they encountered malaria, were attacked by the native Powhatan tribes,
and food shortages which were so bad that at one stage they resorted to cannibalism, one
man even cutting up and eating his wife!

After a number of attempts they did however manage to establish the Jamestown
settlement, also discovering wild tobacco in the area. Fine Virginia Leaf Tobacco and the
tobacco industry developed from here.

It was at Jamestown in 1614 that the first American Indian bride, Pocahontas, an Indian
Princess and daughter to Chief Powhatan, was married to an Englishman, John Rolfe, and
she was baptized in the Church of England.

James I was so appalled by this that he ceased to support the Virginia Company, and
labeled the marriage, and act of treason. The company then turned to the Church of
England for support, asking for funds to enable it to convert local Indians to Christianity.
The Company then brought John Rolfe, Pocohontas- now Lady Rebecca Rolfe, and her
son, along with 10 Native American maidens and Pocohontas’s brother-in-law,
Tomocomo, to London.

All of London’s Society apparently turned out to see the American Princess, and
Pocohontas was presented to King James I and Queen Anne in 1617.

When she was due to leave England however she fell sick and died, and was buried in St
George’s Church in Gravesend, her husband returning to Virginia to develop the Tobacco
industry. In 1619 the first Dutch Slave ship arrived in port, bringing with it 20 Negro
Africans. A year later, the Mayflower arrived in Plymouth, and in 1824 the Virginia
Company collapsed, with Virginia becoming a Crown Colony of England.

The Hudson’s Bay Company was set up in 1670 under British Royal Charter from King
Charles II as a fur, minerals and commodity trading company to operate in the Hudson
Bay area of Canada. The company had also sought to find a way to the America’s via the
North East Passage.

Its shareholders included the King’s cousin, Prince Rupert Count Palatyne of the Rhyne,
as well as various Dukes, Lords, Knights, Baronets, as well as some wealthy individual
citizens and Goldsmiths from London.

By virtue of the Royal Charter, and by virtue of the possibility that the company might
bring riches back to England, the company was granted to them and their successors, “the
sole trade and commerce for all those seas, Straights, Bays, Rivers, Lakes, Creeks, and
Sounds, in whatsoever Latitude they shall be that lie within the entrance of the Straights
commonly called Hudson Bay Straights, together with all the lands, countries and
territories upon the coast and confined by the seas, straights, lakes, rivers, creeks and
sounds aforesaid, which are not actually possessed by any of our subjects, or any other
Christian Prince or State” All of this was written in Olde English, and the intent was
pretty clear!

In the document they also went on to grant Rights to the company to build any Castles,
Forts, Garrisons, Plantations, Towns and Villages as needed, and to govern the territories
as they saw fit, with the full authority of the British Crown. The British Navy was also
asked to provide protection to the company should it require it. This meant in effect that
over 1/3rd of today’s Canada was given to the Company, with total protection to the
company’s rights.

When the French attempted to take some of the Company’s territory in the early 1700’s,
this was forcefully defended by the British Navy, with a treaty signed in 1713 (Treaty of
Utrecht), and later another company, the North West Company, under the leadership of
Alexander Campbell tried to take fur trade away from the company as well. This
company ended up being merged in with the Hudson’s Bay Company in 1821.
In 1867 the company was forced by a Deed of Surrender to relinquish its ownership of
Rupert’s Land, but was compensated for this loss by payment in cash and the transfer of
7 million acres of land into its name.

Much of this land has since been sold, but the company continues to trade in Canada with
its main activity being retailing.

It is hard to believe that a company could be given so much by the King, but his authority
was absolute, and at the time Canada wasn’t even a country, with the land inhabited by
Indians tribes who had no rights as far as the company was concerned.

The creation of Joint Stock Companies allowed capital to be accumulated in London and
used to fund the development of new technologies and develop the ideas put forward by
companies wishing to be listed on the London Stock Exchange.

Where in the preceding centuries, any accumulation of wealth, be it in Gold, Silver or


precious items, was hidden away by its owners in individual hoardings, it was now
possible in England to deposit these funds into the ‘Bank of England’, with the
knowledge that the funds were safe, and that interest would be paid on the savings as
well.

Through the establishment of the Banking system, funds that had traditionally been lying
idle in hoardings or moneyboxes across the country were consolidated through the
banking system into funds that could be used for investment. Country money in a sense
became city money.

This situation was very different on the Continent, where people continued to hoard their
savings, with a deep distrust of the government, banks, and showing their wealth, in case
it should be taxed, stolen or fraudulently taken from them. Much greater wealth existed in
these countries outside of the banking system, then within it.

This difference proved to be a huge advantage to England, and this difference can be seen
in the following chart, showing the extent of deposits in the Banks around 1870 –

London (31st December 1872) 120 million Pounds Sterling


Paris (27th February 1873) 13 Million
New York (February 1873) 40 Million
st
German Empire (31 January 1873) 8 Million
Source: Lombard Street, by Walter Bagehot published around 1850.

The Bank of England through its growing size, strength and the stability of England free
of wars on its own soil enabled it to attract deposits from Europe, its own colonies and
America. There were also a number of Joint Stock Banks set up as well as a number of
private banks, and bill brokers, creating London as a Financial Centre, and a source of
funds for those seeking them.
Even the Private Banks and Joint Stock Banks banked with the Bank of England, keeping
their principal reserves on deposit with it.

In turn the funds held within the Financial Centre of London became the engine for
growth and development, funding everything from factories in England, railways in India
and America, to ships for trade, cotton, wool, metals and even the building of the Suez
Canal.

Where traders and others had traditionally used their own capital to fund their expansion,
they were able to borrow the funding, which enabled them to grow faster.

Prior to 1870 Germany’s overseas trade was largely controlled through London’s
Financial Market.

The German Deutsche Bank, set up as a Joint Stock bank was only established in 1870 in
Berlin, with a Gold Standard introduced by the bank in 1873 to establish its creditability.
It also opened offices in London, Hamburg, Bremen, Yokohama, and Shanghai over the
next three years.

The Bank of France was first established in 1800 by Napoleon Bonaparte, but was
restricted to operating in Paris. It was able to issue bank notes, and was set up as a Joint
Stock Company. In 1803 it was given the exclusive right to offer bank notes for a period
of 15 years, although it was not until 1848 that the bank notes were recognized as ‘legal
tender’. Even as late as 1848 the bank only had 15 branches established outside of Paris.

Private Banks also operated throughout Europe, with one of the most significant being
the Rothschild Banks set up by Meyer Amschel Rothschild (1743-1812) and his family.
His sons, Amschel and Salomon looked after the bank in Germany, while Nathan looked
after England, Karl in Italy and James in France. The Rothschild Private banks provided a
number of loans to Governments to fund war efforts in both Europe and the United
States. It is difficult to gain information about this.

In the United States Wall Street in New York was first laid out in 1685, but it was not
until 1790 that US investment markets were born, the same year as the US Patents Office
opened, with the New York Stock Exchange setting up in 1792.

Twenty four brokers signed the ‘Buttonwood Agreement’, to trade between themselves,
signed under a Buttonwood tree outside number 68 Wall Street, with the first stocks or
shares being traded in the ‘Bank of New York’.

The oldest listed company still in existence is the New York Gas Light Company, which
first listed in 1824.

The Bank of New York had been chartered in 1891 as a state bank. Other state and
private banks followed including the ‘Bank of The Manhattan’ Company, set up in 1799
– now called the ‘Chase Manhattan Bank’ following the acquisition of the Chase
National bank in 1955. The ‘Chase National Bank’ had been founded in 1877.

New York at the time had a breakout of Yellow Fever, and many believed that New
York’s untreated public water supply was to blame. The city council hastily drew up a
bill to put before the State Legislature to set up a Municipal Water Company to be owned
by the city, while others lobbied to have this company set up as a private company
instead.

The Private Company Lobbyists, Alexander Hamilton and Aaron Burr succeeded in
having the Legislature vote in their favour, and a Private Company was set up. It was
also agreed that any surplus capital funds generated by the company could be used for
other investment purposes, including the establishment of a Bank.

On September 1st 1799, using the surplus funds, the ‘Bank of The Manhattan’ was
formed, becoming rivals to the ‘Bank of New York’ and the ‘Bank of the United States’.
‘The Bank of The Manhattan’ established its first office at 40 Wall Street. Hamilton and
Burr subsequently fell out, with Hamilton dying in a duel the two fought in 1804.

In 1808 the Bank sold its water supply business back to the City of New York, but was
permitted to retain all of its capital that it could use in its banking business.

The growth of banks in the United States was spectacular, and over the next century the
American economy grew rapidly in agriculture and industry, with railroads opening up
the west, and the Erie Canal linking the Hudson River to the Great Lakes to the very heart
of the steel and manufacturing industry. The British Banks funded much of this
development initially, and then as wealth grew in America, the American Banks took on
an ever-increasing role. The ‘Bank of The Manhattan’ had played a large role in funding
the Erie Canal.

The relationship between the American Banks and London Financial Market was very
strong.

In 1838 an American businessman, George Peabody set up a merchant-banking firm in


London, with Junius S. Morgan, an American Merchant becoming a partner in 1854, and
subsequently taking over the firm in 1864.

In 1861 J Pierpoint Morgan, the son of Junius, set up a New York office to act as an
Agent for the London Office, and by 1895 they had offices established in London, Paris
New York and Philadelphia. By 1913 J.P. Morgan, named after Pierpoint’s son had
become one of the world’s foremost International Investment Banks.

The Bank was heavily involved in some massive deals.

As an investment bank it specialized in Corporate Finance, and was heavily involved in


not just the loans, but also the way the loans were structured as well as business
strategies. Clients included the General Electric Company, American Telephone and
Telegraph, and US Steel, as well as many of the leading industrial, mining and utility
companies, as well as State and Federal Governments in various parts of the world.

In 1870 it established a 10 million pound loan to the French Government during the
Franco Prussian War, and later it provided financial advice to both the French and British
Governments in both the First and Second World Wars. It was also involved in
reconstruction loans to both Governments after both of these Wars.

In 1933 the US Banking Act required all banks to split their investment bank business
away from their commercial banking business. This Act was enacted as a result of
enquires into the collapse of a huge number of banks and businesses following the Great
Depression, when over 5000 banks folded in the United States, and 2000 Investment
Houses.

When the Stock market collapsed in October 1929, over 30 Billion Dollars in stock
values disappeared overnight, and the repercussions were felt around the world, as
companies, individuals and even Governments defaulted on loans, and stopped payment.

CHAPTER TEN

COUNTING THE MONEY.

The History of Accountancy, and the Law.

In New York in 1850 there were just 14 Public Accountants listed, and by 1886 there
were 115. How many are there today?

Today all companies rely on Finance Directors, Cost Accountants, General Accountants,
Finance Departments, Analysts, Bookkeepers, Auditors, Computer Software and a host of
specialized departments, consultants, bankers, lawyers, computers and specialized
software, procedures, taxation experts and others, all dedicated to maintaining proper
financial records of the company’s activities every year, as well as planning and
budgeting for expenditures and revenues in future years.

The earliest Accounting records date back to the ancient Egypt, around 3300 BC, with
accounts of Grain, and taxes paid being written by Scribes on Clay Tablets in
Hieroglyphics. Ancient records have also been found in Central Asia, China and Greece.
Most of these were basically lists or records of items taxed, stored, delivered or paid for.
Both Ancient Greece and also the Roman Empire recorded details of assets and liabilities,
and when William the Conqueror invaded England in 1086, he set up the Doomsday
Book to record all real estate and taxes due to be paid on it.

The earliest Accounting Record in English is the ‘Pipe Roll’ or ‘Great Roll of The
Exchequer’, which records on parchment annual rents, taxes and fines paid from the year
1130 to 1830.

Remember the Sheriff of Nottingham and Robin Hood?

Apparently the Exchequer, based in Westminster in London, representing the King,


appointed County Sheriffs throughout England who were called together twice a year, at
Easter and at Michaelmas (September 29), to pay taxes to the Exchequer.

County Taxes paid would be recorded by cutting notches on a Tally Stick, about 22cm
long made from Hazelwood with a knife.

A shilling was recorded as a single thin notch width; a pound as a thick one, the width of
a grain; a thumb’s distance, one hundred pounds; and a thousand pounds was the width of
a hand. With the taxes recorded and cut into the stick, the Tally Stick would then be
sliced into two halves – one kept by the exchequer, the other taken by the Sheriff as a
receipt for taxes paid. To stop forgery, the Tally Sticks would be cut in different ways,
had slightly varying lengths, and had Latin inscriptions cut into their outer sides to clearly
identify both halves of each Tally Stick.

When final year-end taxes were paid at Michaelmas, the treasurer of the Exchequer
would sit behind a table covered by a chequered cloth (hence the name exchequer), with
each square representing a County. The Pipe Roll would then be read, and counters
placed in each square, one set of counters to represent what was paid at Easter, and
another to represent what was due. The two halves of each Tally Stick would then be
matched to verify the Accounts, and payments made. Any shortfall would be met with
harsh treatment.

The First ‘double entry’ bookkeeping or accounting’ is credited to the Venetian trader,
Benedetto Cotrugli around 1450, who wrote a manuscript on trading called ‘Delia
Mercatura et del Mercante Perfetto’ (Of trade and the Perfect Trader).

A Franciscan Friar, Father Luca Bartolomes Pacioli (born in 1445 in Tuscany) in the
same century, wrote and published a number of books, with drawings by Leonardo Da
Vinci, on Arithmetic, Geometry, Proportion and also Bookkeeping and Business –
detailing the double entry method, as well as such accounting procedures as daily
inventories, memorandums, journals, account books and ledgers, with debits and credits,
date columns and descriptions to enable traders to view their finances at any point of
time.
He wrote the books “in order that the subjects of the most gracious Duke of Urbino may
have complete instructions in the conduct of business”, and used Arabic numbers (1,
2,3,4,5 etc) as opposed to Roman numbers (i,ii, iii,iv,v,vi etc).

Father Pacioli also wrote about banking issues, deposits, withdrawals, bank drafts, joint
ventures, disbursements, use of a broker in a purchase, barter transactions, and the
opening, closing and balancing of books – all things that the Trader could use in their
daily business.

His teachings and writings, which came to be called the ‘Italian method’, were translated
into a number of European languages, and are heralded as the beginning of modern
accounting, with his methods followed for hundreds of years.

Where in the Ancient world, the role of Accountant was undertaken by Scribes, people
who were able to write, when the vast majority of people were illiterate, in the modern
world Accountancy grew out of a combination of merchant trading, tax collection and the
law, lawyers or solicitors being also people who could write and understood the laws of
the land.

The first Societies of Accountants date back to the 17th and 18th century in Scotland,
evolving out of the ‘Solicitors’ Society of Scotland’ and the ‘Society of Writers to the
Signet’ – a signet being a special ring or seal representing the authority of the law or a
particular person of authority.

When the ‘Institute of Accountants and Actuaries’ in Glasgow set up, some of its early
Presidents were Walter Mackenzie and William Anderson, and in 1854 it petitioned
Queen Victoria to grant a Royal Charter to confirm its status, adopting the initial CA to
stand after its members names, to signify that its members were ‘Chartered Accountants’.
By the end of the 1800’s a number of Accountancy Institutes had been formed, including
the Institute of Chartered Accountants in England and Wales, formed in 1880, which
conducted exams for admission to the Institute, and awarded their success and standing
within the profession by the initials FCA (Fellow Chartered Accountant), or ACA
(Associate Chartered Accountant).

Within a few years the CPA and ACA initials were to be seen in countries around the
world, wherever business developed, the accountants would follow, to check on
investments that had been made, and make sure that the companies maintained accurate
records of their business transactions for purposes of running their businesses, paying
taxes, reporting back to the bank lenders and shareholders.

With industrialization in Britain, Europe and America, the flow of capital was followed
by Accountants to check on its use, and in the early years Bankers would sit on the
Boards of the companies that they had lent money to, in order to protect their money.
This occurred in Britain, Germany, and America, as well as other countries in the process
of industrializing. Many of the British banks that lent money to American companies
would send their accountants to America to check on their loans, and many of these
stayed on.

Banks main interest was in making sure that a company had sufficient funds to pay off
loans, protecting the bank’s interest, more so than if the company was growing in sales
and profitability.

In turn many of the leading industrialists held directorships on Bank Boards. This cross
directorship was seen as a great advantage, rather than a conflict of interest, and it was
only in the 1930’s after the Great Depression that the problems associated with this
conflict was seen.

This relationship between bankers and industrialists was also reflected in the way
Balance Sheets were drafted, with a key indicator being ‘production output’, rather than
‘production sold’ and the value paid for it. Large inventories or stockpiles of product
were a measure of a company’s performance, more so than its ability to sell them, and the
price paid.

Over the years, often due to the booms and busts of business and economies and the
cycles that occur, Accountancy has had to change to better reflect through numbers, the
health and well being of company performance. The focus has also moved to reflect not
just historical picture of what has happened, but also project the likely emerging picture
of the future.

While Accountancy initially had an internal focus, reporting to the owners of businesses,
this has now evolved into a situation where Business must report to a number of external
agencies as well, including auditors, shareholders, government agencies and Tax
departments, all of which have had an impact on their reporting methods.

The Law too has evolved.

Law itself dates back to ancient times, and did Rulers or those in Authority lay down a
mixture of Religious Laws and those in the particular Kingdom, country or area.

Under the rule of the Byzantine Emperor Justinian (527-565), based in Constantinople,
the Roman Laws were codified into a book called the ‘Corpus Juris Civilis’, and the laws
set down became the basis of civil laws throughout Europe right through to today.

The Romans brought these Laws to England, and words like Justice, Jury, Corporate, and
Civil Law can all be traced back to these original Latin words.

Laws which were unwritten are defined as customs and while others which were written
down are called Statutes.

Religion paid a key role in the development of Statutes, with Religious books such as the
Bible and Koran, and others and their interpretation by Popes, Priests, Bishops, Canons,
Monks, Rabbis, and other religious leaders, becoming the primary laws of the country
where the particular Religion dominated.

Most religions also proclaimed their superiority over all others, and wars were often
fought and continue to be fought over Religion.

In turn Kings and Queens were often declared to have ‘divine rights’ based on them
being given this by God.

The ‘Law of the King’ became the law of the land, with a structure of appointed Knights,
Dukes and other ‘noble men’ to both protect the King as well as interpret and carry out
the law in his name.

While each society had a different structure and interpretation of this, in most societies
there was an elite group, with a strict hierarchy of people below them. Everyone was born
into a particular class or station in life – from the Brahman to the untouchables in India,
to the Chief, squaws and warriors in Native America, and the King, Knight and serfs in
England.

When Parliaments were first set up, in general, they were initially made up of Lords
representing the interests of the landed gentry. No ‘commoner’ being a person of lower
birth was allowed to enter this elite group, unless they could prove their ‘birth right’.

It was only with Industrial Revolution that this changed, as the wealth centre moved
away from those who had inherited a title and land, to those who were able to accumulate
wealth through luck, good fortune or their own hard work.
The ‘mercantile classes’, those ‘in trade’, ‘shopkeepers’ and others with ‘new money’
simply didn’t have the breeding, good taste, manners, and sense of etiquette to know how
to handle money!

However, with money came power, and in turn Parliaments were set up representing
initially those who had land, then all men and later women too.

Laws changed to reflect the power of Parliament, and the laws passed by parliament
became the laws of the land.

With laws came enforcement, and Court Structures, which had been in place for many
centuries, continued with Judges, Juries and Executioners carrying out their duties in line
with their role of interpreting and carrying out the Law.

In English Courts it is still traditional to ‘swear on the Bible’, ‘speak in the Queen’s
English’, ‘swear allegiance to the Crown’, ‘all rise’ when the judge enters the Chamber,
and Judges and Barristers still wear Gowns and Wigs to signify their importance and as
part of the tradition of the Law.
The laws pertaining to each country vary enormously, although they share some common
themes and structures.

The first lawyers were people who could read and write, probably read Latin and
understand the Scriptures as well – this in an age when people generally could not read
and write. In turn the name solicitor and advocate grew out of the need to present an
argument in favour or against the innocence or guilt of a party before the court, and argue
for or against the leniency or severity of a sentence.

Where in the early centuries, law dealt with purely the acts of individual people, and
property issues, splitting into Criminal and Civil laws, the rise of business, and the
creation of companies led to Business and Company Law becoming sets of laws in their
own right.

Companies in the eyes of the law are seen as an entity in their own right, and given much
the same status as a person, meaning that they can be found innocent or guilty of a civil
or criminal act or crime, and pay the consequences. It difference is that a Company can’t
be executed or sent to Gaol. The Directors or officers representing that company can be
however.

Laws governing business differ greatly from country to country, both in the Laws
themselves and also their interpretation.

Business has had a very large influence on Government also in the laws that have been
laid down. Equally, Governments have had a large influence on Business, and have both
been pro-business and anti-business, or sought to protect, free up, restrict and even
occasionally destroy industries, jobs, particular groups of people, unions, regions, towns,
or protect the Government’s interest in a particular industry.

Governments have also invested themselves in businesses, lent money directly to


businesses, supported particular industries through subsidies, tax breaks, price fixing,
restricted licences, tariffs, duties all aimed at achieving particular results and outcomes.

Laws have also operated on a Federal or total country level, and at a state and local level,
sometimes in harmony and sometimes not. Laws have also been changed to suit new or
emerging circumstances or industry where there is seen to be a problem arising from laws
which exist. There have also been such differences between laws in adjoining states, and
countries, that whole cities have developed which straddle a border – Berlin straddled a
border for a long time between East and West Germany, until the Berlin Wall was pulled
down with the fall of Communism; and there are many cities throughout the world where
differing state taxes have created ‘border towns’, where people can buy cheaper goods on
one side of the border, all because of state laws.

There have also been thousands of laws passed to protect the rights of workers in relation
to employment by companies, protect consumers of products made by companies, to
protect companies from other companies, and protect the environment, workplace, and
place restrictions on disposal of waste, dangerous equipment, use of chemicals and
hazardous products and by products and the list goes on.

On an international level there have also been thousands of laws written in relation to the
conduct of international trade, shipping, transit, right of passage, and one of the most
constant of these has been the issue, interpreted through international laws, doctrines,
treaties, agreements and customs in relation to ‘protection’ and ‘free trade’.

This issue has consumed the thoughts and actions of almost all governments at one time
or another, extending often into doctrines that govern their whole country – Democracy
and Free Enterprise, Communism, Socialism, Dictatorship and Anarchy.

Laws and Governments have played a tremendous part in determining the development
of industries, companies and brands worldwide, and they continue to do so.

There are thousand of examples of this, and it is not possible to cover them all – at least
not here! Some however are very interesting in both the way they were enacted and also
in the outcomes that flowed from them.

In times of war, a country will bring together all of its resources in people, technology,
and funds to support the war effort and win whatever victory is being sought. There will
be at the war’s end, a victor and a loser, and countries or groups of people who were on
the right or wrong side as the war progressed.

While the war is in progress however, there will also be companies and individuals who
will make money, and also those who will lose it. There have been fortunes made in
supplying armaments, supplies, chemicals, uniforms, infrastructure, providing loans, and
after the war when repairing the damage, fortunes made in finance, re construction and
other areas.

At the time of the Napoleonic Wars in 1815, British farmers were able to sell their Corn
at very high prices, due to the restriction on Corn coming from Europe, and the price of
farms rose enormously based on the new price structure.

The landowners and farmers who controlled the British Parliament wanted for this to
continue, so they brought in the Corn Laws, which stopped any foreign corn being
imported until the domestic price of Corn rose to 80 shillings per quarter (8 bushels) of
grain. At the height of the war it had reached 126 shillings.

Corn was the basis staple used by the people to make bread, and there was great distress
caused by this new law, with riots in the street outside Parliament when they were
enacted, and Food riots broke out across England in 1816, when a bad harvest in England
caused the prices to rise even higher. The laws were modified over the next number of
years, were not repealed until 1846 – some 41 years later, by which time the
Manufacturers, shopkeepers and city voters had more voting power over who was elected
to parliament.
The Laws had benefited the landowners and farmers who made the laws, but the workers
and families had starved in the process, and manufacturers suffered as their cost of goods
rose, through increased wage demands, and their sales fell due to people not having the
money to pay for them!

The Industrial Revolution in England initially saw great exploitation of workers in


factories and mines, with Child Labour being common, dangerous open equipment being
used, and workers subjected to long hours and low pay. If a worker were to die or be
injured in their work, this was considered simply there bad luck, and certainly they had
no rights to sue the landlord or employer. They may well have ended up in the ‘poor
house’, or even ‘debtors prison’ if they failed to meet their debts.

All this changed as laws were enacted to protect workers, children, women and the rights
of people, and employers were forced to provide better working conditions, but it took
over a century to do so.

On the other side of the Atlantic, in America, ‘free enterprise’ was fundamental to the
‘new world’, where ‘a person could make a fortune, just by walking the streets which
were paved in Gold’!! The old Aristocracy of Europe did not exist, and thousands, and in
time millions of people from all parts of Europe paid their fare from Europe to America,
to take up a new life in the various colonies, free of religious persecution that they had
often suffered in their traditional homelands.

Irish Protestants, English Roman Catholics, Puritans, Quakers, Scottish, Welsh, were
followed by French Huguenots, German Lutherans, Dutch, Jews, Catholics, Protestants,
rich and poor people from all over Western Europe and later Eastern Europe as well.
People from all parts came to America in search of their fortune, to buy cheap land, or
even receive it free in later Land Ballots, the Indian population displaced, as the
European numbers grew larger.

Ellis Island, in New York’s harbour became the entry point to the ‘land of opportunity’.

Between 1850 and 1860 the Population rose from 23 million to 32 million.

From the East Coast of New York, they headed to Boston, Philadelphia and Chicago and
on west – greenhorns looking to make their fortune in any way they could.

From the initial English and French colonies, 13 states grew and then came together to
fight the British as one nation, making a declaration of Independence in 1776, followed
by a Constitution in 1787, which took effect in 1789.

In the South, free enterprise saw the introduction of Slavery to create a labour force to
work in the cotton and tobacco plantations, just as they were in the Sugar plantations in
the West Indies.
These industries were built on the labour of African slaves, who were brought in by ship
from West Africa – men, women and children to be sold in Slave Markets to the highest
bidder for use in the Plantations. Initially they had also been used in the North.

As the industrialized North the States had come together under a Union of States, while
the South had formed itself into a Confederacy of Southern States.

The southerners believed that their whole livelihood depended on the use of slaves to do
the hot manual work in the plantations, and perform domestic duties in their homes. Free
Trade saw them able to buy goods cheaply, and the use of slaves enabled them to produce
their Cotton and Tobacco cheaply for export too.

The Northerners, who were more citified with manufacturing industries being
established, saw slavery as inhumane, but wanted protection for their industries. They
were also developing Unions to protect their workers from exploitation in the workplace.

While the North favoured abolition of slavery, the South was totally against this.

When Abraham Lincoln (1809-65) was elected as President in 1860, South Carolina
seceded from the Union and declared its independence, followed in January 1861 by
Mississippi, Georgia, Florida, Alabama, Louisiana, and a month later by Texas.

When war was declared on April 12, 1861, Arkansas, North Carolina, Virginia, and
Tennessee all joined the Southern Confederates.

In the initial two years of the war, the Confederates were largely winning the war, and it
wasn’t until 1863 that the North made Military Service compulsory.

With new Generals appointed, General Ulysses S Grant and General Sherman, the North
reversed the situation, winning a Battle at Gettysburg, followed by others. In the same
year, even though the war was far from over, President Lincoln declared that slavery was
now abolished and that slaves were now free!

On the 9th April 1865, an Armistice was signed between the North and the South, and 5
days later President Lincoln was shot dead.

The Laws abolishing Slavery in the United States were a major turning point in both
American and world history, bringing the United States together as one country, and
allowing it to develop into a World Power.

Free enterprise was still the catch phrase, but there were Laws and limits on how far free
enterprise could exploit its position. A new age had started.

Laws have changed greatly since these times, but continue to be passed to protect the
rights or privileges of individuals, groups of people, companies, organizations,
communities, including such things as the environment, oceans, rivers, animals, and all
manner of other things from issues or problems which arise in all spheres of life.

In some parts of the world, Religious Laws, such as the Muslim Sharia Laws still exist,
and vast numbers of people come under their control, with ancient practices such as
stoning, and amputation of hands for theft still being practiced, with Religious Police
enforcing their rules.

The Laws of all countries are still changing, and will continue to change and evolve as
societies change, and new political, social and economic values take hold.

Company laws, international laws, laws on Protection and Free Trade are all shaping the
way that Companies and individual Brands develop, both within countries and globally.
The impact of this will be seen within the stories of individual brands and companies in
the chapters to follow, particularly in the area of anti trust legislation in the USA, and in
laws to restrict monopoly powers and restrictive trade practices.

CHAPTER ELEVEN

FROM CANDLES TO POWER

The early years of the Industrial Revolution saw machinery developed which used Water
Power to control it.

Steam Power soon replaced this, initially in Stationary engines, and then in moveable
engines powering Canal Boats and Train Locomotives to pull carriages along rails.

Steam power was also used to power all sorts of machines from factories, and later in
steam powered tractors, steam rollers, steam hammers, pumps, threshing machines and
steam ploughs on farms, and wherever power was needed, even to provide the power for
drilling rigs used to drill for oil.

The first steam turbine can be dated back to ancient Egypt, to an ‘Aeolipile’, which was a
ball filled with water, with two pipes protruding from it. When the ball was heated from
below, the ball would spin, as the steam was released from the pipes. The spinning ball
was used to make puppets dance!

In 1712, Thomas Newcomen developed a water pump for a coal mine, powered by steam,
and in 1751, a ship, the “Gran Louis” from Le Havre in France steamed to Haiti, the first
ship to sail under the power of steam.

A year later, the British Royal Navy bought their first steamship to carry troops, and in
1753, the British Government in order to protect British knowledge of steam power
passed a law forbidding steam engine manufacture outside of Britain.
The French were also very interested in Steam power, and the French Government
around 1860 founded the Royal Institute of Naval Steam Engines in an effort to develop
steam for use by the Military.

James Watt patented his steam engine in 1769, making improvements to them over the
next number of years.

The first steamboat on the Mississippi River appeared in 1761, when French troops
steamed up the river from New Orleans to St Louis. It was not until 1803 that the
Louisiana Purchase permitted American Steamers to steam the river.

A year later, Matthew Murray built a steam locomotive running on wooden tracks, and a
few months later, Richard Trevithick built his locomotive in Wales, to carry coal at the
Welsh Penydarran Coal Mine.

The ‘Rocket’, built by George Stephenson in England was built in 1829, and the Age of
Steam had truly begun.

The great disadvantage of steam power was that it required vast amounts of wood or coal
to fire up the Boilers to create the necessary steam, and the Boilers had to be large in size
to carry, with water tanks to carry water.

Not only did the Steam Engines put out a lot of smoke from the coal fires, but the Boilers
could easily blow up, if the pressure on their seams became too much.

This often happened, with the whole engine becoming a fire risk, as well as dangerous to
those working near it, and laws were passed early in Britain and the United States to
place a Quality Standard on Boilermaker’s seams, to help stop the number Boiler
explosions and subsequent fires happening.

Steam gained its first wide spread use in ships, then in coalmines and then railways.

From the early 1800’s steam power became widely used, and at the Great Exhibition in
London in 1851, steam traction vehicles were exhibited.

At this time, horses were hauling steam engines from farm to farm, which were then
connected to threshing machines. Seeing this, Thomas Aveling, a farmer from Kent,
England decided that it should be possible to have the engines themselves, ‘self moving’.

He set about doing this, establishing the firm of Aveling and Porter in 1862, and their
steamrollers continued in manufacture until the 1940’s.

Steam rollers or road rollers were able to use the weight of the steam engine itself, as well
as the rollers, filled with water for added weight to compress road surfaces below them.
This was one area where steam continued to be used long after diesel engines were
developed.
With every industry that evolves, an old one is replaced or shrinks in size, and just as Sail
makers, and all those trades associated with Sailing Ships lost out to trades associated
with Steam Powered Ships, so too were Candle makers affected by new technology.

For centuries, people had burnt wood to create fire, later replacing this with Coal or Peat
fires, which gave out greater heat to keep warm, while light was provided by the fire or
candles.

Various tree and animal oils, such as Camphor Oil, highly explosive Camphene and also
various oils including Whale Oil were used to provide light in Oil Burners, but Candles
were by far the most common way to provide light for people to see at night.

It was not until the mid 1800’s that kerosene was discovered, causing a revolution in
lighting.

Kerosene was initially distilled from Coal, and it wasn’t until 1859 when Edwin Drake
first struck oil in Titusville, Pennsylvania, that kerosene could be made cheaply from
Petroleum Oil.

Kerosene Lights and lanterns contained a bowl of Liquid Kerosene, with a single, double
or flat wick above it drawing a controlled amount of kerosene up to the flame, with the
flame turned up or down, depending upon the amount and size of wick which was
exposed to the air to burn.

By adding a glass chimney above the flame, and altering its length, shape and glass
colour, it was possible to create lights which burnt brightly, gave out colour effects or
worked as night lights which burnt very slowly, giving out just enough light to find the
night potty!

Tinsmith’s trade boomed as the kerosene light took over from candles, and glassmakers
developed a whole new trade making glass chimneys.

Kerosene lamps were made for the home, for use on trains, carriages, and ships and as
street lighting, even for use in a Hurricane – the ‘Hurricane Lamp’!

Kerosene was still very dangerous, and fires often resulted, when lamps were accidentally
knocked over. There had however been equally many fires that were caused through
candles being knocked over, and the embers from fires in kitchens and homes burning
down the whole house.

Early houses can still be seen, built with a separate detached kitchen at the back of the
home, built so that if a fire did occur, it would only burn down the kitchen, and not the
whole dwelling. For many buildings, the only thing left standing was the chimney, built
from bricks!
Almost all of the Lantern Companies also had fires happen in their factories, burning
many to the ground, but the Lantern Business was very big business for a number of
years. Many of the Lantern Companies also built Steam Gauges for use on Steam
Engines, and had such quaint names as ‘The R.E Dietz Company’ from New York, and
‘The Buffalo Steam Gauge and Lantern Company’.

Other names that we would recognize included the Brooklyn Flint Glass Company,
changed in 1868 to the Corning Flint Glass Works, based in Corning New York. This
company subsequently began manufacturing NoNex glass, a glass that could withstand
direct heat, leading to the creation of the Pyrex Brand of Glass cookware in 1908. Both
Pyrex and Corning ware are brands still used today by the company.

People had been aware of static electricity from ancient Greek times, using amber rubbed
on a cloth or fur to magically attract straw to its surface.

It was not until 1600 that Dr William Gilbert, used the word ‘electric’ to describe the
effects of magnetism, and 1752 that the American, Benjamin Franklin was able to show
that the electricity in lightning could travel from a metal piece on his kite in the middle of
a thunderstorm high in the sky, to a metal key held in his hand on the ground. It is a
wonder it didn’t kill him!

Other experimenters followed, including the Italians, Luigi Galvani, and Alessandro
Volta, who were able to create an electric battery and prove that electricity could be made
to travel along a wire. Volta created electricity and his battery by attaching a thin sheet of
zinc to a sheet of copper, separated by a moisture board.

It was however the Englishman, Michael Faraday, who took this a step further in 1831,
creating a dynamo to generate electricity, by using a magnet rotating inside a coil of
copper wire to create electricity.

In 1878, this was improved again by the American, Thomas Edison, creating an electric
generator, and by a British scientist, Joseph Swan, who invented a light bulb, using a
filament element to create light.

An AC or alternating current motor was then invented and patented by Nikola Tesla, and
developed by George Westinghouse. Other pioneers included Sir Humphrey Davy, who
created an electric arc light; John Danniel on better cells for batteries; Charles Grafton
Page who pioneered work on electric motors; James Watt, who attached an electric
generator to his steam engine; as well as the Scot, William Rankine; the Frenchman,
Andre Ampere; and the German, George Ohm.

Electrical terms that we still use today, such as Watts and Wattage, Volts and Voltage,
Amps and Ohms can all be traced back to the names of these inventors.

It is hard to know whether the invention of electricity, or the discovery of oil and
subsequent uses found for it, caused the greatest change in the world, as it was known in
the 19th century. Both had a huge impact on the way the world has developed since then –
economically, socially and politically.

There is probably not a person on earth who has not in some way been impacted by these
discoveries, and the inventions that have flowed from them.

When the first oil discovery was made in the United States, the immediate use that was
foreseen was that it could provide a means to make kerosene, which could be used for
lighting. At that stage the car had not been invented.

The Oil industry is immensely interesting, and remains today one of the most powerful in
the world. Its beginnings however were very humble.

The first oils that were found and used were from Whales, and Whalers and Whaling
ships, with harpoons searched the oceans to find Whales, which they would bring to
shore and cut up the fat blubber and throw into cast iron Whaler’s Pots, which had a hole
in the bottom for the oil to be collected. This Oil was used for making soap, cosmetics,
potions, and oil for use in oil lamps.

Sperm whales were particularly sought after because they contained a great deal more oil
than other whales, and the Oil also burnt cleaner and brighter with less smell.

The Moby Dick stories, and the stories of whaling grew out of these times, and it is only
now that whales, which are now largely protected around the world, are growing in
numbers again, migrating along coastlines and coming into harbours like Sydney Harbour
in Australia, where there were once Whaling Stations.

Whaling stations were set up along the coastlines wherever whales could be found, and
there were many whaling stations along the coast of America, Australia, Europe and
Asia.

In the American Civil war, the Confederates destroyed the Whaler’s fleets from the
North. The Whale Oil was competitive to the Turpentine and Pine Tar that the South
produced.

The turpentine and pine tar being made by slow burning Pinewood and roots in a special
underground earth kiln, which allowed the sap or tar to flow from the timber. This sap
was then made into pitch (a thick tar, which could burn and give off light, or be used for
waterproofing), as well as various grades of turpentine, tars and pine oils, and the residue
wood was left as charcoal. The products were in great demand and most of the southern
States were making it for sale to England, one of the biggest uses being for coating hemp
or jute fibres, and using these treated fabrics for caulking the timbers on ships to stop
leaking, and in the ropes to stop them from rotting.

James Young in England, who took out a patent on his process around 1850, refined the
first Oil. He had refined the oil from a seep in a Coal Mine and later Shale.
In America in the 1850’s, a group of businessmen and chemists meeting in a Connecticut
Hotel in New Haven set up an oil company to look for oil in Titusville, Pennsylvania,
where Oil had been found seeping from the ground.

The Company, named the ‘Pennsylvania Rock Oil Company of New York’, later to
become the Seneca Oil Company, then hired Edwin Drake, a former Railroad Conductor
and Express Agent, who went by the name of Colonel Edwin Drake, was at the hotel at
the time and out of work, to find the seep, search out the title of the land, and report back.

With a free pass on the Railroad, he was the ideal employee to hire!

Drake then set out to the Titusville in Pennsylvania, and managed to find the source of
the seep oil.

After analysis in 1855 by Benjamin Silliman, a Yale Chemist, a report was given stating
that the ‘Rock Oil’ had potential for lighting and other uses, and even though the report
was not paid for, and his equipment blew up during the analysis, it was enough for the
arduous task of fund raising to begin.

A few whiskey barrels of Crude Oil were sent to New York to the offices of ‘Eveleth and
Bissell’, who immediately proclaimed themselves as being Lawyers specialized in the Oil
business.

In 1858 Colonel Edwin Drake returned to Titusville, as a shareholder in the Seneca


Company, and managed to produce up to 10 gallons a day, by variously digging at
different locations in the Valley to find a greater flow of oil. The 10-gallon hat was
possible born here!

By 1859 an Oil Rush was on, with the area around Titusville becoming known as Oil
Creek Valley.

Improvements were made in the way Oil was drilled, and in the early years Whiskey
Stills were used to refine the Oil, putting it into any barrels that could be found. One of
the first stills was set up in Pittsburgh by Samuel Kier, becoming America’s first Oil
Refinery, and capable of refining one barrel at a time, and later up to 5 barrels at a time.
He had to move out of town, due to the smell of the Oil and the fear of the still
exploding!

Wooden barrels had been used for transporting everything from Beer and Whiskey to
Fish and Turpentine, with the specialized craftsmen making barrels from Oak and
Hickory, referred to as Coopers.

As time went on Oil Barrels were standardized in size at 42 Gallons, based on a


standardized North Sea Herring Barrel, as determined by a statute brought in by King
Edward IV of England in 1482!
As oil production and demand grew, the number of Barrels grew too, and Bullock and
Horse drawn wagons and their drivers set up business in large numbers to cart the Oil
Barrels to Railroads, which developed specialized flat cars for transporting the Barrels,
and later around 1865 Tank cars which replaced the Barrels to transport the oil to
Shipping points.

The Oil Boom created the need for transport, and from this the Teamsters Union grew.

By 1863, the first pipelines were being laid down, and while there were a number of
technical problems with leaking joints, maintaining even pressure throughout the pipes,
and experiments with different gauges and pipe materials, the main problem came from
the Teamsters, who dug up and smashed the pipes to stop their trade being lost to this
new method of transporting oil.

Over the next ten years the Pipelines grew in number, and the cost of transporting oil
using them fell. The teamsters, rather than carting oil, turned to carrying pipes, but their
number fell rapidly. They did however play a big part in the early years of the American
Oil Industry.

Specialized Pipeline companies also sprang up, and there were a number of pioneers, like
William Abbott and Henry Harley, who were involved in this.

Colonel Edwin Drake however fell on hard times and sickness, and died in poverty. A
memorial burial tomb, with a bronze statue of him has since been erected in Titusville,
and a museum, named in his honour has been built to commemorate his role in
developing the Oil Industry.

The growth of the Oil Industry was phenomenal, and within twenty years of its start up,
the business had grown to be a major business, creating fortunes for not just those who
drilled for oil, but also companies in refineries, pipelines, sales and distribution. It was
also an industry of boom and bust, and dry wells, explosions, gushers, fights over rights,
and prices that rose but also fell, created companies that succeeded and also companies
that failed.

Some of the world’s greatest fortunes have and continue to be made through oil, and in
America, one name stands out above all others.

John Davison Rockefeller (1839-1937) set up the Standard Oil Company.

He was born in Richford, New York in 1839, moving with his family to Cleveland, Ohio
in 1853, where he attended the Central High School, and became a member of the local
Baptist church.

In 1855 he left school to take up a business course, and joined a local Merchant company
that sold produce and other goods, becoming its chief cashier and bookkeeper.
By 1859, he had saved up a $1000, and after borrowing an additional $1000 from his
father, he went into partnership with a friend, Maurice Clark, setting up the business of
‘Rockefeller and Clark’ as Commission Agents selling flour and other goods.

The Oil Business in Titusville had started, and soon Cleveland became a Refining Centre.

In 1863 ‘Rockefeller and Clark’ entered the refining business, taking on an additional
partner in the business, an Englishman Samuel Andrews, who had worked in the refining
business, and the name of the business was changed to ‘Andrews, Clark and Co’, and
later two more partners joined.

By 1865 the partnership was in disagreement about the company’s future direction, and it
was agreed that they would sell the refinery to the highest bidder.

Rockefeller bought the refinery for $72,500, with ‘Rockefeller and Andrews’ becoming
his new partnership name. Andrews was technically very good, and managed to develop
ways of refining the crude oil to create higher grades of quality kerosene.

The business of providing Kerosene for lighting was booming, and just five years later,
Rockefeller set up a new company, the Standard Oil Company with a capital of $1
million – a huge sum in 1870.

Standard Oil had by this time a new list of shareholders, including his partner Samuel
Andrews and his brother William, as well as Henry M.Flagler, S.V. Harkness and others.

Within two years, Standard Oil had acquired all of the Cleveland based refiners, and set
up two refineries in New York, refining 29,000 barrels of oil a day!

The company was also producing its own barrels, warehousing oil, and even
manufacturing and retailing paints, glues and other products made from Oil. Kerosene
continued to be a huge earner for the company, with American Kerosene exported to
Europe and Asia in large quantities as well.

As an export, kerosene was second only to Cotton in American export earnings at the
time, and over 40 million Americans purchased it for lighting and other uses.

By 1882 all of the Standard Oil assets were merged into a Standard Oil Trust, and its
capital had risen to $70 million, with a total of 42 owners, with around 25% of all stock
owned by Rockefeller.

In that same year, Thomas Edison’s light bulb was invented, and this would eventually
compete directly with Kerosene as a means of producing street lights, home lights and in
time power a whole new range of products.
In 1892, the State of Ohio, fearing that the company was exploiting its near monopoly
position in the market, and was engaging in restraint of trade, ordered that the trust
should be dissolved. In 1897, the State brought contempt proceedings against the
company, but by this time the companies within the Trust had moved to the state of New
Jersey, setting up a new parent company in the name of ‘Standard Oil Company (New
Jersey), and associated companies in states across America.

State powers stopped at the border, and New Jersey Law permitted Parent companies to
be set up.

By 1890 the company had grown in size to the extent that it had control of between 75%
and 90% of all oil business in the USA, with other interests spanning land, transport,
manufacturing, mining and timber.

Being the largest buyer of Rail Freight, it had also set up special prices for supply of its
freight requirements.

Rockefeller retired in 1896, aged just 57, but remained on as President of the company
until 1911, when Federal Anti Trust Legislation was upheld by the U.S Supreme Court,
ordering that the Standard Oil Company (New Jersey) was in violation of the Federal
Laws, and that the whole company, made up of some 34 main companies, with numbers
of subsidiaries and affiliated companies would need to be broken up into individual
companies, to ensure free and fair competition.

Federal Laws took precedence over State Laws.

The U.S Supreme Court took evidence in relation to the Standard Oil Company, which
examined the whole way Standard had done business since its establishment, taking over
12,000 pages of evidence and testimony.

The Court evidence showed that the company had exploited its monopoly position in a
number of ways, the main one being through a long standing conspiracy with the
Railroad companies to fix prices for delivery of Standard Oil at a level below the freight
charges that their competitors could buy at.

This was extended further by forcing the Railroad Companies to refuse to transport the
Oil of certain competitors, when it didn’t suit the Standard to have it delivered, and also
receiving a ‘rebate’ for all oil transported by Standard and also its competitors. The
Standard had set up a special company, called the South Improvement Company that held
this contract.

For many years, competitors had campaigned to have the affairs of the Standard looked
at, as they could only guess at how the Standard had been able to sell Kerosene at prices
below their own operating costs, and the revelation of the ‘rebate’ system confirmed their
main suspicions.
Over the years, the Standard had been able to force opposition refiners out of business,
dictate the terms on which it would buy crude, and control the transport on Railroads and
supply by pipeline, through combinations of secret rebates, denial of supply or purchase
on such terms that the seller would make a loss or be forced out of business.

Competitors would either be bought by Standard or crushed! They may have been able to
produce oil, but if there were no barrels available; the barrels simply didn’t turn up; the
Railroad refused to carry them, or agreed to carry them on such onerous terms that the
producer lost money on the sale, then it was only a matter of time before the producer
would go bust.

Refineries may have been built for large sums of money, but when they couldn’t get Oil
to refine, or were forced to pay higher prices for it, they could be bankrupted quickly, and
then their assets could be bought for next to nothing.

In concert with the Railroads, the Standard was able at times to own all of the Oil
Wagons owned by particular Railroad Companies, or determine the contracted price, or
even to drill for oil on land owned by the Railroad of Canal Company, taking the Oil of a
competitor’s producing well next to it before it came out of the ground!

All sorts of business practices were employed to ensure that the Trust maintained its
monopoly, with total control of pricing.

In 1911, when the Trust was broken up, it was broken into 6 companies – Standard Oil of
New Jersey became Esso, and later Exxon; Standard Oil of New York, which went by its
initials, Socony, became Mobil; Standard Oil of Ohio and Standard Oil of Indiana
became Amoco (now part of British Petroleum); and Standard Oil of California became
Chevron.

In 1999 Mobil and Exxon merged in an $80 Billion deal to become the Exxon Mobil
Corporation, with its headquarters being in Irving, Texas. It was one of the biggest
corporate mergers in history, making the company one of the world’s biggest
Corporations, alongside General Electric and Microsoft.

John D Rockefeller in turn set up the Rockefeller Foundation in 1913 to “promote the
well-being of mankind”. This foundation continues today, using its funds to provide
assistance in education, health, disease control, science and the arts around the world.

He died in 1937, aged 97, and is buried in Cleveland, the city where he made his fortune.

The Railroads also made fortunes for their owners, carrying vast amounts of Oil.

The Railroad Barons, like Commodore Vanderbilt from New York, Jay Gould, James
Fisk, Daniel Drew and others established ‘Railroad Pools’ ostensibly to provide a better
service to users, but these were in effect ways of fixing prices and ensuring that all
railroad companies were able to control the market.
There were many railroad companies, but their position as the only real means of
bringing products to market, allowed them to exploit the market and maximize their
profits, particularly where a single Railroad Company had a monopoly on a particular
track.

Where in Europe, the railways there linked pre existing towns together, in the United
States, the Railroads were often used as a means of opening up new areas, creating a
monopoly on the transport of people and goods to and from these new lands.

In 1830 there were just 23 miles of Railroad Track in the United States. By 1860 this had
reached 30,626 miles, and by 1900 it had reached 201,000.

In many cases where a Railroad Company had the only line available, they were able to
price their transport at a level that meant that farmers, timber or Oil producers lost most
of their profits to the Railroads. They also discriminated in their pricing between large
and small users, so that smaller users found it harder to compete because of the higher
prices they paid. This was the subject of a great level of complaint by farmers and others
who felt oppressed by the Railroad’s pricing, with Railroad Barons, often being referred
to as ‘Robber Barons’! Ultimately this led to the set up of the Interstate Commerce
Commission in 1887.

The Railroads had opened up Western America. They had also provided a network of
transport across the country, and employed large numbers of immigrants in their
construction, in their running, and enabled new immigrants to get to areas where they
could go into land ballots to be given free land.

The Railroads were America’s first truly national business. Building the Railroads also
meant the growth of other types of businesses, including the steel and engineering
businesses, and the invention of such things as signaling equipment, and Air brakes,
which were invented by George Westinghouse in 1869.

They had also played a large part in the Civil War, enabling Soldiers and Guns to be
moved, and supplies either brought or cut off, when tracks were destroyed or trains seized
by the warring sides. The fact that the North had greater mobility because it had more
railroad tracks laid was a large factor in the North winning the war.

The idea of a ‘Trust’ is that it takes care of the financial affairs of the persons or
businesses that have been entrusted to it. It operates on behalf of these other parties in
their best interests, and therefore becomes the legal entity on behalf of those interests.

While a Trust, working on behalf of its shareholders and the companies within it, can
provide great benefits to its shareholders, if it takes on a monopoly role, it can exploit its
position of power, and also abuse this power if it chooses.
There was great fear in the United States that Trusts formed in industries like Sugar,
Corn, Tobacco, Steel, Railroads, Cattle, Wheat and other business areas, could exploit
their positions, and create monopolies, just as the Standard did.

Industries where trusts were formed included the Sugar and Tobacco Industries, and also
Communication.

In the early days of the Standard, the Company and subsequently the trust was competing
with other refineries in Cleveland. At the same time, Cleveland was competing as a
refining centre with other refining centres like Pittsburg and New York, as well as Oil
Creek itself.

In turn the Railroads, Pipeline and Canal Companies were similarly competing for trade,
so it was in their interest to try to bias trade in their favour, by fair or foul means.

Rightly or wrongly, this was all part of free enterprise, part of the ‘American dream’ and
those within the arrangements saw its great advantages, and those outside, saw it as a
threat to their very existence. Survival of the fittest! Risk and reward!

The Oil companies made their early fortunes from the sale of kerosene, but it was the
invention of the internal combustion engine, and in turn the development of the
automotive and plastics industries which saw the Oil Companies move to new products
and new markets around the world.

While the oil business has developed into one of the world’s biggest businesses, as has
transport, the Railroad companies which enjoyed a monopoly position in the early days
have lost their monopolies through the same inventions, with the vast railway and
railroad networks of tracks largely been taken over by Governments in most countries,
smaller tracks closed down, with only the main tracks remaining.

Only now are there some signs of the Railway industry re generating through private
enterprise.

CHAPTER TWELVE

THE TOBACCO TRUST

Just as the Oil Industry and the Standard Oil Company grew enormously in the late
1800’s, so too did some other industries in America, such as the Tobacco Industry.

The Tobacco plant was first found in the Americas, with Tobacco being brought to
Europe by the Spanish in the 1400’s and later the French and English who encountered
American Indian Tribes smoking tobacco as part of their ceremonies.
Spanish tobacco was in widespread use by the 1600’s, and Sir Walter Raleigh (1552-
1618) who spent some time as a privateer attacking Spanish Galleons was said to have
introduced Pipe Smoking to Britain, following his voyages to Trinidad and the West
Indies. He had also been involved in the first English settlement in Virginia in 1584,
which ended in failure.

When the Virginia Colony eventually did get established, wild tobacco was growing in
the area, but it wasn’t until John Rolfe, who married Pocahontas, brought in seeds from
West Indies Tobacco in 1612, that the local tobacco industry began.

Tobacco was in great demand in Britain and Europe, and so the Virginian Tobacco
Industry grew rapidly, expanding to North and South Carolina, and Maryland, with
Tobacco becoming both a big export, and means for paying for imported products.

In the early 1800’s demand for a lighter, rather than dark tobacco grew, and in 1839 an
accident changed the way that tobacco was cured.

A slave by the name of Stephen was in charge of the fires for curing tobacco, when he
fell asleep. When he woke, the fires were almost out, so he used Charcoal from the
Blacksmith’s Forge to relight the fires. The next day the tobacco had all turned yellow in
the curing room.

The simple use of charcoal had created a whole new way of curing tobacco, and mild,
yellow ‘bright’ tobacco was born.

The Civil war disrupted the industry, but when the war finished, farmers who had been
conscripted for the war effort returned to their farms.

One of these farmers was Washington Duke, who walked 135 miles from Richmond,
Virginia, where he had been captured and imprisoned, back to his abandoned farm.

When Duke returned, he and his family began to rebuild the farm, and a little later they
built their first smokehouse to cure tobacco.

By 1866 they were making their own ‘Pro Bono Publico’ tobacco, in competition with
other brands like ‘Best flavoured Spanish Smoking Tobacco’ and ‘Bull Durham’ tobacco,
made in the village of Durham, Virginia. The ‘Bull Durham’ tobacco featured a bull on
the front of its packaging, an idea ‘borrowed’ from Colman’s Mustard Tins!

A second smokehouse followed, and as the business grew, they built more smokehouses,
and in 1874 a new factory was built in Durham near the Railroad line. By this time
Durham had established itself as the world’s leading tobacco manufacturing centres.

In Europe, cigarettes had been handmade since the 1860’s, and initially the American
companies hired skilled Eastern Europeans to hand roll them for sale.
They were able to make about four a minute, and it wasn’t until the 1880’s that machines
were developed to roll cigarettes.

In 1877, one tobacco company, Allen & Ginter from Richmond had offered a reward of
$75,000 for any person who could build a cigarette-making machine. The reward was
claimed by an 18 year old, James Bonsack, who build a machine, but it took another few
years to perfect its workings.

By this time Washington Duke and his sons Brodie and Buck had established W.Duke,
Sons and Company as one of the leading cigarette manufacturers in America.

By the mid 1880’s, Buck Duke, now heading the business, decided that it would be better
if the major competitors merged their businesses to gain efficiencies, and in 1890 the
Duke Company, Allen and Ginter Company from Richmond, F.S Finney Company, the
Goodwin Company from New York, and William S Kimball Company form Rochester,
all merged together, taking a 90% market share in the United States, and renaming itself
the ‘American Tobacco Company’, under the Presidency of James B Duke.

The ATC then acquired exclusive American rights to the Bonsack cigarette making
equipment.

It wasn’t long before the company became known as a tobacco trust, and in 1911, the
United States ruled that the company (or trust) had to split into four companies.

This split resulted in R.J Reynolds being established as well as Liggett and Myers, P
Lorillard and the American Tobacco Company.

On the other side of the Atlantic, 13 tobacco companies had similarly merged in 1901,
based on the need to fight the American competition. They formed The Imperial Tobacco
Company.

The merged firms included W.D and H.O Wills, John Player, and Lambert & Butler, as
well as Mardon, Son and Hall Ltd, a printing company from Bristol, and the tobacco
companies W.A & A.C Churchman from Ipswich, W.T Davies and Sons and W.
Williams & Co from Chester and W& F Faulkner from London. Under the merged
structure, they continued to operate their own businesses, but became ‘branches’ of the
main company, which had board directors from each of the member companies.

The First Chairman was Sir William Henry Wills Bt, who in 1906 was given a life
peerage, becoming Lord Winterstone. He spent his whole working life in the tobacco
industry, and died aged 80 in 1911.

At the time, there were more than 500 British tobacco manufacturers, and over 300,000
tobacco shops throughout the country.
When Buck Duke arrived in Liverpool, England representing the American Tobacco
Company, it is said that he arrived with $30 million in funds to secure the ATC’s position
in the British market.

The ATC immediately bought out the tobacco company, Ogden’s, and then proceeded to
try and buy others, but within 4 months of him arriving, the British had merged their
operations.

The ATC and Imperial Tobacco then went head to head in the British market, competing
with each other through discounted offers, customer bonus offers and other inducements
to gain sales. Imperial Tobacco then bought out Salmon & Cluckstein, a large chain of
tobacconists, to close off a distribution channel to the ATC.

In 1902, Imperial Tobacco then set out to establish an American business. By September
1902, the ATC and Imperial formed an agreement, whereby the ATC would sell Ogden’s
to Imperial Tobacco, the business they had bought the year before, and in turn the two
companies would join together and set up a new business together in Britain, which
would be named The British American Tobacco Company (BAT).

Under this agreement, the export and duty free stores business was put into BAT, and
Imperial agreed to distribute ATC brands in Britain, while the ATC would distribute
Imperial brands in America.

This arrangement continued until 1911, where under the Anti Trust Acts, the ATC was
broken up into the four companies. The new ATC Company continued to sell a number
of Imperial Brands, while brands outside of the agreement could be exported direct by
Imperial to America.

Imperial eventually sold its interests in BAT in 1980.

Another tobacco firm, Philip Morris also began its life in London.

Philip Morris esq. first opened his doors in London in Bond Street, London around 1850
selling tobacco and imported cigars. In 1854 he had made his first cigarettes for sale, and
in 1873 the business was taken over by his wife, Margaret and brother Leopold. By this
time they had American Agents established.

In 1880 Leopold bought Margaret’s shares and the Company went public in 1881,
receiving a Royal Warrant in 1901 from King Edward VII.

The following year the Company was incorporated in New York, with 50:50 British and
American ownership. In 1919 a new firm, Philip Morris & Co., Ltd, Inc with American
stockholders took over the US Philip Morris Company of Virginia. The company then
went on to become one of the world’s tobacco giants.
By the early 1900’s, tobacco had become big business around the world, with British and
American brands competing in almost all markets. From its earliest times individual
Governments have taxed the sale of tobacco, and sale of tobacco continues to a large
money earner for Governments worldwide.

From its earliest beginnings in the 1860’s and 1870’s, there have been health warnings
made about tobacco’s use both in smoked form and also when it was used as snuff.

In 1781 snuff was directly linked with cancer of the nasal passage, and there was
widespread discussion about the harmful effects of smoking in many publications, at this
time and throughout the next century.

In the mid 1950’s the Tobacco companies started to diversify their income sources,
buying into other businesses, such as insurance, food, beer, soft drink and other
industries. By the 1990’s however, they were starting to split these businesses away from
tobacco interests, to protect these businesses from lawsuits filed on behalf of people
whose health was directly affected by smoking- either directly or passively.

Big businesses which were either set up or acquired by the Tobacco Companies but have
since been split away from the tobacco interests include Zurich Insurance, Miller
Brewing, Kraft Foods and General Foods, Coca Cola Bottlers (Companies which held
rights over the sale and manufacture of Coca Cola in different territories), the Seven-Up
Company, since sold to PepsiCo, Jacobs Suchard Chocolate, Nabisco Brands, and many
others in Fast Food, Packaging supplies and other areas.

These lawsuits have sought huge damages payouts to people who have suffered diseases
brought on by their smoking, and ‘class actions’ suits may well result in some of the
tobacco giants being bankrupted at some point, or seeking bankruptcy protection.

The Tobacco Business is however a huge industry, and in many parts of the world is still
growing in spite of the health issues.

CHAPTER THIRTEEN

COMMUNICATIONS

Communication dates back to the very beginning of civilization, and there are thousands
of languages and dialects used by people everyday throughout the world to communicate.

Most of these languages are localized, with people in particular areas developing their
own languages, accents and language usage patterns unique to their area. Many languages
have also disappeared as tribal groups merged, or a particular language was given
precedent over other languages being used at the time, for political, social or economic
reasons.

In New Guinea, even though the land mass is relatively small, there are said to more than
7000 dialects, and in every part of the world, language has distinguished a people or tribe
just as much as appearance, dress or architecture.

The Great Voyages of the Portuguese, Spanish, Dutch, and British took their languages to
the parts of the world they sailed to, just as the languages in the Ancient world traveled
the same way.

Roman, Latin and Greek words have found their way into most European languages, and
there are words which have been adopted from one language and added to another as
needs arose.

There are also languages that have adopted different forms to reflect the status, caste, sex
or familiarity of the person speaking or being spoken to.

The biggest languages based on the number of people using them, are English, Chinese,
Hindi, Arabic, Russian, Spanish and French.

In turn each of these languages are used in many and varied forms. While the general
term, Chinese refers to a whole language group, with some of its main language groups
being Cantonese, Mandarin, Hokkien, and Hakka, there are thousands of other dialects
within the Chinese language.

There are also variations on the way the language is written, and a person who speaks a
particular dialect will most likely not be able to understand a person using another
dialect.

The same occurs with accents. A Scot may use English as their principal language, but
their accent will be very different to the accent of a Kenyan, a Canadian, a New
Zealander and Pakistani, all using English as their language.

There are also versions of English, such as Creole English, spoken in Belize in Central
America, Pidgin English, spoken in Papua New Guinea, and Rojak English, spoken in
Malaysia – which use both English words and local words as a mixture of speech.
Different spellings also result. The most obvious example of this spelling difference is
American English, compared with English English.

English has now become the international language of business, and has become the
second language in a number of countries, because it is used internationally. When a
Swede speaks with an Italian, American, Chinese or Japanese, it may well be that they
speak in English in order to do business.
For many years French also competed with English as the language of business. French
was considered the ‘language of diplomacy’, and seemed natural that it would follow on
to be the language of business.

The fact that the United States adopted English as their language, rather than French (as
spoken in Quebec, and originally in Louisiana), or Spanish (as spoken throughout Central
and South America), or any of the language groups of native Americans, has a lot do with
the strength of English as the main language of business throughout the world.

Spanish has however become the second language of the United States.

Language is essential for communication, both in oral and written form, with early
writings recorded first in rock carvings, then on stone and clay tablets, recording or
passing information from one party to another.

Stone and clay were heavy to carry, and it wasn’t until the invention of paper that words
became portable, and could be sent from one location to another.

Just as paper gave written communication a means of sending a message over a distance,
by passing the letter from the letter writer to a messenger who would then deliver it to its
recipient, so too was the use of signaling a means of communicating a message over a
distance.

When the Great Wall of China was constructed, the towers were built within visual
distance of each other so that a message could be signaled along the wall, by means of
signaling from one tower to another – possibly using mirrors or smoke to flash or signal a
message between towers.

This was refined in later centuries by use of signal flags, particularly on Ships but it
wasn’t until the early 1800’s that a means of relaying a message over a distance was
developed.

In 1820 the Danish physicist, Christian Oersted discovered that it was possible to move
compass needle using an electric current passed over an electrified wire, and the idea of
electromagnetism was born. In the following year, Michael Faraday created the world’s
first electric generator and in 1830 Professor Joseph Henry developed an electromagnet
that enabled him to send a current down a wire to rotate a steel bar and ring a bell!

In 1837 Samuel Finley Breese Morse (1791-1872) invented the idea of a telegraph,
applying for a patent on his idea in 1838. Working with Alfred Vail and William Baxter,
the Morse Code was developed through a series of trials and error, initially trying to
develop a code through numbers, using a pointed pencil to tap out the numbers, and in
time a metal lever tapping up and down on a metal plate to create a series of dots and
dashes codes to spell out words and sentences.
The telegraph and use of the Morse Code revolutionized communication over distance,
and within a few years the telegraph enabled messages to be passed across America, and
then across the world, with telegraph cables laid down even under the ocean.

In turn the invention of the telegraph enabled the Western Union Telegraph Company to
set up.

The Telephone followed in the 1870’s, enabling not just signals but sounds and then
speech to travel over the wires.

From the first message “Mr. Watson, come here, I want you” spoken over the first
telephone by Alexander Graham Bell to his assistant Thomas Watson in 1876, and the
patents which followed, it was just two years later that telephone companies were set up
to commercially develop the invention.

The Bell Telephone Company, soon to become the National Bell Telephone Company
and then the American Bell Telephone Company made telephones, built telephone
exchanges, and rented telephone services to individual telephone subscribers.

In 1885 American Telephone and Telegraph Company (AT&T) was set up as a


subsidiary of American Bell Telephone Company, but by 1893-94 the original patents
had all but expired, leading to the creation of many Bell companies to compete with
different service needs.

By 1913 the company was so strong that the U.S Department of Justice filed an anti trust
suit against the company. The company agreeing to let independent telephone companies
use its long distance connections resolved this.

In 1934 President F.D Roosevelt signed the Communications Act, setting up the U.S
Federal Communications Commission to regulate all interstate telephone business, and in
1949 the U.S Department of Justice filed another suit against AT&T, charging that it had
conspired with Western Electric to monopolize the sale of telephone equipment.

It was not until 1956 that a consent decree was agreed upon, whereby AT&T was
prohibited from engaging in businesses that did not come under regulation. This resulted
in Western Electric becoming a subsidiary of AT&T. In 1982 a federal court approved a
consent decree breaking up the Bell System into local and long distance companies,
spawning what has become known as the ‘baby bells’.

From its early beginnings to today and beyond, the telephone has had a profound
influence on the way that we live and do business. Trillions of phone calls have been
made over the years, and it is now possible to speak to people located pretty much
anywhere in the world – be it in the middle of a city or the centre of a desert, even in the
air or at sea.
Just as paper enabled the written word to become mobile, so too has the phone been freed
from its wire connections to become mobile too! In later chapters we will look at some of
the companies and their brands that made this possible.

CHAPTER FOURTEEN

From Candles to Kerosene… gaslight to Gasoline…. Penny-farthings to cars

Candles had existed for hundreds of years, yet in a space of thirty years or so, they were
largely replaced by kerosene lamps, which were a boom for the kerosene lighting
companies, and a great loss to the companies which made candles and supplied gas street
lighting.

It is interesting to see that the companies which made candles did not make the transition
into kerosene lighting, nor did the kerosene lighting companies, who supplied lamps and
retailed kerosene, make the transition into electric lighting when it very quickly replaced
the kerosene lighting market.

On the other hand, those oil companies which had been supplying kerosene did move into
a new market – petroleum, a market which was to expand dramatically over the coming
years as cars began to replace horses, carts, wagons and horse drawn carriages as a means
of transport.

The invention of the internal combustion engine, and the transport revolution which took
place is possibly the greatest economic change that has ever taken place in the history of
mankind, and the main industries that evolved – petroleum and the automotive industry
are still today, over 100 years later, two of the world’s biggest industries.

Outside of these industries themselves, hundreds of other services and products have
been developed by companies, governments and individuals to supply, co-exist, compete
with or develop alongside the petroleum and automotive industries.

The invention of cars and their evolvement has massively changed the way people live,
travel, work, and spend their leisure time, and has profoundly altered the way cities the
world over have been planned and developed.

While there are certainly cities that do not have cars, like some of the islands of Venice,
these are a rarity, and most cities and towns have been developed around their road
structures, to facilitate the movement of cars, trucks, buses and people.

At any one point of time, there are millions of people in the air flying, just as there are
millions on boats, trains, buses and in cars – all moving from one place to another to
work, live, play and travel for business and pleasure.
It is hard to believe that this transport revolution has occurred in just a little over 100
years.

The car as we know it was the culmination of thousands of individual inventions and not
just one, and the car continues to evolve today, as electronics are added, fuel cells
develop and other new inventions change the way we use it. Will we see a time when
wheels become redundant, or cars fly? Who can tell?

In the early days of automobile development, it was not just the invention of the internal
combustion engine that enabled the cars to be built, but also the development and
invention of such things as gears, differentials, springs, steel fabrication, rubber and air
filled tyres, lights, crank handles, springs, batteries, carburetors, radiators, exhausts,
glass, vacuum seals, and a host of other refinements both large and small.

The first car dates back to 1335, when the Italian Guido da Vigevano created a wind
driven vehicle – with a windmill driveshaft connected by gears to wheels. In 1678,
supposedly a steam vehicle was built by a catholic priest, Father Ferdinand Verbiest for
the Chinese Emperor, Chien Lung, and in 1769, the first vehicle to move under its own
power, a giant steam boiler on wheels, a sort of steam truck, was built in Paris, France by
Captain Nicolas Joseph Cugnot, a French Army Officer and Monsieur Brezin. It managed
to move at up to 2 Miles per hour, and was designed to pull cannons around the city,
although it had no steering as such, and ran into walls and anything in its way!

While railways developed in England, using steam locomotives running on rails, laws
were passed in Britain to stop their use off the rails.

The Red Flag Act in Britain meant that “horseless carriages” could not travel faster than
6 Kph, and a man carrying a red flag had to walk in front of the vehicle to warn people
and clear horses from its path, and the impending danger! The law was not repealed until
1896, which is said to have severely limited the development of the British industry at a
critical stage of development, leaving Continental and American manufacturers to lead
the way.

Steam power required boilers to make the steam, and therefore coal carriages to carry
enough fuel to burn. This severely restricted the use of steam as a means of powering the
first automobiles. Gunpowder as a power source, tended to result in explosions, and coal
gas, as used by Etienne Lenoir, in his patented gas engine in 1860, needed a heavy and
large size block to hold his 24-inch long piston stroke in a 5 inch bore, with a separate
gas compression chamber.

In 1862, Alphonse Bear de Rochas, worked out a way in which the gas could be brought
to the cylinder, then compressed in the same chamber as the piston cylinder, burned and
then exhausted once the gas had been used, creating what we now know as the four cycle
engine.
Lenoir had drawings of this engine using benzene power with an electric spark to ignite
it, but neither Lenoir nor de Rochas patented their invention. This was left to Nokolaus
Otto, who patented his version of the four-cycle engine in 1876.

The patent was however later challenged by Karl Benz and Gottlieb Daimler, who
successfully claimed that the invention was not new, and that ‘prior art’ existed of the
invention through the work of de Rochas.

In Europe and America, there was great interest in the creating a vehicle that did not need
rails to run on, or a horse to pull it. Carriages were well known, railroads were in their
infancy, steam power was established, and dirt, stone or wooden cobble roads existed to
allow horses, people and goods to travel on wagons and carts. The skill of the
wheelwright build wheels for horse and bullock pulled vehicles, solid wheels built with
wooden rims, hubs and spokes, with an outer rim of steel added for strength. On some of
the carriages for ladies and gentlemen, soft upholstery and springs had been added to
soften the ride, and an axle used to link opposite wheels together.

Then, as now there was also a great interest in both speed and comfort, and the idea of
building a vehicle that did not need a horse to pull it, and did not foul the streets or need
constant feeding had great appeal.

In 1885, Gottlieb Daimler in Germany built a wooden bicycle with an engine attached to
it, patenting his design for the ‘reitwagen’, or Riding Carriage – the world’s first
motorcycle. A year later, he bought a four-wheeled open coach from the coach makers,
Wilhelm Wimpff & Sohn from Stuttgart, adding a motor to it, and separately, Karl Benz
in 1888 built a tricycle with an engine. The two never met, even though they lived just a
few miles apart.

In that same year, 1888, Gottlieb Daimler was approached by the American Piano
manufacturer, William Steinway, to buy the American rights to his petrol engine, and by
1891, the Daimler Motor Company (USA), owned by William Steinway, and based in
Hartford, Connecticut, was producing petrol engines for tramway cars, quadricycles, and
even fire engines and boats.

The Daimler engines were also sold in Britain, after Gottlieb Daimler met an
Englishman, Frederick Sims in 1890 at an Engineering Exhibition in Germany. Sims
established the Daimler Motor Syndicate in 1893 in London, using the Daimler engines
in Motor Launches.

By 1896 a factory had been built in Coventry to for the Daimler Motor Company by
Harry Lawson, who had bought the Daimler name from Frederick Sims and by 1897, the
first Daimler Motor cars in Britain were being built.

That same year, an Austro-Hungarian businessman, Emil Jellinek, based in Nice in


France, set up an agency for Daimler motors, taking delivery of a new Daimler. He
entered a motor race with the car, registering himself under the name of his daughter,
Mercedes.

In 1900 he bought 36 Daimler motorcars to sell, and asked the company, known as the
Daimler Motoren-Gesellscaft, for the distribution rights for Austria, Hungary, France and
Belgium, on the basis that he could sell them under the name of his daughter, her name
being ‘Mercedes’.

By the year 1900, Daimler’s competitor, Benz and Cie had become the world’s biggest
auto manufacturer, producing a total of 603 vehicles in that year!

The two companies eventually merged in 1926, by which time Daimler engines had
established themselves as one of the world’s leaders, and Benz had established an equally
impressive reputation, having built the world’s first mass produced car in 1893, and then
achieving a succession of firsts, both on and off the race track.

The Englishman, Harry Lawson also had interests in other Coventry manufacturers,
including “the Great Horseless Carriage Company”, and later on Humber, another British
marque.

The early automobile makers variously used steam and petrol engines to power their
prototypes, adapting bicycles, buggies, carriages and coaches and bringing together
wheels, engines, steering mechanisms, and other components to create their own
‘horseless carriages’.

There were many early pioneers in France, Germany, Italy, United States, as well as
England in the development of cars, trucks and also motorcycles.

Many of these pioneer’s names became brands for their vehicles, including in the USA,
Ransom Eli Olds whose Olds Company built Oldsmobiles, David Dunbar Buick, Louis
Chevrolet, Walter Percy Chrysler, Charles W. Nash, the Dodge Brothers- John Francis
Dodge and Horace Elgin Dodge, Henry Ford, and August Dusenberg (a German
emigrant) who gave his name to the Dusenberg racing car.

In France, the situation was similar with Louis, Marcel and Fernand Renault, Jean-Pierre
and Jean-Frederic Peugeot, and Andre Citroen giving their name to their cars.

British pioneers included Dr. Frederick Lanchester, Percy Riley, David Napier, William
Richard Morris, W.O Bentley, Charles Stewart Rolls, Henry Royce, Alan Jensen, and
Frederick York Wolseley.

In Italy, Vincenzo Lancia, Ettore Bugatti, Enzo Ferrari, Nicola Romeo also added their
names to their cars while in Germany, Adam Opel, Karl Benz, Gottlieb Daimler, and Dr.
Ferdinand Porsche are all names familiar to us.
In Japan, whose car industry began in the 1912 when an engineer, Masujiro Hashimoto
returned to Japan from America, and built a car prototype in his factory, which he named
the Kwaishinsha Motor Works. On the basis of this he was able to get finance from
K.Den, R. Aoyama and A. Takeuchi, using their initials as the name for new DAT car
that he produced in 1914. This name then changed to Datson in 1931, shortly after to
Datsun, and in 1983 to Nissan.

Mitsubishi was founded as a shipping company in 1870 – Mitsubishi meaning ‘three


diamonds’, and produced its first car in 1917, based on a Fiat design, which was
produced until 1921, at which point the company’s production concentrated on trucks.

During World War II, the company produced the Zero aircraft, and in the post war period
it began to manufacture Jeeps under agreement with Jeep’s US owners, and in 1959 it
began to manufacture cars in its own name again.

In 1929 Sakichi Toyoda sold the patent for a Japanese weaving loom to a British
company for £100,000. Sakichi’s son, who had studied car manufacturing in America and
England, convinced his father when he returned in 1936 to invest some money in setting
up a car division. This he did in 1936, forming the Toyoda Motor Company in 1937, and
then changing the name to Toyota shortly later.

During the war that followed, Toyota trucks were manufactured in large numbers, with
car production recommencing in 1947.

The Mazda car company, founded by Juriro Matsuda began around 1920, initially
producing cork, drilling equipment and machine tools, before building its first truck in
1931, a car prototype in 1940, and ultimately a full size car in 1960.

Soichiro Honda was born in 1906 and first worked in his father’s bicycle shop making
repairs and fixing instruments. In the 1923 Tokyo earthquake, the earthquake and fires
that followed- destroyed much of Tokyo including the shop where he worked.

Many cars were damaged, with their wooden spoke wheels burning, which led him to
think of and develop metal spokes, and develop a great knowledge of cars and how to fix
them. He took up car racing, and was almost killed in a triple somersault crash in 1936.

Over the years that followed he began to make piston rings as well as aeroplane
propellers, and in 1949 his company manufactured its first motorbike, a four stroke
engine in 1950 and in1963 its first car. Soichiro was recognized for his great
inventiveness, and this became one of Honda’s qualities.

Equally famous are names such as the German, Rudolph Diesel, who invented the Diesel
motor, William S. Harley and Arthur Davidson who gave their names to the Harley
Davidson motorcycle, and names such as Edward W. Allis (Allis-Chalmers tractors),
Jerome Increase Case (Case tractors), John Deere (John Deere tractors), Harry Ferguson
(Massey Ferguson tractors), Cyrus Hall McCormick (McCormick tractors and
harvesters), Harry Kent and Ken Worthington who established Kenworth trucks, John
“Jack” Mack and his brother William C. Mack who established Mack trucks, Clessie
Lyle Cummins (Cummins engines), and William Richard Morris who became Lord
Nuffield (Nuffield tractors).

The invention of the internal combustion motor using gasoline, and the diesel motor led
to a transport revolution. At the same time, the evolvement of the car and also
motorcycles owes a lot to the development of the bicycle a few decades earlier.

In 1817, Baron von Drais invented the ‘Draisienne’ or hobbyhorse. This had a seat set
between two wooden wheels, which the rider would straddle, and strut or walk along
with. The seat gave support, while the wheels allowed the rider to move long faster than
normal walking. The road needed to be very smooth to ride out the bumps!

In 1865, the ‘velocipede’ improved on the ‘draisienne’, by adding pedals to the wheels.
Again, it was made from wood, and was ridden largely indoors in riding academies, as
cobble streets made the journey a ‘bone shaking’ experience.

By 1870, metal wheels had replaced the wooden ones, and a solid rubber tread was added
to soften the ride. With one large wheel at the front, with pedals, and a seat and handle
bars above it (the ‘penny’- a large copper coin) and a small wheel behind (the ‘farthing’-
a very small coin), the high-wheel bicycle or ‘penny farthing’ became very popular. This
was followed by many variations, including tricycles, and high wheel safety bicycles,
with different size wheels, and such refinements as spokes, spring seats, rack and pinion
steering, chain drives, pedals separated from the wheels, and even brakes!

The big breakthrough in comfort was the pneumatic tyre, which replaced the solid rubber
tyre with one filled with air under pressure.

Rubber was first used in pre-Columbian Central and South America for coating shoes and
fabrics and brought to Europe by the Spanish and Portuguese in the 16th century. Between
1736 and 1751, Charles de la Condamine and Francois Fresneau of the French Academy
of Science began development of rubber solvents and fabrics using rubber, and in 1770
Joseph Priestley created the first eraser (or rubber) for rubbing out mistakes written in
pencil.

The first rubber factory opened near Paris in 1803, with Thomas Hancock opening a
factory in England to ‘masticate’ rubber and break down its polymers in 1820. In 1823,
the Scottish Scientist, Charles Macintosh created a process using benzene to make rubber
soluble. Using this process he could make fabric waterproof, creating the world’s first
raincoat or ‘Macintosh’.

In 1835, the American, Edwin Chaffee patented a process for rolling rubber into sheets,
and Rubber bands were invented and patented by Stephen Perry in London in 1845.
Perhaps the greatest improvement to rubber however was vulcanization, a process
developed by the American, Charles Goodyear in 1839. He had been experimenting with
raw ‘India’ rubber (given its name after the Indians of South America) for over 10 years,
even purchasing a truck load in 1830, and then being thrown into debtor’s prison, when
he wasn’t able to pay for it!

Following his return from debtor’s prison, he continued his experiments, and found that
by adding sulphur to the rubber, he was able to create a ball of gummy rubber, but it was
sticky. Some time later he invited some friends to his home, and inadvertently the sticky
rubber ball was thrown onto the top of the hot stove. Goodyear was apparently very
annoyed, but then saw that the heat had transformed his ball into a hard mass – the secret
was revealed enabling the rubber to go hard. He called this process vulcanization.

Goodyear himself died penniless, but his name lives on because a company founded by
Frank Seiberling in 1898 took up his name, going on to become one of the world’s
biggest rubber companies.

Punctures in tubes were a constant possibility in both car and bicycle tyres, and special
vulcanizing kits were sold to car and bicycle owners to use. These consisted of a small
metal rasp or file to roughen the surface of the area being patched, usually being part of
the tin holding the rubber patches, several rubber patches of varying sizes, and a sulphur
or magnesium pad, which was to be clamped over the patch to hold it tight, and then lit
with a match to create the heat, or vulcanization.

In 1845, the Scottish inventor, Robert William Thomson also took out a patent for the
development of an inflated rubber tyre using air. A few years later, in Ireland, a Scottish
Veterinarian immigrant, John Boyd Dunlop (1840-1921) patented an inflated rubber tyre
in 1888. He had developed the tyre for his son’s tricycle, to make it more comfortable to
ride on.

Although Dunlop invented the idea without knowledge of the earlier invention, he spent a
lot of time and money defending his patent, before selling his rights in 1889 to Harvey du
Cross Jr. The new owner then went on to establish the Dunlop Tyre Company, with the
name honouring the inventor.

Charles Macintosh’s niece, Miss Elizabeth Pugh Barker (1809-1859), in 1829 moved to
France to marry a Frenchman, Edouard Daubree (1797-1864). She brought with her some
rubber, and later when they had children, she used rubber to make balls for them to play
with.

Her new in laws also took an interest in rubber, and a cousin, Aristide Barbier and her
husband, who had set up a farm machinery and pump manufacturing business, began to
manufacture rubber machinery belts, seals, valves and pipes, using the newly developed
vulcanizing process developed by Goodyear.
On May 28th 1889, Aristide’s grandsons, Edouard Michelin (1859-1940) and Andre
Michelin (1853-1931) took over their grandfather’s business.

Edouard had studied and obtained a Law Degree in Paris, before going to the Paris
School of Art to study painting. He returned to the family business, and was joined by his
brother, who had an engineering degree from Paris Central School, and had been working
as a cartographer with the French Ministry of the Interior, as well as setting up his own
business in metal framing. They also changed the name to Michelin and Company.

In 1891 Edouard patented the idea of making a ‘removable’ tyre for use on bicycles. At
this time bicycle tyres were glued to the wheel rim, and to change a tyre required about 3
hours work, followed by 6 hours drying time! Michelin’s removable tyres proved to be a
huge success, and within a year more than 10,000 bicyclists were using the new Michelin
Tyres.

By 1894 rubber was being used to make solid rubber tyres for horse drawn carriages, and
in 1895 Michelin developed an air filled pneumatic tyre, which they tested in the ‘Éclair’,
a car they built using a Daimler engine and Peugeot body for a race between Paris and
Bordeaux and return. Despite more than 20 flat tyres in the race, and 20 bolts to undo to
remove each tyre, plus spoke replacements as well, they managed to finish, with their
new ‘air filled tyres’ replacing such materials as hay, sand and sawdust as a means of
keeping the ride soft.

The Michelin Man, ‘Bibendum’ made his first appearance n 1898, and in 1900 35,000
copies of the Michelin ‘Red Guide’ were published and launched at a Paris Exhibition, to
provide travelers with a guide to French roads, including useful information for the
traveler on places to stay, eat and visit, as well as the things to do in planning a trip by
car. Andre’s cartography knowledge came to good use, and the Michelin name went on to
become one of the world’s great brands.

In Italy, the story was similar. In 1872, Giovanni Battista Pirelli set up a partnership in
the name of G.B. Pirelli and Co. to manufacture elasticized rubber products for textiles,
and later electric insulation cables.

Pirelli’s first pneumatic tyres for bicycles were produced in 1890, and their first for
motorcars and motorcycles was produced on an experimental basis in 1899. By 1905 they
were producing solid tyres for heavy vehicles, and in 1907 an Italian car using Pirelli
tyres won a race from Peking to Paris, a distance of 17,000 kilometres. The car had on
board Prince Scipione Borguese, a journalist Luigi Barzini and a chauffeur to drive,
Ettore Guizzardi.

In the USA, alongside Goodyear, another inventor and entrepreneur, Harvey S Firestone,
also established a tyre company – the Firestone Tire and Rubber Company, set up in 1900
to make carriage tyres. Henry Ford chose his tyres for use on his new T Model Ford Cars.
The development of the car had a huge impact on the rubber industry, but similarly the
car industry would not have succeeded as quickly as it did without the invention and
development of the tyre industry.

Just as bicycles needed a flat road surface to travel on, so too did carriages and cars!
Roads that were smooth to travel on, and did not become bog holes in the wet, or dust
bowls in the dry weather became a major priority.

The world’s oldest known constructed roads are in Ur in Iraq, built in stone, which date
back to around 4000BC, and a timber road which was preserved by a swamp in
Glastonbury in England.

The most famous road builders were however, the ancient Incas in South America, and
the Romans in England, who constructed solid roads to speed movement of their military
from one place to another. The Romans typically built their roads higher than the
surrounding countryside, to provide a view over it, and give greater protection from
brigands. The words ‘Highway’ and ‘Highwayman’ are derived from this.

In the 1800’s in England, ‘turnpikes’ were built as toll roads, financed by trusts set up for
the purpose, but with the advent of railways, many of these trusts collapsed, as traffic
moved from the roads to the new rail systems.

The first roads to be paved in asphalt were built in Babylon around 625 and 604BC. It
was not until 1595 that Sir Walter Raleigh on his third voyage to the West Indies fighting
the Spanish discovered Lake Trinidad, off the coast of Venezuela, the Lake being the
world’s biggest deposit of natural pitch asphalt.

Raleigh used the pitch for caulking his ships, but it was not until 1888 that a company,
the ‘Trinidad Asphalt Company’ was formed to export the asphalt for roads, with one of
the most famous roads being Pennsylvania Avenue in Washington DC, surfaced with
asphalt in 1877. Another company, the Barber Asphalt and Paving Company was formed
in 1893 by Amzi Alonzo Barber to export Trinidad Asphalt.

The first asphalt road, using asphalt blocks was the Avenue Champs-Elysee in Paris, in
1824. Fifth Avenue in New York was also surfaced with asphalt in 1872.

Road building had evolved through the work of a number of engineers, including Scottish
born John Metcalfe, who although blind, who built over 180 kilometres of road in
Yorkshire using various sizes of stone and gravel to create a well drained and serviceable
road surface in the early 1700’s.

Thomas Telford in the mid 1700’s followed with improved drainage systems using
broken stone, and John Loudon McAdam who used broken stones to create a tight gravel
road. His methods became known as Macadamized Roads.
It was not until the mid 1870’s that asphalt made from petroleum began to be used, and in
1902 Edgar Purnell Hooley took out a patent on the use of Tarmac – linking the two
words tar and the abbreviation of McAdam together. Hooley was a surveyor, and had
come across a smooth section of road, finding out that a barrel of tar that had spilt on the
roadway had been mopped up using slag from a nearby iron works. By heating the tar,
and adding gravel or Macadamized road surface to the mix, Hooley was able to create a
smooth surface.

To exploit his invention, Hooley set up the TarMcAdam( Purnell Hooley’s Patent)
Syndicate Limited, registering Tarmac as a Trade Mark, and later selling the patent rights
and company to Sir Alfred Hickman, a steel manufacturer from Wolverhampton. Tarmac
Limited still operates.

A European chemist, Emile Feigel, who in 1905 created a bitumen emulsion, and a
British chemist, Mackay in 1922, who developed a means of cold spraying asphalts on to
a surface, made further advances.

In spite of all these developments, bitumen and asphalt roads, particularly in the first half
of the twentieth century were reserved for only heavy usage roads because of cost, with
gravel roads still forming a large proportion of secondary roads right through to the
present day. Specialized equipment was developed to both grade and maintain roads, and
also spray down bitumen and asphalt surfaces.

In the 1890’s bicycles became a craze, because for the first time people could afford their
own reliable transport. The bicycle, which had initially been very expensive, and only
available to the rich, was now available to all, including women. It also caused a fashion
revolution as step through bicycles enabled women to ride too, but their clothing had to
change its style to allow it. The new bicycle owners lobbied for better roads, and it was at
this time that the League of American Wheelmen (Bicyclists) was formed. The new car
owners, also voiced their demand for smoother roads, and roads became an important
new area for government planning and control.

The first traffic lights had already been installed outside Britain’s House of Commons in
London in 1868, to control hansom cabs and the flow of horses and carts, when the
world’s first traffic accident between a car and a bicycle occurred in New York City in
1896. The cyclist had his leg broken, while the driver of the car was imprisoned
overnight!

While the early cars were able to move quickly forward, stopping was still an issue. Their
drivers easily reined in horses most of the time, but a car needed brakes to stop!

The first brakes, like those on a carriage or buggy, were based on a lever control that
controlled blocks of wood, rubber or leather pads that were then applied to grip onto the
outside rim of the wheel. They would quickly wear out! Some cars even carried a large
rock or tree truck attached to a rope, which they would throw off the back of the car as a
means of slowing it down!
Drum brakes using brake shoes first made their appearance in 1902, and a brake using the
transmission in 1905. Four wheel brakes were initially only used on race cars, with the
Italian car company, Fabricca Automobili Isotta Fraschini, set up by the brothers Cesare,
Oreste and Vincenzo, developing four wheel brakes for their Isotta Fraschini race car,
and first trying them in 1909. The company built many great sports cars, but ceased to
exist in 1949.

By 1920 luxury and sports cars had four wheel drum brakes, but there were many cars,
even in the 1930’s that only had rear brakes. Hydraulic brakes, using a master brake
cylinder filled with hydraulic brake fluid, and feeder lines to each wheel cylinder came
into use in the 1940’s, while disk and power assisted brakes came in much later.

It was not until 1935 that the first parking meters made their appearance, these being in
Oklahoma City. By that time, cars had a fair, but not absolute means of stopping!

In the early years of the car’s development, there were many companies and brands
created. Many of these brands and companies failed while others merged or were bought
out by larger competitors.

Every brand and company has a history, and they are all interesting in their own right.
There are however many brands which have ceased to exist – individual car brands as
well as thousands of suppliers to the automotive industry.

Before detailing the history of some of the most successful brands, it is worth seeing the
names of some of the brands that have disappeared over the years. This is by no means
comprehensive, but does give an indication of the extent of the automotive revolution that
took place.

How many of these brands do you recognize? American Bantam, Auburn, Cord, Crosley,
Desoto, Frazer, Graham, Hudson, Hupmobile, Kaiser, La Fayette, La Salle, Nash,
Oakland, Packard, Pierce Arrow, Reo, Studebaker, Terraplane, Willys – and these are just
the American brands. What about Bristol, Riley, Wolseley, Vanguard, Lanchester,
Standard, Triumph, Essex, Lagonda, La Croix de la Ville, Hispano Suiza, Mors,
Sunbeam, Jensen, Alvis, Bugatti, Goggomobile, Bedford and Fargo trucks and buses,
Rugby, Vauxhall, Singer, Hillman, Armstrong Siddeley, and Simca?

Motorbikes also had their share of British, American and European brands, brands like
Indian, Ariel, BSA, Triumph, BSA, Velocette, Norton, Matchless, AJS, Royal Enfield,
Brough Superior, Scott Squirrel, Vincent, Rene Gillet, Panthere, Douglas, Indian,
Raleigh, Zundapp (Czech), Moto Guzzi, Gilera, and of course BMW and Harley
Davidson.

There were also brands of motor scooters like Piaggio, Lambretta and Vespa in Italy, and
even vehicles which were half motor scooter and half car, ‘cyclecars’, built with three
wheels- two at the front and one at the rear – brands like Messersmidt, Morgan, Rollux,
Darmont, Velorex and Vilard.

The world of motoring certainly had its share of brands. This was followed by individual
model brands, using letters, numbers and words to distinguish individual cars – matched
to their status as a prestige, sports, economy or family vehicle. Many of these model
brands attained an almost cult status, as buyers became fanatical supporters of their brand
and model of car.

Just as great architecture, art and music had evoked passion in previous centuries, the age
of motoring opened up a whole new age of travel and adventure, and changed the world
forever. No other machinery produced either before or since has captured the imagination
of people, as much as cars.

CHAPTER 15

The World’s greatest car brands.

Within the scope of this book, it would be impossible to detail the history of all the cars
that have ever been developed.

As with all developments, there are links between one development and the next, with
one invention becoming the inspiration for others. Inventions, by their very nature, try to
solve problems, or provide solutions, and like a game of chess, rely heavily on strategy,
technique and patience, and a degree of luck and good timing.

Just as the carriage and bicycle became inspirations for the car, so too were the car and
carriage an inspiration for the first bus (1895), a motorized carriage on wheels; first
Truck (1896), a motorized dray on wheels; and first taxi (1897) – a motorized carriage for
driver and passengers -all of these vehicles powered by Daimler engines. The first
delivery vehicle (1896) was a Benz on a Viktoria car chassis, sold to the ‘Bon Marche’
department store in Paris.

Gottlieb Daimler (1834-1900) had been the Technical Engineering Director of a company
called Deutz Gasmotorenfabrik in 1872, a company jointly owned by Nicolas August
Otto (1832- 1891) and Eugen Langen, before leaving to set up his own company, with a
partner Wilhelm Maybach.

Otto had been a salesman, selling sugar, coffee and tea, before setting up the world’s first
engine manufacturing company, N.A. Otto & Cie, in 1864 with a partner, Eugen Langen,
who was a technician by trade, and owned a sugar factory.

In 1866, they built an engine using atmospheric gas, and were awarded a Gold medal for
the engine at the Paris World Exhibition in 1867.
Exhibitions, both in Europe and America played a very important part in showcasing new
technology, and providing the opportunity for potential business partners, distributors and
buyers to meet.

In 1876, the Otto engine was built – a four-stroke piston engine with a magneto ignition
system, using it to build a motorcycle, and in 1887 they also applied for a patent on a gas
motor engine. His original patent was not granted, even though he had a working model
of the engine. The patent on the four-stroke engine was granted in favour of Alphonse
Beau de Rochas, another inventor, who had designed a four-stroke engine on paper, but
never built it.

The Otto & Cie Company changed its name to Gasmotoren-Fabrik Deutz in 1872, and
the Deutz AG Company continues today to be a leader in the manufacture of diesel
engines for tractors and trucks, their first diesel engine being produced in 1898.

While Daimler is largely credited with the invention of the motorcycle, rather than Otto,
Daimler’s work with Otto would have been a tremendous benefit to him in the
development of his engineering skills and thinking. Likewise, one would surmise that
Daimler’s skills would also have added to the Otto Company while he was employed
there.

Another inventor, Sylvester Roper, had also invented a motorcycle using a steam engine
to power it. He could also lay claim to have invented the motorcycle.

Did the car industry really begin when Karl Benz sold his first car to the public in 1888,
or did it start with Daimler’s motorized 4-wheel carriage in 1886? Either way, the
industry began to grow rapidly from this time on.

In 1890, the Daimler Motoren-Gesellschaft Company was set up to manufacture engines


developed by Daimler and his partner Wilhelm Maybach. As discussed in the preceding
chapter, the Daimler engine engineering and design won great accolades at an
Engineering Exhibition in Germany held that year, leading to distribution agreements
being set up in Britain, the United States and in Europe.

Daimler engines were also produced under licence by the French company, Panhard et
Levasser as early as 1887, and this company, which made woodworking equipment, built
their first car in 1891. Where the early German cars had essentially been modeled on
bicycles, which were light in weight, the French ‘Panhard’ car had a solid wooden
carriage, with wooden spoke wheels, with a tiller mechanism to turn the front wheels. It
was powered however by a Daimler engine

What also brought great attention to the engines and their quality, was winning
automotive races, with a car using a Daimler engine winning the world’s first automotive
race in 1894. Further successes followed, and Car Racing, as with bicycle racing, both on
circuits and between towns became a fanatical sport over the coming years.
Car racing also encouraged budding manufacturers to build better, faster and more
reliable cars, adding new mechanical devices as they were developed. What was learnt on
the racetrack became a springboard for developments and refinements on road cars in
Europe and the United States, with car designers and engineers learning from each other,
or applying the knowledge they had learnt with one employer, to their work with another.

The first Benz car, built in 1885 was a three wheeler, with a seat for two, a tiller to steer
with, connected to a single front bicycle wheel, and a motor attached to the two rear
wheels by chains and belts, could obtain a speed of up to 12 miles per hour, though it is
unlikely that anyone would attempt to travel this fast given the solid tyres and rough
cobble and dirt roads at the time!

Karl Benz formed his first company in 1871, the ‘Iron Foundry and Machine Shop’ with
a partner, August Ritter. The partnership split shortly afterwards, with Benz pursuing his
interest in motors, building his first 2-stroke motor by 1879.

In 1886 he was granted a German Patent on his ‘Motor car’ invention – a three-wheel
carriage with a 0.7 hp motor driving the rear wheels.

Within three years, he was mass-producing cars, with 50 workers in his factory.

Initially he concentrated on his three-wheeler design, but changed to a four-wheel design


in 1893.

Cars were initially a novelty, with horses pulling various forms of carriages and carts
continuing to provide the main means of road transport. Even trams were pulled along by
horses. To gain an idea of the number of horses involved, the Cologne Tramway in
Germany had some 765 horses in use in 1899 to pull some 341 trams along their tracks.
Within two years, this tramway had been electrified. The situation was similar in cities
around the world, as railways, tramways, cars, tractors and trucks gradually replaced
horses as a means of power. The horse was however given credit, when the power of a
motorized engine was measured in ‘horsepower’!

The 1890’s saw a number of brands develop.

In France, Louis Renault (1877-1944) built his first car in 1899 with his brothers, Marcel
and Fernand, winning the Paris to Bordeaux race the next year. The following year,
Marcel was killed in the same race, establishing car racing as not only an exciting sport,
but also one which was dangerous.

Also in France, the Peugeot family business had been established in the 18th century,
establishing a steel works in 1815 and manufacturing initially water wheels, then coffee
grinders (1855), and steel fabricated products such as garden furniture, watch springs,
razors, sewing machines, saw blades, and roasting spits as well as bicycles and tricycles.
The trademark Peugeot Lion standing on an arrow was registered in 1858 with the
Conservatoire Imperiale des Artes et Metiers.

One branch of the family, led by Andre Peugeot, son of the Peugeot Brothers,
concentrated on making bicycles, winning the first five places in a 1025 kilometre race
from Paris to Nantes in 1889, and launching sports cycles (Velocipedes) in 1892. They
also built a steam powered tricycle and also a quadricycle , built in association with
Emile Levasser ( Panhard Levasser), using a Daimler motor for the Universal Exhibition
in Paris of 1889. Their quadricycle won a race form Paris to Rouen in 1894.

Another branch of the family in 1896, led by Armand Peugeot (1849-1915) founded the
‘Societe Anonyme des Automobiles Peugeot’ in 1896, building their own Peugeot engine
– a two cylinder horizontal engine, rather than vertical engine as used by Daimler.
Armand placed the engine in the rear of the vehicle and a more streamlined body shape,
moving away from the wagon shape that had previously been used.

In 1899, the Peugeot Brothers sons, led by Andre, built a motorbike, and in the 1901
Paris Automobile Show, he exhibited his motorbike and bicycles near Armand’s Peugeot
cars.

By 1905, both Peugeot companies were producing cars, and in 1910 they merged their
operations, producing cars and bicycles under the Peugeot brand, but later (1927)
separated again, remerging again in 1952, and taking over Citroen (1976), Simca (1977),
and Talbot (1982).

During the First World War, the Peugeot Company factories, like many of the other car
companies at the time, were used to manufacture cars, aircraft engines, tanks, and even
bombs and shells for use in the war.

The other great French brand was Citroen a company set up by Andre Citroen in 1919.

Andre had graduated from the Ecole Poytechnique in Paris, and then began working with
the Mors car company in 1908 as an engineer, before joining the army as an engineering
officer. In 1913 he set up his own company to manufacture gears, and then the French
Government helped him set up a large factory to manufacture shells for the war effort.
Andre achieved great success during the War making armaments, and with the war over,
he was able to adapt the machinery he had to begin the manufacture of his first car, which
he did in 1919.

Besides cars, he also set up a Taxi company, and also a network of bus services
throughout France. He was also one of the first companies to adopt the use of steel in car
bodywork, which he did in 1924, and his radical front wheel drive cars, with independent
suspension all round in 1934. The cost of achieving this however forced him into
bankruptcy, and his car company was taken over by his main creditor, the Michelin Tyre
Company. Andre Citroen died a year later, but his cars and the brand that he developed
live on, being bought out by the Peugeot Car Company in 1975.
There were also in the early days many other French car makers, including De Dion-
Bouton, set up by Count Albert de Dion and Geoges Bouton in 1883, which made cars
until 1932; De Dietrich, set up in 1897, which also closed at the end of the Great
Depression in 1934; Darracq, established by Alexandre Darracq in 1896, which made
cars until 1920; Brasier cars, built between 1897 and 1930; Leon Bollee, built by Leon
between 1895 and 1933 (his father had also built a steam carriage in 1880); Berliet cars
built between 1895 and 1939; Bignan, built by Jacques Bignan between 1919 and 1931;
Ballot built between 1919 and 1933; Amilcar 1921 to 1939; Mors 1895 to 1925; Panhard
1891 to 1967; Serpollet 1887 to 1907 who built steam propelled tricycles and cars;
Salmson 1921 to 1957; and there were no doubt others.

In England, the car industry, restricted in its development by the Red Flag Act, began
with the import of the Daimler motors and chassis built by the French company, Panhard
et Levasser.

As detailed in an earlier chapter, Frederick Simms had acquired the rights to sell Daimler
engines in England, establishing the Daimler Motor Syndicate in 1893. In turn, Harry
Lawson bought the rights to the Daimler name in Britain from him, and in turn, then set
about setting up a car manufacturing plant in Coventry in 1896 using the German motor
and the French Chassis. His first Daimler cars were produced a year later, with one of the
first being for the then Prince of Wales.

By 1910, there were over 50 car makers established in Britain, most based in Coventry.
During the War that followed, many of these closed or were converted to the making
armaments and military equipment.

The Birmingham Small Arms Company (BSA) that had unsuccessfully tried to
manufacture cars itself, had taken over Daimler in 1910, but allowed the company to
remain antonymous.

Daimler continued to build high quality cars, building aircraft engines and trucks during
the war, before returning to car manufacture after the war. As the official Royal Car,
Daimler achieved great respect and admiration, and its coachwork became a benchmark
by which others were judged. In 1931 Daimler took over Lanchester, another British
marque, named after Dr F. W Lanchester, a leading figure in British Car and Aircraft
Engineering. In turn, Daimler itself was taken over from BSA in 1956 by Jaguar, which
was then taken over by Ford in 1989.

BSA itself, which began in 1861, became well known for its motorbikes, which it first
manufactured in 1910. It had earlier, in 1908, tried to manufacture its own car, a copy of
the ‘Italia’ car.

Jaguar itself dates back to 1922, when William Lyons and William Walmsley set up the
Swallow Sidecar Company, producing sidecars for motorbikes, changing the name of the
company to the Swallow Sidecar and Coach building Company in 1926.
In that year they built the Austin Seven, as well as building the bodywork for cars
including Fiat, Swift, Wolseley, Standard and Morris.

In 1933 they changed the name of the company to SS Cars Ltd, and in 1936 William
Lyons bought out his partner in the business.

They produced their first Jaguar in 1935, the 3.5 litre SS Jaguar- a car that achieved huge
success on the racetrack, and was capable of reaching speeds of 100mph. After the
Second World War, the company’s name was changed to Jaguar Cars Ltd, and William
Lyons went on to be knighted, only retiring in 1972.

The Jaguar brand has continued in operation, becoming part of the Leyland Group, before
being sold to ford in 1989. After many years of slow death through poor quality
manufacture, the brand is now very much alive. In spite of its quality issues, it has always
been seen in the luxury sports market, and its designs have remained distinctive and
stylish throughout its history.

Rover, another great English marque dates back to 1884, when a firm, ‘Starley and
Sutton’ in Coventry used the name to brand a new ‘tricycle’. This was followed a year
later by a Rover Safety Cycle. The first Rover car was built in 1904 complete with an 8
horsepower motor, steering wheel, bench seat for two, side lamps, radiator, wooden
spoke wheels, pneumatic tyres and brass air horn. Between 1915 and 1923 it also
produced a number of motorbikes.

Rover was involved in wartime production throughout World War 1, producing shells,
fuses, mortars, military bikes and also Sunbeam Ambulances and Maudsley trucks.

In 1930 it won a race against the Blue Continental Express Train, beating in by 20
minutes in a 750-mile race between St Raphael and Calais in France.

In World War 11, it was again involved in wartime production, producing engines for
aircraft, tanks and other military equipment. The mighty Land Rover was first produced
after the war in 1948, a British version of the American Jeep. In 1965 the company
merged with Alvis, and in 1967 it was merged in with the Leyland Group, forming one of
the brands owned by British Leyland a year later, when Leyland was merged with BMC
(British Motor Group). In turn British Aerospace bought Rover in 1988, and then sold it
to BMW in 1994. After massive losses, BMW sold the whole company for 1 pound
sterling to a new group of owners.

The Triumph Brand dates back to 1883, when a German immigrant, Siegfried Bettman
arrived in England, setting up a bicycle manufacturing operation. During the 1890’s he
built bicycles under the Triumph brand, building his first motorcycle in 1902, and a year
later, a three-wheeler.
It was not until 1923 that a car was produced under the brand, with the Bicycle division
sold in the late 1920’s, and the motorcycle and car divisions separating in 1936. In 1939
the car company went into receivership, and was taken over by the Thos W Ward
Company from Sheffield, and subsequently the Standard Motor Company in 1945. The
Leyland Group subsequently bought it in 1960, and the brand ceased production in 1984.

Humber too was one of the earliest British marques, started by Thomas Humber in 1867.

Initially the company, like many others, built bicycles, then three wheelers, which it did
until 1905. In 1899, it built its first car, using a French de Dion engine, and went on to
produce family cars. In 1926 it took over Commer Cars (a brand later best known for its
trucks), then Hillman in 1928, before being taken over itself by the Rootes Group in
1932. When Chrysler took over the Rootes Group in 1976, the brand was discontinued.

The Hillman Car Company was started by William Hillman in 1907, and built family
cars. It was taken over by Humber, but continued in production as a brand through the
Rootes Brothers Group takeover, before it too disappeared in the Chrysler takeover in
1976.

Vauxhalls were first produced in 1903 by the Vauxhall Iron Works Company, which had
been making marine engines since 1857. It too ran into financial problems, and was taken
over by General Motors in 1926, producing munitions and also the Churchill Tank in
World War II, before returning to car production after the war. Vauxhalls continue to be
made in Britain, under the ownership of General Motors.

The Wolseley Car Company, named after its founder, Frederick York Wolseley began its
life in Sydney, Australia, under the name of the Wolseley Sheep Shearing Company
Limited. Herbert Austin also worked for Wolseley both in Australia and back in Britain.

The company and its founder moved back to Birmingham in England in the late 1800’s,
producing their first three-wheeler car in 1895.

Wolseley cars continued in production right through to 1975, and were considered an up
market, bordering on luxury car, with the brand gaining favour as a British police vehicle
in the 1960’s. They maintained a distinctive Wolseley emblem in their front radiator,
which was illuminated, giving the brand a distinguished appearance.

In 1918, the Isuzu Company, known then as the Ishikawajiama Automotive Works
Company, a company merged between Tokyo Ishikawajiama Ship Building and
Engineering and Tokyo Gas and Electric Company, also produced Wolseleys in Japan.

Britain’s most prestige brands were Rolls-Royce and Bentley.

In 1902 Charles Stewart Rolls, the third son of Lord and Lady Llanngattock, set up a car
importing company under the name of C.S Rolls and Co. in London. He had earlier
during his days at Cambridge University owned a Peugeot car, while he studied for his
mechanical engineering and science degree. He developed a passion for motor racing,
and in 1903 set a world record of 93 mph, racing a French built ‘Mors’ at Phoenix Park in
Dublin. Emile Mors had been building his cars since 1895, initially starting with steam
cars before moving to petrol driven sports cars. The brand however died in 1925.

Henry Edmunds, a shareholder in the Rolls and Co. importing business convinced him
that he should travel to Manchester to see a new car that was been built there, and despite
reservations he decided to make the trip.

Henry Royce was a partner in a Manchester electric light company making dynamos,
electric light fittings and cranes.

The electric light business was a great success, and Royce bought a French built second
hand Decauville car, only to find it unreliable and hard to start. He then decided that he
would build his own car, and by 1904 the first Royce was built, proving to be a great
success.

When Rolls saw the quality of Royce’s car, he made an agreement with Royce to take all
of the cars that he could produce, these to be sold under their joint names, as ‘Rolls-
Royce’, and built as the finest cars in the world.

This they did in 1906, producing the ‘Silver Ghost’ 40/50, continuing to produce this
Rolls-Royce model until 1925, when the ‘Phantom’ was produced.

In 1910, Rolls was killed in a flying accident, while Royce continued to head Rolls-
Royce right up until his death in 1933.

Rolls Royce also between 1919 and 1931, produced cars in the USA, but USA buyers
preferred the British produced cars.

The other luxury British marque was Bentley.

W.O Bentley bought his first motorcycle in 1906, a Quandrant and shortly after began
racing them, while still a mechanic in a locomotive works.

In 1912 he set up ‘Bentley and Bentley’ with his brother, H.M, importing the French
D.F.P. car to England. He designed his first car in 1919, and it was put into production in
1921. By 1924, the company was facing financial ruin, but was saved by Woolf Barnato,
a millionaire-racing driver at the time, but it again ran into financial problems in 1931,
and was bought by Rolls Royce.

The British car industry developed rapidly in the first half of the twentieth century, and
developed on a number of levels, with cars for the rich aristocracy and those with new
found wealth, another range of brands for those with sporting interests, while other
brands were developed for the mass market.
Rolls-Royce, Bentley, Jaguar and Daimler headed the luxury market, while brands such
as Armstrong-Siddeley, Rover, Triumph, Lanchester, Riley, Wolseley and Humber filled
a middle luxury area, and brands such as Morgan, Aston Martin, Alvis and Morgan filled
a sports car area.

The mass-market area was covered by brands like Austin and Morris, although they also
had their sports cars too with brands like MG.

Herbert Austin began his career working for the Wolseley Sheep Shearing Company,
before returning to England, and working for the Wolseley Car Company. He built his
first car Austin car in 1905, and over the next few decades, Austin cars became one of
England’s most popular and affordable car brands. It merged with Morris cars in 1952,
creating the British Motor Corporation.

William Morris grew up in Oxford, England initially working as an apprentice in a


bicycle shop, before setting up his own bicycle repair business with a friend, Joseph
Cooper, and beginning to make his own bicycles. He then started to build motorbikes,
advertising his business as the “sole maker of the celebrated Morris Cycles and Motor
Cycles”, and in 1903 he also set up the ‘Oxford Automobile and Cycle Agency’, forming
a partnership with Lancelot Creyke and F.G Barton.

Both partnerships however failed, with the second business forced into liquidation, so
Morris traded in his own name, repairing and selling bicycles and cars.

In 1912 he assembled his own car at his ‘Morris Garage’, using parts supplied from
different makers. The success of the Morris Oxford led him to introduce a new model, the
Morris Cowley using an American motor.

When war came, the Morris assembly works initially made hand grenades and machined
bomb cases, and then began to make sinkers for mines for the Royal Navy. The mass
production of these sinkers, taught him a lot about production and cost control, and after
the war ended he used the skills he had built up to apply it to car assembly.

In the 1920’s Morris cars went from strength to strength, buying out engine, gearbox,
bodybuilding companies and component manufacturers, and at the same time cutting
costs, so that his cars became more affordable.

He also introduced pressed metal bodies in 1925, introducing the first all steel car body in
Britain. In 1927 he bought out Wolseley, set up a French manufacturing plant – which
subsequently closed due to lack of French buyers for an English car, and set up a vast
dealer network to sell his cars. By 1925, Morris cars held 40% of the British market, and
in 1939 they became the first British carmaker to sell a million cars.

It was in 1924 that another great British marque, the MG, which stood for ‘Morris
Garages’ first made its appearance. Cecil Kimber, who worked for Morris, developed the
MG as a sports car brand. It was established as a separate company in 1927. It achieved
great success on the race track, and won a wide band of loyal followers, particularly
during the 1950’s when it reached its heyday with a number of hugely successful sports
car models, which have since become classics.

The American Ford Company also set up in Britain, designing and building cars that
were exclusively British. The company began in 1932, and went on to produce some of
Britain’s most popular cars, including the Anglia, Prefect, Consul, Zephyr, Zodiac and
Cortina. It continues to build cars today.

There are also some other great British sports car brands.

These include Morgan, which started production in 1910, established by H.F.S Morgan
(1884-1959), who initially built motorbikes, then 3 wheeler sports cars – built until 1952,
and 4 wheelers, which continue to this day.

Other great British sports brands included Frazer-Nash, set up by Archie Frazer-Nash in
1924, which lasted until 1957, Armstrong-Siddeley, set up in 1919 and Jensen, set up by
Richard and Alan Jensen in 1934, which continued to be manufactured in small numbers
right up to the 1970’s. Alvis also began in the 1920’s, founded by T.G John in 1919,
producing sports and saloon cars until 1967, and Bristol cars began in 1947, developed as
a sideline manufacture to the company’s main business building aircraft.

Made famous by James Bond films, Aston Martin was first established in 1913 by Lionel
Martin, a wealthy car enthusiast, and an engineer, Robert Bamford. The company, like so
many others went into receivership early in its life, and passed through a number of
ownerships, including the David Brown Tractor Company, who created the DB model
name, and also bought the Lagonda sports car brand. Ford now owns the brand.

Lotus cars began in 1952, when Anthony Chapman set up the Lotus Engineering
Company with Michael Allen. Some of its famous models included the Super 7, Elan,
Europa, and Esprit as well as a number of Formula 1 cars.

If the British Sports cars were famous, the Italians were even more so. Names like
Ferrari, Maserati, and Lamborghini have become synonymous with the world’s best
racecars, leading other great Italian brands like Fiat, Alfa-Romeo and Lancia.

The Italian Fiat company began in 1899, with the word Fiat standing for ‘Fabbrica
Italiana Automobili Torino’. The Fiat company was set up by Giovanni Agnelli di
Bricherasio and Count Biscaretti di Ruffia. They developed a number of innovative
designs, using both small and large engines. These included even a 6.8 litre V12 engine,
which they produced in 1921 following the war.

Before the war the company had been heavily involved in motor sport, but also built
buses, trams, aircraft engines, and trucks that were also built during the war. The Fiat
Company, under the control of the Agnelli family manufactured a vast array of models
over the years that followed, with one of their most successful models being the tiny
Topolino, launched in 1936, powered with a 570cc motor. This car enabled the vast
number of Italians to afford a car, and continued in production right through to 1948.

Following the Second World War, the company built a range of cars, but is perhaps best
remembered for its Fiat 500 ‘bambino’, launched in the 1950’s which had two doors, a
roll back fabric roof and an engine in the rear. Fiat is still Italy’s biggest car brand.

Alfa Romeo’s story began in France, when the French maker, Alexandre Durracq,
decided to set up a car plant outside Milan in Italy to assemble cars.

The car plant was sold in 1909 to the Anonina Lombardo Fabbrica Automobil, which
gave rise to the name ALFA, and in 1916 Nicola Romeo, an Italian engineer with a
passion for car racing took over the company, initially building military equipment,
including Aircraft engines and Locomotives, and making a fortune, before building a
number of winning Grand Prix race cars.

Enzo Ferrari, who began as a race driver with Alfa, but left in 1929 to set up Scuderia
Ferrari, selling and racing Alfa’s, looked after Alfa’s race team during the 1930’s,
finishing his relationship with Alfa in 1938.

The company had been put into receivership in 1929, with the start of the Depression,
passing into Government control, where it stayed until 1979. Romeo had also departed
the same year.

After World War II the company manufactured products including stoves and even
aluminium windows, before returning to car manufacture. In the years that followed,
design companies such as Bertone, Pinafarina and Zagato were involved in creating some
of the brand’s most memorable car bodies – including the Giulietta, and Spider.

The Alfa Romeo logo badge is probably one of the best of any brand, with its ‘red cross’
evolved from the Milan coat of arms, which originates from the Milanese hero Giovanni
da Rho, who fought in the first crusades in the 11th century, and was said to have placed
the red cross on the walls of Jerusalem, when it was recaptured in the name of
Christianity. The serpent with the baby in its mouth is the crest of another Milanese hero,
Ottone Visconti, who killed an infidel during the First Crusade. The Laurel wreath,
dropped from the badge in 1981 is in honour of Alfa Romeo winning the 1925 World
Championship race.

Lancia began in 1906, built by Vincenzo Lancia. He initially started work as a


bookkeeper, but went on to racecars for Fiat, initially in Italy, then France and even the
United States, before leaving to set up his own business with another Fiat employee,
Claudio Fogolin.

The company enjoyed great success, and built a number of coupes, sedans, and
commercial vehicles, and is today part of Fiat.
While there were a number of Italian makers, such as Itala (1904-1934), Isotta Fraschini
(1900-1949), De Tomaso (1956- ), and Cisitalia (1946-1965), the most famous marques
are undoubtedly Maserati, Ferrari and Lamborghini.

The Maserati brothers – Alfieri, Bindo, Ettore, Ernesto and Mario, started Maserati with
their first car being produced in 1926. It went on to produce a number of racecars, and in
1937 produced a road car, and has continued to produce a small number of high
performance cars under various ownerships.

Lamborghini is named after its founder, Ferrucio Lamborghini, who built up a business
manufacturing tractors and industrial heating and air conditioning systems, before
attempting to build the ‘ultimate sports car’ in 1963 – a 3.5 litre V12 350GTV.
Lamborghini sold his interest in the company in 1972, returning to the agricultural
industry, producing grapes, including ‘Bull’s Blood’.

Enzo Ferrari was born in 1898, with his father involved in making railway equipment.

Following a stint in the Army during World War II, he began work in Bologna in an
engineering plant converting small trucks from the war into cars. His interest in motor
racing saw him in hillclimbs, and in 1920 he joined Alfa Romeo as a racing driver.

One of his racing fans, the mother of an ace pilot, Francesco Baracca who was killed in
1918 during the War, gave him her son’s squadron badge in 1923, a prancing horse, after
a race win, and Enzo adopted the badge as his.

In 1938, after leaving Alfa Romeo, he formed a new company, ‘Societa Anonima Auto
Avio Construzioni Ferrari’, making machine parts. Following the Second World War,
Ferrari set out to build his own race cars, which he did in 1946, followed by a number of
road cars for the European and American markets. His first Formula One Grand Prix win
came in Britain in 1951. Tragically his son, Dino died in 1956, aged just 24, but his name
lives on through the Dino Ferrari cars which bear his name.

Today Ferrari leads the world in Formula One racing, and is one of the only carmakers
that are dedicated to Motor racing as their main business, with production of sports cars
for road use, a bi-product to it. Enzo Ferrari died in 1988, aged 90.

In Germany, apart from Mercedes Benz, there were many other brands, including Horch,
a car company started by August Horch, who had worked as an engineering manager
with the Benz Company, before building his own car in 1899 -1900. It also had a
chequered history of ownership, forming part of Auto Union in 1951, along with other
German makers D.K.W, Audi and Wanderer.

The Audi name is the only one of these to survive, but the name Audi came from August
Horch, it being the Latin word for the German word ‘horchen’, meaning to listen. Horch
had left the Horch company he set up, in 1910, forming the Audi Company, and he was
forbidden from using his own name in the new venture.
Following World War II, the Auto Union Company was nationalized as part of the
Industrie-Vereinigung Volkseigner Fahrzeugwerke. While some cars were produced in
the 1940’s under the D.K.W name, it was not until 1965 that the Audi name was revived
under the ownership of Volkswagen. The brand Audi is now marketed in competition
with luxury cars in Germany and abroad, including BMW.

BMW, which stands for Bayerische Motoren Werke AG began as an aircraft engine
maker, before starting to build motorcycles in 1923.

In 1928 the company began making British Austin Seven cars under licence from the
English company, having purchased a company called Dixi. In the 1930’s they also sold
cars back to Britain, marketed under the name of Frazer-Nash.

During the war, their factories were heavily bombed, and it was not until 1948 that the
company started building motorbikes again, and this was followed in 1952 with the 501
car, which appeared in both four door sedan form, and with a fold back soft top. In 1955
the company began to manufacture the Isetta – a three wheel enclosed bubble car, with
one door which opened to the front of the vehicle, produced under licence from its Italian
originator. In 1961 the company began producing a number of 4 cylinder luxury compact
cars, and in the years since, the brand has moved from strength to strength in the luxury
market.

Volkswagen, the other great German marque began life in 1936, when the German
Chancellor, Adolf Hitler decided that a ‘people’s car’ should be developed. Volkswagen
is the German word for ‘people’s car’.

Hitler arranged to meet the engineer, Ferdinand Porsche, who had designed and built an
Austrian car, the Sascha, named after its financier, Count Sascha Kolowrat, as well as
designing suspensions for the Wanderer car produced by Auto Union. The result was
while Porsche designed the car, Hitler set up the car company, and committed funds to
build its factory near Hanover. Production of the Beetle or VW, later referred to as
‘Hitler’s revenge’ began in 1939, the beginning of World War II.

When the war ended, the car plant was offered for sale to both American and British
companies, but none were interested. Under the leadership of the British Army Officer,
Major Ivan Hirst, the factory was restored, and production of the car began again in 1945.

The designer of the car, Ferdinand Porsche received royalties from the sale of each car,
and this enabled him to start his own business building his own Porsche cars.

Volkswagen Beetles continued to be built as cheap reliable transport, with a motor in the
rear, and only relatively minor design changes throughout he fifties and sixties, with the
car being exported around the world, and plants being set up in places like Mexico and
Brazil producing the same models. When production of the beetle stopped in Germany, it
was several years later that they stopped in these countries. By 1979 the company had
sold over 35 million Volkswagens worldwide. The company in 2000 also brought out a
new Beetle as a ‘retro model’, and has also purchased the British Bentley Brand, with
BMW retaining the rights to the Rolls-Royce brand.

Adam Opel (1837-1895) began making sewing machines, before starting to build
bicycles in 1886. His sons, Carl and Wilhelm took over the business on his death, and
bought the rights to the Lutzmann car, before abandoning this in favour of the French
Darracq, which they were able to build under licence form the French maker.

Opel began manufacture in their own name in the years that followed, building cars and
trucks as well as aero engines during the War. After the War, the company went on to set
up moving assembly lines, and in 1929 General Motors from the USA bought an 80%
share in the business, buying the rest in 1931.

Today the company is still under the control of General Motors, but is still marketed
under the Opel name.

The other great German Brand is Mercedes Benz, which we discussed in the last chapter,
and of course Porsche.

Ferdinand Porsche (1875- 1952) was a car designer in Austria, setting up his own design
company there in 1930. He had worked with Austro-Daimler- the company set up by the
German Daimler company in Austria- which developed the Sascha car funded by Count
Sascha Kolowrat; Steyr, Austria’s leading car company, as well as the Zundapp
motorbike Company and the NSU car company, which at the time also made motorbikes.

His interest in car racing and design skills led him also to design a V16 Race car for Auto
Union, and also brought his skills to the notice of Adolf Hitler, who asked him to design
“a people’s car”, their first meeting taking place in 1934.

During the 1930’s he went to both Britain and America to study the motor industry,
including visits to Henry Ford’s plant where he met with Henry Ford – the meeting
taking place in 1937. The motor industries in both countries were by this time well
established, and Porsche would have seen a number of cars produced at low cost for the
mass market in each country, as well as the best cars of the time.

He visited the USA twice that year, seeking to learn more about mass production, and in
May 1938 Hitler laid the foundation stone for the new Volkswagenwerk factory. By April
1939 the factory was turning out its first KdF-wagen cars – named by Hitler, but only 210
cars were produced before the factory turned its skills to War production.

Porsche also designed the Tiger Tank for the German war effort, and at the end of the war
in 1945 he was arrested by the Allied victors and handed over to the France, where he
was imprisoned for two years.
His release came when the Italian company, Cicitalia, owned by a wealthy industrialist
and former professional football player, Piero Dusio, paid the French 1 million French
Francs for his release, so that he could design a Grand Prix racing car for him. Porsche
was released from prison in 1947, by this time aged 72. The cost of producing the racecar
blew out however to five times the original estimate, and the Cicitalia company filed for
bankruptcy in 1949.

On Porsche’s release from prison, he went to work on his own sports car, completing a
chassis by March 1948, and a body two months later.

After showing his car at the 1949 Geneva Motor Show, production began in earnest, and
by 1951 over 500 Porsches had been produced. The following year he died from a stroke.

His son, Ferry Porsche then took over the business, and over the years that followed the
brand has gained worldwide acclaim as one of the best sports cars in the world.

Its body styling and rear engine design has remained pretty much the same as when it was
first designed, a living testament to the skill of Ferdinand Porsche as one of the world’s
best car designers of all time.

It is interesting to consider that a man designed one of the world’s great sporting icons in
his 70’s.

While there were a number of marques developed outside of Germany, France, Italy and
Britain in the early years of the car’s development, the majority happened within these
countries.

In Belgium there was the Minerva car produced in 1899. This car company survived until
1939. In Czechoslovakia, there was the Laurin-Klement, which evolved out of a bicycle
repair shop in the 1890’s, going on to become Skoda. In the USSR, the Gaz car began
production in 1932

In Australia, Model T Fords were built from 1925 when Ford Australia set up and the
Ford Company has continued to produce Australian models since this time, with the first
Falcon model launched in 1960.

General Motors has also been in Australia since 1931, when it bought out an Adelaide
based Car Body Building Company, named ‘Holden and Frost’. This company had been
producing cars using imported chassis from Lancia in Italy and also Morris in England,
as well as assembling other British and American cars since 1914, before being bought
by General Motors in 1931.

Both Ford and General Motors have continued to produce Australian models since this
time, and hold the majority of the market between them, with large market shares been
taken by brands such as Volkswagen, Morris and Austins in the 1950’s, and Japanese
brands taking large market shares in the 1970’s and since. A number of these companies
have set up assembly works in Australia, the most significant being Toyota, which is now
one of the three top sellers. The number one spot has changed year to year, but remained
largely in the hands of General Motors Holden, Ford Australia and Toyota.

In Scotland, the Arrol-Johnston car was produced in 1895, named after George Johnston,
who had been involved in the development of the steam locomotive, and William Arrol,
an engineer who had built the Forth Bridge in Scotland. This car company eventually
stopped production in 1929, but had in 1913 also experimented with electric powered
cars, producing 50 of them for the Edison Company.

Assar Gabrielsson and Gustav Larson founded the Volvo car company in 1924 in
Sweden.

Gabrielsson had previously worked with the Swedish company SKF, a company founded
by Sven Winquist in 1907 in Goteborg (Gothenburg), which had produced the world’s
first self-aligning ball bearings, and had been hugely successful. By 1920 SKF had set up
agencies and production factories in over 100 countries, employing over 12,000 workers
and becoming one of the world’s first multinationals.

SKF had produced a number of ball bearing types by this time, including the spherical
ball bearing, which they invented in 1918, and had become a major supplier to the
railway and booming automobile and engine marine markets. The company is still the
world’s leader in this industry.

SKF’s use of high-grade steel in the ball bearings had also helped build Sweden’s steel
industry.
When Gabrielsson and Larson came together, they both had experience in the automobile
industry in Europe at the time, Larson having worked in England as an engineer/designer
on Morris engines, and Gabrielsson in France and Sweden with SKF.

At the time, many of the cars being built were unreliable, made up from component parts
assembled from any manufacturers that could supply. Rather than do this, Gabrielsson
and Larson decided to design their own parts, and then commission makers to build the
parts for them. They chose a Penta marine motor, supplied by another Swedish company,
Pentaverken, and build their first cars.

SKF then underwrote the car’s production, by providing credit and a factory to build the
first 1000 cars, and the Volvo Car Company was on its way.

The word ‘Volvo’ comes from the Latin, meaning ‘I roll’, a trade name owned by SKF
for their ball bearings, and the arrow logo was based on the alchemist’s symbol for iron
ore – the idea behind the logo and name being ‘rolling strength’.

Saab, the other Swedish marque, began in 1937 as an aircraft manufacturer. The name
itself is the initials for Svenska Aeroplan Aktiebolaget, the company set up to produce
aeroplanes during the Second World War.
At the end of the war, with the need for aircraft likely to fall, the company decided to use
its skills in engineering and production to try and build a car, developing prototypes and
then a full production model by 1949, and continuing to produce distinctive cars since
then. The carmaker also bought out Scania trucks in 1968.

The company was one of the first to introduce Turbo engines, and in 1989 General
Motors took a 50% interest in the company, buying it out 100% in 2000. The company
exports around the globe, and is now considered one of the world’s leading luxury
vehicles.

CHAPTER 15

Developing the American Car

The American Car Industry, just as in Europe developed as a result of the efforts of a
number of individual engineer inventors and enthusiasts, and many of their names
became well-known car brands.

Just as in Europe, there were a great number of failures, and many of the early brands
disappeared in the Depression, or were merged in with bigger companies. Building a car,
not only required great engineering skill, but also finance, and just as in Europe,
wherever there was an engineer attempting to build a car, there was either a rich
enthusiast or investor not far away!

Many car makers evolved from Bicycle makers, adding engines and then steering and
other refinements to create their first cars, and experimenting with different types of
steam and electric engines before settling on ones powered by gasoline.

America’s first cars were imported from Europe, probably more as a novelty, or latest
fashion trend, then as a serious means of transport.

The first engines to be imported and then built in America were German Daimler engines
to be used in Boats.

A German immigrant, Henry Engelhard Steinway, had settled in Manhattan Island in


New York, setting up a business in the name of Steinway and Sons to build pianos. The
year was 1853, and the quality of his work quickly established Steinway Pianos as the
world’s leading brand, a reputation it still maintains today. At the time Pianos were the
centre of entertainment in homes that could afford them, and Steinway Pianos were the
Piano of choice of leading concert pianists.

The business grew rapidly, and by 1880 a Steinway Factory was established in not just
Queens, where they had moved to in New York, but also in Hamburg in Germany.
In 1888, after a meeting between Henry’s son William Steinway and Gottlieb Daimler,
the Steinway Company agreed to set up a new company, to be called the Daimler Motor
Company in the USA to build Daimler engines. This they did in Hartford, Connecticut,
with the engines then sent back to a Steinway factory on Long Island to be installed into
boats.

Daimler’s partner, William Maybach, who had visited a World Trade fair in Philadelphia
and visited his brother who worked with Steinway, had made the initial contact between
the Steinway Company and Daimler.

The first true American car built was the Duryea, built by Frank and Charles Duryea from
Springfield, Massachusetts. Charles had added an engine to a horse buggy in 1891, using
his brother to help make it work. Frank had a bicycle repair business. The second and
third car brands to appear were the Haynes (1894) and the Winton (1895).

The 1891 Duryea horseless buggy is considered the first American built car, and in 1895
a Duryea, driven by Frank won the second American car race, a 90-mile race sponsored
by the Chicago Times-Herald. In the first race while some 80 cars had originally entered,
but only 2 turned up for the race – the Duryea and a Mercedes, and the imported
Mercedes won when the Duryea ran into a ditch to avoid running into horses on the road.

In that same year, a US patent was taken out on the ‘invention’ of the car by George
B.Seldon, a Rochester, New York Lawyer and inventor, although he never built a car.
Licensing fees were paid to him by all US carmakers for a number of years, until Henry
Ford successfully challenged and won a court case, which enabled him to build cars
without paying a royalty.

In the re-race, the Duryea won against a field of six cars, two being electric and the others
being Mercedes motorcycles.

By 1896 Duryea cars were the leading maker of gasoline-powered cars, with other
manufacturers concentrated on building cars with steam or electric engines. One of these,
a four wheel steam vehicle was build by Ransom Eli Olds, and sold to the Francis Time
Company in Bombay in India – one of, if not the very first American vehicle to be
exported.

In 1897 he set up Olds Motor Vehicle Company to build cars with Gasoline engines,
moving his production from Lansing to Detroit, until a fire destroyed the factory in 1902,
and the company moved back to Lansing in Michigan, taking with it the only car that
survived, ‘the curved dash Olds’, a four cycle engine based on one cylinder.

The company enjoyed great success with this early models, forcing the company into
mass production, and leading to it buying such vital components as gearboxes from the
Dodge Brothers, who later set up their own Car Company, and engines from Henry
Leland, who went on to become head of Cadillac, named after the French explorer,
Antoine de la Mothe Cadillac, who had founded the city of Detroit.
Where cars were handmade by individual craftsmen, Olds factory adopted a form of mass
production, later adopted and refined by Henry Ford.

In 1905 General Motors bought out the Oldsmobile Company. Olds himself left to form a
new company, and establish a new marque, the Reo, using his initials. Reo cars continued
in production until 1936, with some trucks continuing in production until 1956, when the
remains of the company were taken over by the White Trucking Company.

Oldsmobiles became a major brand in the United States, and continue to be marketed by
General Motors.

Two of Old’s suppliers also set up major car brands – these being Cadillac and Dodge.

The Cadillac car was produced by the revived Detroit Automobile Company, set up in
1899, and renamed the Henry Ford Company briefly in 1901, before Henry left the
company to pursue his interest in car racing, taking his name with him. This left the
company with no name and no cars, until the investors met with Henry Leland who had
an engine that he had produced, which they agreed to take on, a name ‘Cadillac’, and in
turn a man who would buy the company- Henry Leland himself.

Leland bought the company and pioneered the use of precision engineered parts which
could be interchanged between vehicles and fit! Most cars then, and for a long time after,
continued to produce parts which might or might not fit on another vehicle, depending
upon who had machined them. Henry Leland with his knowledge of machinery saw a
great advantage in producing parts that were accurate to a 1000th of an inch, and the
quality of his cars reflected this.

The Cadillac became the most prestigious of all the American brands, competing with
Lincoln and Packard for leadership in the luxury market using tools and techniques
developed by Leland.

In 1915 it was the first brand to introduce V8 motors; in the 1920’s it led with styling by
Harley Earl; in the 1930’s it introduced both a V12 and even a V16 motor; and in 1948 it
introduced ‘fins’ over its rear wheel arches – starting a styling trend, which saw ‘the size
of fins’ become a 1950’s styling phenomenon, lasting until 1965, and grow larger with
each new model release.

As in Europe, there were carmakers that designed their cars as essentially horse carriages
without the horse, while others developed their cars as an evolution to the bicycle.

In Victorian times, the aristocracy in Europe and the new rich in America had the money
and the power, and carriages and private coaches were designed to provide them with as
much comfort and privacy as was possible. Coachwork was very much a craft, and there
are still examples of these magnificent vehicles kept by enthusiasts.
While all car builders needed finance to build their cars, there were those who designed
their cars for the rich, and also some that saw that if they could build a car which was
affordable to all, then they would through the greater number of people able to buy them,
be able to create even more cars. One of these was Henry Ford (1863 -1947).

It was in 1896 that Henry built his first car in his home garage – a quadricycle.

Over the next few years he continued to pursue his interest in cars, gaining financial
support from investors to set up the Detroit Automobile Company, renamed the Henry
Ford Company, and then renamed again as Cadillac when Ford left, taking the name with
him.

It was not until 1903 that the new Ford Motor Company was set up again, with 12 new
investors, and in 1905 another company, the Ford Manufacturing Company was set up,
excluding one of the original investors who Henry Ford had taken a dislike to.

In 1904 Ford set a world speed record of 91 miles per hour racing his car across a frozen
lake, and in 1908, he introduced the Model T, an instant success, with its affordability to
large numbers of people. It would remain in production until 1927, an incredible 19
years, becoming the world’s most popular car at the time, and selling more then 15
million cars in the process.

From an initial price of $850 in 1908, the car by 1923 was being sold for just $265, as a
result of Ford’s skill in mass production, and cost control.

The idea of mass production was not new, but the Ford was able to perfect its use,
creating a moving assembly line, which greatly increased production rates, but also
created great unhappiness with workers, who became ‘semi robots’, doing the same job
over and over. This eventually led to the formation of unions, strikes, lockouts and riots.

Mass production as a production technique developed in a number of ways. First was the
development of the Micrometer, which enabled measurements to be made, accurate to a
1000th of an inch. This instrument was invented by James Watt, of steam locomotive
fame, and then refined and improved by the Englishman, Henry Maudsley in 1805, who
went on to develop a lathe for cutting metal and precision metal working equipment for
making mill parts, marine and steam engines. He had previously made locks, so
understood the need for great accuracy. One of his apprentices, Joseph Whitworth, then
went on to produce a micrometer in 1830 which was accurate to 1 millionth of an inch.

In America, Eli Whitney (1765-1825) was said to be “able to invent anything”, working
initially as a blacksmith making nails using a machine he had invented, and later ladies
hatpins, before moving to the South and inventing the cotton gin which was to
revolutionize the cotton industry, replacing the hand labour needed to separate the cotton
lint from the seeds. Before he could even patent the machine, the idea was copied by
others and in spite of a number of court cases, he received very little from his invention,
even being sued by some of the Cotton States who had earlier agreed to pay royalties, but
later reneged on the agreements. He returned to the North in 1804, settling in New
Haven, and winning a contract to supply 10,000 muskets rifles to the U.S Government.

At the time muskets were all hand made, and what Whitney set out to do was to invent a
system of manufacture, where it was possible using templates and milling machines set to
exact tolerances to get an unskilled worker to produce a musket absolutely identical in
detail and accuracy, to that produced by the most skilled machinist. This meant that the
parts of one musket would fit exactly on any of the others produced.

It was the refinement and development of this technique, and the learnings which were
derived from it that enabled ‘mass production’ to be taken up and used so effectively in
the manufacture of American cars.

Ford was also the first carmaker to refuse to pay the royalty on George B. Seldon’s Patent
on the invention of the car, with the US Court of Appeals ruling that the 4-cylinder
engine did not fall under the Patent. It was a historic win, and saved Ford countless
dollars. Profits from the 1923-24 year alone amounted to over $100 million, and there
were many years like this, making Henry Ford one of the world’s richest men at that
time.

The Ford Company continued to expand, setting up overseas subsidiaries in Germany,


England and Australia. Initially most of these subsidiaries acted as assembly plants, but
they quickly evolved into full car production centres, designing and building cars
specifically for these markets.

Today, Ford sells it cars, trucks and other vehicles in almost every country. It also
competes in most of these markets with another American Giant – General Motors.

Unlike Henry Ford, William “Billy” Crapo Durant (1861-1947) is not a well-known
name, but he was the founder of General Motors.

He grew up in the town of Flint in Michigan, leaving school at sixteen to work as a


laborer in a timber mill, before becoming a salesman, and in turn businessman, running
the Flint City Waterworks.

In 1886, Billy Durant, aged 25, and a partner, Dallas Dart purchased the Coldwater Road
Cart Company, a venture set up by the Flint Woolen Mills, to building 2 wheel horse
carts that the two partners had designed. By 1890, the company, now known as the
Durant-Dort Carriage Company was building 150,000 2 and 4 wheel carts and carriages a
year out of 14 factories, making the company the largest cart company probably in the
world, and in turn Billy Durant and his partner multi millionaires.

In 1904, James Whiting from the Buick Car Company, named after its founder David
Dunbar Buick, which had only been set up the year before, asked Durant to invest into
the car company, and become its President.
This he did, running the company from 1904 to 1908.

At the time there were four main car companies established in the United States, these
being Buick, Ford, Reo and Maxwell-Briscoe.

A proposal was put forward by the Financiers, J.P Morgan, proposing that the four
individual car companies and automobile industry itself would prosper if all four were to
merge together – a proposal not unlike others they had set down in other industries.

Ford and Reo pulled out of the deal, but the deal still went ahead in 1908 when a new
company was incorporated in New Jersey under the name of General Motors, with Billy
Durant as President.

Within days of incorporating, ‘General Motors’ took over Buick, and in rapid succession
Oldsmobile and Cadillac.

Billy Durant however lost control of the company in 1910, just two years later. That year
he had also put forward a proposal to buy out Ford, but the bankers refused to finance the
deal. By this time, General Motors had a market share of around 22%.

Durant left his position, but maintained his shareholding and his position on the Board of
Trustees and over the next four years he set up other Car manufacturing and supply
companies – including Chevrolet, named after his chauffeur, Arthur Chevrolet, and his
brother Louis. The Chevrolet brothers were both racing car drivers and originally from
Switzerland, but grew up in France, working in the French, then Canadian and ultimately
American car industries.

Louis and Durant set about building a French style car using the name Chevrolet, but
Louis Chevrolet left the company in 1913.

By 1915 Durant was back in control of General Motors, having retained his stock in the
company and bought more stock after he left the company, he and one of the other Board
members, Pierre Du Pont, now had majority control with 54.5% of the stock and in 1919
they took control. That year the company bought out Chevrolet; a 60% interest in the
Fisher Body Works; set up GMAC (General Motors Acceptance Corporation) as its Car
Finance arm; taken total control of the Guardian Frigerator Company, changing the name
to Frigidaire – ultimately sold off in 1979; and purchased the Dayton Wright Airplane
Company (later sold to Fokker Aircraft in 1929, with GM taking a 40% share of that
company), but a year later Durant was again out to the company.

He went on to set up Durant Motors in 1921, losing a lot of his fortune during the
Depression, with Durant Motors filing for bankruptcy in 1933, and three years later,
Durant himself also filing for bankruptcy. After the Second World War he went on to
open Bowling Alleys, dying in March 1947, one month before Henry Ford died.
Pierre Samuel Du Pont (1870-1954) became President of General Motors replacing
Durant in 1920. He was a member of the wealthy Du Pont family, which had been set up
in 1802 by his grandfather, Eleuthere Irenee du Pont de Nemours to manufacture
gunpowder and other chemicals. The company had been hugely successful, creating a
virtual munitions monopoly, but it was broken up under an Anti-Trust action by the
government in 1910. The Du Pont Company had been incorporated in 1899, and was a
big investor in General Motors Stock, continuing its hold its stock through the Depression
and World Wars, holding on to 22% of the Company’s stock until 1961, when it was
forced under another Anti-Trust case to divest itself of 63 million shares, bringing its
stockholding down to 15% of the total General Motors stock on issue.

The Du Pont Company throughout the twentieth century continued to build its chemicals,
plastics, glass and other businesses, creating some of the world’s most innovative
products and applications, including Rayon, Ethyl gasoline, Freon refrigerants, Nylon,
Neoprene, Teflon, Lycra and Kevlar. As with many of the other hugely wealthy
American dynasties, they also heavily supported a number of charity and educational
causes.

General Motors during the 1920’s rapidly expanded overseas, buying Vauxhall Motors in
England in1925, and setting up operations in Brazil, Argentina, Spain, France and
Germany. This was followed in 1926 by South Africa, Australia – where GM was later to
buy out Holden Motor Body Builders Ltd in 1931, subsequently called Holden and Frost,
followed by New Zealand, Egypt, Japan, and Uruguay, and in 1927 Java, as well as a
new assembly plant in Osaka, Japan. The first Pontiac had also been released in 1926,
with Adam Opel AG, the German Car Company being bought in 1929.

In 1929, the company also bought a 40% share in Fokker Aircraft, which took over its
Dayton Wright Company, with GM also taking a 24% interest in the Bendix Aviation
Corporation.

During the Depression, the company suffered losses in car sales, but managed to survive,
while many of its rivals went into receivership.

By January 1940 the company had produced 25 million cars, and by 1954 this had
reached 50 million, and by 1962, 75 million.

With the start of World War II, the German Government seized the Opel plant, while the
Japanese plant ceased production. Over the war years, the company then began to
produce a huge amount of armaments, over $12 Billion worth – everything from
ammunitions, guns, shells to aircraft and trucks, including the ‘Army Duck’, a troop
carrier that was able to travel on water, as well as on the land.

Following the War, General Motors became the pulse of America’s business and success.

This was highlighted in a 1953 Senate hearing, when the then President of General
Motors, Charles E. Wilson, when asked if he could see any possible conflict of interest
between his job as President of General Motors, and the position he was seeking as the
America’s Secretary of Defense, stated: “I cannot conceive of one (a conflict) because for
years I have thought that what was good for the country was good for General Motors,
and vice versa”.

As a vast corporate empire, General Motors has weathered many storms, including a
number of oil crisis, wars, recessions, model successes and also failures, and a vast array
of competitors in all of the markets where it is involved. It remains one of the world’s
most enduring brands, a living testimony to William Durant’s vision of a car
conglomerate.

The other ‘Big Three’ brand in the United States is Chrysler.

Chrysler Corporation officially began life later than General Motors and Ford, beginning
life in 1921 when Walter P.Chrysler took over the Maxwell Motor Corporation,
subsequently changing the name to the Chrysler Corporation in 1925, incorporated the
company with new funds of $400 million.

The Maxwell Motor Company however could trace its history back however to 1903,
when Jonathan Maxwell and Benjamin Briscoe formed the Maxwell-Briscoe Company in
Tarrytown, New York. The company at the time Chrysler took it over, had accumulated
great debts, and was heading towards bankruptcy.

Maxwell had worked for Oldsmobile before teaming up with Briscoe, who had a sheet
metal business, manufacturing metal garbage bins, as well as automobile parts. He and
his brother were early financiers for David Buick, before Durant became involved.

Walter P. Chrysler (1875-1940) began work as a mechanic in Kansas, before moving to


Colorado, becoming the division chief for the Fort Worth and Denver City Railroad.

In 1908 he purchased a Locomobile at the Chicago Auto Show, and a year later he took a
job as Work Superintendent with the company that made them, American Locomotive, in
Pittsburgh. He then joined Buick in 1912 as their Works Manager, becoming President of
Buick in 1919, and then Vice-President of General Motors the same year, when General
Motors was formed.

A year later, he was lured to the Willys Corporation on a salary of $1 million a year,
where he began working with an engineering supply company, Zeder-Shelton-Breer,
setting out to produce the most advanced car ever produced – which became the Chrysler
Model A.

In turn, in late 1921 the bankers, who were heavily exposed to the Maxwell Motor
Corporation, sought Chrysler to run that company. The company in 1920, at the height of
a post war recession had built up a debt of $32 million, producing 34,000 cars, but only
selling 8000 of them, and stockpiling the others.
When his contract with Willys expired in 1922, he left the company to head Maxwell,
initially saving the company, and then taking it over, introducing new models under the
name of Chrysler at the 1923 New York Auto Show. Within two years the company was
producing four times as many cars as it had done previously under the Maxwell
management, and when the Chrysler Corporation was formed in 1925, the new
Corporation took over the Maxwell Company, Walter Chrysler became a substantial
stockholder, as well as President of the company, and Chairman of the Board.

The first Chrysler – the model A and all its tooling, ended up as part of the auction sell-
off of Willys, being bought by Billy Durant.

In 1928 the Chrysler Corporation set up the Plymouth Motor Corporation- the name
having its origins as the place where the Pilgrim Fathers first stepped on to American
soil, ‘Plymouth Rock’. Plymouth was also a brand of Binder twine used on farms. The
Corporation also set up the De Soto Motor Corporation and Fargo Motor Corporation- to
build small trucks, and bought out the Dodge Brothers, who built Dodge cars and trucks.

The world famous Chrysler building was built in New York in 1931.

Dodge itself had a history going back to the beginning of the automotive industry.

John Dodge (1864-1920) and Horace Dodge (1868-1920) had been producing bicycles,
initially working in Ontario, before moving to Detroit to build bicycles and in turn parts
for the auto industry. In 1902 they secured a contract to supply transmissions for
Oldsmobile, and a year later they secured a contract with Ford to supply engines, on the
basis of securing a 10% shareholding in that company. They then dropped Oldsmobile as
a client, and the company grew very strong with the success of Ford’s Model A and then
in 1908 the Model T.

In 1914, Ford decided to build its own engines, ending the engine contract with the
Dodge brothers, and leading the Dodge brothers to build their own car. During the war
years, the Dodge Brothers supplied staff cars and ambulances to the American forces, and
also produced a recoil mechanism for the French 75 and 155 cannons, for which John
Dodge received a French Legion of Honour.

By 1920 Dodge cars, which had won great acclaim during the war for their reliability,
were almost as popular as Ford itself. That year however, John Dodge died in January,
and in November his brother, Horace died as well.

The business was then sold in 1923 by their widows for $126 million to Dillon, Read and
Company - a banking group, and in 1928 resold it at a considerable profit to the Chrysler
Corporation.

While the ‘Big Three’ became the face of Detroit and the American motor industry, there
were also many independent manufacturers, particularly during the early days of the
automobile’s development. All of these have interesting histories, with most being
merged or bought out by the major companies and usually disappearing or closing down
when forced into bankruptcy.

The car industry itself has become a barometer to the financial health of a country, with
people buying or leasing new cars when times are good, and not buying when times are
bad. In the Great Depression many car companies folded as people stopped buying, and
the same has occurred since when recessions have forced businesses and people to defer
or simply not purchase a new car.

A great number of great automotive brands died in the Depression or in 1930’s just after.
Some of these brands are now considered some of the great classics – among these being
Pierce-Arrow, Cord, Auburn and Duesenberg.

The Pierce-Arrow brand was started by George Norman Pierce in 1901. He had
previously made birdcages, ice boxes and washing machines, before concentrating on
building bicycles in the 1880’s and 1890’s. In 1910, shortly before his death, his cars
were selected as the fleet cars for the American President. At a time when Ford were
building cars for less than $1000, Pierce-Arrow were selling their cars for over $8000,
designed to be chauffeur driven, with right hand drive, with a school for Chauffeurs set
up by the company as well.

The company was eventually taken over by Studebaker in 1928, a company that also
folded in 1933. The Pierce-Arrow V12 engine however lived on being used as the motors
for fire engines produced by the Pierce Manufacturing Company in Wisconsin.
The front wheel drive Cord began production in 1929, closing down in 1937. It was
named after Erret Lobban Cord, a highly successful car salesman in Chicago, who had
taken over the Auburn Car Company in 1924, when it was put into receivership, and
later, in 1928 also buying the Duesenberg Motor Company.

The Cord cars were very stylish, and considered to be true classics of the flamboyant
1930’s.

Auburn, named after the town where they were first produced, Auburn in Indiana began
production in 1900, built by Frank and Morris Eckhardt, before being sold to a group of
Chicago businessmen in 1919, and then, when it was being liquidated to Cord.

The early models were fairly standard sedans and open tourers, but it is the speedster 2
door coupes that made the Auburn a true classic. The cars were styled by one of the
industry giants in styling, Count Alexis de Saknoffsky, with bodywork by Gordon
Buehrig, with the 1935 cars featuring a choice of 6 or 8 cylinder engines, including a
supercharged 8 cylinder with a guaranteed speed of 100 miles an hour.

Duesenberg cars began in 1920, built by Fred and August Duesenberg, who had initially
built bicycles before starting to build racing and marine engines. While their early cars
were pleasant in styling, it is the cars built after Erret Cord took the company over that
have become classics. Duesenbergs became the ‘Cars of Hollywood’, with actors like
Clark Gable and Al Jolson owning them. With massive size engines under a huge
extended bonnet, twice the power of most other cars and chrome plated side exhaust
pipes exiting the side of the engine through the side of the bonnet, the cars were the
epitome of luxury and bold 30’s sporting style.

The Studebaker brothers began building their Studebaker cars in 1904, having been
making wagons and carriages since the mid 1850’s in South Bend, Indiana. They initially
looked at building electric cars, but quickly changed to gasoline, building a succession of
cars over the next two decades, and surviving the Depression after a brief period when
the company was put into receivership, a time when its then President committed suicide.
It then went on to produce trucks and aero engines during the Second World War, and
produced some stylish and distinctive cars in the 1950’s when it merged with Packard.
The Studebaker brand ceased to exist in 1966.

Packard began operation in Ohio in 1899, again run by two brothers – James and William
Packard, who moved the company to Detroit in 1902. The company concentrated on the
prestige market, with its peak success being in the 1930’s and early 1940’s, when it
produced a number of high class Speedsters, Convertibles and Phaeton limousines. After
the War it continued to produce cars in the mid market, buying out Studebaker, before
finally dying as a brand in 1958.

The Hudson Motor Car Company began its life in 1909, when a Detroit Department Store
owner, Joseph Hudson, who died just three years later, put together a group of mainly
engineers to build their first car. The company had great success, introducing a second
brand, the Essex in 1919, and continuing to build cars until 1957. The later cars had a
distinctly Hudson look, with the arch over the rear wheels completely missing. In 1954,
the company merged with Nash, and the two brands becoming a part of American
Motors, and then disappearing.

Nash began operation in 1917 after Charles Nash left General Motors, where he had been
President to buy the Jeffery Motor Company. The company survived the Depression,
even making a small profit in 1932, and in 1937 it joined with the Kelvinator Corporation
to build cars, supply air conditioning for cars, and also make refrigerators. General
Motors owned Frigidaire. The Nash Rambler, introduced in 1950, was expanded to a
much larger product range when AMC (American Motors Corporation) took over the
brand in 1954, but they dropped the Nash brand, preferring to use the Rambler brand on
the models they produced. A number of interesting cars were then produced, with
Renault buying a share in the company in the early 1980’s, before selling out to Chrysler
in 1987.

Willys was set up in 1907 by John North Willys, going on to produce Overland and
Willys-Knight cars, before going into receivership in 1933 in the Depression. It survived
by producing one model only – the Great Six, until 1941, at which time it was awarded a
contract to supply Jeeps for the American Army, along with Ford. The Jeep had been
developed by American Bantam, and the Army ordered 1500 of them, as well as placing
orders for the General Purpose vehicle, abbreviated to form the name Jeep, with both
Ford and Willys.

Willys Jeeps became a highly visible symbol of the American forces, and in the post war
period, when Willys gained the exclusive rights to manufacture Jeeps, the company
flourished. The British Land-Rover was largely inspired by the success of the American
Jeep, with the Willys company merging with Kaiser, a short lived American brand in the
late 1940’s and early 1950’s, eventually being bought out by Chrysler – who have
continued to market the Jeep as the all American four wheel drive vehicle.

In the early half of the century, Jeep was the only brand of American vehicle that was
successful and small in size. All other small vehicles had failed, with no European
models achieving any real success, until after the fuel crisis of the early ‘60’s and 70’s
which saw the VW succeed initially, then the Japanese brands, and other European
luxury models.

It is hard to believe that all of the changes that have taken place in the car industry have
occurred in a little over 100 years. No other product before or since has so captured the
imagination of people the world over. While almost everyone in the developed nations
and a large number of people in the developing world can buy a car, there are now, unlike
the early days, very few companies or individuals who could build a new car, or start up a
car company.

CHAPTER 16

Detroit, Coventry, Stuttgart - A Tale of three cities

In the development of the car industry, three cities played a key role. These are Detroit in
Michigan USA, Coventry in Warwickshire, England, and Stuttgart in Baden-
Wurttemberg, West Germany.

Each of these cities became a centre for the car industry during the twentieth century, and
although very different, each played a critical role in the development of their countries.

The oldest of the three cities is Coventry, which can trace its history back to the
year1043, when the local Earl and his wife, Lady Godiva founded a Benedictine
Monastery, granting the monks the right to graze their sheep on the land, around a tree
known as the Coffan Tree- hence the name Coventry. The town’s first mayor was elected
in 1348, by which time there were a number of merchants in the town, and weaving and
dying wool had become the main industry.

A wooden stockade had been built, and as the town prospered, a stonewall replaced this,
with a number of gates allowing access to and from the town. Franciscan friars – grey
friars, named because of their grey habits, settled in the town during the 12th century, and
Carmelites – white friars, settled here in the 13th century, setting up a hospital, an
almshouse for the poor and even a hostel for lepers. There were also outbreaks of plague
around 1603, and the in 1642 the city refused entry to King Charles I, who was fighting a
civil war against the English parliament. During the civil war, prisoners were “sent to
Coventry”, with this phrase entering the language, and meaning being banished or
excluded from polite society!

In 1662, Charles II ordered that the walls of the city should be pulled down, and much of
the wall was destroyed after this, with the gates and gatehouses surviving until around
1760-1770.

The town’s traditional wool and dying industry was replaced by silk in the 1700’s, and
silk ribbons became the main industry, with watch making becoming important in the
1800’s.

Between 1769 and 1790 Coventry Canal was built linking the town to the River Trent
and River Mersey, and in 1838 it was connected by Rail to other major towns. Gas street
lighting had arrived in 1820.

In 1860 the Tariff protecting the silk industry was lifted, and the industry virtually
disappeared overnight, although one company survived, ‘J.J Cash’, which still makes
ribbons, labels and badges to this day. The weaving industry at its height in 1840 it had
employed over 30,000 weavers in the town.

The watch industry too collapsed in the late 1800’s as cheap imported watches from
Switzerland took hold of the market. In 1874 there were 130 watch manufacturers listed
in Coventry.

When the bicycle boom began in the 1880’s and 1890’s, the skill of the watchmakers and
weavers was taken up in the new industry, and the motor cycle and car industry that
followed, with watchmakers becoming instrument makers, and learning new skills in
motor bike and car assembly and production. In 1905 there were 22 motorcycle
companies set up in Coventry.

Over the first half of the twentieth century, the car industry boomed, and at one stage
there were over 130 motor manufacturers established in the city – including Daimler,
Hillman, Humber, Alvis, Armstrong-Siddeley and Jaguar.

The city was also heavily involved in the startup of the aviation industry, with a Coventry
firm, Morton and Weaver designing and building the first British monoplane in 1906.
This was followed by other firms like Humber, Armstrong Whitworth and Alvis building
aircraft and engines for aircraft during the war, and continued through the Second World
War, right through until 1965.

During the Second World War, the German Luftwaffe heavily bombed the city. On the
14th November 1940 four hundred and forty nine German bombers blitz bombed the city,
dropping around 500 tons of explosives, as well as 40,000 firebombs. The bombing
virtually destroyed the city’s industry, and a large part of the city.
Today Coventry is still the manufacturing centre for Jaguar, owned by Ford, and also
Peugeot.

In America, the city of Detroit was founded in 1701 as a Fort by the French, in an
extended part of their Canadian territory then known as ‘New France’. Fort Pontchartrain
du Detroit was established by Antoine de la Cadillac just above the Detroit River, where
the channel was one half mile wide, and “one gun shot across”.

Cadillac became the Commander of the fort and also the Seignior of the settlement,
granting him by Royal decree from the French King, Louis XIV, the rights to the fur
trade in the area.

At the time, the area was inhabited by a large number of Indian Tribes, with English and
French fur trappers and traders working the area. Indian tribes included the Fox, Huron,
Miami, Ottawa, Wyandot, Chippewa, Potawatomi and Shawnee tribes also lived and
hunted throughout the area, trading pelts for European goods as well as rifles.

The area was very much frontier land, and as France and Britain fought wars against each
other, the fortunes and importance of Detroit as a Military Centre waxed and waned.

Britain defeated France in Canada in 1760, and in the Peace Agreement that followed, the
whole of Canada, including New France and Detroit, were taken under the control of the
British. At that time there were close to 600 French citizens living in Detroit.

In 1763, between May and October, the British came under attack by Indians led by
Chief Pontiac, with a Peace Treaty signed which formally banned white settlement west
of the Appalachian Mountains. Over the years that followed the British bought peace
with the Indians through fur trading and gifts.

During the American War of Independence, the British in Detroit organized Indian
raiding parties on the Americans, even at one stage paying the Indians a bounty for
‘scalps’, with the Fort’s Commander nicknamed the “hair buyer”!

Detroit officially came under American control in 1796. In 1805 a city house caught fire
and the whole city was burnt to the ground, with only the fort avoiding destruction.

Over the next few years, Detroit remained a dangerous, semi wilderness area, but in 1818
the Erie Canal began to be built, opening in 1825, enabling steamers and their passengers
a way to get from New York to the Great Lakes and beyond. By this time the United
States Government had negotiated treaties with the Indians, which extinguished native
title, and transferred all title to the United States Government, who proceeded to survey
all of the land, so that it could be sold to new settlers.

A road was built from Detroit to Chicago in 1825, and a second one followed shortly
later.
Detroit became a boom town, and by 1836 there were three passenger ships, with
between 200 and 300 passengers each, arriving every day with new settlers from the east,
ready to buy supplies, a wagon, horses and bullocks to head west to make their fortune.

In January 1837, Michigan became the 26th State of the United States. Before and during
the Civil War, Detroit also became one of the final destinations for escaped slaves from
the South, on their way to Canada, where Slavery was illegal. The ‘underground railroad’
as it was called, passed runaway slaves from one safe station to another, with Detroit
being one of the final stopovers, before they crossed the border to freedom in Canada, or
moved to cities where they felt safe.

The freedom they sought was hard won, and many who attempted to find freedom,
ending up being sold back to the South, or being used and abused as indentured cheap
labour.

As Detroit grew as a trading centre, it also built up industries, producing shoes, beer,
tobacco, and building carriages for the railroad, ships, and by the late 1890’s the world’s
biggest iron stove manufacturers was established here – a company known as the
Michigan Stove Company.

Ransom E. Olds built his first car factory right next door!

As the auto industry grew, Detroit became the auto capital of the world.

Ford’s moving assembly line needed workers, and in 1914, Henry Ford introduced his $5
a day payment scheme to attract workers – a payment twice as high as his nearest
competitor, and also introduced an eight-hour day, instead of the previous nine.

Large numbers of Black Americans arrived in Detroit attracted to the chance to make
good money. Ford also undertook recruitment drives in the Southern States to attract
black workers to his factories.

In 1932 at the height of the Great Depression, when many auto companies were failing,
and sales were hitting new lows, a peaceful hunger march ended in the deaths of 5
marchers, with more than 60 people wounded. This became the start of the UAW (United
Auto Workers) campaign for better wages and conditions.

During the Second World War, Detroit became the production centre for the war effort,
with all of the large motor corporations changing over to war production, to produce
armaments, tanks, anti-aircraft guns, navigation equipment, aero engines and vehicles for
the American forces.

Detroit became the ‘arsenal of democracy’.


Everyone was employed in the war effort, with women entering the work force in large
numbers, as well as black workers.

When the troops returned, those who had jobs wanted to keep them, and those returning
felt they were owed them.

It wasn’t long before the first race riot broke out in Detroit – 1943, with 35 people killed
and the US Army called in to stop the rioting.

By 1946 Detroit became a boomtown again, as every returning soldier, sailor, marine or
airman looked to buy a car and set up home.

The 50’s were good for the auto industry, with the Big Three introducing a constant
stream of new models every year.

When the industry slowed in the early 60’s, the unemployment lines grew, and Detroit
became a hot bed of discontent. Civil Rights became a major issue, with Martin Luther
King’s Freedom March in 1963, highlighting the injustice and racial discrimination in the
nation.

A new industry was also to emerge from Detroit – Motown.

Former slaves earlier in the last century had brought with them their gospel, blues and
jazz music, and Detroit had many gospel choirs and singers.

In 1959, Berry Gordy borrowed $800 from his family, and set up Motown Records, the
name coming from the words ‘motor town’ as a reference to Detroit, with a recording
studio in a house he called ‘Hitsville USA’. Before setting up Motown Records he had
worked as an auto assembly line, set up shop selling jazz records, as well as writing songs
for Jackie Wilson.

Motown launched the careers of a number of black artists, including the Four Tops,
Supremes, Gladys Knight and the Pips, Stevie Wonder, Marvin Gaye, Temptations,
Jackson Five, and many others.

Motown was hugely successful in not just promoting its artists, but also in breaking down
the prejudices towards black artists and African Americans in general.

It also brought another face to Detroit.

Today, Detroit has a population of around 5 million people, and in recent times there has
been a huge investment back into the city to revive its fortunes, and rid it of its ‘rust belt’
image, with a number of companies setting up their global headquarters there. These
include the three major car companies – General Motors, Ford and Daimler-Chrysler, as
well as Volkswagen of America, and companies like K Mart, Compuware, Stroh’s
Brewery, Budd Company, and Federal Mogul.
Detroit is even becoming a tourist and education centre.

In Germany, Stuttgart ( Stuotgarten) has a population of around half a million people,


with over 20% of its land area being under a land conservation order to protect it from
development.

The city itself can trace its history back to the Stone Age, officially becoming a town in
1219. At the time it came under the control of Count Eberhard I the illustrious of
Wurttemberg, and was ruled by the Count and his descendents until the 1500’s. It then
came under the control of Austria for a short time, and in the years before German
Unification, the city and the state of Wurttemberg became part of the Confederation of
the Rhine (1806-1813), under the protection of Napoleon, later joining in the Zollverein
in 1834. King Wilhelm I reined over the state from 1816 to 1864, forming a loose
association with the Hapsburg Kings, before becoming part of Bismarck’s Unified
Germany in 1871.

In 1885 Gottlieb Daimler invented his automobile and a year later Robert Bosch set up
his workshop going on to develop a huge electrical business.

Over the following years Stuttgart became a centre for German industry, with Daimler
merging with Benz in 1926.
During the Second World War, British and American bombers largely destroyed
Stuttgart, with much of the city reduced to rubble.

Following the war, the city was rebuilt, and became famous as the home of Mercedes-
Benz and also Porsche, which built their new factory there.

Today the city boasts a number of museums, its own castle, an international airport,
mineral spa springs, and is surrounded by vineyards. Strange as it may seem, the city’s
coat of arms is a prancing black stallion on a yellow background shield – a symbol not
unlike Ferrari, but in Stuttgart’s case dating back to the Stuotgarten horse stud farm in the
10th Century.

Detroit, Coventry and Stuttgart all share a common history in that they were all ‘car
cities’, with each having an important part to play in the development of the automobile.

CHAPTER 17

THE WORLD TAKES FLIGHT

For all time people have marveled at the way a bird can simply fly from the ground,
while mankind can simply jump in the air and fall.
The idea that man could fly was considered largely a crackpot idea, and while many
people variously tied wings to their arms, and leapt off buildings and mountains in the
hope that they would miraculously fly, flying remained a mystery.

Leonardo da Vinci in the sixteenth century had drawn up his ideas for Parachute,
airscrews and propellers, as well as an ‘ornithopter’ – a machine that was supposed to
flap like a bird, and the concept of a helicopter and a glider!

In 1809 Sir George Cayley documented his studies of flight, and concluded that he
believed that “it will soon be brought home to men’s general convenience, that we shall
be able to transport ourselves and our families, and their goods and chattels, more
securely by air than by water, and with a velocity of 20 to 100 miles an hour”.

Unlike Leonardo, he understood that “weight for weight, man is comparatively weaker
than a bird”, and went on to highlight the need to for an engine “which will generate
more power in a given time, in proportion to its weight, than an animal system of
muscles”. He also recognized that birds had two distinct movements – one to lift off the
ground and the other thrusting motion that carried them forward, and also enabled them
to glide.

Prior to his work, a number of Balloonists had attempted flight, with flights recorded in
1783 (Pilate de Rozier in Paris); 1784 (Vincenzo Lunardi in London); and balloons were
also used for observing enemy forces in 1794 by the French Army: 1862 by the US
Federal Army, and by the British Army in Africa, with the royal Engineers forming a
Balloon section in 1890.

It was not until 1881 that a German, Otto Lilienthal (1848-1896) managed to develop
gliders that could fly, documenting his experiments under the title of “Practical
Experiments for the development of Human flight”. He died however following a glider
crash, but is certainly considered one the pioneers of flight.

In the years that followed there were many attempts by people in both Europe and
America to develop ‘flying machines’, but with little success. Many of the results and
observations of the early pilots were documented in magazines, and there was even an
‘Aeronautical Annual’ published by and for enthusiasts in the 1890’s. All sorts of engines
were tried as well, including steam engines, compressed air, and even rubber bands!

It was not until 1903 that Orville and Wilbur Wright, who were bicycle mechanics in
Kittyhawk, North Carolina achieved what was considered impossible – a sustained
manned flight under power. They used a 4-cylinder gasoline engine, and took out a patent
on their invention in 1905.

Over a three-year period they had built gliders and kites – experimenting with different
wing shapes, and configurations and building a wind tunnel to test their creations before
taking to the air. They also managed to sell an airplane they developed to the US Army
Signal Corps in 1908, even though Orville Wright crashed in one of the demonstration
flights, killing his passenger and injuring himself.

What the Wright Brothers had managed to do was to achieve lateral control over the
wings, so that the plane could fly in the direction sought.

While the courts in the USA recognized the patent, the ideas put forward were simply
used in Europe, and it wasn’t long before others copied and developed their own versions
and improvements over the original designs.

The aircraft industry developed very fast after the Wright’s initial flight, as newspapers
spread word of the flight, and enthusiasts on both side of the Atlantic built new planes
and experimented with flying greater and greater distances.

In 1909 a Frenchman, Louis Bleriot flew across the English Channel, and the following
year the Air Battalion of the Royal Engineers formed two companies – number 1
company for Airships, Balloons and Kites, and number 2 company for Aircraft.

An aircraft was then used in 1911 to drop bombs on Turkish troops fighting against the
Italians, and in 1913 the first air to air combat, firing pistols, had happened in Mexico
between rival Mexican factions.

With the outbreak of War, aircraft squadrons were quickly formed on both sides, with
German air raids happening over London in 1917, and the British Air Force coming into
effect in its own right in 1918, rather than being part of the Navy as it had been
previously.

By the end of that year the RAF, the first Air Force in the world, had over 22,000 aircraft
in operation as well as 103 airships, with 27,333 officers and 263,837 other ranks. During
that year the RAF claimed to have destroyed close to 3000 German aircraft.

By this time, Germany, Austria-Hungary, Russia, Belgium, France, the United States and
Britain all had set up air forces as part of their armies or navies.

It is interesting to consider how fast the aircraft industry would have developed if the
War had not occurred.

The initial military view was that aircraft might be useful in gathering information on
enemy whereabouts, but it didn’t take long before their use as both bombers and fighters
became very apparent. The First World War became the first large scale use of aircraft
ever, and wars which had since time began been fought on land and water, now claimed
the skies as a fighting ground too.

As a testing ground for pilots and aircraft the War also proved invaluable, and while most
of the pilots had very little experience when they took off, they very quickly learnt.
The British relied heavily on a small fighter aircraft that was developed by the Sopwith
Aviation Company, and launched in May 1917. The Sopwith ‘Camel’ was powered by a
Bentley engine, could stay in the air for up to two and a half hours, and had a top speed of
118 mph. It had a length of just 18 feet 8 inches, and a wingspan of 28 feet, and was
fitted with Vickers and Lewis machine guns, with room for the pilot and no one else.

Its great strength was its maneuverability, but this was also a weakness too, as the
‘camel’ had a tendency to kick, spinning out of control during takeoff, as the engine
pulled the plane one way, with the pilot using the rudder to counteract the force of the
engine.

It is sad to say that while 413 British pilots died in combat, 385 were killed through non-
combat activities, crashing on takeoff or landing or getting lost and running out of fuel.

Other aircraft used included fighters and bombers developed by the Bristol Company

When the war ended, the aircraft industry entered a new phase. In May 1919 Harry
Hawker and Lieutenant-Commander Mackenzie-Grieve tried to fly from England to the
United States, but they had to ditch their plane, being picked up out of the ocean by a
Danish ship. In June, a second attempt, this time by Captain John Alcock and Lieutenant
Arthur Whitton-Brown, between Newfoundland and Ireland proved successful. An
airship followed a month later from Scotland to New York, returning to Norfolk, taking
just five days to make the return trip.

On the 12th November 1919, Captain Ross Smith and his brother, Lieutenant Keith Smith
then flew from England to Australia – over 18,000 kilometres, arriving in Darwin on the
10th December, the longest ever flight at that time.

There were countless other firsts, and with the War finished, many ex bombers were
converted to civilian use, and pilots who had learned to fly during the war, looked to
extend their careers in flying by purchasing aircraft where they could, and doing anything
that could earn them a living through flying.

In 1920 the world’s first National Airline was formed, KLM Royal Dutch Airlines, and in
the United States, Britain, France, Australia and elsewhere, a large number of airline
companies were set up to carry mail, and passengers where they could.

Taking a flight though was a pretty hazardous affair, as pilots had to rely on having good
weather to take off and fly by, and navigate by following ground objects that they
recognized, such as railway lines, roads, coastlines and villages. They would often
operate only in summer while the weather was fine. In 1921 the Cairo- Baghdad Mail run
for example, run by the RAF, relied on 1350 kilometres of tracks ploughed across the
Syrian Desert to show them the right way to Baghdad!

In the United States, the US Post Office, which had started experimental airmail flights in
1917, established a trans-continental mail service from New York to San Francisco, with
13 city stops in between in 1921. To help them navigate by day and night, 289 flashing
beacons were laid down along the route.

By 1930, a number of airlines had merged, but there were still 43 airlines operating in the
United States- including Pan Am, set up in 1927, TWA – Trans World Airlines and
United Airlines in 1930 and American Airlines. There were also a number of aircraft
manufacturers, including Douglas, Boeing, Ford, Lockheed, Bell, Sikorsky and others.

The situation was similar in England and Europe, where a number of airlines had already
merged to form larger groups, and a number of manufacturers built aircraft, including
Vickers, Bristol, Handley-Page, de Havilland, the Royal Aircraft Factory and many
others. With the French and Dutch Governments subsidizing their airlines in the
immediate post war period, it was difficult for the independents to make a profit.

In 1923 France formed a national airline, Air Union, which later became Air France, and
in the 1930’s a number of British Rail Companies formed airlines. It was in 1935 that
British Airways was formed from the merger of Spartan Airways and United Airways
Limited, first being called Allied British Airlines, before opting for the shorter name.

Shortly later it purchased British Continental Airways Limited (BCA), and in 1938 the
British Government forced a merger between Imperial Airways and British, the merged
group becoming BOAC (British Overseas Airways Corporation) in 1939.

Qantas, the Australian airline, was also one of the first airlines to set up after the war.

As part of the British Empire, Australia also declared war on Germany at the start of
World War I, and while most young Australians joined the army, a few also joined the
newly set up ‘Australian Flying Corps’ and moved to Britain where they were to be
based.

At the end of the war, an England to Australia Air Race was organized, and two ex
Flying Corps pilots, W. Hudson Fysh and Paul McGinness, who had hoped to race, but
lost their funding when their sponsor died, decided to take on a job surveying the route
for the race from the town of Katherine in the Northern Territory to Longreach in
Western Queensland. They drove the barren wilderness between the two towns in a
Model T Ford, dropping supplies along the way, and building an airport runway in
Longreach for the race planes to land.

By the time the race winners, Ross and Keith Smith had landed on 10th December 1919,
they had decided that they wanted to set up an airline.

While working they had helped a wealthy grazier (the Australian word for cattle farmer
or rancher) whose car had broken an axle, and needed help. His name was Fergus
McMaster, and by approaching Fergus and some of his business friends, they managed to
secure funding to buy two Avro aircraft, only one of which ended up being delivered.
The business was set up at Mascot Aerodrome in Sydney, with their former mechanic in
the Air Corps, Arthur Baird joining them in the venture. It was called the Western
Queensland Auto Aero Service Limited, but changed its name to Queensland and
Northern Territory Aerial Services Limited – the initials of the name becoming more
recognizable as Qantas.

Over the next few years, the company flew between towns in the far west of Queensland
and the Northern Territory, taking mail and supplies, newspapers, beer and even fish to
the outback towns, building Australia’s first private aircraft hangar in 1927 in Brisbane,
eventually moving is headquarters there in 1931.

In 1934, Qantas merged its operation with Imperial Airways from Britain, and began its
international flights to Britain via Singapore. In 1938 it purchased Empire Flying Boats
that enabled it to fly from Southampton in England and land on Sydney Harbour.

In 1947, following the war, the airline was purchased by the Australian Government,
which also purchased TAA (Trans Australian Airlines) in 1949. While Qantas
concentrated on international routes, TAA and another private company, Ansett Airlines
set up by Reg Ansett, who had built up a transport empire, concentrated on domestic
routes.

In 1992 Qantas and TAA merged operations, with the Australian Government selling a
25% share in the merged Qantas airline to British Airways. TAA had by this time
changed its name to Australian Airlines.

Ansett also underwent a change in ownership, first being bought by the transport group,
TNT and the communications group of Rupert Murdoch, before being sold to Air New
Zealand. It suffered severe financial problems in 2001, and in spite of its great history,
and a number of proposed rescue attempts, it was liquidated, shortly after the September
11 attack by al-Qaeda terrorists on the World Trade Centre in New York.

The collapse of Ansett occurred in the same year as Swiss Air, Sabena, Aerolineas
Argentina and KLM all collapsed after suffering plummeting numbers of passengers, and
in turn financial losses.

Over the years there have been literally hundreds of airlines that have come and gone.

Airline businesses have always been risky, and from the start of the aviation industry,
there have been a constant flow of start-ups, and also failures. With the industry being a
mixture of government subsidized, public and private companies, and with heavy
investment in planes, people and infrastructure, the investment has always been high, as
well as the risk of failure.

There has also been, particularly on the international side, the issue of landing rights,
with landing rights being both given and denied to individual airlines, depending upon
politics at the time.
In the early days of flight, planes were very small, but they still required a place to land.
This problem grew larger, as planes gained speed and size, and the lack of airports
became an issue.

To overcome this problem, seaplanes were developed, which did not need a runway,
simply a stretch of calm water. The first seaplanes were developed before the First World
War, and following the war, in the 1930’s and 1940’s, there were a number of seaplanes,
and flying boats developed by German, American, Italian and British aircraft
manufacturers like Junkers, Curtiss, Fairchild, Dornier, Sikorsky, Savoia-Marchetti,
Martin, Douglas, and Boeing, with airlines like Finnair, Deutsche Luft Hansa – which
started in 1926, Pan Am, Imperial, Cathay Pacific, Panair do Brasil, BOAC, Qantas,
TEAL, and others using Flying Boats. The end of the flying boat era happened in the
1950’s by which time concrete runways, advances in navigation and more sophisticated
landplanes, spelled their end as large passenger aircraft. There are still however a number
of small seaplanes used today, and a lot of nostalgia for the days of the ‘Flying Boat’.

Pretty much everyone has experienced the sound of an echo across a valley, when one
person yells out a word or two, and the sound bounces back. It was this phenomenon, but
using radio waves, rather than sound waves that led to development of radar.

Research into radar began in 1932, led by Sir Robert Waston-Watt in Britain, who had
also invented stereo, using 2 speakers. The use of Radar was first deployed as a means of
detecting aircraft approaching, by both the Germans and also British in 1939. That year
the British established a number of Radar Stations along the coastline facing Europe to
detect approaching enemy ships and aircraft, and by 1940 both Britain and the United
States were using radar on ships, as a ‘magic eye’ that could see through fog, and in the
darkness of night. By the end of the war, radar was used in aircraft to detect other aircraft,
and it has been used ever since, with growing sophistication. While visual line of sight is
still important, the use of radar was a major step forward in aviation safety.

The other major move forward was the changeover from conventional internal
combustion engines to jet engines.

Two scientists, Dr. Hans Joachim Pabst von Ohain (1911-1998) working in Germany and
Sir Frank Whittle working in Britain developed this invention.

Both had developed their prototypes in the mid 1930’s, with the von Ohain engine
powering a Heinkel aircraft on August 27, 1939, and Whittle’s engine a Gloster Aircraft
Company aircraft on May 15, 1941. The Germans also powered a Messerschmitt Me 262
in 1942, and a Junkers aircraft.

The technology was not exploited however until after the war.

In the development of large commercial and military aircraft there have been many
companies involved – including the German companies, Albatros, Fokker (started by a
Dutchman), Focke-Wulf, Messerschmitt, and Junkers; the Russian company, Polikarpov;
Italian company Savoia-Marchetti; Japanese companies, Kawanishi and Mitsubishi;
French company SPAD, and later the joint French-British Company BAe-Aerospatiale,
but by far the leading manufacturers have been the British and Americans.

British companies included Bristol, Avro, Felixstowe, De Havilland, Hawker, Sopwith,


R.A.F, Supermarine and Vickers, and according to one source there were 27 aircraft
factories in Britain in 1945.

American companies include Bell, Boeing, Consolidated, Convair, Curtiss, Douglas,


Grumman, Laird-Turner, Lockheed, North American, McDonnell, Martin, Republic,
Travel Air, Thomas Morse, and Vought.

There were also many engine makers including the most famous Rolls-Royce, Pratt &
Whitney, and General Electric, which continue to power today’s major aircraft.

All of these companies have individual histories, and there are also individual aircraft
models that became equally famous or infamous, depending upon which side of the war
you were on.

In the First World War, Britain’s Sopwith’s Camel fighters fought against German
Fokker Triplanes, the Fokker company moving back to Holland in 1919 following the
war.

Fokker aircraft, set up by Anthony Fokker then figured prominently in the 1920’s in
world distance records set by leading pilots like Amelia Earhart who flew solo across the
Atlantic Ocean and Charles Lindbergh - who flew solo from New York to Paris in 1927,
and whose his son kidnapped and murdered in 1932 in a notorious case as well as Charles
Kingsford-Smith, who flew in the ‘Southern Cross’ from San Francisco to Sydney.

By 1930, there were 54 airlines using Fokker aircraft worldwide.

The Fokker factory was totally destroyed in the early stages of the Second World War,
rebuilding again in 1945, with the Fokker Friendship becoming the aircraft of choice for
many airlines between 1958 and 1969, during which time 786 Friendships were sold
worldwide.

In the Second World War, the Germans flew Messerschmitt Bf 109’s- at the very start
powered with Rolls-Royce engines, while the British flew Supermarine Spitfires, De
Havilland Mosquitos, and later North American Mustangs and DC-3 Dakotas, as well as
their own British made Avro Lancaster and Bristol Heavy Bombers. The Japanese
Nakajima and Mitsubishi Zero fighters, after bombing Pearl Harbour established air
supremacy very early in the war in the Pacific. The Americans flew Boeing B17 bombers
as well as a wide range of aircraft developed by all of the American aircraft
manufacturers, who all secured military contracts.

Of all of the Aircraft Manufacturing Companies to emerge from the Second World War,
the one that stands out most is Boeing.

William Boeing (1818-1956) left Yale University in 1903, the same year that the Wright
Bothers made their historic first flight. Born in Detroit, way before the car took hold of
that city, he made a fortune selling timber land in the state of Washington, taking an
interest in the newly emerging aviation industry, and even getting to ride on the wing of a
Curtiss bi-plane. Curtiss Aeroplane and Motor Company had initially built motorbikes.

Boeing began taking flying lessons in 1915, and convinced a friend, George Westervelt,
who shared his passion, and was also an engineer, that they could build their own twin-
float seaplane, so they set to work in Boeing’s boat shed, naming the craft the B&W
using their initials.

By 1916, although Westervelt had been posted East with his job, Boeing had been able to
build two planes, and he incorporated the business under the name of Pacific Aero
Products that year, changing it in 1917 to the Boeing Airplane Company.

That year they succeeded in securing a Navy Contract to build 50 seaplanes, having
freighted their planes from Seattle to Florida to present to the Navy.

By the end of the War, orders dried up, as surplus warplanes flooded the market. To
survive, the company began building shop furniture, and a sea sled, a flat bottomed boat,
as well as a Curtiss designed flying boat, and some prototype bi-planes, one of which
they used to take mail to Canada.

In 1923 he and his wife set up Boeing Air Transport (BAT), as a dedicated airline to
carry mail, freight and passengers, winning a U.S Post Office contract, and in 1929 they
built a pure passenger plane, able to carry 12 passengers. That year the company changed
its name to United Aircraft and Transport Group. It then bought out Pratt &Whitney,
Hamilton Standard Steel Propeller Company, Chance Vought Corporation, and Sikorsky,
also establishing the Boeing School of Aeronautics in Oakland California.

A year later, in the middle of the Depression, they bought out Varney Air Lines, an
airline set up by Walter Varney, and BAT became the first airline in the world to have a
hostess on board to serve coffee and sandwiches – a qualified nurse by the name of Ellen
Church.

That year a scandal broke out when the US Postmaster General, Walter Brown, was
accused of giving out airmail contracts to a favoured few airlines.

By 1934, the scandal and accusations of favoritism resulted in President Roosevelt


declaring that all existing airmail contracts be cancelled and the U.S Government passed
Anti-Trust legislation that prevented airframe manufacturers from owning mail carrying
airlines. The result of this was that the Boeing Company was forced to split into three
separate companies.

Boeing Aircraft Company was forced to restrict itself to building aircraft on the West
Coast, and Boeing Air Transport then became United Air Lines – to carry mail, freight
and passengers, and the third part of the company became United Aircraft –taking over
Pratt & Whitney, Hamilton Standard Propeller Company and other non-airline business.
This company later became United Technologies.

The anti-trust legislation had an immediate effect on Boeing himself and he resigned
from the business in protest, selling his shares and leaving the aviation industry to breed
racehorses.

All of the three companies created through the split up have since become huge in their
own right, with Boeing becoming Seattle’s biggest business and producing large military
and civilian aircraft. They introduced the first pressurized airliner, the Stratoliner, the
four engine ‘Clipper’ Flying Boat, the B17 ‘Flying Fortress’ and B29 bombers, this
aircraft being produced by Boeing in Wichita in Kansas, as well as by the Bell Aircraft
Company and Glenn L. Martin Company.

In 1940 Stratoliners and Clippers carried 2.2 million passengers.

Boeing factories were heavily camouflaged during the War to protect them against
possible enemy attack, but none occurred. They also developed rocket technology, to
enable missiles to be fired at an enemy without the need to carry them to a target by
aircraft.

When the war ended, the need for bombers ceased and some 70,000 Boeing workers lost
their jobs as the Military cancelled their orders.

War had allowed Boeing to build up its research, technical and production skills, and
when the War ended they were also able to gain an insight into Germany’s aircraft
technology as well – including their jet engine and wind tunnel knowledge.

Under the Allied occupation, German car and aircraft factories which had not been
destroyed, were closed, and Deutsche Luft Hansa was liquidated in 1945, only being
allowed to restart in 1953 under the name Luftag, before changing to Lufthansa in 1955,
flying American Douglas DC 3’s, as well as Lockheed Constellations on flights to New
York.

The Post war period saw the launch of the Boeing 707 jet liner, an aircraft that was used
by airlines around the world.
At the same time Boeing continued to work with the Military, and the new space
program, producing the first Lunar Orbiters, and Roving Vehicle used by astronauts to
travel on the moon itself.

It also launched its first Helicopters, the Chinook and Sea Knight in the 1960’s, after
buying the Vertol Aircraft Company in 1960. These helicopters saw great service in
Vietnam.

In 1970-71 a recession in the USA hit hard, and the company was forced to lay off over
half its workforce, dropping to 32,200 workers. It even went for 18 months without a
single US order, and was forced to diversify out of aviation.

During this time, it started selling computer systems, as well as building a desalination
plant, building light rail carriages, wind turbines and managing Federal Government
housing projects.

Their main business continued however in both civilian and military aircraft, as well as
missiles and other defence systems, and by 1983 the company had built its 1000th 737
airliner.

It is amazing to think that the company which has produced some of the world’s best
known aircraft, such as the Boeing 747, in which millions of people have flown, has also
produced some of the world’s most sophisticated military aircraft, like the F22 fighter,
and the amazing B2 Stealth Bomber.

In 1997 the Boeing Company also merged with another of America’s leading aircraft
manufacturers, McDonnell Douglas.

The McDonnell Douglas Company had earlier come into being through the merger of the
Douglas Aircraft Company and the McDonnell Aircraft Corporation in 1967.
Both companies had a long history in aviation, the Douglas company being incorporated
in 1921, and the McDonnell company incorporated in 1939, their founders being Donald
Douglas (1892-1981) and James McDonnell (1899-1980), who both worked as engineers
with the Glenn L. Martin Company, although at different times – Douglas in 1915, and
McDonnell in 1933.

Throughout their histories both companies manufactured a number of civilian and


military aircraft for both American and international sale.

The Douglas Company began life working in a rented motion picture studio on Wiltshire
Boulevard in Santa Monica in California in 1922, before moving to new premises in
1929.

Among the many craft produced by the Douglas company were the Cloudster (1921-
when the company was the Davis-Douglas Company), Douglas World Cruiser (1923),
Dolphin flying boat (1930), and luxury amphibians, one of which was bought by William
Boeing in 1934, and the famous series of aircraft – the DC-1, DC-2 in the 1930’s, right
through to the DC-10 jumbo jet launched in 1970. The company also produced a number
of military aircraft such as the C-54 Skymaster and Dauntless dive bombers of 1942,
Douglas DC-3 Dakotas (used by the RAF), and Skywarriors, Skyraiders and Skyhawk.

Douglas was also responsible for the development of a number of rockets, one in 1960
launching the world’s first weather satellite into space. This list of aircraft is only a
fraction of the number of aircraft, torpedoes, rockets and other craft produced by the
company.

The McDonnell Company began life as J.S. McDonnell & Associates in 1928, building
the ‘doodlebug’ aircraft for the Daniel Guggenheim ‘Safe Aircraft Competition’, which
offered a price of $100,000. The aircraft made its first flight in 1929, but crashed landed
with the pilot, James McDonnell making the comment “ I was too much of a Scotsman to
use the parachute. I still had my motor left, and most of my ship. If I had jumped, I would
have had nothing!”

It wasn’t until ten years later that the company was incorporated, with McDonnell in the
years in between working for other aircraft companies as an engineer before being asked
to submit a proposal for a US Army fighter aircraft in 1940, and winning the supply
contract the following year. This enabled him to restart his business, and a US Navy
contract followed in 1943, and McDonnell’s company went on to build the XP-67 twin
engine bomber destroyer in 1944, followed by the FH-1 Phantom in 1945, Banshee in
1947, the world’s first ramjet helicopter, the Little Henry in 1947 and then a parasite
fighter, the Goblin, designed to be carried inside a bomber, and launched from it, before
returning to the bomber to be landed in a trapeze. The Goblin only made it to testing
stage, with two only being built!

Other aircraft followed- the Demon jet fighter (1951), Big Henry helicopter (1952),
Voodoo jet (1954) which went on to set a world speed record of 1207mph in 1957, the
F4H in 1958, which was named the Phantom II in 1959, and in 1961 McDonnell was
chosen a the main contractor for NASA’S second generation manned spacecraft. By this
stage, McDonnell was considered the leading aircraft manufacturer of Navy aircraft,
designing them to suit taking off and landing on aircraft carriers.

In 1961, when astronaut, Alan Shepard became the first American to go into space, he did
so in a McDonnell space capsule, and a year later John Glenn orbited the Earth, he was
also in a McDonnell space capsule.

By 1965, the 1000th Phantom jet was delivered to the US Navy, becoming one of the
main aircraft in the Vietnam War. Two years later, the 2000th Phantom was delivered to
the US Air Force, and a year later the 3000th Phantom is delivered to the US Navy, and in
1971 the 4000th is delivered to the US Air Force making the Phantom the most successful
military jet in history.
As a merged company, McDonnell Douglas produced during the 1970’s the F-15 Jet
fighter, Delta rockets, F/A-18 fighter, Tomahawk cruise missile guidance systems, C-X
cargo carriers, Harpoon anti-ship missiles, Harrier Jump jets in association with British
Aerospace and many other aircraft setting new standards in sophistication and technical
skill.

The company was also heavily involved in the NASA’S space program, developing the
first Skylab, which stayed in orbit between 1973 and 1979, and being involved in all of
the space programs since then.

In the development of aviation there are many names, and sadly it is impossible to name
all of them. One of the more interesting stories however is that of Igor Sikorsky.

Igor (1889-1972) was born in Kiev in the Ukraine, and as a young design engineer he
tried to build a helicopter, but failed to make it work. He then designed and built a fixed
wing aircraft, exhibiting his sixth aircraft at the 1912 Moscow Air Show, winning the
highest award at the show, and the same year first prize in a Military Competition in
Petrograd.

This led to him being made the head of the aviation division of the Russian Baltic
Railway Car Works that year. Here he developed the idea of a multi engine aircraft,
which would overcome the problem of an engine failure. He had apparently conceived
the idea when he experienced mosquitoes clogging up his carburetor, causing the engine
to fail! He then went on to develop a four engine aircraft, ‘the Grand’, which had such
refinements as a toilet on board, as well as an exterior catwalk on top of the fuselage for
passengers to take in the air! This was the world’s first four engine aircraft.

This was followed by a military bomber for the Russian Army in World War I, called the
‘Ilia Mourometz’, named after a 10th century Russian hero, and 70 of these were built.

The Bolshevik Revolution however led him to flee to France, where he was
commissioned to design a bomber, but the War’s end meant that the aircraft only reached
the design stage. He emigrated to the United States in 1919, initially taking up a teaching
position in New York, before a group of friends and students pooled their money to help
him launch a company in America.

The company, named the Sikorsky Aero Engineering Corporation, very quickly built a
twin engine, all metal aircraft, at a time when most aircraft were built with one engine
and fabric covered wings and fuselage. A number of aircraft followed and Pan Am
purchased a Sikorsky twin engine amphibian for its routes to Central and South America.
This was followed by other flying boats, including the ‘Flying Clippers’ for cross Pacific
and Atlantic travel. The company was taken over by the United Aircraft and Transport
Group in 1929, but maintained its own identity.

It was in 1939 that he returned to his dream of building a helicopter, producing the
world’s first commercial helicopters, which were then produced for the US Military. By
1943 Sikorsky Helicopters were being produced in large numbers, and have continued in
production ever since.

Bell Helicopters, one of Sikorsky’s main competitors, began its life in 1941, when Larry
Bell, then a successful aircraft manufacturer, gave his support to an inventor, Arthur
Young, who had successfully built a helicopter. The company in 1951 made a decision to
specialize in helicopters and dropped out of conventional aircraft manufacture. Today, it
continues to be one of the world’s leaders in helicopter design, development and
manufacture, and is based in Fort Worth, Texas.

Igor Sikorsky retired at age 68, but continued to work for the company as a consultant
engineer until the day before he died, aged 83.

Today, the United Aircraft and Transport Group, split off from Boeing in 1934, is now
called United Technologies. The company still owns Sikorsky helicopters and Pratt &
Whitney – which compete with Rolls Royce as one of the world’s foremost aircraft
engine companies. Hamilton Standard Steel Propellers is also still part of the company,
producing 500,000 propellers in 1942 alone during the Second World War, moving on to
fuel controls, electronic cabin pressure regulating systems, and later space suits for
astronauts – as used on the Apollo 11 space walks.

The company changed its name in 1975 to United Technologies Corporation, buying out
Otis, the world’s biggest elevator lift company, the company started by Elisha Otis in
1853, which invented some of the world’s first passenger lifts (1850’s) and escalators
(1900). The company installed elevators all over the world, including in such famous
landmarks as the Eiffel Tower in Paris, which it did in 1889, and again in 2001.
United Technologies Corporation in 1979 bought out Carrier, the world’s largest
manufacturer of air conditioning and refrigeration equipment. Willis H. Carrier, who
invented air conditioning in 1902, had started that company in 1915.

Today, United Technologies employs 152,000 employees, and in 2001 had a turnover of
US$27.9 Billion, making it the 59th largest U.S Corporation, and the 164th biggest in the
world. It is also now heavily involved in Fuel Cell development.

United Air Lines, the other part of Boeing has also prospered after the breakup of Boeing
in 1934.

As an independent company, after a short period when the Army stood in to provide air
mail delivery, only flying in daylight hours, with disastrous results, United Air Lines Inc.
was able to renew its West Coast and Trans Continental mail contracts.

In 1937 it then purchased its first Douglas DC-3 passenger aircraft, rather than Boeing
Aircraft, introducing its ‘sky lounge’ and ‘skysleeper’ services, and serving meals on
board flights, prepared in its own flight kitchen in Oakland, California.
When War began, United became a training arm for U.S Army and Navy air force ground
crews, training more than 7000 personnel. It also set up maintenance facilities in
Cheyenne to convert aircraft into bombers, and supplied the Army and Navy with mail,
freight and troop transport into the Pacific war zone and to Alaska.

The War changed many things, but most of all it changed attitudes. During the War
everyone was involved in the War effort, with women working as well as men, and
everyone aware of the great contribution that aircraft had made. People lived every battle,
every win, and every loss of life. It was an era charged with emotion.

When the troops returned they returned as heroes, focused on getting married, having a
good time, buying a car, settling down to a family and getting back to their normal
careers.

Travel was now on the agenda, and flying became part of business activity. Governments
built airports and airline companies like United bought aircraft to keep up with the
demand for seats. Flight times were reduced with faster aircraft, and pressurized cabins
became the norm.

In 1955 United Air Lines and Radio Corporation of America (RCA), installed airborne
weather mapping radar on their aircraft to highlight storm activity, a safety first.

1959 saw the introduction of Jet aircraft into the fleet, and United take on International as
well as U.S Domestic flights. This was short-lived however, as the U.S Civil Aeronautics
Board, which had jurisdiction over all airlines in the United States, denied United the
right to fly internationally. This action occurred in 1969, and by the following year,
United was in losses. During the 1980’s United fought to survive.

In 1978 the U.S Congress passed the Airline Deregulation Act, which opened the skies to
free and open competition in freight and passenger air transport, and in 1985 the Civil
Aeronautics Board ceased to exist.

The 1990’s also saw United in losses, even though they had expanded internationally and
in 1992 they reported a loss of $957 Million. Massive cost cutting became the main
mission, and in 1994 the company became the largest majority employee-owned
company in the world.

By 1997 the airline was in expansion mode again adding new routes, and joining the
international Star Alliance group.

Airlines depend heavily on flying with full seats, and in the 1990’s most airlines began to
market themselves under marketing alliances like Star Alliance, where travelers gained
an advantage under Loyalty programs developed by the group of airlines, and could also
‘coach share’, where one airline would fly the route, with the seats filled by maybe three
or four airlines, who had sold the seats.
On September 11, 2001, an American Airlines jet and a United Airlines jet were hijacked
by al-Qaeda terrorists out of Boston and flown direct into the twin towers of the World
Trade Centre in New York, totally destroying both buildings which collapsed with the
impact and subsequent explosions, fire and heat. All aboard the aircraft were killed, as
well as thousands of people in the building, and many of those who came to rescue them.

The effects were devastating.

Like Pearl Harbour in 1939, this was an outright attack on the United States, but unlike
Pearl Harbour it was harder to identify the enemy.

In the aftermath of September 11, the United States attacked the al-Qaeda terrorist group
network in Afghanistan, and the regime that supported them, the Taliban. They have
since been trying to identify other terrorists groups and continue to seek and destroy
them.

The effect on airlines was immediate, with passenger numbers plunging both
domestically and internationally.

In October 12th 2002 another bomb attack occurred, this time a massive car bomb
explosion in the Sari Club Bar, followed by another just outside the building in the tourist
city of Kuta on the island of Bali, Indonesia. Over 180 international tourists were killed,
including many Australians as well as many Balinese workers in the club.

The Balinese tourism industry was devastated, with the effects on tourism felt around the
world.

The Airline business has always been difficult, and although air traffic returned to pre
September 11 numbers, a number of airlines collapsed in the aftermath, and those that
survived were forced to be highly efficient, and control costs as never before to make a
profit.

Government has always been closely involved with the airline business – providing direct
business in freight, passengers and mail as well as providing the airport infrastructure, air
traffic control and safety procedures. Government purchase orders and guarantees to
purchase aircraft for national airlines and military purchases have also to a large extent
enabled the major airlines to survive, and the Aircraft manufacturers to invest in new
aircraft and defence technology. While Governments support defence and tourism and
see this being in the national interest, the airlines and airline manufacturers are the direct
beneficiaries of this money being spent.

The two busiest airports in the world are O’Hare Airport in Chicago and Heathrow in
London.

Heathrow opened in 1946, immediately after the end of World War II, and has become
the biggest airport in Europe.
O’Hare in Chicago occupies nearly 7,700 acres of ground. It handles close to 900,000
take offs and landings every year, with over 70 million passengers passing through the
airport every year.

The airport, first known as Orchard Depot, officially opened in 1955, replacing the other
Chicago airport, Midway, named after the World War II, Battle of Midway, as Chicago’s
main airport. Midway has been operating as an airport since 1926.

O’Hare Airport is named in honour of Navy Lieutenant Commander Edward Henry


‘Butch’ O’Hare, a World War II American Navy fighter pilot, who received the
Distinguished Flying Cross as well as the Congressional Medal of Honour for his valour
during the war.

Butch O’Hare attacked a full squadron of Japanese aircraft who were about to bomb the
U.S Aircraft Carrier, Lexington near the Gilbert Islands in 1942, shooting down 5 of the 9
enemy aircraft, and saving the aircraft carrier and its crew from certain destruction.
President Roosevelt described the act as “one of the most daring, if not the most daring
single action in the history of combat aviation”. Butch O’Hare died in 1943, shot down
near the island of Tarawa in the Gilbert Islands.

He was a true son of Chicago.

His father was also shot down, but in very different circumstances.

His father, also named Edward, was a lawyer, who was closely associated with ‘the mob’,
and Al Capone.

The story goes that an inventor Oliver P. Smith developed a ‘mechanical rabbit’ in 1909
for greyhound dog racing. Working with O’Hare, with his very appropriate name, he was
able to patent the idea, but when he died in 1927, O’Hare gained the patent rights.

Using the mechanical rabbit, O’Hare joined with Al Capone and other mobsters to run
the Hawthorne Kennel Club, running bets on racing there as well as other tracks that they
controlled.

At that stage, dog racing was unregulated, so it was easy to fix races, one scam being to
get all but one or two of the dogs to run on a full stomach! The dog that wasn’t carrying
the extra weight of dinner usually won!

O’Hare also became involved in Real Estate, going into partnership with a judge, Judge
Holland, who apparently had dismissed over 12,000 gambling charges against mob
members over a 15 month period, finding just 28 guilty!

When the FBI closed in on the mob, they needed informers, and apparently knowing that
O’Hare was desperate to get his son into the U.S Navy Academy at Annapolis, but
needed a Government recommendation, they arranged it on the basis that O’Hare would
give them information they needed on Al Capone!

Al Capone was brought to trial, and found guilty on Tax Avoidance violations, and sent
to Alcatraz Prison.

O’Hare junior then went of to the Naval Academy, and O’Hare Senior continued to live
in Chicago. On November 8, 1939 however a car pulled alongside O’Hare’s Lincoln and
he was shot dead at point blank range in a classic Chicago Mob killing. The murderers
were never found.

With McDonnell Douglas and Boeing coming together, the American Aircraft industry
consolidated into a giant operation.

Right from the end of World War II, the American Aircraft Industry began to dominate
aircraft sales worldwide.

One can only postulate the reasons for this. Germany, Italy and Japan’s Aircraft industry
were destroyed during the War, and any of the technology that they had developed, as
well as key engineers were enticed to the United States where they could pursue their
careers in a developing aviation industry, rather than stay in Europe where the industry
had essentially closed down.

While the United States was heavily involved in the War, it was not directly bombed as
Britain was, and in the post-war period, Britain took a long time to recover.

It was in 1970 that a consortium of French and German aircraft companies came together
under the name of Airbus GIE ( Groupement d’interet Economique), being the French
Aerospatiale Company and Deutsche Aerospace from Germany, later in 1989 to become
Daimler Chrysler Aerospace AG, having taken over MBB ( Messerschmidt-Bolkow-
Blohm). A year later Hawker Siddeley from Britain, Fokker for the Netherlands and
CASA (Construcciones Aeronauticas S.A) from Spain joined the consortium.

The consortium’s first aircraft, the A300 went into full scale production in the 1970’s,
first supplying Air France, and then in around 1979 they secured a sale to the American
airline, Eastern, gaining great credential from this American sale, and taking a 26% share
of the international large passenger jet market.

That same year, British Aerospace (BAe), which had taken over Hawker Siddeley,
British Aircraft Corporation, and Scottish Aviation in 1977, before being nationalized by
the British Government (and later privatized -1981-1985), also joined the consortium.

Earlier, in 1962 the French and British Governments had collaborated in building the
Concord(e), the world’s first supersonic aircraft, launched in 1969
In 2001 the consortium was set up as a single company, known as EADS (European
Aeronautic Defence and Space Company), having achieved what would have seemed
impossible a few years earlier – a 50% market share of the new market for large size
passenger aircraft, even though it is still, based on aircraft flying, outnumbered six to one
by Boeing.

The sale of new aircraft is not simply a matter of which aircraft is better for the use
intended. Certainly both Boeing and Airbus aircraft are superb aircraft on a technical
level.

Behind every aircraft sale however is a Finance deal, and with the cost of new aircraft
being so high, many aircraft are leased rather than purchased.

Since the Second World War, airlines have been seen as an extension of a country’s
national identity, proudly taking a country’s national flag, and the hopes of the nation to
the world. This has led to even the smallest countries becoming airline owners.

With many of the new aircraft being bought by developing nations, there is also the
influence of aid grants, given by individual countries and organisations such as the World
Bank. The ‘strings’ that are attached to such aid are not usually declared, only the value
of the aid given. It would be a rare aid gift indeed if the aid money given by one country
for purchase or lease of new aircraft did not favour the country’s own manufacturers.

As the new century gets underway, the airline industry at all levels is facing up to major
issues and changes. One thing is certain however, and that is that people the world over
now see air travel as an integral part of modern living.

CHAPTER 19

THE TWENTIETH CENTURY - THE WORLD CHANGES

While the First World War (1914-1918) had created tremendous demand for fabric in
uniforms, and steel for weapons, ships and aircraft, it also had the effect of creating
stronger national identities. Trade meant that countries were no longer isolated from each
other. They depended on each other for money to pay for the goods they bought. This
was made very apparent during the Great Depression 1929 to 1932, when the collapse of
the New York Stock Exchange had its effects felt throughout the world.

The Second World War, 1939 –1942 involved all of Europe, much of Africa, the Middle
East, Asia, the Pacific, and the Americas.

After the war, massive reconstruction was needed to repair the damage that had been
caused through the war.
As much as the whole population of each country was mobilized for the war effort, they
were now mobilized to help in the re construction of their countries. Huge numbers of
people in the old countries, moved to what were perceived to be the new countries like
South Africa, the United States, and Australia which saw huge numbers of immigrants
arriving from countries like Italy, Greece, Ireland, and England.

Just as the British Empire had created demand for British goods throughout the British
Empire, the huge wealth that had built up in America enabled it to expand its influence
beyond its own borders.

America didn’t have an empire, but it did have dollars and a large population at home,
which meant that if a product was successful in achieving a large market share in
America then it was likely to be able to use this success to move into other markets.

Where British companies had largely concentrated on developing the British market and
then moving into countries within the British Commonwealth (former British colonies or
parts of the British empire), the Americans didn’t have the same view.

American companies like Ford established their own car factories in the UK to build Ford
Prefects, Zephyrs and Zodiacs in the 1950’s, while General Motors bought out the British
car company, Vauxhall, which manufactured Vauxhall cars and Thames and Bedford
trucks, while Chrysler bought out the Rootes group, which manufactured Hillmans and
Sunbeam cars. The American car companies were competing directly with established
British companies like Rover, Morris and Austin for market share, manufacturing in their
own backyards – making not big American cars, but cars of a size and design that would
suit British road sizes.

The British manufacturers never tried to do the same in the USA.

While Morris, Austins, Rovers and Jaguars may have been on sale during the 1950’s in
countries as far away as Malaya, Australia, India and South Africa, all former British
Empire countries, they never attempted to launch their cars into the American market, or
even Europe, which was still seen as ‘foreign’ to the British makers, still with fresh
memories of the war.

The Americans didn’t have the same mindset, and they either bought out existing
manufacturers or set up their own factories in countries like Australia, making cars for
the local market.

The Australian car manufacturer, ‘Holden’, named after its founder, James Alexander
Holden was bought by General Motors from the USA in 1931 and renamed General
Motors Holden, while Ford USA had already set up Ford Australia in 1925, launching its
Ford Falcon in 1960. The first Ford, a Model A, was imported into Australia in 1904, just
a year after the company had produced its first car in America.
The Holden car company can trace its history back to 1856 when it was first set up
working in leather and making saddles. By 1908 it had moved into car upholstery, then
hoods and side curtains for cars, and then into motorbike sidecar manufacture and by
1914 into assembly of Dodge and Buick cars from the USA. It was in 1948 that the first
Australian built car rolled off the Holden assembly line- appropriately called a Holden,
and Holden continues to be its biggest brand in Australia. It is interesting to see that the
evolution of car manufacture in Australia followed much the same manufacturing
evolution that it did in the USA.

During the 1950’s German car companies also took their cars to the world, with VW
becoming prominent in countries like Brazil, and Mercedes Benz Trucks and cars being
sold in new markets in Asia. These cars were made in Germany, but exported into the
emerging markets.

In the 1960’s a new wave of car Brands appeared. These were Japanese, with strange
names like Toyota, Suzuki, Mazda, Honda, Hino, Datsun, which later became Nissan,
Mitsubishi and Subaru. Many of these brands were named after their founders, like
Honda, while others like Mitsubishi and Nissan were named after the Trading Companies
that had founded them.

At the same time home radios, long the preserve of brands like HMV, Philips, RCA,
Astor, Kriesler and others, were being wiped out by new Japanese brands like Sanyo,
Sony, Toshiba and others, which were able to sell at cheaper prices, because of the cheap
cost of manufacture in Japan. Unlike today, labour was cheap in Japan at the time.

They were also able to make Transistor Radios – small portable radios that could be
easily carried, and used batteries to power them, rather than electricity. This portability
created a whole new market of users.

The new age of Television, invented before the war, but not commercialized until after
the war, was launched to the public in the 1950’s and into the 60’s. For the first 10 to 20
years of its existence, the European and American brands dominated the market, with
many televisions being manufactured as elaborate pieces of furniture. There were even
sophisticated 3 in 1 models incorporating a TV, Radio and record player for 33rpm,
45rpm and 75rpm recordings. These beautifully crafted Radiograms, or Grammaphones
with their wooden cabinets and integrated speakers took pride of place in people’s lounge
rooms. It wasn’t until the early 70’s that the Japanese brands were able to move into these
new markets, taking the market away from the traditional brands like Pye, Kriesler and
Philips, with cheaper TV’s for the mass market.

Whereas in the 1940’s, ‘Made in Japan’ meant shoddy, inferior quality, by the 1970’s
Japanese brands came to symbolize both cheaper prices and greater value for money.

The Japanese cars even came with car radios built in, better trim and all at a cheaper
price. In markets like Australia, these features were initially seen as gimmicks, but the
public loved the added features and also the reliability of the newcomers.
In America, the market was accustomed to having big cars, and the smaller Japanese cars
were first seen as novel, and were bought as a second car, as a little runaround. It didn’t
take long before the Japanese had secured a sizeable market.

The situation in Europe was different again, with each country being highly loyal to its
own brands of car. The European and Japanese cars were of a similar size, and while the
Japanese brands overall succeeded, they took a much smaller share of the market, then
was probably foreseen. There were also greater levels of protection from European
governments to protect their local industry.

Whereas the Japanese brands had been ridiculed as imitators, simply copying the
products and ideas of the western brands, by the 1970’s they were in a position where
they were seen as the leaders. The Japanese market was also fiercely protected from
outside brands, so that the Japanese brands were the only ones to be able to tap into the
cheap labour.

Japan’s success in the electronic and car markets was also followed up in watches with
brands like Seiko, taking on the British brands like Timex, and European brands like Tag
Heuer, Longines, Rolex, Cartier and others.

While products like cameras, calculators, binoculars, photocopiers, toys and computers
may have been developed as products by a diverse group of companies, it was the
Japanese who manufactured these products in a mass marketed form, creating a new
group of brands in the process. Brands like Nikon and Canon, Toshiba, Nintendo and
Asahi Pentax, Nachimichi, Pioneer became the benchmark for quality in the markets they
entered and came to dominate markets around the world.

This huge success saw many of the formerly strong brands from Europe, the UK and
USA falter and many simply disappeared from the markets, but all did not go the
Japanese way.

As Japan’s labour costs rose, they too had to relocate their manufacturing plants to other
cheaper labour areas. Brands like National Panasonic are now manufactured in countries
like Malaysia, China, and Korea.

From being sources of cheap labour, countries like Malaysia are now rapidly developing
their own products. Where once Malaysia’s main exports were once tin, rubber and
timber, Malaysia now manufactures its own Furniture, using its own timber rather than
selling this timber cheaply for others to make into furniture. Rubber plantations have
largely been replaced by Palm Oil estates, while the tin Mine craters have been made into
lakes, where fish were cultivated, or developed into theme parks, or as central lakes with
housing estates on their sides.

While Singapore in the 1960’s through to the early part of the 1990’s developed a
substantial manufacturing industry, by the mid to late ‘90’s this industry had relocated to
Malaysia and Indonesia, who were actively pursuing Japanese, European, American and
other investors to build their factories in their countries.

By the year 2000, Malaysia was manufacturing its own brands of cars (Proton, and
Perodua), using technology and investment from Japanese and French car manufacturers.
The Proton car company (EON) had also bought out the British Sports car brand, Lotus.

Malaysia’s Government set a deliberate course of action to become a developed nation by


the year 2020 – the so-called ‘Twenty -Twenty vision’.

The Koreans too had developed their own car manufacturing brands like Hyundai and
Kia, and electronic brands like Samsung.

A large component cost in manufacturing is labour, and as countries develop, their


workers gain greater wealth, and then demand higher wages.

Any products that require a high level of labour in their manufacture will gravitate to the
countries where it is cheapest to manufacture them. If the labour rises in cost, then in time
the manufacturing will move to a new country that has cheaper labour costs.

In the year 2000, countries like Indonesia, India, Vietnam and China were being used as
the Manufacturing centres for the world – simply because the labour in these countries
was cheap by world standards. Countries in Eastern Europe were also becoming
manufacturing centers, again based on their cheaper labour costs.

While the manufacture of products had relocated to the places where they could be
manufactured cheaply, the brands remained firmly in the hands of the USA, British,
French, Italian, German and Japanese companies.

PART 2 UPDATED 1st July 2004

CHAPTER 20

A flute of Champagne, nip of whisky - a schooner of beer, or a cognac?

Alcoholic Drinks, including wines, beers, ciders, distilled spirits, and a whole range of
other liquors have always held a special place in societies the world over.

In some societies they have been accorded great reverence, yet in other situations, times,
states, regions, and even entire countries they have been banned from sale.

Alcoholic drinks have been made in monasteries and used in religious ceremonies, yet
many religions have banned them, and proclaimed alcohol as a source of evil.
Alcohol has been called ‘devil-water’ but also called ‘the elixir of life’.

It has been seen to cause great hardship to people, yet provided great happiness and
solace to others.

Almost all governments have in one way or another been involved with the production
and sale of alcoholic drink – banning it altogether, restricting its use, where and when it is
sold, and who it is sold to- restricted by age, gender and even race. At the same time,
many governments have made millions in revenue and taxes through its purchase.

Governments have also sought to alter consumer behavioral patterns, by restricting or


heavily taxing certain types of alcoholic drinks in preference to others, and by
highlighting the problems associated with alcohol consumption or abuse.

Everything from car accidents to football riots has been blamed on alcohol. At the same
time people have launched ships, celebrated weddings, race wins, business deals, relaxed,
socialized and enjoyed the companionship of others at parties, festivals, over dinner and
in a thousand other social situations.

While the French enjoy champagne, anis, wine and cognac - the English down beers and
ales, sip gin and tonic, enjoy a tipple of scotch whisky, cider or a pint of Guinness.

Just as Greeks love their Ouzo, Russians their Vodka, Japanese their sake, and
Americans, Australians, Germans and Danes their beer, so too do people around the
world enjoy all of these, with preferences being determined by a mixture of tradition,
availability, taste, price and other factors.

Every nation has their favorite drink, and almost all of these traditional ‘national’ drinks
have moved into international distribution, consumed the world over.

Wine made from fermented grape juice is without doubt the world’s oldest alcoholic
drink, dating back to around 6000BC in the Mesopotamia area. From there wine
production spread to Egypt and Phoenicia, Greece, and then on to most of Western
Europe between 50BC and 600AD.

The Muslim religion does not allow the consumption of alcohol, and therefore the wine
industry did not develop in the Arab world. Even Spain, which was conquered by the
Moors in the 12th century, lost its wine industry for close to 100 years, when the Moors
were in charge.

The Romans were largely responsible for bringing wines to France, Germany and Britain.
Even so, around 92 AD, the Roman Emperor Domitian decreed that French vineyards
should be uprooted to eliminate the competition with Italian wine, and for the next two
centuries French wine had to be produced in secret. This led to the church taking a role in
producing wines, as they needed wine for various sacraments that they performed, and
the Church was largely outside of the control of the common law.

There are many references to wine in the Bible, and right down through the centuries.
While France is still the most famous wine growing region, and the world’s leading wine
producer, wine is also grown in Germany, Spain and Italy, as well as Eastern Europe,
with grape vines taken by first settlers into the New World, to places as diverse as South
Africa, Virginia, California, Australia, Argentina, Chile and recently China, which is now
developing its wine industry.

In the late 1800’s when the grape vines in France were devastated by Phylloxera disease,
which attacked the roots of the vines, rootstocks were brought back to France from some
of these new regions, and the French vines grafted on to the rootstock to overcome the
Phylloxera. The French scientist, Pierre Viala, and an American, Thomas Munson were
responsible for bringing American rootstocks to France, with Munson being awarded the
‘Chevalier du Merite’ Agricole Award, and in 1888, inducted into the French ‘Legion of
Honour’. Rootstocks were also brought in from Australia at that time too.

The French wine industry is central to the French agriculture and the economy, but is also
central to the whole French way of life.

In my mid twenties I spent a number of weeks working in France picking grapes, and
living with other grape pickers from all over Europe on a farm in Vosne-Romanee, and
later in the south in Touzac where the grapes were used to make a local pineau (a sweet
syrupy wine, only consumed on the farm) and Cognac.

After a 7 o’clock breakfast of hot rolls, pate and coffee, it was less than an hour to the
first ‘little quaff’ and then on through the morning with regular ‘quaffs’ until our 7 to 8
course two hour lunch break, then on through the afternoon snipping off the bunches of
grapes to fill the ‘panier’ on our backs, with regular breaks to taste the fruits of our
labour.

One morning a rabbit ran through the vines, only to be caught by the ‘patron’s’ dog. It
then became our lunch that day. I have to say, that in all my time, I have never eaten
better, nor enjoyed myself more than my time doing the ‘vindange’. I also bear a small
scar on my hand where the secateurs snipped me, grape juice becoming the antiseptic on
the cut, and a leaf the bandage!

Nuits St.George and Vosne-Romanee wines still hold a special reverence to me.

Having grown up on a farm myself, what amazed me most was that the Vosne-Romanee
vineyard consisted of rows of grapes located all over the valley. There were a few rows
on this hill, some on another and more in isolated pockets up and down the valley. It was
very much a family vineyard, and had been in the family for generations.
At season end, each ‘patron’s’ tractor would drive wildly through the village bedecked
with flowers, with the grape pickers sitting on the trailer behind, to signal the end of the
harvest.

This was and is typical of the French Wine Industry.

In 1855, in Paris the then Emperor of France, Napoleon III, invited all the wine brokers
from Bordeaux to meet at the ‘Exposition Universelle’ to establish a classification system
for grading all wines produced in the region. The result of this was that five classes were
established, from ‘Grand Crus’ and ‘Premier Crus’ to ‘Cinquiemes Crus’, with sixty one
winemaking chateaux chosen, with each given a grade to indicate the quality of their
wine.

Since that time, the classifications have remained largely in place, with only a few new
ones added, including a new ‘Crus Bourgeois’ class, which was created in 1920 for
wineries in the Medoc area. The 61 Chateaux nominated in 1855 have become the elite
winemakers of Bordeaux, but while this established a standard, it also has become a
means of restricting the sale of those winemakers outside of the group. Even such famous
names as Chateaux Mouton Rothschild, only received its classification in 1973.

In 1930 the French established the ‘Appellation d’Origine Controlee’ (AOC), which
established a system for controlling the quality of Bordeaux wine sold. With each vintage
an Appellation number is given or denied, based on the wine meeting the criteria set. This
number is then printed or stamped on a seal over the cork, with the wine also being
described on the label as ‘Bordeaux, Bordeaux Superieur, Bordeaux Regionale,
Chateaux, or Petit Chateaux, to indicate its quality level.

There are currently 57 Bordeaux Appellations in total, with individual winemakers or


farmers being able to use the Appellation number on their wine, and the region name and
description, with their individual name being a small byline on the label somewhere.
There are at least 20,000 different producers in Bordeaux alone.

The Appellation Committees also direct these wine producers as to what grapes they can
and can’t produce, and on what basis, acting essentially as co-operatives. There are close
to 900 of these in France.

In Champagne, the situation is the same, yet different. There are 301 villages in the
Champagne area, each rated on an ‘echelle des crus’ basis – with only 17 being classed as
‘grand cru’ and 41 being ‘premier cru’.

The AOC has exactly defined where wines to be used in Champagne can be grown, and
has some 35 rules governing the type of grapes that can be used (only three – Pinot Noir,
Chardonnay, and Pinot Meunier), right down to the height, pruning, spacing between
vines, aging periods and yields per vineyard. The Champagne wines however do not
carry an AOC number; they simply have the right to use the word ‘champagne’!
The French also sell wine called ‘Vin de Table’. These are table wines for general
consumption, with a much lower selling price, with no AOC number or heritage details.
They may be very good, or very rough, and are made for immediate consumption, not
cellared, with many brands, including retailer store brands.

French wines are very much identified with their place of origin, with many of these
locations becoming synonymous with the type of wine itself. Words such as Bordeaux,
Cabernet Sauvignon, and Champagne for a long time were used strictly by the French,
but then came into general use by all winemakers, anywhere in the world using the names
as a way of describing their wine. In the 1980’s the French Winemakers reclaimed these
names, with them successfully claiming that these names were the intellectual property of
the particular region, and only the winemakers in France could use them. This also
applied to other European regions – so that words like Moselle, from the Moselle region
in Germany regained ownership over these words.

They saw that if a wine was called ‘Burgundy’, then it should be produced in
‘Burgundy’, and not California or South Australia!

Within a few years, wines produced outside of France, previously described as


‘Champagne’, were forced to change their descriptions to ‘Methode Champenoise’,
‘Sparkling Chardonnay’ or ‘Chardonnay Pinot Noir’. They still continue however to use
French language in their descriptions, with terms such as ‘Brut Cuvee’, and the
winemakers in these areas were also able to continue to describe their wines based on the
name of the grape vine being used to produce it.

What the French didn’t claim back were the unique shapes of the bottles they used for the
wines they produced.

In the ancient world, wine was sold in clay jars called ‘amphoras’, which could hold up to
26 to 40 litres of wine, and enabled it to be transported from one place to another. In
Roman times, flasks were made of animal skins to hold the wine, but it was the 17th
century that glass bottles and corks began to be used. Later this developed into the use of
wooden barrels.

Glass bottles and the use of Spanish cork to seal the opening enabled the winemaker to
seal off the wine from air so that it could be stored and also transported easily. Glass was
also inert and didn’t impart any flavour or contamination to the wine itself, while the
cork, first used for corking ales in England, sealed the wine from the air.

As the glassmakers improved their craft in the 18th century, certain bottle shapes and
glass colours began to be associated with particular wines. Bordeaux red wine often had
sediment, and therefore a bottle with vertical sides, high shoulders and a long neck was
preferred for this type of wine to trap the sediment, rather than pour it into the glass.

Clear glass was preferred for many white wines to highlight the colour of the wine, rather
than hide it, while champagne developed its distinctive shape, heavy glass weight, punt in
the base, and wire cradle to hold back the champagne cork, all designed to contain the
pressure inside the bottle.

Each wine type has developed its own bottle shape, and while there is no law to restrict a
specific wine to a particular glass shape or bottle colour, there is a very traditional
acceptance of this. Particularly newer winemakers, outside of Appellation Control, who
are trying to break into the market, are breaking more and more these traditions.

The French glass industry has also grown side by side with the French winemakers. They
have also helped develop the French perfume industry, where exotic glass bottle shapes
have become a way of life. Their greatest lament is that the French Wine industry has
been so steeped in tradition that the French Glass makers sell their most exotic and
interesting wine bottles to wine makers in the New World. The exception to this is the
sale of Cognac, where individual cognac makers have developed their own unique bottle
shapes, the first of these bottles being developed in 1894.

Cognac is a made from distilled wine grown around the town of Cognac in the Charente
River valley area in South West France on the Atlantic Ocean Coastline. The wine is a
blend of different grapes grown within the valley, with the six crus (growing areas)
strictly defined under a 1909 decree. Only grapes grown in these six areas can be used for
Cognac. The blend of grapes is then distilled into what is called ‘eaux de vie’ (water of
life) and is then distilled a second time, with the ‘bonne chauff’ (middle section) of the
distillation, with a maximum of 72% alcohol, then being used to make cognac, while the
high alcohol heads and low alcohol tails are removed and put into a new distillation. The
Cognacais (people of Cognac) say “you must boil the body twice, in order to extract the
soul”!

The Cellar master then creates a ‘marriage’ by buying different second distillations that
he or she selects – maybe up to a hundred of them, for blending and then cellaring in oak
casks for two or three years.

As the Cognac matures, over a third of the alcohol evaporates, creating a haze over the
town – described as the ‘angel’s share’. The final Cognac is later classified according to
its age at the time of bottling, with the label declaring it as V.S (Very Special) and star
rated according to age, or V.S.O.P (Very Superior Old Pale) with an age of 4 ½ to 6 ½
years of maturing, or Napoleon or X.O (Extra Old) being over 6 ½ years of maturing.

It seems strange that the descriptors use English rather than French, but there is a good
reason for this. In the 17th century Cognac was a port city visited by Dutch and English
merchant ships to pick up wine and salt. Rather than let the wine deteriorate on the
journey back home, they began to distill the wine, finding that it took up less space, and
even that the burned ‘brandewijn’ even gained in quality the longer it was kept in the
barrels. At the time the Cognac area was largely Protestant in a predominantly Catholic
country. In the Edict of Nantes, they had “freedom of faith and worship and safe heaven”,
but this changed under King Louis XIV, and many Cognac families fled to England,
Ireland and the Netherlands where they began to import their Cognac.
In the 18th Century there was a boom in Cognac sales, with Merchants and traders taking
it with them to new Trading Centres they set up in Asia and America.

Today, some of the biggest importers of Cognac are countries like China, Singapore, and
Malaysia. This all dates back to the times when sea captain Merchants would celebrate a
successful negotiation with a Chinese businessman, by serving Cognac.

Cognac is still used in Asia as a means of sharing success and prosperity. It is one of the
main drinks placed on the table to celebrate a Chinese wedding, and is a most desired gift
in Chinese New Year Celebrations.

The Chinese are also very aware of the V.S, V.S.O.P and X.O classifications and the age
values attached to good Cognac. They also clearly distinguish ‘brandy’ from ‘cognac’,
and recognize names like Remy Martin, as representing the best Cognac in the world.

There are also names like Hennessy, named after an Irishman, Richard Hennessy, who
was a mercenary soldier with the French army, before leaving the Army and settling in
Cognac, where he set up business in 1765, selling Cognac initially to the Americans in
1766, and later to China (1859) and Japan (1868). He also sold a lot of Cognac to
England, where it was used both for drinking and as an antiseptic during outbreaks of
Cholera.

The English love of Cognac also saw an Englishman, Jean Martell, from the Isle of
Jersey, set up business in Cognac in 1715.

Another Cognac maker, Courvoisier, gained its reputation as one of the region’s best
cognacs, when Napoleon visited Courvoisier in 1811. Since that time it has been called
the ‘Cognac de Napoleon’.

In 1870, when the Prussian army invaded France, a Paris distillery owned by M. Jean
Lapostolle moved to Cognac away from the war zone, also buying a cellar of Cognac.
When the war ended, his son in law, Alexandre Marnier decided to blend cognac with
oranges and orange rind, creating a new drink sensation, a drink he called Grand Marnier.

Just as Cognac has achieved its status as a drink of celebration, so too has Champagne.

Champagne is produced in the North East of France, in and around the towns of Epernay
and Reims.

Wines have been produced here since pre-Roman times, and fossils suggest that wild
grapes grew in the area as far back as a million years ago.

The Champagne and Burgundy wineries, which both use Pinot Noir grapes have always
competed with each other, but it was in the 17th century that the Champenois began to
make light wines, referring to them by colour descriptions like ‘oeil de Perdrix’( partridge
eye), ‘couleur de miel’ (honey-coloured), ‘cerise’(cherry pink), ‘fauve’(tawny), and
‘gris’(grey).

The light wines of Champagne were very much sought after, and were the choice of the
Royal Courts in Versailles, and the French aristocrats in Paris.

There are many stories about the development of Champagne, and it is hard to determine
which parts of the stories are correct or simply added or the facts embellished to make the
story more interesting.

One such story is as follows.

Monsieur A.M. Saint-Evremond, a courtier with the French King Louis XIV fell out with
the King around 1660 and fled to England, becoming a doyen of French style in London
High Society.

He brought with him his love of wines, and arranged for Champagne wines to be shipped
to London in wooden casks. When they arrived in London they were decanted into
English glass bottles, with the bottles sealed with cork, rather than using a wooden bung
wrapped in hemp as used in France at the time. The English liked the bubbles in the wine,
or ‘mousse’, but the mousse was erratic, with some bottles retaining the mousse, some
having only a light mousse and some bottles exploding when the mousse became too
strong. They also added flavours like sugar, molasses, nutmeg and cloves to the wine to
help make the wine more bubbly.

The French saw these additives as being a sacrilege, preferring the natural effervescence,
but it remained erratic too!

Two Monks, who were also cellar masters in Pierry and Epernay, Dom Perignon (1639-
1715), and Brother Jean Oudart (1654-1742) began to experiment with different methods
of capturing the mousse, including the idea of blending different wines together,
clarifying the sediment from the wine, and introducing cork as stoppers.

It took close to 150 years more to perfect the means of controlling the fermentation and
sugar level within the champagne, with a number of Cellar masters and chemists,
including Louis Pasteur, putting forward theories and attempting to solve different parts
of the puzzle. Trying to balance the fermentation of the wine – when every grape has a
different sugar content, and the atmospheric pressure within the bottle differs from one
bottle to the next, and is subject to different outside temperatures and differing lengths of
time in the cellar, took a great deal of skill, knowledge, experimentation and experience.
At one stage around 20% of all champagne was either spoiled or exploded in the bottle,
and it wasn’t until around 1840 that the main problems were overcome, and the method
of making a consistent quality champagne was established.
Where wine generally in France is named after the region or vineyard where it is
produced, Champagne is made and sold by ‘Champagne Houses’, and it is the name of
these Champagne Houses that have become the brands by which champagne is marketed.

There are just twenty-four ‘Grandes Marques of Champagne’, including Bollinger, Krug,
Moët and Chandon, Charles Heidsieck, Taittinger, Veuve Clicquot-Ponsardin, Pol Roger,
Mumm, Piper-Heidsieck, Perrier-Jouet. There are also other champagne houses outside
of the ‘Grandes Marques’, called ‘Principle Champagne Houses’, with most having a
history dating back to the early 1800’s.

All of the Champagne Houses have fantastic histories, with one of the first being Moët
and Chandon founded in 1743 by Claude Moët (1683-1760). This is the largest of all
Champagne Houses.

All of the Champagne Houses have their own cellars, with most being extremely large.
One of these is the Cellars of Mercier, a Principle Champagne House, which was set up
by Eugène Mercier in 1858.

He began to dig his cellars through the limestone under Epernay that year, and continued
digging for another 8 years. The French President opened the cellars in 1891, taking a
tour through the 18 kilometres of tunnels on a carriage pulled by four horses!

In recent years most of the ‘Grandes Marques’ and many of the ‘Principle Champagne
Houses’ have been taken over by one of the three giant liquor companies of the world –
Pernod-Ricard, Allied Domecq and Diageo, who have continued to produce and
distribute French Champagne to an even greater number of people worldwide.

As Madame Pompadour declared in 1745, “Champagne is the only wine that leaves
women beautiful after drinking”. Certainly in the time since, there are many men and
women who have since sought to prove the truth of this!

It Italy there are also many famous wine types including Chianti, Lambrusco, Spumante,
Marsala, Vermouth ( a wine with added fruit and herbs) and others. Like France, many
wines are produced and sold according to the region or vineyard where they were
produced. There are also DOCQ regulations, much like the French AOC covering which
wine can or cannot be called Chianti, or Lambrusco, but these have been more haphazard
and less strictly enforced then in France.

One story told is that the Chianti wine growing area was determined in 1924 when the
border of the Tuscan Chianti area was determined on the basis of two horsemen riding to
meet each other – one from Florence and the other from Siena. Both were to leave at
dawn as soon as the cock crowed in their town.

Perhaps fortunately or unfortunately, the cock in Florence rose earlier having being
starved of food, so the Chianti area grew in size accordingly! The ‘Black Cock’ still
however crows on the bottle!
Germany’s wine industry is as old as the French, with the Romans and later monks
establishing vineyards in and around the Rhine and Mosel valleys. These are still large
wine growing areas today, with vines growing along the valleys, and up into the hills
above.

There are many great German wines, and the Germans have producing wines such as
Traminers, Rieslings, Moselle, Spatlese, Muscat, and others for both domestic sale and
export for centuries, interrupted only by wars, which also saw many of the vineyards
destroyed. There are also a number of famous brands such as Three Nuns and
Liebfraumilch, which have perhaps unfairly characterized German wines as being sweet.
It is only now that this reputation is changing, as the industry re establishes top quality
blends to rival those of the best French vineyards.

In Spain and Portugal vineyards can be found across both countries, and wine is also part
of the whole way of life. Port originally came from Oporto in Northern Portugal, while
Rosè and Sherry are the two most distinctive Spanish wine products, with both Portugal
and Spain producing many whites and reds as well.

The production of Sherry goes back to 1100 BC when Phoenician traders planted grape
vines in Spain, and traded around the Mediterranean Sea, the trade later carried on by the
Greeks and Romans.

Trade in Sherry was abandoned in the 12th century when Spain was invaded and occupied
by the Moors, but began again at the time of the Crusades, when Christians could be
distinguished from the Arabs because they ate pork and drank sherry!

When the giant Spanish Galleons sailed to the West Indies, one third of the cargo space
was reserved for Sherry, and it became one of the prize possessions for raids on ships by
pirates.

In 1587 the English privateer, Sir Francis Drake attacked Cadiz, and plundered Jerez,
taking back to England 3000 kegs of Sherry to the English Court.

The plundered Sherry may well have been the start of the British love of Sherry or Sack
as it was often called.

Shakespeare, a devotee of Sherry wrote, “If I had a thousand sons, the first human
principle I would teach them should be to forswear thin Potations, and addict themselves
to sack”.

Europeans have always loved their wines, and it was only natural that when German,
French, Italian, Spanish and other Europeans emigrated to North and South America,
Australia and Africa that they would take their love of wine with them.
One of the first new settlements was in the Cape of South Africa, and the first grapes
were planted there in 1655, just three years after the Dutch arrived to establish a
settlement. In 1659 the first wine was produced, and by 1687 there were a million grape
vines growing. A year later the first French Huguenots arrived in the Cape, bringing with
them their skills in wine making.

The South African wine industry did very well during the Napoleonic wars in the early
1800’s, a time when the British stopped buying French wines, and were very pleased to
take South African wine instead – as part of their patriotic duty. The British continued to
provide tariff protection for South African Wines up until 1861.

Just as in France, a lot of the South African vines were destroyed in an outbreak of
Phylloxera disease in the 1890’s, but in spite of this the industry managed to survive, and
1918 the South African vineyards joined together in a Co-operative to market their wines
under the KWV brand.

In the period of Apartheid, world trade sanctions restricted the sale of South African
wines outside of South Africa, but that is now changing and once more South African
wines are finding favour in markets around the world.

The Australian Wine Industry also began with the first Europeans led by Captain Arthur
Phillip arriving to settle in the country in 1788. They brought with them grape vines from
South Africa to plant, and over the next fifty years grapes were planted with mixed
results around Sydney, using grape vines purchased in South Africa and later Europe by
the country’s landed gentry and prominent citizens – including Gregory Blaxland, Dr.
William Redfern, James Busby, Didier Joubert, Sir John Jamison and the Macarthur
Family.

By the 1830’s grapes were being grown in the Hunter Valley, as well as the new
settlements in Western Australia, South Australia, and Victoria.

A number of wineries can trace their history back to this time, including in NSW,
Wyndham Estates – 1836, founded by George Wyndham (1801-1870) and Lindemans –
1843, founded by Dr. Henry John Lindeman (1811-1881).

In South Australia prominent wineries include Reynella – 1841, established by John


Reynell (1809-1973); Penfolds – 1844, founded by Dr. Christopher Rawson Penfold
(1811-1870); Gramps and Jacobs Creek – founded by Johann Gramp (1819-1903);
Yalumba -1849, founded by Samuel Smith (1812-1889); and Hardy’s founded in 1857 by
Thomas Hardy (1830-1912).

Lindsey Brown and George Morris started their vineyards in Victoria in the 1850’s while
Joseph Seppelt (1813-1868), and Paul Henschke also set up their wineries in South
Australia in the 1860’s. Samuel McWilliams set up his winery at Corowa in 1877.
The Australian wine industry essentially struggled for existence for over a century, with
the vast majority of Australians preferring to drink beer to ‘Colonial Wine’, or ‘plonk’ as
it was referred to in the 1950’s.

From the second half of the 19th century, up until the start of the Second World War, the
majority of wine and Australian brandy was sold to Britain, with the British Government
introducing preferential tariffs for wines purchased from ‘the Empire’ in 1925, and the
Australian Government also introducing various subsidies and incentive schemes to
promote its export. At one stage in the 1930’s Colonial Wine held 20% of the British
market.

In the early days of the Australian wine industry, a number of German and Swiss
vineyard workers had emigrated to work in the Australian wine areas, bringing with them
their skills and knowledge.

In the 1950’s the sale of Australian Port and Sherry in Australia, often for use in trifles (a
type of pudding dessert), as well as Brandy outsold table wines two to one, and it wasn’t
until the 1960’s that sweet ‘German style’ Australian wines began to change the
Australian palate.

‘Barossa Pearl’, ‘Starwine’, ‘Porphyry Pearl’, ‘Kaiser Stuhl’, and later ‘Bodega’ and
‘Cold Duck’, as well as imported wines like ‘Mateus Rose’, and ‘Asti Spumante’ from
Italy introduced Australians to the taste of wine.

As the post war baby boom and waves of immigrants from Europe began, clubs and
restaurants began to open, and with the restaurants and clubs came wine, and eventually
wine lists. Even Pubs, which had never sold a glass or bottle of wine in the previous
hundred years began to sell ‘casks’ of wine and a range of the most popular wines by the
1970’s, and within a decade Bottle Shops were established with 100’s of brands and
varieties of wines on offer.

The Australian Wine Industry is now well established, with new winery areas opening up
across the country, and domestic as well as international sales growing rapidly.

Growing grapes for wine has also now been followed by olive growing, and Tourism
with thousands of new boutique wineries now in operation.

In America, wine also dates back to the first settlement by Europeans in 1607 at
Jamestown. They found native grapes growing there, but tried unsuccessfully to use
imported grapes from Europe to set up vineyards. In 1624 there was even a requirement
by the Virginian Government “to plant 20 vines per male colonist over the age of 20”.

It wasn’t until around 1800 that a wine industry was properly established in Virginia, but
then through a combination of war and later prohibition, the wine industry all but
disappeared until the 1980’s when it was revived, and is now flourishing as a mixture of
wine and tourism business.
In California, the first grape vines were planted by Father Junipero Serra in 1769, brought
in by the mission from Mexico. The Missions became the main wineries in California in
the early years, with ‘mission’ grapes being planted by Americans, Joseph Chapman,
William and John Wolfskill, and Dr. David Halland in the 1800’s.

Vines were imported from France and planted by a Frenchman, Jean Louis Vignes in the
1830’s; an Austrian, John Volypha planted Austrian vines in the 1860’s; and a
Hungarian, Count Agoston Haraszthy de Mokcsa imported grapes from Hungary,
including the Zinfandel variety. Other pioneers included Etienne Thee, Paul Masson,
Pierre Pellier, Jacob Schram, Charles Krug, Carl Wente, Joseph Concannon, and Gustav
Niebaum.

The Californian wine industry began well, largely as a result of these European
immigrants but its life was cut short when Prohibition was introduced in 1919.

It wasn’t until the 1960’s that the wine industry in California began to grow again, and
Americans, who had grown up on beer, began to take an interest in wine, both American
wines and imported wines from Europe, Australia, and new wine producing areas like
Argentina and Chile.

The big difference between wines grown in the Europe and countries like Australia is that
the European wines have, with some notable exceptions, sold wine based around
individual regions. With thousands of individual wineries and regions, it is only the true
wine connoisseur who understands the subtle differences between these different regions.

In contrast, Australian wines, while they do list the type of grapes used, and in most cases
the region where the wine is produced, they market the wine as a branded item, or in the
name of the winery itself. Brands like Jacobs Creek from Orlando, Grange Hermitage
from Penfolds, and wineries such as Wolf Blass, Yalumba, Brown Brothers, Stanley,
Houghtons and many others are names that wine drinkers recognize and buy based on the
reputation of the winery itself.

Australian and also New Zealand brands like Montana have also been able to experiment
more using different grape vine varieties, and don’t have the restrictions placed on them
by Appellation Controls. They also have very much mechanized the growing, cellaring,
production and distribution of wine, and in many situations the individual wineries are
now merging, or becoming part of larger corporate entities. In 2001 Southcorp, itself a
company which had in the 1980’s and 1990’s bought out a number of wine companies
including Penfolds, Wynn’s, Lindeman’s, Leo Buring and others wineries, both large and
small, also merged with another large Australian winery, Rosemount. The merged
company is now one of the biggest wine producers in the world.

Outside of these conglomerates, there are also thousands of family and boutique wineries
that sell their wines through restaurants, cellar doors, and wherever they can achieve a
sale.
At the same time, the two main Australian Brewers, Fosters Group and Lion Nathan have
purchased wineries both in Australia and New Zealand, with Fosters also buying out the
Mildara Blass (1996) in Australia and Beringer Winery in California in 2000. They also
bought out a number of Wine Clubs in the late 1990’s including Cellarmaster in
Australia, Pallhuber in Germany, Bourse du Vin in the Netherlands, and Wine Buzz KK
in Japan, with the company now the world’s leader in this marketing area.

The ‘big three’ liquor groups, Allied Domecq, Diageo, and Pernod Ricard have also
bought out winery and other liquor operations in Australia and New Zealand, and
brewery giants such as San Miguel, Heineken and Carlsberg are also starting to make
their presence felt.

There is no doubt that the liquor industry has become global, with larger and larger
companies competing as never before.

Beer, like wine is almost as old as time itself, with Beer production dating back to around
5000 BC in China, and 4000 BC in Mesopotamia. There were also taverns around in
2000BC in Babylon, where innkeepers were required to serve correct measures of Beer or
face drowning!

Supposedly the Egyptians taught the Greeks how to brew Beer, and they taught the
Romans, who then spread the skills to Europe and England, with Monks also becoming
fine master brewers. They even declared three Christian Saints as ‘Patrons of Brewing’ –
these being St. Augustine of Hippo, St. Luke the Evangelist and St. Nicholas of Myra-
better known as Santa Claus!

Beer is brewed from barley and occasionally wheat, which is soaked in warm water that
is kept warm until the grain begins to germinate. The grains are then placed in a kiln and
roasted, then mixed with hot water and the resulting ‘wort’ is then left to ferment, the
mixture becoming beer. Hops are added to the mixture to help preserve it, and to impart a
bitter taste.

Beer is produced in virtually all countries outside of the Arab world. Where wine, outside
of France gained a reputation as a drink favoured by the nobility and new rich, beer
became a drink for the common man and woman, who could consume beer as though it
were a food. It also became the main drink for travelers and by the 12th Century the
Germans were producing cold temperature lagers, which they stored in Alpine caves. At
about the same time, the English were drinking warm ales, which they would store in
cellars.

In 1295 Good King Wenceslas granted Pilsen Bohemia (today’s Czech Republic and
Slovakia) the right to brew beer. Hops grew well in the Bohemia area, and so prized an
ingredient was it that the Good King also decided that anyone caught trying to export
hops should face the death penalty! The first Czech brewery had already been in
operation since 1118 at Cerhenice.
Needless to say the hops was eventually exported, along with the Bohemian lifestyle,
which revolved around drinking, talking, music and playing games in taverns and inns,
along with Czech Pilsener style beers.

While there are many Czech beers, the one that is best known is Budvar from which the
American beer Budweiser also derives its name.

The original Budvar Brewery was built in 1895, with its famous ‘Blatacka’ trade mark
showing a Czech girl in traditional dress serving six jugs of beer – three dark in one hand
and three light in the other, first made its appearance in 1911.

There are many famous brewery names throughout Europe, including Stella Artois
(Belgium- est. 1366), Beck’s (Germany – est 1553), Carlsberg (Danish – est 1847),
Peroni (Italy – est 1846), Guinness (Ireland – est 1759), and there are many other smaller
or less known brands as well.

Beer is very much a universal drink, with enthusiastic supporters in many countries,
including Germany, Denmark, the USA, Canada, Australia, Japan, China and many
others.

Where most countries have their preferred brand or brands, one country has pride in
having more brands and types of beer than any other, and that country is Belgium.

Belgium has somewhere between 300 and 400 different beers on offer, with pubs focused
on providing as diverse a range as possible to attract Belgians to drink at their pub.

In Belgium, beers come in every colour and style, with 5 of the 6 Beers produced by
Trappist Monks in the world being brewed in Belgium. The Beers are named after the
monasteries where they are produced – Chimay, Orval, Westmalle, Westvleteren, and
Rochefort.

Some of the beer styles produced in Belgium include Red Beers, produced using red
barley; Brown Beers; Kriek Beer, made from cherries; Faro Beer; Trapiste Ales, made by
the monks; Gueuze, a blend of old and new beers; Blanche, white beer, made form
Wheat, and the Lambic, a naturally fermented beer, considered one of the best.

One of the most famous of the Belgian brewers is Interbrew, based in Leuven, Belgium’s
Beer Capital, which make Stella Artois, Hougaerdse Das, Julius, Jupiler, Leffe, Vieux
Temps, Hoegaarden, La Becasse and Belle-Vue. Other cities have their brewers as well,
including the town of Silly, which, you guessed it, brew Silly Beer!

Holland, equally has great pubs, selling a rich variety of Beer and Frites (hot potato chips
with sauce on top), with the Dutch Heineken Brewery being one of the world’s great
brewers.
The Heineken brewery was founded in 1863 by Gerard Adriaan Heineken, a Dutchman
who with his mother’s financial help bought out an Amsterdam brewery named Hooiberg
(meaning haystack). His motivation for buying the brewery was supposedly because he
was so appalled at the sight of drunken gin drinkers on the streets of Amsterdam, that he
decided that the best thing he could do was to brew healthy beers to combat the problem!

By 1873 he had opened a second brewery in Amsterdam, and another in Rotterdam, to


compete with Amstel, another Dutch brewer, and he began to brew Bohemian style
pilsner lagers, rather than the traditional ales for the Dutch market. Heineken eventually
bought out Amstel in 1968.

It wasn’t until after the Second World War that the company began to expand its sales
internationally, and it is now brewed in more than 100 countries.

The Heineken family continued to control the company, with Gerard’s grandson, Freddy
Heineken (1923-2002) who ran the company in the 1970’s and 1980’s largely credited
with the international expansion. Freddy was kidnapped in 1983, and was released only
after the company paid out a huge ransom.

If the Dutch love their Heineken beer, the Danes are equally passionate about their own
Danish beer, Carlsberg, also a family brewing business.

Carlsberg was set up in 1847 by J.C. Jacobsen (1811-1887) just outside Copenhagen in
Denmark, named after J.C’s son, Carl, with the word, ‘berg’ meaning ‘hill’.

At the time Copenhagen was, like many cities in Europe at the time, largely polluted, and
drinking brewed beer rather than water was a way of avoiding typhoid and diseases like
the plague.

The Carlsberg brewery used the latest technology at the time, and was one of the first
breweries to use steam power in its operations.

J.C’s son, Carl Jacobsen (1842-1914) was brought up by his father to take over the family
business, but rather than coming into his father’s business, J.C set him up in his own
independent brewery in 1870 – with the father’s business becoming known as Gamle
Carlsberg (Old Carlsberg) and Carl’s business becoming known as Ny Carlsberg (New
Carlsberg).

In 1876 J.C set up the Carlsberg Foundation, to promote the natural sciences,
mathematics, philosophy, and social sciences, and on his death in 1887, the Foundation
became the sole owner of Old Carlsberg.

In 1902, the son also followed the father’s example, creating the New Carlsberg
Foundation, and donating the New Carlsberg brewery to it. The son had become a serious
art collector during his lifetime, and he and his wife, Ottilia had been instrumental in
setting up the New Carlsberg Glyptothek Museum in 1896. They donated all of the Art
Collection to the Museum in 1888, and the foundation they set up continued to promote
the arts and architecture after their deaths.

Carlsberg Beer has also become one of the World’s Greatest Brewers, and is now brewed
in more than 40 countries.

In Italy, Francesco Peroni set up the Birra Peroni Company in 1846 in Vigevano, before
moving in 1864 to Rome. At the turn of the century it merged with a company which
manufactured ice and artificial snow, and in the post World War I period it acquired a
number of other Italian Breweries, and Peroni has established itself as Italy’s main
brewer, exporting its beers around the world.

It is hard to say which of Europe’s major brewers has the most distinctive beer, but
certainly Guinness would be a contender for the crown.

In 1759 Arthur Guinness took over a disused Brewery at St. James Gate, outside Dublin,
negotiating probably the world’s best lease agreement – a 9000 year lease at an annual
rental of 45 pounds!

Within a few years he was brewing a black velvet liquid porter or stout, and ‘Guinness’
as it came to be known quickly established its reputation as Ireland’s best export, so
much so that by 1886 the Guinness Brewery in Dublin was the biggest in the world.

The famous Guinness harp logo was first used in 1862, and has continued to be used to
this day.

Irish pubs have equally become famous, and in the 1990’s ‘the Irish Pub concept’ began
to be exported around the world.

In places as diverse as the USA, China, Italy and Australia, Hotel Bars were renamed as
O’Shaunessy’s, O’Malleys, Bridie O’Reilly’s, Paddy Maguires and other names, and
decorated inside with memorabilia from Ireland, becoming ‘more Irish than Ireland’, with
Irish and local beers on-tap.

Design Companies in Dublin would supply a complete ‘Irish Pub’ anywhere in the world,
taking Irish Beers, music and atmosphere ready made for installation in pubs around the
world, even training and supplying Irish bar staff to complete the picture!

Pubs in Ireland, just as in the rest of Britain, were set up in every village, town and city -
wherever there were people who wanted to meet other people for a drink. They were
initially built along highways for travelers, and when canals and railway lines were
constructed, the pubs became the first businesses to set up next to them, tapping into the
needs of travelers for a bed, food and beer to drink. This transport revolution also enabled
the larger brewers to distribute their beers across the country, and use city money to buy
country drinkers and publican loyalty. The Beers that survived were those who had the
most money to spend, and pubs became focal points for Brewers as well as their patrons.
They often became the social centre for the community – and the ‘local’, with the
comforts of a warm fire, a dartboard and ale and beer on-tap became the ‘lounge room’
for many people across the country.

In America, the Beer industry is as old as the country, with one story suggesting that the
Mayflower moored at Plymouth Rock, rather than continue to search for a new landing
spot, because they were running short of food and especially beer.

Small Brew houses were quickly set up by individuals, with individuals like George
Washington and William Penn setting up their own breweries. Even Harvard College had
established its own brew house in 1674!

By 1789 Beer production was being encouraged to help preserve the health of the
citizens, and brewers were being sought to come to the new colony and bring their
knowledge with them. The Beers they brewed were largely ales, based on the English
tradition.

It wasn’t until the 1850’s that a number of German immigrants arrived bringing with
them their knowledge of the new cold fermentation beers.

The immigrants included George Schneider, Eberhard Anheuser, Adolphus Busch,


Adolph Coors, Jacob Schueler, Frederick Miller, Joseph Schlitz and Frederick Pabst.

The German style beers quickly began to gain distribution in the American market, and in
the 1870’s, pioneers like Adolphus Busch set up a network of ice houses across the
country next to the Railroad tracks, where their new refrigerated rail cars could bring
Budweiser beer to distribute to local bars and saloons.

Busch was also one of the first brewers to introduce pasteurization, a process developed
by the French microbiologist, Professor Louis Pasteur (1822-1895) based in the Sorbonne
in Paris. He discovered that microorganisms in the air were responsible for fermentation
in beer, and that through the application of heat it was possible to kill off disease carrying
microorganisms, while stabilizing the fermentation process. Twenty years later milk was
also pasteurized!

By the 1870-1880’s there were over 100,000 saloon bars in the United States, and over
2300 breweries, yet while the liquor industry grew rapidly, there was an even faster
growth in people who saw saloons as the central reason for the destruction of families
and American values.

In 1851 the state of Maine was the first state to introduce laws prohibiting the
manufacture and sale of ‘spirituous and intoxicating liquors’, and by 1855 there were 13
of the 31 states that were ‘dry’.

In 1917 the U.S Congress brought forward the 18th Amendment to the Constitution,
prohibiting the manufacture, sale and transportation of intoxicating liquors in the United
States, and in 1919 this was ratified by the individual States, with Prohibition officially
coming into effect on January 16, 1920 across America.

Prohibition continued for 13 years, ending on April 7, 1933 when the 21st Amendment
repealed the 18th Amendment in the U.S Congress.

During prohibition most companies involved in the Liquor Industry either collapsed or
moved into different industries.

The Anheuser-Busch Company moved into the manufacture of ice, soft drinks, Malt
syrup, a chocolate drink called ‘Chacho’, and even manufacturing truck and car bodies,
while Coors moved into the manufacture of ceramics and even malted milk. Other
breweries did likewise.

The Prohibition Era also spawned the birth of the ‘Roaring Twenties’ – when bootleggers
in the North (those who traded in illicit spirits) bought liquor in Canada to sell in the
United States, and speakeasy bars (illegal bars) opened up the way for mobsters to
control the market for liquor and gambling, while in the South the liquor industry either
created liquors for “medicinal purposes only’ on prescription, or went underground with
illicit ‘stills’ being set up in the backblocks by hillbillies and other renegade bootleggers,
often operated at night to avoid being caught, hence the name ‘moonshine’.

Bourbon, like beer also traces its history back to the early days of the American colonies,
with the name ‘bourbon’ derived from ‘Bourbon County’, established in 1785 in
Virginia, later to become a county in Kentucky, named in honour of the French Royal
House of Bourbon Family. A number of other ‘French names’ also sprang up at the same
time with cities like Louisville, La Fayette and Versailles honoring the French support of
the Americans against the English.

Bourbon Whiskeys and also Kentucky and Tennessee Whiskeys use corn (a minimum of
51% by law) as their base rather than barley as used in Scotch Whisky. Only Whiskey
produced in Kentucky can use the name Bourbon, which is why Jack Daniels and George
Dickel are referred to as Tennessee Whiskeys and not Bourbons, while Wild Turkey,
Early Times, Makers Mark, Jim Beam are referred to as Bourbons.

Jim Beam can trace its history back to 1785 when Jacob Beam arrived in Kentucky from
Maryland setting up a distillery. His son, Jim went to work in the distillery at age 15, but
in 1920 when prohibition arrived, he sold the distillery, the warehouse full of Bourbon,
and even the farm to ‘a bunch of bootleggers’, who then went underground to sell the
illicit liquor, making a fortune in the process. When Prohibition ended, he decided at age
70 to get back into the Bourbon business, and he built a new distillery, with his family
joining him in the business which has since been passed down through the generations.

Jasper Newton Daniels, better known as Jack Daniels was born in 1850, the youngest of
ten children. He left home at age 6, after his mother died, later moving into the home of
the Reverend Dan Call who ran a distillery. He took over running the distillery at age 13,
and in 1866 the distillery gained official Government Registration, moving a little later to
Lynchburg, Tennessee, where it has remained ever since.

Wild Turkey, Jim Beam, Jack Daniels and some of the other Bourbons and Whiskies
have established an almost cult following with their drinkers, capturing the spirit of the
South, its slow pace of life and southern drawl. Words and phrases like ‘slow sippin’,
‘round here folks..’, ‘fancy folks’, ‘single barrel’, ‘sour mash’, ‘ we’re kind of traditional
round here’ and pictures to match have created an image for Bourbons and Southern
Whiskies that is unique in the world.

It is very different to the words and associated images of other liquors like Tequila,
Vodka, Gin, Rum and Scotch Whisky, but all of these have their unique stories as well.

Gin, flavoured with Juniper Berries was born in the Netherlands, sold as Genever, before
William of Orange, a Dutch Royal who became the English King, William III and
English soldiers introduced it to the English around 1688. The soldiers had been drinking
it in the Netherlands before battle, to give them what they called ‘Dutch Courage’, a
figure of speech that is still used today.

Gin became the most popular drink in London after this time, with the English distilling
their own Gin, when heavy duties were imposed on imported spirits. During the 1720’s
and 1730’s, Gin became the scourge of London, with over 7000 Gin-shops or ‘strong
water shops’ set up to sell a dram of cheap gin, leading to thousands of drunken
Londoners roaming the streets from morning to night. Much of this Gin was illicit, and
no doubt led to many of the gin drinkers being slightly crazy.

The Government then brought in a number of laws to control the sale of gin, including
various Gin Acts, and even a Tippling Act (1751), introducing taxes on its sale, and
restrictions on who could distill or brew Gin. The drink then moved up market, but its
association with London stuck, with London Dry Gin being seen as a mark of quality.

As the British Empire expanded to India, Africa and beyond, the heat of the tropics led to
Hill Stations being established for English officers, gentlemen and their wives to retreat
to the cool of the mountains.

In the heat of the tropics, Gin and Tonic, abbreviated to G&T, became the drink of
choice, almost as essential as a cup of tea! The tonic also contained quinine to help
prevent malaria.

Back in London, in the 1830’s, a number of ‘Gin Palaces’ were established to compete
with Pubs and taverns. These were elaborately decorated with lots of mirrors and fancy
bars and seating. While these have all passed by, the name ‘Gin Palace’ has stayed in the
language, with expensive luxury boats often described as ‘floating gin palaces’, where
those on board are seen to be drinking and reveling to excess.
Most of the main brands took their names from the surnames of their English founders,
including Gilbey’s (Walter and Alfred Gilbey), Tanqueray (Charles Tanqueray), Booth’s
(Sir Felix Booth), Gordon’s (Alexander Gordon), while brands like Plymouth Gin were
named after Plymouth, a major port for ships sailing to the colonies, Beefeater, named
after the London Regiment, and Bombay, named after the Indian City of the same name.

In total contrast to Gin, Rum made from fermenting molasses derived from sugar cane,
and is associated with pirates, sailors and the Caribbean Islands in the West Indies where
the main brands come from.

It has been a drink favoured by sailors, ‘warming the cockles of their heart’ out at sea,
when all else failed.

Barcardi Rum, the most famous rum of all, began its life in Cuba in 1862, set up by two
brothers, Facundo and Emilio Barcardi.

In the Cuban Revolution in 1960, Fidel Castro’s Liberationist Army seized the refinery
and assets of the Barcardi Company. The family and the brand re-established itself in
Bermuda, and Barcardi continues to be made there. While the brand and company still
claim their Cuban heritage, the Cuban government totally denies them this right, and
refuses to recognize them.

Many of the island states in the Caribbean have their own rum brands, with brands like
Mount Gay, Barcelo, Captain Morgan and Coruba.

Australia also makes Rum, its two best known brands being Beenleigh and Bundaberg,
both made in Queensland, named after the sugar towns where they began. Rum has a
long history in Australia, being used as one of the first Currencies in the 1790’s and
period up to around 1813, before coinage was established. The Colony was even
described by Governor King as having “two classes of citizens – those who sold rum, and
those that drank it”. Much of this trade was even run by the NSW Corps, who became
known as the ‘Rum Corps’, because of the trade they were engaged in.

Dealing in illicit spirits has long been a trade carried on by people the world over, and in
Scotland it was no different, only there they called them ‘smugglers’, and they traded in
Scotch Whisky, when taxes forced the price up.

Scotch whisky was first developed in the 9th Century when monks from Ireland came to
Scotland to convert the Picts to Christianity. They also brought with them their stills to
make liquor, and used the Picts heather based ales as a base for their distilling. Whisky
was created, and over the coming centuries, whisky made in this way became a part of
Scottish life. It wasn’t until the 1860’s that ‘blended Scotch Whisky’ first began to be
made, and it was in the 1870’s when the French Cognac and Spanish Port industries were
virtually destroyed by the outbreak of Phylloxera, that Scotch Whisky began to establish
a wider market in England, Europe and America.
During American prohibition, strange as it may seem, there was also a boom in Scotch
sales to Mexico, Canada and the Bahamas!

Scotch quality is measured by its age and its blend, although there are also a number of
single blend whiskies on the market. It is the blenders however who have made the drink
famous.

John Walker was a licensed grocer in Kilmarnock; John Dewar and Arthur Bell were
wine and spirits merchants in Perth, and John Haig was from Fife. All of these brands –
Johnnie Walker (est. 1820), Dewar’s, Bell’s, Haig, are named after their founders. Others
like Glenfiddich (est 1887) are single malt whiskies.

Vodka is best known as the favorite drink of Russia, but it is also the favorite drink of a
number of Eastern and North European countries, including Finland, the Ukraine,
Belarusa, and Poland, made from distilling almost any sort of grain, but best filtered
using charcoal made from birch trees.

The drink can trace its history back as far as the 9th century, with the first known
distillery for vodka being in Khyinovsk around 1174. It was initially used as a medicine,
and by the 15th century was being exported to other parts of Europe.

In the 1700’s, a number of flavourings were used to create added taste, including cherry,
dill, ginger, acorn, anisette, absinthe, horseradish, mint, sage, watermelon, and a number
of others. Between the 14th and 18th centuries, vodka came largely under the control of
the Tzars, who taxed its production and restricted or expanded its sale through Russian
Taverns, or Kabaks as they were called, according to their need for tax money at the time.

By the late 1800’s there were somewhere between 2000 and 5000 vodka distilleries in
Russia, and in 1861 a law was passed which stopped the state monopoly, imposing and
excise tax instead. Over the next 33 years a number of private distilleries set up including
Smirnoff. In 1894 the law was changed again however to make its production a state
monopoly.
When the Bolsheviks took control in 1917, many of the private Vodka makers fled the
country, and officially under Lenin, the country went dry. Home distilling continued
however, and by the 1930’s, under Stalin, vodka production was expanded, with the
alcohol level moving from 20% to 40%. Vodka as it did in the centuries before, became
an important tax earner for the Soviet Government.

With the fall in Communism, the state monopoly was replaced with a system of licensing,
and Russia now has over 250 different brands registered. At the same time foreign Vodka
brands like Finlandia from Finland, Absolut from Sweden, and Smirnoff were re-
introduced to the country.

Pyotr Smirnoff who was personal advisor to Tsar Alexander II established the Smirnoff
brand in 1888. Pyotr Smirnoff became the official Vodka supplier to the Imperial Court,
before fleeing to France when the Bolsheviks took control, confiscating all private
distilleries in Moscow.

By way of interest, my great grandmother, on my mother’s side was Maria de Smirnoff,


and as far as I know, no relation to Pyotr. She was the daughter of Chevalier Conte de
Smirnoff, the Russian ambassador to the Netherlands, until he was assassinated when she
was around 11 years old. She then returned to Russia and grew up in the Palace of the
Tsar, and when she was 21 she was betrothed to an Englishman who was on his way to
take up a position as the Sheriff of Bombay. She then moved to India, but in her later life,
following her husband’s death, she wrote to a friend in Australia, recommending the
employment of her son to him. She was later to follow her son to Australia, and spent the
rest of her life living on a farm at Woodside on the Manning River in New South Wales.

When the Smirnoff brand returned to Russia, they also ran across a relative of Pyotr, who
also claimed the Smirnoff name as his. A long court case between Boris and the owners
of Smirnoff in the West ensued.

While most liquor is made from the distillation of wheat, corn, rye and other grains, there
is one which is made from distilling the flesh of a lily – a lily variety, not a cactus, called
the Blue Agave in Mexico, the only agave variety used to produce the liquor known as
Tequila.

Tequila is produced in the town of Tequila, named after the town itself, with the Mexican
Government owning the trademark rights to the name, a right they assumed in 1976.

In Mexico, the Ticuila Tribe in the state of Jalisco, founded the town of Tequila around
1530, making a drink they called Pulque. This was thought to be the best Pulque in the
whole of Mexico, and when this was distilled it becomes Tequila.

There are four types of Tequila – Blanco of Silver, Gold, Reposado and Anejo, meaning
Old, and it is either sold using 100% Agave of Mixed – where it is based on 51% Agave
juice with the rest being derived from Sugar cane.

Tequila is usually consumed from a glass where the rim has been imbedded in salt, and it
is usual to have a shot of Tequila, and follow by sucking on a lemon! Like Corona Beer,
also produced in Mexico, which is drunk with a segment of Lime, Tequila is an
experience, not just a drink.

There are many other types of alcoholic drinks in the world, and we have covered just a
few of the most popular ones.

While many have international distribution, there are others that are highly localized, and
may not even travel beyond their local area. There are also others that are so powerful
that they can easily kill the unwary, or poison them, if they are poorly distilled.
Some of these local drinks include ‘Toddy’ (Malaysia), Arack (Sri Lanka), Kava (Fiji),
and there are many people in the world who make their own special brews for their own
consumption and that of their friends. Some of these are superbly produced, while others
have the ability to either kill or severely damage the brain cells.

There is also a drink that has largely been outlawed in most countries for close to a
hundred years, and that is Absinthe – said to be the elixir of Geniuses as well as idiots! It
originated in Switzerland, and was credited as giving the strength and fighting spirit to
Napoleon’s soldiers, who took it into battle with them, spreading it across Europe. It is
produced in parts of Eastern Europe in small quantities, but is still banned in most
countries.

Alcoholic drinks have fallen in and out of favour throughout history, often due to the
taxes imposed on one type of drink over another, which directly affects the price, and at
other times because of availability or lack of it, such as when the grape vines in France
were devastated by the Phylloxera outbreak. There has also been a lot of peer pressure
involved, with some drinks being acceptable in some situations and not in others, while
fashions have also moved consumption from one form of drink to another.

The Gin Palaces and Parlours in London in the 18th century have long disappeared, but so
too have the wine bars of the 1970’s, the drinking of cider at folk concerts, and the mixes
of fruit juices and wine, and Passion Pop that were a huge hit in the 1980’s.

In the late 1990’s, Spirit mixes have emerged as one of the fastest growing segments, and
brands like Stolly and Barcardi Breezer have become the trendy. Is this a long term trend
emerging, or one that will fade into oblivion?

Certainly, some of the greatest reasons for the growth of particular drinks have been the
development of brands like Schweppes, Coca-Cola and Pepsi-Cola; large scale
distribution methods and the development of refrigeration, which has allowed drinks to
be served cold, and stored for long periods of time.

In countries and places where snow abounds, refrigeration has never been an issue, but in
hot climates, refrigeration has enabled drinks to be kept cool or cold, and to provide them
with an additional taste sensation adding to their ability to quench a thirst.

A Gin and Tonic, Scotch and Dry Ginger Ale, Rum and Coke, would never be the same
without the addition of ice, but neither would a beer in Australia be the same, if served
warm!

CHAPTER 21
Off to the movies

Hold up a mirror and you will see a perfect reflection of yourself in it, but once you move
the image disappears.

The first photographs were seen as ‘mirrors with a memory’, and it took many centuries
to establish a way of holding the image permanently.

The first true photograph, the word derived from ancient Greek, meaning ‘writing with
light’, dates back to 1825, and is an image of a horse led by a boy. The photo was taken
by a Frenchman, Joseph Nicéphore Niépce, who was able to record the photo on a glass
plate covered with an emulsion of bitumen.

He used a ‘camera obscura’ to capture the image, a box with a lens at the front, and the
plate at the back, where the image was exposed, with an exposure sometimes taking
several hours to record the image. He was then able to print this image onto paper.

In 1826, he showed the images he had created to a theatre owner, Jacques Daguerre, who
ran a ‘diorama’ show, where a succession of large painted scenes were flashed past the
audience, creating the sense or illusion of being in the painted picture.

It was in 1835 that Daguerre discovered that silver iodine, using a copper plate was more
responsive to light than the bitumen, and then over the next few years he discovered the
use of mercury fumes as a means of holding the image, when he inadvertently broke a
thermometer in the cupboard where he had his plates and even better results when he
washed away the excess silver iodine. Niépce had by this time died (1833), possibly from
the exposure to the chemicals he was using.

The Daguerreotype process was hailed as a remarkable achievement, and it certainly was,
so much so that in 1839 the French Government bought all rights to the invention, giving
Daguerre and his son lifetime pensions.

The most remarkable part of this story is however that the French Government gave away
all of its rights to the invention, and openly declared the details of the invention for the
world to follow.

Meanwhile in England, William Henry Fox Talbot, had also developed a similar but
different system, using Silver Chloride, and creating a negative before printing onto
coated paper.

Talbot called his system the ‘calotype’, but it was the ‘daguerreotype which became a
sensation in the 1850’s, with Portrait Studios being set up all over Europe, and then in the
United States, introduced to America by Samuel Morse, of Morse Code fame.
Over the coming years Portrait photos, expanded to include photographs of famous and
important people, the countryside, cities and foreign lands, scientific studies as well as
significant events like the Civil War in America, Coronations and the launching of ships.

In 1851 a new wet plate system, developed by Frederick Archer came into being, and
over the last half of the century, photographers, carrying their large cameras and
equipment were able to record people, landscapes and events as never before.

The Agfa Company, based in Berlin, started in 1867 as a company making dyes, creating
the Agfa brand in 1897. The company later amalgamated with Lieven Gevaert from
Antwerp, a manufacturer of photographic papers, with the two companies subsequently
being taken over by Bayer in 1925.

In Britain, Alfred Harmon (1841-1913) had set up Britannia Works Company in 1863 to
make photo enlargements, moving in 1879 to Ilford in Essex to make dry photographic
plates, and naming the company after the town, with Ilford becoming a well-known brand
name.

That same year, George Eastman (1854-1932), an American from Rochester, New -
1932), an American from Rochester, New York, came to London and took out a patent on
a plate-coating machine, returning to the United States where he started to manufacture
dry photographic plates, and taking out a patent on both the formula for the dry plate
emulsion and also the machine to make the plates.

Eastman had left school at age 14 to support his family after his father died, working
initially in an insurance company before joining the Rochester Savings Bank as a clerk.

He bought his first camera in 1878, a huge camera that used wet plates, and instead of
going on holidays as he intended, he became completely absorbed in finding a simpler
way of creating photos.

In 1880, he began to manufacture the plates, and with the business thriving, Henry A.
Strong, who had made his money making whip handles, put extra money into the
business.

The big breakthrough was in 1883 with their invention of a film on a roll, that could be
used on any plate camera on the market.

Rather than make plates for professional and a small number of enthusiast photographers,
he had developed the idea that photography could be “an everyday affair”, and that it was
possible to “make the camera, as convenient as the pencil”, so that everyone could create
photos. It was an historic moment, and by 1888, he had coined the advertising line “You
press the button, we do the rest”. He also that same year registered the trademark,
‘Kodak’, because he liked the letter ‘K’, and dreamed up the word, which sounded good!
By 1896, over 100,000 Kodak cameras had been sold, and 400 miles of film and
photographic paper was being produced every month.

Eastman went on to make a fortune in photography, and at the same time became one of
America’s greatest Philanthropists. He donated $20 million to Massachusetts Institute of
Technology anonymously using the name, ‘Mr Smith’; $30 million to the University of
Rochester and three other educational institutions and millions for dental health and other
programs. He eventually left his entire estate to the University of Rochester.

It should also be said that these gifts were given in the 1920’s and 30’s when a million
dollars was worth a great deal more than today.

He was very much the Henry Ford of the photographic world, building his business
through sheer hard work and a commitment to mass production and international
distribution of low cost products used by everyone. He also had a strong commitment to
his staff, introducing profit sharing and in 1919 he gave the staff one-third of his own
shares in the company. At that time the shares had a value of around $10 million.

He was a passionate art collector, and loved music and the outdoors. In a strange twist of
fade, he committed suicide, aged 77, after he suffered cell hardening in his lower spinal
cord, which caused great pain and greatly restricted his ability to move around.

It was in 1889 that George Eastman had developed a roll film that enabled Thomas
Edison to make one of the world’s first movie cameras.

Where still cameras and film sought to capture a single ‘still’ image of a scene or group
of people, requiring all movement to be stopped while the photo was taken, movie images
sought to capture not just the image, but also the movement as well.

Movie films brought together a diverse number of individual inventions, with each
invention becoming the inspiration for another, as problems and possibilities were
isolated and then solutions found.
The development of ‘silent’ movies was followed by the ‘talkies’, but all of this took time
and a great deal of invention, thought and application by individual people to achieve
what was a total revolution in the way movies were made and also shown to the public.

The process involved a number of steps - firstly capturing movement, then be able to
record this movement, making the movement flow, rather than jerk from one action to the
next, then adding detail and sound for realism – both in voice and music. The overall idea
was to make what was on screen as real to the screen audience as possible, given that
they could see through their own eyes movement, dimension and colour.

Thomas Edison was one of the most prolific inventors of his time, and was also one of
the first entrepreneurs to set up a research and development facilities where he and people
who he employed could experiment with different inventions he was thinking about.
His first successful inventions had been in the telegraph industry in the 1860’s and early
1870’s, and he had made a fortune from his ‘Universal Stock Ticker’, which enabled
Morse code signals to be printed onto a tape and be read, rather than listening to a Morse
Code message and the operator recording it. Over the coming decade use of the telegraph
boomed, with telegraph cables linking cities and countries together into a communication
network, and telegraphs also enabling multiple messages to be passed at the same time
between Telegraph Stations.

Edison’s work also evolved into work with electricity and sound. In 1877 he created a
Phonograph, which enabled sound to be recorded onto a cylinder made from tinfoil, and
in 1879 he made history by creating the electric light bulb.

Edison and others rapidly commercialized this work with electricity, and in 1882 Edison
set up a Power Station in New York, to provide the electric power to light the streets of
New York.

At the same time, another inventor and engineer, Professor Elihu Thomson (1853-1937),
who was born in Manchester, England, but moved to Philadelphia with his family when
he was five years old, was also experimenting with electricity, setting up the Thomson
Houston Electric Company in Philadelphia in 1879, that later provided lighting for that
city, and others including Kansas City in Missouri, which received electric street lighting
six months before New York.

During his lifetime Thomson submitted around 600 patents to the U.S Patent Office, and
was one of the pioneers and proponents of the use of alternating current rather than direct
current, as promoted by Edison. He developed a number of electric motors, arc lights,
generators, and X ray tubes and is credited as the inventor of the electric welder. His
company later merged with Edison’s company to form General Electric in 1892.

Also another inventor, Nikola Tesla (1856-1943), an American born in Serbia, who had
worked for Edison’s companies in both France and the United States, was also a strong
proponent of alternating current, developing dynamos, transformers and motors, along
with Patents in relation to many of their features. He in turn sold his patents in 1885 to
George Westinghouse (1846-1914), himself an inventor and entrepreneur with 361
patents to his name. Westinghouse had made a fortune in the railroad business, inventing
and then supplying air brakes to Railroad companies. Using Tesla’s patents, his company
then went on to develop electric motors and turbines for railroads, ships and power
stations. He was also involved in developing natural gas supplies to homes and industry,
with his company becoming one of the main producers of domestic appliances for the
home.

Just as there were different viewpoints, great discussions and arguments about the virtues
of Alternating Current as opposed to Direct Current, so too was there great debate about
the virtues of Tin Foil Cylinders, as patented by Edison, using the name ‘Phonograph’, as
opposed to wax coated cylinders, as developed and patented by Chichester Bell and
Charles Tainter, using the name ‘Graphophone’, and flat non wax, photo engraved disks
as developed and patented by another inventor, Emile Berliner (1851-1929) using the
name ‘Gramophone’. Edison’s system had gained its first patent in 1878, with
improvements in 1887, while Bell and Tainter had received their patent in 1885, and
Berliner in 1887.

Improvements were made to both cylinders and disks over the following years, to provide
better sound and longer recording times, with the material used to make the cylinders
and disks changing from such materials as shellac to vulcanite, to Bakelite and other
plastics.

Motors to move the cylinders around rather than moving them by hand, or using
wind-up mechanisms like a clock were also introduced as time went by.

Berliner’s gramophone invention was greatly improved by the addition of a motor, also
the subject of new patents taken out by Levi Montrose and Eldridge Johnson in 1896,
with Berliner’s company and their company, the ‘Consolidated Talking Machine
Company’ merging to form the ‘Victor Talking Machine Company in 1901. Their brand
symbol became an illustration painting, titled ‘His Master’s Voice’ of ‘Nipper’ the Jack
Russell terrier dog, with its head listening to the music. The Victor Company was later
taken over by RCA in 1929, which continued to use the dog as their logo, while in Britain
the dog was used on the HMV brand, named in honour of the painting.

Berliner himself was also a brilliant inventor and entrepreneur, also establishing the
Deutsche Grammophone Gesellschaft Company (later part of Polygram) in Germany, and
the Gramophone Company in Britain. He was born in Hanover in Germany, emigrating
to the USA in 1870, and is also credited as the inventor of the Microphone, marketed
phones in Europe, as well as developing the concept of acoustic tiles and cement for
concert halls. Berliner was also one of the leading advocates in the 1890’s and early
1900’s for boiling milk to kill bacteria before giving the milk to children. At that time
there was a very heavy mortality rate for children, who died from tuberculosis, carried
through milk, and Berliner’s work saved hundreds of thousands of children from the
disease. He was also one of the early inventors in the aviation industry, developing a
lightweight internal combustion motor for use in aircraft and helicopters, his first rotary
powered helicopter in 1907 and others up until around 1920.

Both Berliner’s company and Edison’s both sought out singers, orchestras and choirs to
record their work, with recording companies competing not just in equipment but also
through the popularity of the artists signed to them.

For the first time in history, singers could record their music, and then sell it to people
who had never seen them on stage, with these people purchasing the music cylinders or
disks to play in their homes.

At the same time that these advances were being made in the recording industry, another
industry was also in its infancy. On one hand the telegraph had enabled messages to be
sent form one Telegraph Station to another, replacing men on horses. In turn, the
invention of the Telephone had made voice contact possible, yet both the telegraph and
the telephone required wires to connect two points together.

It therefore seemed logical to extend the phoneline into a means of distributing


information and music, and although it was tried at the time, particularly in Europe, the
phoneline remained a person-to-person communication, rather than a mass
communication medium until the advent in the 1990’s when the phone lines became a
means of linking computers as well as phones and faxes – which had in just a few years
replaced telex machines and telegrams, and to a large extent the physical distribution of
information through the post office and by courier companies.

In 1887, Heinrich Hertz (1857-1894) discovered Radio waves, and set about creating
artificial ones, giving rise to the measurement standard for radio waves- ‘hertz’, as a unit
of frequency, hence radio stations announcing their station identity along with their
kilohertz frequency number.

In 1894 Guglielmo Marconi (1874-1937) from Bologna in Italy began studying the work
of Hertz, and developed a means of transmitting and receiving radio waves across a
distance. After approaching the Italian Posts and Telegraph Office, who showed little
interest in his invention, he went to England in February 1896 and filed his patent for his
invention. Later the same year he demonstrated his invention to the British Post Office as
well as the British Navy and Army, who took a great deal of interest.

What he had succeeded in doing was to send telegraph messages without wires, and in
1897 he registered his company as the ‘Wireless Telegraph and Signal Company’,
reflecting the idea of the invention. This company was later taken over by English
Electric in 1946, becoming GEC (General Electric Company) in 1968 following a
merger, and then renamed Marconi plc in 1999.

Marconi’s invention, enabling communication without wires, was initially seen as a


means of communicating in places where no telegraph wires were possible, such as in
ship to ship and ship to shore communication.

In 1900 a patent was also taken out under the title of 7777 for sending signals on different
frequencies, to enable multiple communications.

Marconi’s invention was credited as saving thousands of lives at sea, as it enabled


distress calls from ships to be made in the case of a disaster. One of these ships was the
Titanic.

It wasn’t until 1906 that voice transmissions became possible, with the American
Scientist, Reginald Fessington transmitting readings from St. Lukes Gospel on Christmas
Day, which were picked up by ships in the Atlantic. This was followed by the invention
of the vacuum tube and the Audion by Lee de Forest (1873-1961), which provided better
voice definition by amplifying the sound signal to make it audible.
Another inventor, Edwin Armstrong, disputed Lee de Forest’s claim to the invention and
there were lengthy court cases that followed the release of the invention. He also had an
unhappy experience later in the thirties when he tried to set up FM broadcasting, when
the industry was controlled by AM Broadcasters. They petitioned the FCC to take over
the bandwidth being used by the FM stations, which was granted, and in so doing
Armstrong’s business was destroyed. He eventually committed suicide.

In the early days of radio, there were many claims made, well beyond the reality of the
technology developed, and de Forest was also caught up in the ‘radiotelephone fever’, as
companies sought to make great claims in order to be able to entice people to invest in
their new technology. Some of de Forest’s partners went to Gaol on the basis of stock
fraud, but de Forest was acquitted.

During World War I, the Federal US Government suspended all non-military radio
communications, but this also meant that a lot of people who had joined up, becoming
radio operators, and learning new skills.

At the end of the war, de Forest re started a radio station he had set up in New York. The
radio station was closed down however within a few months by a Federal Inspector, who
said that the station had moved location without approval! This led de Forest to move to
California, and in turn Hollywood, where he developed the Phonofilm process, where a
voice or soundtrack was added to the film. The system was eventually only used in 34
cinemas, but really did not get off the ground due to legal and financial issues. This was
in the period 1920 to 1925, but it wasn’t until 1959 that he received an Honorary
Academy Award for his pioneer work in bringing sound to movies.

In the United States there were around 9 million telephones in operation by 1910.

By 1920 the idea of using ‘wireless’ communications for public broadcasting had come
into being, with the radio station, KDKA in Pittsburg officially becoming the world’s
first commercial radio station to open in 1920, owned by RCA, and the BBC (British
Broadcasting Company) starting transmission in 1922. There had been a number of
amateur radio stations, and stations like de Forest’s prior to this, as well as a few other
commercial stations who also made claim to be the first radio stations in America. These
included a Montreal station called XHA.

RCA (Recording Artists of America) had been set up by General Electric in 1919, taking
over the interests of American Marconi, with the responsibility of selling General Electric
and Westinghouse radio equipment. The US Government under President Franklin D.
Roosevelt, having controlled the radio industry during the war, felt that it would be in the
best interests of America if the radio industry in the United States stayed in American
hands.

While RCA had set up radio stations and was making broadcasting equipment, where
they made most of their revenue over the next few years was through selling radios to the
public produced by GE and Westinghouse.
In 1928 RCA bought out the Victor Talking Machine Company, and began to market
radios and phonographs in its own name.

Many of the companies that had entered the market to make lighting and other electrical
products also began to manufacture radios. These companies included many American
companies as well as European companies like Telefunken and Philips.

Philips was set up in 1891 by Gerard Philips, in Eindhoven in the Netherlands and began
to make radios in 1927.

For the next 30 to 40 years the medium would be known as the Wireless, replaced in
most places by the new word, Radio.

By 1927 there were at least 6 million radio sets in the United States alone.

When transistors began to replace valves in the 1950’s, portable radios began to be
referred to as ‘trannies’, an abbreviation of the word, transistor, reflecting the new
technology, and powered by batteries, while home radios, powered by electricity, began
to become more elaborate furniture pieces, using molded plastic, rather than bakelite
cases. These home radios were also incorporated with record players, and later TVs to
become 2 in 1, or 3 in 1 home entertainment units, built as elaborate furniture items, to
become the central feature in lounge rooms across the globe.

The rapid growth in the radio industry in the late 1920’s and early 1930’s also caused the
US Government to have concerns about the size and strength of the US companies
involved, and in 1931 an anti trust action forced Westinghouse and GE to sell their
shareholding in RCA.
.
RCA, that same year, then began to build ‘Radio City’ in New York as their new
headquarters, for both themselves and NBC (National Broadcasting Company), a
company they had been set up to run their radio stations across America.

One big difference between the United States and Britain in their approach to the Radio
Industry was that in the United States, while the Government was involved in regulation,
the industry was fully commercialized in essentially a free market.
In contrast, Britain completely nationalized its Radio Industry, setting up the British
Broadcasting Corporation in 1926 as a government monopoly, and taking over the British
Broadcasting Company that had been set up just four years before.

This led in the 1970’s to the ridiculous situation where ‘Pirate Radio Ships’ anchored in
international waters off the coast of Britain to broadcast commercial radio. The
Government had no control over them, because they were outside of their jurisdiction.

Countries like Australia adopted a mix of both a Government owned national broadcaster
– the ABC (Australian Broadcasting Commission), and commercial broadcasting.
Rules of operation were set down by the Australian Government, through a regulatory
body, the Australian Broadcasting Control Board, which was given control over both the
national broadcaster and also commercial broadcasters.

The development of the gramophone, graphophone and phonograph, was also mirrored in
the development of movie film, with varying systems vying for supremacy in the
marketplace.

In 1889 Edison went to Europe to see Jules Marey, who had invented a roll film,
Chronophotographe, after spending time developing a moveable cylinder which
contained a sequence of film frames on its outside and a light inside. When the cylinder
was spun, it made the film appear in motion. On his return to the United States, Edison
then set about building a machine called a Kinetoscope for people to view motion films,
launching this in 1894, and setting up Kinetoscope Parlours across the country. This was
followed by variations of this, including the Phantoscope and Edison’s Vitascope, but it
was the French Lumière Brothers in France who perfected a new way of showing movie
films.

Auguste and Louis Lumière, whose father was a portrait painter, had grown up to see
photography take over from portrait painting as a means of recording the image of
families and important individuals.

Their family had moved into the photography business, and at the age of 17 Louis had
developed a new ‘dry plate’ process, which proved very successful. By 1894, their
business was producing 15 million plates a year. By this time Edison was also making
and selling his Kinetoscope machines and film to buyers in Europe.

In order to view a Kinetoscope film, only one person at a time could view it, and even
then it was restricted to only a minute or so before the film finished.

The Lumière Brothers patented their lightweight Cinématographe in 1895 in France and
then in Britain and elsewhere, using 16 frames per minute, rather than Edison’s 48. They
also developed a projection method that enabled the image to be viewed by a number of
people looking at a screen, with the projector using an intermittent movement to capture a
smoother flow of images.

By 1896 they had opened ‘cinemas’ in Paris, London, New York, and Brussels, opening
up the way to cinemas to open worldwide, and supplying catalogues of silent films that
cinemas could show to their audiences.

In places as far distant as India, Lumière Brothers’ Cinématographe films were shown the
same year in Bombay, and three years later the first Indian films were being shown using
Edison’s Kinetoscope, by this time incorporating projection. The first silent feature film
shot in India was in 1913, and the first talkie in 1931 heralding the start of Bollywood.
It is interesting to compare the development dates of radio with that of the cinema.

Both the cinema and radio, after radio’s initial use in the military area, became
entertainment mediums, just as sideshows, pantomimes and fairs had been in the century
before.

Where the gramophone record had enabled singers to record their music, and people to
play it on their home gramophone, ‘radio’ broadcast their songs to a wider audience, with
the radio set becoming the centre for entertainment, news, sport and weather information.
Radio advertising and radio half hour shows followed, with a mix of comedies, sitcoms
and dramas. Radio also had a dramatic effect on record sales, which declined sharply in
the early years of radio.

In the century before, entertainment was created in the home by the activities of families
entertaining themselves by playing the piano (where they could afford it), singing, card
playing or simply sharing conversation and meeting with other people. For the first time
in history it was possible to have entertainment in the home everyday through the radio.
The Radio very quickly became the centre of entertainment in the home, with people
anxiously waiting for news, their favourite radio show, latest songs, sports and weather
information.

The movies being silent, apart from the sound of the projector, and the audience, meant
that they had to create action that could compete with live radio. To create sound, the
larger cinemas had orchestras or a pianist play alongside the films, but mostly they relied
on the facial expressions of the actors and actresses in the film, and the action to tell the
story, along with title cards and subtitles to relate the storyline, or make comments.

In 1903 the Warner Brothers – Harry (1881-1958), Albert (1884-1967), Samuel (1887-
1927), born in Poland and Jack (1892-1978), born in Canada, opened a ‘Nickelodeon’ in
New Castle, Pennsylvania, charging a Nickel entrance charge to see pictures, hence the
name. By 1912 they were producing their own films in New York, and in 1918 they had
opened their own studio in Hollywood, creating Warner Brothers Pictures in 1923.
In Chicago, Carl Laemmle from Bavaria in Germany, who emigrated to the United
States, founded a Nickelodeon cinema in Chicago in 1906. Three years later he began to
produce his own movies, setting up the ‘Universal Film Manufacturing Company in
Chicago.

In 1915 he moved his company to Los Angeles, setting up ‘Universal City’ on a former
chicken ranch to make movies. The ranch with 230 acres of ground had room to build
sets, and provide locations and it was later expanded in size to 420 acres – room enough
to shoot Westerns, and also movies like Frankenstein.

Los Angeles, which originally had been given the proposed name of ‘El Pueblo de la
Reina de Los Angeles Sobre el Rio de la Porciuncula’ in 1777 (The Town of Our Lady,
the Queen of the Angels of the Porciuncula River), by the Spanish Governor, Felipe de
Neve, began as a small Spanish Mission, before coming under the control of Mexico after
the Mexican Revolution in 1822.

It was declared a city in 1835 by the Mexican Government, but in was ceded to the
United States in 1848, at the end of the Mexican-American War (1846-48).

Hollywood itself was established in 1887 by Harvey Wilcox, a leading prohibitionist, but
it wasn’t until 1906 that the first movie theatre and also movie studio was set up. The
movie, ‘The Count of Monte Cristo’ was shot the following year, and in 1908, ‘In the
Sultan’s Power’, the first movie to be filmed entirely in Los Angeles.

The dry climate in Los Angeles made it perfect for shooting movies outdoors, with
greater certainty of clear skies and good light, and ‘Hollywood’ quickly became the
centre of the movie world, with production companies, producers, directors, stars,
starlets, and all those who wanted to be in movies moving to Hollywood in the hope of
becoming famous. Later in the 1930’s it also became the centre for radio productions –
with its ready access to writers, voice actors and production facilities.

There were many studios set up in the early years.

The very first studio in Hollywood was the Nester Film Company’s film studio set up in
1911 in an old barn.

Besides the climate there was also another reason for Hollywood to become the centre for
movie production.

In the early 1900’s there were a number of patents covering different movie production
and projection methods, including Edison’s, for showing movie shorts and actualities
(reality films of events like two bears fighting or an earthquake) to cinema audiences.
Films were often described according to the number of reels it took to show them – hence
a one reel film, two reel film or later feature, which might have as many as twelve reels.
From just a few cinemas at the start of the century, the number of Nickelodeons had
boomed and by 1910 there were over 10,000 cinemas in the United States alone.

The Edison Manufacturing Company, along with other motion picture equipment
manufacturers decided that rather than compete with each other, it would be better if they
worked together, so in 1908 they joined together as a Trust to form the Motion Picture
Patents Company, to “stabilize the industry”, and get payment for use of their equipment
through licensing fees from film producers, distributors and exhibitors. By this time there
were a number of distributors who had established themselves as state ‘Film Exchanges’,
and these fell under the control of the MPPC.

All users of the MPPC’s equipment were obliged to pay licence fees, and another
company the Edison Company set up for the purpose, this being the ‘General Film
Company’, enforced this.
Rather than comply, a number of companies refused to pay the licence fees or comply
with the Trust’s demands, becoming ‘independents’. The independents included
companies owned by William Fox, Carl Laemmle and Adolph Zukor, and most of the
independents moved to Hollywood away from the East where the Trust was dominant,
and began to create their own destinies.

The Trust itself was the subject of Anti-Trust laws and was forced to disband in 1915,
ending the monopoly they had enjoyed as producers of the equipment, but at the same
time passing the power to the studios.

William Hodkinson (1881-1971) had worked for the MPPC in both Los Angeles and Salt
Lake City, and earlier run the state film exchange in Utah. In 1912 he presented the Trust
in New York with a plan to split the revenue from films between Producers and
Distributors, whereby the distributor would keep 35% of the revenue, with the balance to
be paid to the producers. Under the scheme, the producer would be able to produce
movies, knowing that they had assured distribution and money to make the movie.

The idea however was rejected, and Hodkinson lost his job. He then set up the
‘Progressive Company’, changing its name to Paramount Pictures in 1914, and signing up
some of the best producers at the time, including Jesse Lasky and Adolph Zukor on five
year contracts, with his company having the sole rights to distribute their movies.

This proved to be a double edged sword however, as in 1916, the two producers having
negotiated and secured 25 year contracts, sold 51% of their production companies to
Paramount, and then turned around and bought a majority share in Paramount, with
Hodkinson forced to resign. The company then became known as Famous Players-Lasky,
the biggest film production and distribution company in the United States at the time.

Adolph Zukor became known as the ‘Napoleon of Motion Pictures’, but it wasn’t long
before the merged company also came under the scrutiny of the Federal Trade
Commission who launched an anti-trust case against it in 1921, the first of many.

They alleged that the company was ‘block booking’, that is forcing cinemas to enter into
lengthy 5 year contracts to take all films they distributed, using ‘predatory’ tactics to
force them either to accept the deal, or be denied movies.

The Federal anti-trust action dragged on for a number years, without resolution, and then
in 1928 the Federal Trade Commission brought a new action, proclaiming a Hollywood
Conspiracy involving ten leading studios who had established a monopoly through ‘block
booking’ on over 98% of all film distribution. In 1930 they were found guilty, but action
against them was not taken as by then the whole industry was heading into the depths of
the Great Depression.

It wasn’t until 1948 that the studios were forced to sell their cinema chains, and become
purely production companies. This occurred through a combination of rulings from the
Supreme Court to say they were in violation of anti-trust laws, and the rise in power of
independent producers who had joined together as the Society of Independent Motion
Picture Directors. Also one of the main studios, the Howard Hughes owned RKO studio
broke ranks with the others, and sold off its theatre interests.

The movie business has always been a tough business, but it has also been a business that
has emotionally touched the heart and soul of people the world over.

By far the greatest change in the industry was the crossover from the ‘silent movies’ to
‘talkies’, which destroyed the careers of many silent movie stars, whose voices did not
make the grade, while making others, with good voices became even more famous. For
the first time, a movie actor needed to have a good voice to become a star, and elocution
lessons became an important part of their training.

While the idea of sound had been around for a number of years, there were a number of
technical issues which had to be resolved, which led to a number of possible solutions.

On one hand there was the kinetophone, developed by Edison, which put the sound track
on a cylinder that would then run in tandem with the film. Trouble was it rarely ran in
synch with the movie, and had poor quality sound.

The MPPC took up the American rights to the Chronophone, invented by the Frenchman,
Leon Gaumont. The Chronophone linked the running of the film by cables to two
phonographs, which were played in the theatre. It also did not have very good sound
quality, but at least the sound could be heard in the theatre.

Following the war, there were many ‘radiomen’ who had gained experience in radio,
signaling, the use and application of electricity, and phone systems, and by this time all of
the big phone and electrical companies like General Electric, Bell, Westinghouse had
their own laboratories and others were employing sound and electrical engineers to work
on projects. There were also a number of colleges and universities which by this time
offered courses in Electrical Engineering.

Western Electric, a company set up by AT&T had secured the rights to de Forest’s
Audion tube. Between 1922 and 1924 they made great advances using the Audion tube,
as well as a number of other improvements involving microphones, electrical sound
recording, loud speakers, public address systems, projectors, film and sound
synchronization. The also developed such operational techniques as separating the
projector from the theatre audience by placing it behind a glass screen, so that the
audience couldn’t hear the noise of the projector. Another technique involved providing
the projectionist, who hand cranked the film, with a counter unit which displayed
numbers as the film rolled, which were matched with those of the disk playing the sound
track, and setting up a number of speakers in the theatre itself to spread the sound.

The engineering teams at Western Electric, which included engineers like Stanley
Watkins, George Groves, E.B Craft, J.P Maxwell and others worked hard to solve many
of these issues.
In 1924 they were ready to show the big studio producers, but most weren’t interested. It
wasn’t until 1925 that Sam Warner was shown a demonstration of the system, declaring it
to be “the greatest thing in the world”.

What attracted him to the system was the quality of the sound, and the chance he saw to
be able to take the sound of a full orchestra to cinema audiences across the country, by
using the sound recording alongside of the film.

Within a year, a new company, the ‘Vitaphone Company’ was set up by Warner Brothers
to develop the new ‘talking picture’ techniques. Western Electric would supply the
technical engineering and sound skills and Warner Brothers would supply the movie
production and distribution skills.

In August 1926, the world’s first commercial sound film, Don Juan, starring John
Barrymore, with the sound track featuring the New York Philharmonic Orchestra was
shown in New York, and this was followed by a smash hit in 1927, The Jazz Singer,
starring the singer Al Jolson, and in 1928, Lights of New York, which took the emphasis
away from the music onto the voices of the actors – a true talkie.

Western Electric quickly realized that the new talking films opened up a new market for
them, and Fox studios took up a licence from Western Electric to put sound into their
films in December 1926, and on January 1st 1927 Western Electric set up a new
company, ‘Electrical Research Products Incorporated (ERPI) to license the technology
they had developed in amplifiers, loud speakers, microphones, and the Vitaphone system,
improving the quality of sound at both the recording end and also in the cinema itself.

The system still ran the sound track separately to the film itself.

A different system had also been developed by Theodore Case, who was working on a
way of putting the sound track down directly on the film itself, rather than using a
separate optical sound track. He joined up with Fox Film Corporation, who began to
record vaudeville acts. By 1927 many of the best known vaudeville acts had been tied up
under contract with other studios, greatly restricting the number of acts they could film,
they then set about filming newsreels. Fox ‘Movietone’ newsreels became famous, and
played to audiences worldwide for next 40 years.

William Fox set up Fox Studios in 1915, but he was forced to leave the company under
the anti-trust actions in 1930, with the studio later merging with Twentieth Century to
form Twentieth Century Fox in 1935.

A different system was also developed by RCA and General Electric. This system was
called the ‘Photophone’ system, and it was also used for optical sound recording direct
onto the film itself.
With all the systems, it was necessary to convert cinemas to sound, involving the
installation of sound systems, and sound barriers to deaden the sound of the outside
world. With most cinemas tied to the big studios, it then became a question of numbers.

RCA’s system was therefore largely used by independent cinemas, which weren’t too
many, and it wasn’t until 1928 that the company entered the studio production business,
through the purchase of some small studios, including FBO Studios, a studio briefly
owned by Joseph Kennedy (father of US President John F. Kennedy), combining them
into RKO Pictures.

In spite of the difficulties involved with the arrangements between studios using one
system rather than another, by 1930 most cinemas had converted across to optical sound
tracks laid down directly on film, and the use of the Vitaphone system was beginning to
end.

The new optical sound systems allowed the projectionist to concentrate purely on the
running of the film itself, rather than trying to run and synchronize separate film and
sound tracks. Vitaphone sound tracks usually deteriorated fast as the steel needle slowly
cut deeper into the sound disks, and the projectionist always had the constant worry of the
film itself snapping in two as it was wound out, as well as the normal breaks as one film
reel was changed to the next. The breaks normally occurred during the height of the
action, with the projectionist under a great deal of pressure from the audience to fix the
problem, or change reels fast, before they broke out in a riot!

The changeover from silent movies to talkies happened over just a few short years, and
with the Depression in full swing it provided some happy relief to the gloom and doom of
everyday existence.

Many of the early silent movies were comedies, featuring stars like Charlie Chaplin, who
appeared in many movies, but is probably most famous for his ‘Little Tramp’ character.

Equally famous were Mickey Mouse, born in 1928 and the rest of the Disney characters
created by Walt Disney (1901-1966). When they made the transition into sound, their
voice characters became almost as famous as the characters themselves.

The film industry has always had its strong critics, and as much as Hollywood became
famous for its movies, in an era of prohibition it also became famous for breaking rules
of decorum, and this has continued to this day. From the very first time that it showed the
‘bare flesh’ of a woman’s ankle in 1895, in the film Serpendine Dance produced by the
Edison Company, the story of Hollywood has been a story to capture the headlines and
attention of the world, both through its films and through the actions of the stars it
created.

It would be impossible in this book to talk about every famous producer, actor or director
in Hollywood, all with individual stories and inputs into the creation of the Movie
Industry.
Some of the early famous star names include the Marx Brothers, Laurel and Hardy, W.C.
Fields, Greta Garbo, Tyrone Powell, Edward G. Robinson, Marlene Dietrich, Bette
Davis, Bing Crosby, Clark Gable, Spencer Tracy, Judy Garland, Rock Hudson, Marilyn
Monroe, John Wayne, an endless list of individuals, each with their own special talent
and charisma.

What Hollywood did was establish a ‘new age royalty’- ‘stars’ that people the world over
could fall in love with, laugh with, hate, admire, respect, and know through film and
gossip columns throughout the world.

Hollywood also brought the reality of war, poverty, depression, romance, history, crime,
science, science fiction and millions of other stories to life. From epics to classics; Disney
and Warner Brothers cartoons, to the sinking of the Titanic; Alfred Hitchcock horror
films to shootem’ down cowboy westerns; Tarzan jungle stories and Chicago gangster car
chases - Hollywood has created its own history, and it continues to do so.

Technology and the companies involved in developing movies have never stood still.

The Gramophone gave rise to the recording industry, and while movie stars sometimes
became singing stars and singing stars sometimes also became movie stars, both
industries grew in their separate ways.

Recording artists became famous in their own right, with their music available over the
radio, or on record – initially as 78’s played on wind up gramophones, then on record
players powered by electricity. The 78’s format was then replaced in the 1950’s by 33
1/3rds long play (LP) album records and small 45’s singles produced on vinyl. In the
1980’s vinyl records were supplemented with cartridges and cassettes, a compact version
of the reel-to- reel tape recorders that were born in the 1950’s, and in the 1980’s optical
disks or CD’s were born, virtually replacing vinyl records overnight and to a large extent
cassette tapes.

Where radios had earlier developed as home entertainment units in a compact form to sit
on top of the kitchen bench or sideboard, they also evolved into furniture, beautifully
crafted in wooden cabinets to sit in pride of place in the home lounge rooms of the world.

In the 1950’s the radio also became mobile, having already been installed in the more
expensive cars for some years. It was now possible to use battery power and
transistorized parts to make the radio in a form that could be carried anywhere, and
eliminate the valves that had started the whole development of the industry. The
transistor radio, in its molded plastic or metal outer case, and sometimes even further
protected against damage by a smart outer leather case, complete with a strap to carry it
like a handbag, took radio to parties on the beach and wherever there were people. A
simple volume control connected to the on-off switch and a dial that would spin or slide a
pointer needle to the names of stations, not just a frequency, printed on a see through
plastic cover made it easy to find the ‘Dr Paul’ radio serial, Elvis Presley, the Top Forty,
the football, news, races or country & western music. It was all available from different
radio stations, which all fought hard to grab and hold an audience.

While there were serious stations that played classical music, and presented the latest
news and political information, there were also emerging new stations focused on
teenagers. For the first time teenagers were recognized as an important group of people,
who were not yet fully adults, but were certainly no longer children. They no longer
followed exactly in their parent’s footsteps. They danced new dances, and they played
different music.

As much as electricity had changed the world through lighting and power, and movies,
radios and gramophones had emerged to entertain the world, electricity had also given
power to musicians.

Where in the 19th century, the most popular instruments to play were the piano and violin,
to play classical and popular music, it was in the early 1920’s that the brass instruments –
the trumpet, trombone, and saxophone suddenly came to the fore, as Jazz emerged as the
music of a new generation.

The invention of microphones and the need to record better sound led to the creation of
music studios. In turn musicians were looking for more powerful sound amplification and
speakers to play their music to audiences, both live and in recorded form.

In the 19th century, steel strings, had become an option to strings made from gut, and
given the guitar a stronger sound, but even greater sound and power was needed for the
new public dance music of the 1920’s and 30’s.

While some inventors looked at replacing wooden bodies on their guitars with metal,
others looked at making bigger bodies, and there was also a move to make a solid body
and couple it with electricity.

In 1932, George Beauchamp, who worked for Adolph Rickenbacker, filed a US Patent
Application for a guitar made from cast aluminium using an electromagnetic piThe patent
was given in 1937, and the Rickenbacker Electro guitar, or ‘frying pan’ went into
production. Others, including a guitar developed by Leo Fender, the ‘Fender Guitar’,
patented in 1948, followed this guitar.

By the 1950’s electric guitars had become the most popular musical instrument, and ‘big
bands’ had become small bands, with two or three guitarists, a drummer and a singer. The
new electric guitars and better amplifiers and speakers, meant that they no longer needed
big numbers of people in the band to create a big sound.

A whole new ‘Rock ’n Roll’ age was about to emerge, with names like Buddy Holly,
Chuck Berry and ‘the King of Rock ’n Roll’, Elvis Presley becoming as famous, if not
more famous than many movie stars.
The music of black Americans, long on the fringe of the main stream due to the racial
prejudices that existed, also began to emerge from the shadows to become mainstream
artists. On radio, no one knew whether the artist was black or white, all they related to
was the music, with groups like the Four Tops, Supremes and others creating some of the
best music ever made.

On the other side of the Atlantic, Britain too, became a centre for Rock’n Roll, and
through the power of radio in the 1950’s and ‘60’s, the music industry emerged as one of
the first truly international businesses, with the music of Cliff Richard, Jerry and the
Pacemakers, Rolling Stones, Beatles and other individuals and groups becoming famous
around the world.

The music of the world became ‘English’, and although groups and individual singers
sang in Spanish, French, German and their own language, wherever they were, it was
English that became and still is the international language of mainstream commercial
music.

The greatest challenge to cinema and radio however was about to emerge, where sight
and sound came together not in a cinema, but inside the homes of ordinary people.

CHAPTER 22

The Age of Television

Teleacoustics, electric telescopes, telectroscopes – these were just a few of the names
given in the late 1870’s to devices which sought to duplicate with pictures, what had been
achieved with sound and voice – a telephone device that could in some way send
pictures.

From the light bulb that signified the beginning of the electrical age and the radio valve
that heralded the start of radio, it was yet another glass tube which started the beginnings
of television.

There are a number of inventors who were involved in some way with the development
of television, and the developments happened not just in one country, but also in several.

There were also two levels of television development – the first being of what is called
‘mechanical television’ and the other ‘electronic television’, which took television into a
true medium, in the same way Radio was.
In the ‘mechanical’ stage, Paul Nipkow in 1884 invented what became known as the
Nipkow disc. Rather than capturing a single image, as one, like a photograph, a spiral of
lenses captured the whole image as a series of lines. Each rotation of the disk would then
capture one whole image. In 1928 Nipkow was able to send a picture image by wired
transmission, and in 1930 he also demonstrated the system without using wires at a Radio
and Television Exhibition in Berlin. A number of other inventors used Nipkow’s disk as
the basis of developing their versions of television.

In 1897 Karl Braun invented the cathode-ray tube in Germany.

It was in 1906 that Boris Rosing in Russia managed to combine a cathode-ray tube with a
Nipkow disc. The following year, he and also A.A Campbell-Swindon in separate
experiments developed an electronic scanning device for reproducing images. Both
Rosing’s and Campbell-Swindon’s ‘Distance Electric Vision’ concept involved electronic
television approaches, rather than mechanical, but used valves, as used in radios of the
day.

Another inventor, Vladimir Zworykin (1889-1982), is also one of the key founders of
television, having emigrated from Russia to the United States in 1919, and studied under
Rosing in Russia and Paul Langevin in Paris.

In 1923 he patented an electronic camera tube, which he called a ‘iconoscope’, which


was able to scan images to produce a picture, and a year later another device, ‘the
kinescope’, which was able to reproduce these images on a picture tube. At the time he
was working for Westinghouse, but they were not interested in the ideas he had
developed. He then moved to RCA, and in 1929 he took out a patent on colour television,
demonstrating the electronic system in Pittsburg that year.

When he initially presented the system to the head of RCA, David Sarnoff, he was asked
how much it would cost to develop the system to a commercial level, and he replied it
would cost $100,000. The reality according to David Sarnoff, speaking with the New
York Times was that “RCA spent $50 million before we ever got a penny back from
TV.”

It wasn’t until 1939 that TV was presented to the public by RCA at the New York World
Fair of that year, with the first programs in the USA broadcast in 1941. The war largely
interrupted its progress, and although limited broadcasts were made, it wasn’t until the
early 1950’s that television began to come of age, with mass production of sets, and TV
stations being set up to broadcast movies, and present live broadcasts of the news and
other events. As the number of TV sets and TV Stations boomed, programs began to be
developed especially for television.

Zworykin retired from RCA in 1954, the same year that RCA’s first colour televisions
were produced.
At the same time that Zworykin was working on his research in the 1920’s and ‘30’s,
others including the American, Philo Farnsworth, and the Germans, Fritz Schröter,
Werner Flechsig and Manfred von Ardenne were also developing scanners and picture
tubes. There were also others.

Ever since the development of the telegraph, scientists, engineers and inventors had
conceived the idea of sending pictures and not just sound across a wire. The development
of radio, which did not need wires, also inspired the idea that one day it would be
possible to send pictures this way too.

In Britain, John Logie Baird (1888-1946) had even as a teenager in Scotland built his
own telephone exchange and network to four of his friends nearby in Helensburgh, just
outside of Glasgow. Unfortunately, the exchange was short lived, because a low-slung
wire caused a hansom cab to have an accident in the street. He then retrieved the wiring
and attached it to a generator to create home lighting for his parent’s home.

After leaving school, he studied electrical engineering at Glasgow’s Royal Technical


College, going on to start a University degree, but leaving when the First World War
began.

It was in 1926 that he first demonstrated his television invention, projecting the image of
a shop window dummy and then an office boy onto a screen. This was followed by public
demonstrations in a Shop window, and then pictures were sent via wire from London to
Glasgow, and in 1927 to New York, and even a ship at sea. The images were fairly crude
however, with just 30 lines per picture, although he was able to send images in colour,
and sound in stereo.

He set up his own company, the Baird Television Development Company Ltd in 1927. In
1929 the German Post Office allowed him to set up an experimental television service,
and in 1930 he demonstrated a big screen TV in London, then in Berlin, Paris and
Stockholm.

The British Broadcasting Company also initially used Baird’s system, first broadcasting
over their existing radio transmitters in 1932. In 1936 however, Baird’s mechanical
system, which by this time had succeeded in transmitting 204 lines per picture, was
replaced by a 405 line electronic system developed by Marconi-EMI.

In school textbooks John Baird is largely credited as the inventor of television, and there
is no doubt that he made a significant contribution to its development. There were
however many others who can rightly claim to have had an input into its development.

By 1936 there were 2000 television sets in homes around the world, and transmissions
had started in the USA, Britain, France, Germany and a number of other countries. By
1948 there were at least a million sets in American homes alone, and the first
transmissions in colour began in the USA in 1951. Portable TV’s were then launched in
1956, and in 1969 more than 600 million people watched their TV to see Neil Armstrong
walk on the moon, with pictures being relayed from the moon, to Houston, and then
around the globe. Today there are more than a billion televisions in homes around the
world, a remarkable achievement in such a short time.

Television has also enabled advertisers to take their products and services direct into
homes, and created a whole advertising and television industry.

Where in the early 1950’s, the movie industry felt that the introduction of television was
likely to cause the death of the cinema, it has in fact created a whole new channel of
distribution for their product.

The movie studios had always competed with each other on the basis of the actors,
directors and producers they contracted and the popularity of the movies they created. All
of the big studios had their ‘movie smash hits’, but they also had their share of ‘flops’,
which each cost fortunes, rather than created them.

On another level they also competed through technical quality, both in production and
also when shown in theatres.

A French professor, Henri Chretien had in the 1928 created a new type of lens, which he
called the ‘Hypergonar’, which created a wide screen image. At the time it was only
possible to create a wide screen image by using three cameras and linking the images
together. Although a few studios toyed with the lens idea, and even taking up options for
its use, it wasn’t until 1953 that ‘Cinemascope’ movies were introduced by Fox using the
Chretien lens, which they had developed and refined with the help of Bausch and Lomb,
a company first set up by John Bausch and Henry Lomb in 1853 in Rochester, New York
first to import and then manufacture lenses for eye glasses, binoculars, microscopes and
other applications.

The first major movie Cinemascope release by Fox was the Robe, which took over $30
million at the box office in its first six months and Fox declared that all of its future
movies would involve the use of Cinemascope. This movie was quickly followed by
others, including Gentlemen prefer Blonds and Diamonds are a Girl’s Best Friend, and
Fox then set about licensing the system to other studios.

Initially the other studios resisted, looking to find alternatives, but within a year MGM,
Paramount and Warner Brothers had taken up licences, and Cinemascope became the
standard for the industry, creating the ‘big screen’ as a real difference to ‘small screen’
television, which was just emerging as a threat to the movie world.

While Cinemascope was originally the lens system for shooting movies, it became more
recognized as the style of presentation in cinemas. In the 1960’s another, ‘Panavision’, a
system developed by Robert Gottschalk and MGM, replaced the lens system.
While the ‘Big Screen’ cinemas with films in colour were able to compete with black and
white, small screen TV, many thousands of cinemas did close in the 1960’s as Television
took movies, sitcoms, news and current affairs into homes around the world.

It took many years for the Movie cinemas to recover, and when they did start to be rebuilt
in the 1980’s, they were as smaller multi-cinema complexes, where patrons had a choice
of the latest releases.

The moviemakers have also helped cinemas by releasing movies first through cinemas,
before allowing them to be released through video stores, or shown on TV.

Hollywood still holds a strong grip on the movie world, with all of the big name actors
primarily focused on Hollywood. There is also still a distinction between big screen
actors and those seen on the small screen.

Production of movies has however moved to locations all over the world, in search of
cheaper production costs. While television stations purchase movies and buy the rights to
Television shows produced out of Hollywood, they also buy shows produced in their
local markets, and in most cases produce their own in-house programming.

The original radio shows – the dramas, quizzes, comedies, serials have however faded
into history, with television shows taking over from them. Some of these serials lasted for
many years, even decades, and radio has now evolved into a mixture of music and talk
back shows, where the audience may be out in the suburbs at home, at work or on their
way to or from home. The phone line has in turn enabled the radio program to be
interactive with its audience, and TV and radio, rather than directly competing against
each other, have become complementary.

CHAPTER 23

A Healthy Life

The magic of television and movies has revealed the world as never before.

Cameras have enabled us to see what it looks like on the Moon, in the Amazon, under
water, in a racecar, out in the desert and inside a person’s body during an operation.
Cameras have even been made so small that they can be swallowed like a pill, and the
images seen and recorded on a doctor’s screen. Movies have brought to reality the life of
the Samurai warrior, the Gladiator in Rome, the Age of Dinosaurs, lives of Kings and
Queens, of extraordinary and ordinary people from the past, the present and the future.

Television has taken us to almost every place on earth – to cities, countries, mountains,
forests, lakes, islands and oceans the world over, for news, interviews with people, to see
and learn about every facet of existence in the places we are shown.
It has also taken us into wars on the ground and in the air, and we have been witness to
buildings being destroyed and people killed, as well as acts of heroism and amazing feats
of courage.

Life has never been a static force, and just as we think we have seen everything,
something new emerges that is able to amaze us with its brilliance.

Most people have no idea how or why a car, television or computer works, they simply
accept that it does, and switch it on. It is very easy to accept things simply as they are,
even life itself, and while things have changed around us, we ourselves have changed too.

By far the greatest change has been in life expectancy. In the early 1900’s, in Europe and
the United States, the average life expectancy was around 35 years, by the end of 1900’s
it had reached around 50 years of age, and it is now between 70 and 80 years of age, with
small variations from one country to another. In some of the heavily industrialized cities
it was as low as 17 years.

Sadly, this contrasts greatly with countries that have been devastated by Aids, where the
life expectancy has plummeted to a life expectancy figure of between 30 and 40.

Our height has also increased with better and more consistent nutrition throughout our
lives. If you visit one of the thatched roof cottages in England, you will, in most cases
need to bend constantly to walk through the house, bending to fit through doors,
squeezing to get up stairs, and if the bed was built in the 19th century, it is unlikely that
you will fit into it! As we have grown taller, we have also broadened out, so our bone
structure is now, on average much larger than our forebears, and we will undoubtedly
carry more weight – not just in fat, but also muscle. We will most likely have a better set
of teeth than our forebears too, and our shoes and clothing will have changed in material,
style and comfort.

It is interesting to look at the 1851 British Census, and compare the occupations of
working people then and now.

In 1851 there were


501,565 people employed in dyeing, printing or making cotton and calico
274,000 boot and shoe makers (cobblers)
268,000 hat and dress makers (hatters, milliners, seamstresses, dressmakers)
219,000 coal miners
146,091 washerwomen, manglers and laundry keepers
101,000 errant boys, porters and messengers
86,000 grocers
81,000 gardeners
48,000 engine and machine makers
34,306 railway labourers
30,500 pedlars
29,000 horsekeepers, grooms and jockeys
25,500 nurses
22,000 straw hat and bonnet makers
18,587 Anglican clergymen
18,348 policemen
15,163 surgeons and apothecaries
13,700 stay makers (making corsets)
12,000 hair dressers and wig makers

In the early 19th century, work available included such jobs as a Beetler (to beet and
emboss clothe); a Caulker (to caulk the holes in ships); a Colporteur (a traveling book
seller); a Cowper (a maker of cups); a Drysalter (a dealer in Pickles, dried and tinned
meats and sauces); a Dyker (to build dry stone walls); a Flesher (butcher); a Kish maker
(making willow baskets); Orraman (odd job man on farm); Pirn-winder (threading yarn
onto a weaving machine); Sawbones (a surgeon); Todman (a farm worker employed to
kill foxes); or a Walkster (to clean and thicken clothe by wetting and walking on it), and
there were many other jobs with similar work.

It was also possible to be a Scavenger or Scaffie, brushing and cleaning the streets, or a
Pauper, in which case you probably lived in it!

Prior to the Industrial Revolution, the population in Britain divided into the landed
gentry, who owned the estates, farms and property, and those serfs who worked on the
estates, raising and tending animals, growing wheat, corn or vegetables, or looking after
horses and protecting deer from poachers. There were also townspeople, and those people
like tinkers who sold pots and pans, traveling the countryside to sell their wares.

With the industrial revolution, many of the farm workers moved into towns that in turn
became cities, and people’s lifestyle changed accordingly. The landed gentry and
aristocracy with so called ‘old money’ inherited and past down along with noble titles,
now competed with ‘new money’ industrialists, ship owners and business people- a new
mercantile class. In turn, farm workers became factory workers.

The change in job meant a move into a town, and a change in home too. No longer did
workers live on a farm, and rent from the landlord owner of the estate. Those who moved
off farms were now housed in factory owned tenements, with one or two rooms for
themselves and their family to sleep and eat in.

The ‘laissez faire’ system allowed factory owners freedom to build their factories as and
how they felt fit, and to employ their workers on terms that suited them. Initially there
were no government regulations, and early industrial towns in Britain, Europe and the
United States were often blanketed in thick black smoke and Soot from fires. In the cold,
the combination of mist, fog and smoke created a lethal combination, and such diseases
as Tuberculosis and other respiratory diseases killed many people at an early age.

The traditional means of obtaining water was to draw it from a well in the village, or
from a river or stream. As cities developed, this practice continued, even in cities as large
as London, but rather than being able to dispose of waste water, food waste and the
contents of the chamber pot, by spreading it in the countryside, waste was often just
thrown in the street, or carried along an open trench. Horses were not the only ones to use
the street as their dumping ground.

In London, as in many of the large European and American cities, outbreaks of typhoid
and cholera occurred regularly in the early 19th century, and even the later part. Cholera
was initially put down to breathing bad smelling air, so called Miasma, with Cholera
victims dying through chronic diarrhea and massive dehydration. There were regular
outbreaks of cholera in cities like London, Chicago, San Francisco and other cities
around the world.

To ward off Cholera, people would search for the source of the miasma or bad smells,
and try and hide it by using camphor oil, and other sweet smelling herbs to hide it away.

A London Physician, Dr. John Snow (1813-1858) believed that it was due to
contaminated water, and he set out to do a large-scale experiment to prove the correctness
of his beliefs, by mapping where Cholera deaths occurred in London in an 1854 outbreak
of Cholera, relative to their supply of water. At the time he found that the deaths occurred
where people used the water from the Southwark and Vauxhall Water Company, which
drew its water from the lower Thames, just downstream from a sewer outlet, and not
from water supplied by the Lambeth Water Company, which drew its water from the
upper Thames. Hundreds of deaths had occurred in the meantime, but the experiment was
successful in identifying the cause, and there were no such things as class actions against
the water company!

In another demonstration of his theory, he took the pump handle off a London city well,
when he felt that this was the cause of the Cholera outbreak, halting the epidemic in the
area near the well which had already killed 500 people. As late as 1865 a cholera
outbreak in Britain killed more than 14,000 people. Other diseases like Smallpox and
Typhoid were also common.

The result was that water supply and separate waste disposal became a feature of city
planning and government health departments.

Smallpox epidemics too also were widespread.

Although Dr Edward Jenner (1749-1823) had developed the idea of a vaccine around
1798, based on inoculating people with ‘cowpox’, a mild disease which from his research
and observations had protected dairymaids from smallpox, smallpox epidemics occurred
in England as late as 1870 in London. An epidemic at that time in England killed over
42,000 people, with possibly as many as 200,000 people being infected.

Free infant Smallpox vaccination had come into effect in England in 1840, and after 1871
new acts made it compulsory, with even fines and imprisonment for not agreeing to it.
Successive acts in 1898 and 1907 however allowed people to object to being vaccinated
if they wished.

While electricity has always been recognized as one of the greatest inventions ever,
plumbing has also been an essential part of homes and civilization.

Water has always been used for drinking, washing, cleaning and cooking. It has also been
used to irrigate crops throughout the world, and without it we would all die.

From the terrace hillsides in the Philippines and South America, to the canals of Venice
and Bangkok, water has been used in intricate engineering feats, to flow along Roman
aquaducts, and through bamboo, wooden and later steel and copper pipes.

It has been used to bring water to homes and also to take it away.

While there are very early examples of plumbing in Greek, Roman and Arabian Empire
times, with plumbing in ancient cities like Pompeii in Italy, and even places like the
island of Lamu in Kenya, today’s modern plumbing, and particularly the water closet or
toilet can be traced back to Queen Victoria, and the year 1596.

The Queen’s godson, Sir John Harrington, created a water closet for her in that year. This
was strictly for Royal use, and it was not until 1775 that Alexander Cummings created
history by inventing the S Trap bend. This was followed two years later by Samuel
Prosser’s invention of a water cistern to hold and then release water, and then various
other inventions followed in the 19th century all designed to in various ways hold, stop, or
make a flow of water into the bowl, and out through the S Bend.

A number of pottery companies also became involved including such prestigious names
as Wedgwood and Doulton and Twyford in the 1800’s.

Perhaps the most famous name associated with the development of the water closet was
Thomas Crapper (1836-1910), a plumber in London who patented a number of plumbing
inventions involving such things as manhole covers, pipe joints, drains and of course
water closets. He also owned three plumbing shops, and at one stage was the Royal
Sanitary Engineer to the Palace.

In spite of all these advances in plumbing inventions, internal plumbing for water and
later sewerage did not happen in many cities around the world until the later part of the
twentieth century.

Until that time, outside toilets, variously described as outhouses, privies, bams, loos,
dunnies or in less decorative terms, were a common feature of many backyards, with the
night porter, seweragecart or sanitaryman retrieving pots and their contents, to place in
their wagon or truck for disposal. There was a heavy use of Phenyle to kill the smell.
Many of these outhouses were simply constructed over pits, with sawdust or ashes
thrown in to help absorb or disperse the contents.

Even when the sewerage was connected to some of these homes, the toilet remained an
outside convenience. The single separate toilet has also in many homes become a feature
in bathrooms and ensuites, and homes often now have a number of toilets set up for the
convenience of those who live there.

The other great change in the 1800’s that occurred was the scientific discovery that
infectious diseases were caused by living, parasitic organisms.

The Royal Doulton Company, founded by John Doulton in 1815, which is best known for
its tableware, also made ceramic water filters, one of the first being for Queen Victoria,
who was so pleased with it, that she bestowed on his company the right to use the Royal
Warrant. King Edward knighted later John Doulton’s son, Henry, for his efforts in water
filter work in 1901.

Water filters however were a luxury item, and were never seen in most households.

Many illnesses and diseases had remained a mystery, with many theories to explain them,
and it wasn’t until an understanding of hygiene and the importance of cleanliness that
some of these illnesses came under control.

Many medical scientists also studied disease.

These included the German Scientist, Robert Koch (1843-1910), who studied Cholera,
Anthrax in cattle, discovering the anthrax bacillus, as well as immunology work with
Diphtheria, Malaria, Backwater fever, East Coast Fever in cattle and other work for
which he received a Nobel Prize for Physiology and Medicine in 1905.

There was also the work of Louis Pasteur, documented in an earlier chapter who
pioneered the Pasteurization of milk, and Dr Paul Ehrich (1854-1915) whose work in
immunology, serums, chemotherapy and other areas led to him being awarded a Nobel
Prize in Physiology and Medicine in 1908.

Another Medical Scientist was Sir Alexander Fleming (1881-1955) whose work in
bacteriology, immunology and chemotherapy led him to discover Penicillin in 1928,
which became known as a miracle drug in the Second World War, when it became
widely used, after work by the Australian Pathologist, Sir Howard Florey and Ernst
Chain, a German- English biochemist. American work by Rene Dubos and Selman
Waksman in antibiotics also followed.

While there are many doctors whose pioneering work in Medicine led to breakthroughs
in overcoming diseases, there was also work by Hospitals, Nurses and Health Authorities
to overcome nutrition and general health problems.
Writers like Charles Dickens brought to life the social problems that existed at the time,
through books like Oliver Twist. In America, Harriet Beecher Stowe, who wrote Uncle
Tom’s Cabin, published in 1852 highlighted the plight of slaves in the South.

Governments and Parliamentarians as a result of these books and the growing social
awareness of the plight of working people had to take notice of the problems associated
with poverty and poor working conditions.

Then, as now, it was a matter of capturing the imagination of the public to highlight a
problem, and seek remedies to fix them.

Around 1854 at the height of the Crimean War (1853-1856), British troops, along with
soldiers from France, Turkey and Piedmont were fighting against Russia in Turkey.
Many British soldiers were injured, and the British Public’s imagination was captured by
descriptions of an English nurse tending to the wounded, and walking through the wards
at night carrying a small lamp. This ‘lady with the lamp’, the nurse Florence Nightingale
(1820-1910) became overnight a national hero.

Following her return from the Crimea, she established a school for nursing, and was
involved in setting the standards for both nursing care, and military and general hospitals
set ups within England and also in places as far distant as Sydney in Australia, and India.

In 1860 she wrote a book outlining the principles of good nursing, and she spent her life
lecturing and advising people on the need for cleanliness and good hygiene, building the
esteem and respect for nurses and nursing. Her words and actions were often very direct,
with her berating authorities for ‘calculation rather than action’ when it came to
improving the sanitary conditions in which people lived, and instructing mothers on the
need for children “to grow up healthy, with clean minds, clean bodies and clean skin”.

Another campaigner was Sir Joseph Lister, an English surgeon who lectured hard on the
need kill airborne germs in the operating rooms of hospitals, what he called ‘the invisible
assassins’. With no gloves, often covered with blood and using instruments that were not
sterile, the chances of a patient walking way from an operation alive were very slim.

An American, Robert Wood Johnson, heard Lister speak in 1876, and ten years later he
set up a company to make surgical dressings, publishing a book, Modern Methods of
Antiseptic Treatment in 1888. Robert was joined in the business by his brothers Edward
Mead Johnson and James W. Johnson and went on to become Johnson & Johnson,
making surgical dressings for hospitals and homes around the world, with their famous
Band-Aid ® launched in the 1920’s.

In the 1800’s there was a large chance that a child would die before its fifth birthday.
With no birth control to control the number of children being born, poor nutrition, lack of
food or an irregular supply of it, plus the problem of disease being spread rapidly in
crowded conditions, there was every chance that a child would not survive.
In winter, the cold and damp air could kill through the onset of pneumonia or
consumption, later called tuberculosis, and in summer the heat could sour fresh milk and
its bacteria kill too. Bad food or contaminated water spread germs and bacteria fast.
Large families might commonly have up to 12 children, with the older tending the young,
but most families also had a number of children who had died at birth, or in their early
years. Infant mortality, even in 1900 was around 20% of all babies born, whereas in
Western countries now, it is around 8 per thousand children born – a massive decrease.
The drop in child deaths is one of the main factors for the increase in life expectancy
figures.

During the 19th century there were also, as there are now, many wars being fought around
the world. In every war, people die, and in most cases these are young men in their late
teens and early twenties who are in the front line of the fighting.

In 1859 Franco-Sardinian troops fought against Austrian soldiers in Solferino in Italy, at


the start of the process to unify Italy into one country.

A Swiss businessman from Geneva by the name of Henry Durant (1828-1910), seeking
an audience with Napoleon III, had come to Solferino in 1859 to meet with him. At the
time Napoleon III was leading the French Troops.

The day Durant arrived he witnessed thousands of injured soldiers lying unattended after
a battle, and over the next few weeks he spent his time tending the wounded in and near
the Chiesa Maggliore Church in the village of Castiglione.

The image of the dead and dying stayed with him, and in 1862 he published a book called
A Memory of Solferino in which he proposed the idea of setting up a relief organization to
help tend the wounded in wartime. He also asked if it would be possible to formulate
some sort of international principle between all governments in relation to the treatment
of prisoners and the wounded. This led to the formation of the Red Cross (and later Red
Crescent) organization in 1863, and the establishment of the Geneva Conventions on the
conduct of war and treatment of war prisoners. Within a year of its establishment, war
had broken out between Prussia and Denmark, and wars have continues ever since.

Durant himself became famous through his book, but his business failed, and he was
forced to declare bankruptcy in 1867. The scandal that followed resulted in him being
forced to resign from the Red Cross organization, and leave Switzerland for France,
where at one stage he ended up sleeping on park benches.

By 1870 he was back helping the wounded, and he introduced the idea of all soldiers
wearing badges that could identify them if they were wounded or died. He was also
involved in setting up an international conference in London in 1875 to work on the
abolition of slavery around the world, but for the next number of years he lived in
poverty, until his story was brought to the public’s knowledge in 1887, and his great
deeds were celebrated. In 1901 Henry Durant received the Nobel Peace Prize for his
work.
While organizations such as the Red Cross focused on the wounded, dying and
imprisoned victims of war, other organizations were set up to help tend the poor and the
destitute. Many of these were affiliated with the established churches, or had broken
away form them. This included the Salvation Army and Quakers.

The Salvation Army began in London in 1864 as a Christian Mission, set up by Catherine
Booth (1829-1890) and her husband William (1856-1896), a Methodist Minister to fight
for the rights of the poor and underprivileged. The Salvation Army modeled itself on a
military army, with a Commander, Generals and enlisted supporters, who gained ranks
according to their experience and commitment to the cause.

It incurred the wrath of the established churches, with William Booth being described as
the ‘anti-Christ’, and his wife being imprisoned at different times for preaching outdoors
and not in a church building. The Army was also condemned for allowing women to
perform the duties of men, but as William Booth stated “some of the best men in my
army are the women”, and the Army went on to feed and help millions of people in times
of need.

Quakers, also called ‘the Society of Friends’, had been founded by George Fox (1624-
1691), as a group of silent worshipers, whose strict moral codes governed their lives. In
the 1800’s they were at the forefront of Temperance movements, and campaigned
strongly for the abolition of slavery and prison reform.

In the late 19th century as conditions in factories began to improve, and people began to
understand the virtue and value of cleanliness, housing also began to change, in line with
better sanitation, water supply and the arrival of gas and then electricity to provide street
lighting and eventually home lighting.

Throughout Europe the staple diet of all people was based around the purchase and
consumption of vegetables like potatoes, bread and cheese. Where people could afford to
they bought meat, fish and vegetables, boiling their gruel to eat as a soup. In Scotland, the
Scots ate Porridge, made from rolled or crushed oats, in France they made patés and in
Germany they had developed smokehouses to smoke meats so that they could keep them
for long periods of time. Smoked fish as well as dried and salted fish were also eaten.

With no refrigeration, food, and particularly meat did not keep for long unless it was
heavily salted, pickled or smoked. This led to the addition of flavouring agents to mask
the taste of meat that had deteriorated or gone bad. The English became famous for their
sauces and prepared and dry mustards, made famous in England by Jeremiah Colman’s,
Colman Mustard, first sold in 1814. Worster or Worstershire Sauce, Horse Radish, and
HP sauce along with relishes, pickled onions and pickles all date from this period.

To keep the relish from spoiling, they would be stored in earthenware bottles made for
the purpose, with cork or candle wax stoppers.
Coopers also made barrels to transport such products as pickled codfish and herrings, for
export overseas, many of these empty barrels ending up being used the first oil barrels in
the start up of the early Oil strikes in the United States.

Armies and Navies had long recognized the importance of being able to get food to
soldiers in the field, with Napoleon famously quoted as saying “an army fights on its
stomach”. Bad food in the field could well mean defeat in battle, and while it might be
possible to plunder food along the way, it was also possible that the food supply might be
destroyed as it was in Napoleon’s Great Russian campaign.

In 1795, a French chef and confectioner won a prize of 12,000 francs from Napoleon for
developing a process for canning vegetables and meat, using fragile glass jars and sealing
their ends with pitch tar. By 1804 he had opened a canning line, but his secret had already
leaked across the Channel to England.

In 1810, an Englishman, Peter Durance patented the use of a metal food can for the
British Army. Up until this time, metal cans had been used for products like snuff, with
the metal thought to be poisonous.

Early pewter used to make plates and even forks and spoons often had a high lead content
in it, which caused lead poisoning, eventually leading to madness.

Using Durance’s invention, canned Bully beef became a feature of army life, with the
steel can coated with tin to stop it from rusting, and with the ends soldered to close them.
Opening the can however meant using a hammer and chisel, until can openers and roll
top key openers were invented in 1875.

The metal can revolutionized the food business, with cans initially being soldered with a
hole in one end to put in food, and then a patch soldered over this to seal it, with the
product then being cooked in the can. A dozen cans might well take a number of hours to
produce. It wasn’t until 1888 that a can with seams on both ends was invented, as well as
cans with removable lids. In the meantime, everything from meat and fish, to biscuits
and fruits, even tooth powder and tea were canned. While some cans were very basic,
other were elaborately embossed and decorated, with labels of their makers and
proclamations of their genuine quality, place of manufacture, and pride in their country of
origin printed on their sides. There were even different shapes tins, some even with
hinges, or made for special toiletry items, or such things as string balls, where the can had
a secret enclosed base to hold sand for weight, and a top with a hole to pull the string
through, and a razor to cut it to length. String became an important means of tying parcels
of products together, and everyone from butchers to drapers used it to help tie wrapped
parcels together.

Canning became an industry around the world by the second half of the 1800’s, with
canners like the California Fruit Packing Corporation setting up canning lines in 1875
(today’s Del Monte); Campbell Soups, formed in Camden, New Jersey by Joseph
Campbell and Abraham Anderson in 1869 to can tomatoes (so called love apples),
vegetables, and minced beef, and later tomato soup, which was launched in 1895.

Companies like Heinz reflected the changes that were taking place. Henry John Heinz
(1844-1919) set up the Heinz Company in Pittsburgh in 1869. His first product was
Horseradish, which he packed in clear glass bottles, at a time when competitors were
hiding the contents in solid jars. He grew his own horseradish and then moved on to
make pickles, sauerkraut and vinegar, selling his products in the United States, before
sailing to London in 1886 and presenting his products to Fortnum and Mason, London’s
most prestigious Food Purveyor where seven products were accepted for sale. By 1905 a
factory was established in Peckham in London, and the company became famous around
the world for its canned baked beans, soups and other products.

Canning meant that products could also be transported and stored, and they became one
of the first items on sale in corner stores, both in Britain and in countries around the
world. Not only did they protect the contents, but unknowingly, through the cooking
process, they also destroyed the bacteria, although this was not known at the time.

Sealed cans for products like flour and biscuits also stopped vermin like rats and mice, as
well as weevils spoiling the contents, or contact with air or moisture making the products
go stale or rancid. This was particularly important on long sea journeys, and in War,
when supply rations might take a long time to reach soldiers fighting on the front line.
Soldiers during World War I often had no choice other than to eat canned food, and the
Canned Food Industry grew rapidly as a result, as the soldiers brought back the idea of
eating food from cans, based on their wartime experience. Even cheese was packed in
tins for the soldiers, cheese made by J.L Kraft & Brothers.

Paper bags were first developed in 1844 in Bristol, England, with Francis Wolle in the
USA inventing a machine to make them in 1852. By the 1870’s, glued paper bags and
even gusseted paper bags were being used. Boxes too had been invented using cardboard,
as early as 1817, the first cardboard originally being invented in China in the 1600’s.

Solid cardboard boxes for carrying ribbons, silks, embroidery and items such as hats and
shoes became available in fashionable stores. Corrugated cartons also made their
appearance after about 1850, and came into wide spread use by the turn of the century,
when they were first introduced for packing cereals – with boxes often being described as
‘cereal boxes’ because of its use in this area.

One main company made the ‘cereal box’ famous, and that was Kellogg’s.

In the United States, as in Britain in the 19th century, outbreaks of diseases like cholera,
smallpox and typhoid occurred regularly. An American born child had only a 50%
chance of reaching its 5th birthday in 1870, which by 1900 had only increased to a 75%
chance of survival. Even Abraham Lincoln had suffered but recovered from smallpox.
As in Britain, religious organizations had played a part in campaigning for better living
conditions. In Battle Creek, Illinois, a Seventh Day Adventist lady by the name of Ellen
G. White set up an institute under the name of the ‘Western Health Reform Institute’ to
promote the Adventist vegetarian lifestyle involving good food and exercise to promote
well being, and teaching its principles. In turn the Institute sponsored a youth from the
congregation to go to Medical school in New York – his name, John Harvey Kellogg
(1852-1943), the son of a broom maker.

While in New York he continued the Adventist way of eating, and he began to think that
there must be a way that a pre cooked cereal could be made for sale. On his return to
Battle Creek, he took over the institute’s hospital, renaming it as the ‘Battle Creek
Sanitarium’, and began to promote his various ideas on healthy living. As a doctor he
promoted the value of a healthy colon, simple food, and exercise.

He then developed a product that would become his first commercial cereal, ‘Granola’,
and then developed a way of steaming and then rolling out grains of wheat to make a
flake cereal. By this time his brother, William had joined him, as Business Manager, and
in 1898 Will developed a way of flaking corn. By 1902, there were over 40 cereal
companies in Battle Creek, including the C.W Post Company, set up by Charles Post in
1895.

While John was more interested in bringing good nutrition to patients, Will was more
interested in the manufacture and sale of products, and the two brothers split, with Will in
1906 setting up the ‘Battle Creek Toasted Corn Flake Company’, in competition with his
brother’s business, and using his signature ‘W.K Kellogg’ on the boxes he sold.

Corn Flakes were a huge success, but also caused a massive family feud, the two
companies operating side by side for many years, before finally merging.

By far the most important manufactured product in the 19th century was flour, which had
been milled for thousands of years. Flour was essential to make bread, and without bread,
the population would usually starve or riot. The French Revolution and the Bread Riots in
England, during the time when the Corn Laws stopped the import of grain, had shown its
importance to general peace.

The industrial revolution, enabled steel baking pans to be manufactured, so that a


‘standard loaf’ could be baked with consistency in size.

Where flourmills had used stone to grind the flour, steel rollers replaced these in the
1870’s. The first steel rollers had been invented in Switzerland in the 1830’s.

Steel rollers meant that flour milling was faster, and also finer and then water and steam
power made the processing faster. Flour was first stored in linen sacks, and later when
paper bags came into their own, they became a common way to sell flour as well,
although it wasn’t until 1925 that multi walled paper bags could be sewn like cloth.
Flour millers like Cadwallader Washburn and Charles Pillsbury who set up their flour
mills in Minneapolis in the United States in the late 1860’s, later to merge and form
General Mills in 1928, were typical of the flour millers who set up in the late 1800’s in
countries including Britain, the United States, and Australia.

Flour Milling was one of the fastest growing industries at this time, a combination of
demand for better flour, and the industrialization process brought about through
mechanization, use of steel and supply of power.

Of all the products being manufactured for sale to the public, besides flour and bread, tea
and coffee also formed the essentials of daily life – tea in Britain and its colonies and
Coffee in Europe and the United States.

Both coffee and tea have rich histories, with their consumption, even today being largely
determined by the trading patterns set up by the activities of the early traders, including
the Arabs and Venetians, and later the Dutch and English.

Tea is by far the larger product, because it is consumed in China, Japan and India, which
have the biggest populations. It is also the drink of choice of the British, whereas in the
United States coffee is drunk in preference to tea, largely as a result of the Boston Tea
party, when tea was so heavily taxed by the British, that the Americans revolted and the
British lost their colonies. What started as a protest and uprising against the British,
ended up making Americans coffee drinkers and not tea drinkers as they had been prior
to the War of Independence.

Just as the cooper’s wine barrels had enabled fish and fish oil to be transported around the
world, so too did the tea chest enable tea to be shipped from tea estates to ships and
carried to the tea drinkers in England.

Tea had originated in China, initially cultivated for emperors, and then taken to Japan by
monks around 1000AD, where it became entrenched in Japanese society, and part of the
culture of the country. When the Portuguese and Dutch arrived in China and Japan in the
16th Century, the Portuguese took tea back with them to Lisbon, and the Dutch to France
and Holland, along with other spices and sugar. The Dutch to the English about the same
time also introduced tea.

While the American War of Independence in 1776 destroyed much of the British market
for tea, back home, tea which was initially consumed by high society, it began to become
an everyday drink for the population in the 1800’s, with ‘tea clippers’ built for speed,
rather than carrying capacity, sailing from the East to England, bringing tea to Britain.
The opening of the Suez Canal however spelled the end of the clipper era, as it greatly
shortened the journey, and steam power enabled ships to arrive closer to the times
planned.

The British East India Company had claimed a monopoly over tea sales from China, and
this lasted until 1834, by which time the British had introduced tea planting in India and
Ceylon (Sri Lanka) and tea became a major export for these colonies. The control of the
tea market then moved to those merchants who could sell it, such as Thomas Lipton
(1850-1931), who grew up in Glasgow working in his father’s grocery shop before
stowing away on a ship heading for America. After working as a farm labourer and later
in a New York Grocery store, he returned to Glasgow, and bought a Grocery store, the
start of a chain that he built up over the following years. He eventually moved to London,
importing his own teas from Ceylon, and setting up a home and plantation there. He was
later knighted for his business efforts selling tea around the world, and also became
famous for never winning the America’s cup, even after four attempts, the first being in
1899.

Twinings Tea is even older, and dates back to Richard Twining, who set up in business in
The Strand in 1706 in London to import and distribute tea. He became chairman of the
London Tea Dealers, and his family continued to run the business through several
generations. It was granted a Royal Warrant in 1837 by Queen Victoria, and still retains
the Royal Warrant today.

In order to drink tea, it is necessary to boil the water, and tea may well have led to an
improvement in health in the population, as people drank boiled tea rather than non
boiled water – a side benefit, but unknown at the time.

Coffee too has an intriguing history.

The first Coffee beans originally grew in Ethiopia, and spread to Yemen, and on through
the Arab world and in turn Ottoman Empire, and Constantinople (Istanbul), where the
Turks began to drink it adding spices for flavour in the 1400’s.

Venetian traders then brought it to Venice in the 1600’s, where attempts were made to
ban it as the ‘the drink of infidels’ and the ‘devil’s drink’ with Pope Clement VIII asked
to make a ruling. Having tried it, he declared, “This beverage is so delicious that it would
be a sin to let only misbelievers drink it! Let’s defeat Satan by blessing this beverage,
which contains nothing objectionable to a Christian.” With the Pope’s blessing, coffee
houses flourished, and from one coffee house in Venice in 1640, the number grew to 218
by 1763. Some of these original coffee shops still exist.

Britain’s first coffee shop opened in 1652, and they quickly became meeting places for
businessmen and others, as discussed in an earlier chapter, with companies like Lloyd’s
of London starting up their business in one owned by Edward Lloyd in 1688. In 1672 the
first coffee shop in Paris opened, Vienna in 1675 and Berlin in 1721.

The Arab traders always kept a close guard on the source of their goods, and coffee was
no exception.

In 1690 the Dutch managed to smuggle a coffee plant out of the Arab port of Mocha,
taking it with them to Java, where they began to grow coffee.
In 1713 a French Naval Officer, Gabriel Mathieu do Clieu then stole a coffee plant from
the Dutch, and took it with him to the French Colony of Martinique, and from there
coffee began to be cultivated in many countries around the world, and consumed in even
more.

It was in 1901 that the first instant coffee was invented in Chicago by a Japanese
American chemist, Satori Kato.

The Maxwell House brand traces its history back to 1886, and is named after a hotel in
Nashville Tennessee, while Nescafé was born in 1938 in Switzerland and the first
cappuccino machine was invented by Achilles Gaggia in 1946 in Italy. Starbucks began
in 1971.

Alongside the development of canned foods, there were also changes happening in the
home.

Cooking had long been on open fires, and in Victorian England the open fire was used to
both heat the room and provide a place to cook. Where large mansions would have
several fireplaces, many of the workers cottages had just one.

The development of steel, and particularly cast iron had in the second half of the 19th
century enabled stoves to be manufactured using it, and mass produced. Cast iron stoves
had been around since the early 1700’s but only been used by the very rich. Cast iron
stoves using wood and later coal to burn, with possibly up to six hotplates on top, enabled
a kettle and other cooking pots to be heated at the same time, with an oven for baking as
well. They provided heat in the home as well. It wasn’t until the 1920’s and early 1930’s
that gas and then electric stoves began to be used. The development of the cast iron stove
also enabled water to be heated for use in baths. Bathrooms took the form of a large
portable tub in which to sit, that also doubled as a place to wash clothes.

Soap itself had been around for a number of years, it was the Lever Brothers, William
Hesketh Lever and his brother James who first brought out Sunlight laundry soap, when
they started up business in 1885. Lever Brothers soaps and washing products then began
to be exported to countries around the world, particularly within the British Empire
Countries.

Another soap maker, a company called Proctor and Gamble, which was started by an
Englishman, William Proctor and an Irishman, James Gamble in 1837 in Cincinnati
USA, also made soap. It had originally started as a company making candles and soap,
and in when the Civil War broke out, their business boomed. The Ivory brand was
launched in 1879, and this was followed by Ivory Flakes in 1890, and America’s first
vegetable cooking oil, Crisco in 1911, Camay soap in 1926 and in 1933 the first
detergents were launched.
Just as the tin can had enabled foods to be stored and carried more easily, and had
revolutionized the food industry, at the beginning of the 20th century, it faced a new
competitor - glass.

Glass bottles had already made an inroad into the wine industry, but it was the invention
of the glass bottle making machine by Michael Owens (1859-1923) in 1903 which made
glass bottles a real competitor to steel cans for packing everything from food to sodas and
soft drink. He set up his company, the Illinois Glass Company that year, and it later
merged to form the Owens Illinois Inc in 1929. By this time there were a number of glass
companies around the world, and their machines were able to mass produce glass bottles
and create a whole new wave of products for sale.

Mass production of glass bottles enabled the price and therefore availability of products
like jams and fruit, soft drinks and beer to be marketed to people everywhere.

Glass itself had also transformed homes. Originally the windows in homes were small
panes of glass, with the some of the oldest still in existence being the stained glass
windows we see in churches, where lead separates each pane. At one stage in England,
there was even a window tax, based on the number of windows in a home, but it was only
in the 20th century that glass expanses could be increased and large size windows
produced. Glass in cars also similarly increased in size, and safety as new technology
emerged to enable it to span longer gaps, and be shaped to suit individual models.

Plastics were also about to emerge, as was refrigeration in the home.

As far back as the 1300’s, Sheffield was renowned for the quality of its knives, and over
the coming centuries, knives made in Sheffield as penknives, butcher’s knives, and
knives for the home became famous for their quality and sharpness, as did scissors and
razors. By the mid 19th century there were over 10,000 cutlers employed in Sheffield.
With improvements in steel, and water mills to grind it, blades could be made sharp, but
there was also a demand for fancy handles to help hold the knife steady. This led to the
use of bone and also ivory, with 1000’s of ivory tusks being brought into England to meet
the demand.

At the same time, there was demand for ivory for piano keys, for decorative carvings and
for making billiard balls, billiards being a popular pastime for the rich aristocrats and
gentlemen clubs in London.

In the United States, demand for ivory was equally strong, as Billiards had also become
popular. With great ivory shortages, an American Billiard Ball manufacturer offered a
$10,000 reward for anyone who could find an ivory substitute.

The $10,000 reward was awarded to John Wesley Hyatt and his brother Isaiah, who
developed a new plastic material that they called ‘Celluloid’, taking a patent out on its
invention in 1870. The material that they shaped and carved, rather than molded,
unfortunately also had a tendency to explode when one ball was hit by another! By
adding camphor this problem was overcome.

Another inventor in England, Alexander Parkes had in the 1860’s invented a type of
rubber substitute, which he called Parkesine, but he wasn’t able to secure any investors in
its development.

In France where the silk industry was located, Louis Marie Hilaire Bernigaut, the Count
of Chardonnet, had studied the way silkworms produced their silken thread. This lead
him to develop cellulose in 1891, later improved, and made less flammable by Charles
Topham.

The first hard plastic created was in 1907 when a New York chemist, Leo Baekeland
invented a resin liquid that he could pour into different molds and set. The hardened
material he called Bakelite. Unlike some of the plastics he had played with before,
Bakelite once hardened would not melt or change shape when formed.

The Bakelite revolution saw it being used in insulation and switches in the new electrical
industry, as well as used in clocks and radio cases, and formed into everything from
ashtrays to vases.

A Swiss, Dr. Charles Brandenberger in 1913 invented Viscose, and created the first
cellophane as a water proofing material. He was in the textile industry, and was looking
for a way to protect fabric from liquid that was spilled on it. He had developed the idea
after watching the drama when a bottle of wine was accidentally spilled on the tablecloth
in a restaurant.

In the 1920’s and 1930’s all of the big chemical and rubber companies were working in
plastics – Imperial Chemicals in Britain, DuPont, B.F Goodrich, Dow Chemicals,
General Electric in the United States, Friedrich Bayer and Company in Germany and
many others, and it was during this period that a number of plastics were developed by
chemists working for the big companies.

Polythene or Polyethylene was invented in 1933 by Reginald Gibson and Eric Fawcett at
ICI; nylon by Wallace Hume Carothers at DuPont in 1939, which saw the launch of
Nylon stockings; PVC by Waldo Semon at B.F.Goodrich; Saran cling plastic by Ralph
Wiley at Dow Chemicals; Teflon in 1938 by Roy Plunkett at DuPont; PET plastic by Rex
Whinfield and James Dickson in 1941, working for the Calico Printers Association and
there were many others.

Plastics were to become to the 20th century what steel had been to the 19th century, totally
changing virtually every facet of 20th century life. From packaging materials, to
upholstery, record recordings, raincoats and plasticized fabrics, table mats, glues, cabling,
and eventually everything from body parts to space suits and even bullet proof vests,
plastics could be molded, extruded, blown, shaped, cut, distorted, bonded, glued,
stamped, integrated with different materials, and produced as soft foam or made harder
than steel.

Plastics replaced wood, metal, glass, and cloth fabrics in application after application
over the course of the century, and are still evolving through new applications in the 21st
century such as conductive polymers in the electronics industry and aeronautics.

In packaging, plastics enabled bottles to be blown for soft drinks, once it was possible to
hold and control the aeration inside, and there are now experimental uses of beer bottles
made in plastic, and uses where hot filling the product has meant continuing to use glass.

More plastics are also now being recycled, and as the environment issues become more
dominant in mainstream thought, the recycling issue is working its way across all
packaging forms.

One of the biggest uses of packaging is the milk industry, which moved over the century
from home deliveries where the milkman filled people’s milk can left out for him, to use
of glass milk bottles, and then the complete phasing out of glass, replaced by tetra pak
cartons, and in recent years plastic as an alternative.

The Dairy industry is as old as ‘Jack and the beanstalk’ story, and there are still many
families and farmers who rely on their cow’s milk to make a living. There are also a
number of large companies whose use of milk has made them some of the biggest food
companies in the world. These include Nestle and its processed milk products, including
condensed milk, powdered milk, baby formulas and of course chocolate, Kraft Foods and
its development of cheese products, Danone and its use of milk for yoghurts, Parmalat,
the Italian Company which ran into massive financial problems in 2003, Cadbury and its
use of milk in chocolates, and Tetra Pak which has revolutionized the sale of milk
through its invention of the Tetra Pak packaging form, which enabled liquids like milk
and juices to be sold in a sealed carton, using a plastic coating over cardboard to create a
sealed surface, and a unique closure system.

On the farm itself the company that contributed most to change was the Alfa Laval
Company, who developed the milk separator and milking machine. Carl Gustav de Laval
(1845-1913) and Oscar Lamm set up the company in Stockholm in Sweden. They built
up a business in 1880 separating fish oil using a centrifugal separator, and then in 1888
began to separate milk and sell pumps. They then bought out the patent of a German
inventor, Clemens von Bechtolsheim in 1889, whose invention used a set of conical disks
which were placed one inside another, and placed in a separator. Milk could then be
pumped into the separator, and as the handle of the separator turned the disks would spin
on a spindle, with the milk being separated into milk and cream. The invention was a
huge success, and by 1917 over a million milk separators were sold around the world,
and by 1945 over 12 million. Milking machines and milk sterilization machinery
followed, and the name of Alfa Laval became synonymous with milking machines, even
though the company has moved into areas such as the oil industry and others since then.
Refrigeration too changed the world.

Where in the 19th century, ice was cut from frozen lakes and wherever it occurred
naturally in winter and then insulated as best it could be from the effects of heat, to keep
it from melting, commercial ice works only began operating around 1870, although some
had started as early as 1840.

The first industry to use ice commercially was the brewing industry, and in the railroad
industry in the United States, refrigerated wagons to transport beer from the brewery to
ice houses set up along the track began to operate around this time. Meat packers
followed with railroad cars set up for their use, as did fruit packers and dairy companies.
In Australia, meat bound for England was sent in refrigerated ships set up by Thomas
Mort, based in Balmain in Sydney, with his own docks to load Beef for Britain. It wasn’t
until 1949 that refrigerated road trucks first began to appear.

The first household refrigerators were ice boxes, which were heavily insulated and made
from wood with metal linings, designed to hold a block of ice, delivered by the iceman
who home delivered the ice from his horse drawn insulated ice wagon. Later a motorized
ice truck replaced the horse, but in parts of Asia, it was also delivered by bicycle.

In hot countries like Australia, a meat safe was developed, a metal box with holes
perforated in the sides, a door at the front and shelves inside. Here the meat was protected
from flies, with air to keep it cool. Another ingenious device was a canvas water carrier,
which was hung from the front of a wagon or later car, with the air passing through it to
cool it.

The first refrigerators to dispense with ice to keep it cool used ammonia gases and later
carbon dioxide and liquid oxygen, and these gained large-scale use in industrial areas.

In the military area, gunpowder and ammunition had always been stored in a ‘magazine’,
a building specially built in an isolated location with reinforcing designed to withstand an
explosion.

In ships a magazine needed to be kept at a constant temperature to avoid explosions, and


refrigeration became an essential part of ensuring the safety of the ship and crew.

The great advance came in the 1920’s when Frigidaire, a company formed in 1916 by
Alfred Mellowes in Fort Wayne, Indiana as the Guardian Frigerator Company and bought
out in 1919 by General Motors, developed the use of chlorofluocarbons (CFC’s). This
gas could be piped around a Refrigerator, with a motor and compressor to keep it
flowing. Some of the early motors were powered with kerosene, but later ones used
electricity. Insulation was still however very important. Kerosene fridges also had a
tendency to explode.

The household refrigerator caused a sensation when it was launched, with more than
5000 being made in the United States in 1921. By 1931 this figure had reached 6 million,
and the spectacular growth was similar in Europe and elsewhere. Brands like Frigidaire,
Kelvinator, Hallmark, General Electric, Phillips, Westinghouse, Crosley and others
became household words. All used the patent work of Frigidaire.

Kelvinator, the other biggest brand had already been in the ice business since the mid
1800’s, with its name derived from Baron Kelvin, who also gave his name to the Kelvin
scale for measuring temperature, to establish a zero point in all liquids, not just water.

Over the next twenty to thirty years, refrigerators along with radios became the most
important new appliances in the home, changing the way food was kept, the type of food
purchased, with the radio becoming home entertainment at the same time.

Before this time, the only appliances in the home were the cast iron stove, and Singer or
White brand sewing machine, machines that first began manufacture in the 1850’s. They
were the first home machines in the world, and became an essential part of home sewing
over the following century. While commercial sewing machines were invented earlier,
the credit for the development of the first home sewing machine is given to Elias Howe in
1844 who patented its invention. It was Isaac Singer however who used a treadle to create
the power to make the machine work, rather than hand shuttling, and then took it to the
world, introducing the first hire purchase arrangements in the world – what was then
known as time payment.

When you look at a picture of people from around the 1900’s it is apparent that the
clothes they wore were very heavy. The dress for men, women and children largely
covered all parts of the body. Long dresses, masses of petticoats, bonnets, pinafores, long
stockings, and for men serge clothe long trousers and a heavy waistcoat. Even in the
hottest climates in India and beyond, the dress standard was maintained. Even army
uniforms were made from heavy woolen cloth, designed to withstand the rigours of war,
but certainly not made for comfort.

Washing clothes and bed linen was a major activity, and this was conducted in the ‘wash
house’ or laundry, a large room or shed dedicated to washing and sometimes ironing.

The wash house, like the kitchen was usually at the back of the house, and even detached
for safety in case it caught fire, and central in it was a copper, a large tub made from
copper, that would sit above a hearth where a fire could be built to heat the water and
‘boil’ the clothes. While some coppers were built in, others were placed on iron stands.
Laundry tubs would be set up next to the copper to hand wash or remove hard to remove
stains, and also to rinse away the soap residue. Once washed, laundry would then be
wheeled or carried to the line.

A clothes line would then span the back yard, strung from a building to the fence, or even
supported by its own posts on each end, and in between, with a pivoted wooden arm
which could take the line up or down to catch the sun and the breeze and dry the line
faster.
Laundry coppers would be stirred using a wooden rod to move the clothes to and fro
inside it, but although hard work, the copper washed clothes exceptionally well. It
required constant stoking of the fire and stirring of the clothes to do the washing, and
each home was geared around a particular day of the week to do the washing, with the
day being declared as “washday”, or “washday Tuesday” and so on.

The first inventions to help make washing easier was the development of mangles, a set
of rollers, with a handle at one end, through which the clothes were rolled when they
were removed from the copper, before being rinsed in the laundry tubs. Often the mangle
would be set up between the two tubs, with the clothes rolled through them first to
remove excess suds, and then rolled back from the rinse water to remove excess water, so
that the clothes once put on the line would be less heavy, and hopefully dry faster as well.

Washing machines initially looked something like a cross between a butter churn, cement
mixer and a grain thresher! They usually had a large tub or barrel for the clothes,
variously made from wood and steel, with a motor attached to blades, agitator or
agitators, which would stir the clothes, from the top down, side or base upwards. Belts,
pulleys, drive wheels completed the picture. There were also early models which where
the paddles or agitator was turned by hand.

Mangles were sometimes attached and sometimes not. Where they were attached, there
was a strong possibility of losing a finger or being dragged into the mangle if hair became
caught. In the 1930’s hundreds of different brands of washing machines were developed,
and most of today’s brands like Maytag, Hoover, Speed Queen, Simpson, Hotpoint and
others dating back to this time. Even so many homes did not have washing machines until
the 1950’s.

As the age of electric motors dawned, inventors sought to develop labour saving devices
for the home, workshop, tradesman and industrialist.

Just as the washing machine had replaced the copper and hand washing, so too was the
electric vacuum cleaner as means of making it easier to sweep the house and remove
dust. This became even more important when carpet runners and carpet squares became
fashionable in homes.

Various ‘sweeping machines’ had been invented in the mid to late 1800’s, adding motors
to brooms, leading eventually to a carpet sweeper, invented by Melville and Anna Bissell,
which used brushes on rollers to sweep the dust into dust trays next to the brushes. It was
in 1901 that Hubert Booth, a British Engineer, received a Patent on his vacuum cleaner,
the Puffing Billy, and this was closely followed by others by David Kenney and Corinne
Dufour.

In 1907, James Murray Spangler, a janitor in an Ohio department store, invented his
vacuum cleaner using a bag attachment, motor and suction device, to suck up the dust
rather than sweep it, and stop it affecting his asthma. The Electric Suction Sweeper
Company was born. He then sold one of his first machines to a cousin’s husband,
William Henry Hoover, who bought out the patent, and then went on to make Hoover the
world’s best known vacuum cleaner for close to a century. So successful was he, with
marketing ploys like ‘free home trials’ that the Vacuum cleaner salesman became
synonymous with the ‘hard sell’, with the word ‘Hoover’ replacing the words ‘vacuum
cleaning’ and meaning the same thing. People began to ‘Hoover the carpets’, as a general
description, and while Hoover tried hard to protect their trademark, it was a word applied
generally to vacuuming with any brand, and not just their cleaner. A similar problem was
also later faced by Kleenex, who always refer to their product as ‘Kleenex® Tissues, and
not just Kleenex.

In Europe, the Lux Company was set up in 1901 making Lux kerosene lamps. With the
advent of electric lighting, the company then began to look to new products, and in 1912
they developed a hand cart with a large suction pump on the back which could be pulled
along the street, with a series of pipes fed in through the windows of houses to vacuum
out dust and dirt.

A salesman, Axel Wenner-Gren, who had seen a Santo vacuum pump in Vienna, took up
the German, French and British agency for the new Lux machines in 1912, and then in
1915 he too began the process of selling home vacuum cleaners through home
demonstrations and time payments. Over the next few years, the Electrolux Company
was born, purchasing the AB Arctic refrigeration company in 1925, which had developed
an absorption fridge in 1922.

It has since through various acquisitions become one of the biggest electric appliance
companies in the world with factories located around the globe, and making everything
from vacuum cleaners to washing machines, refrigerators, stoves, air conditioning and
other products. Many of the early pioneer companies in the white goods market have
been absorbed within the Electrolux Company, including the Email Group in Australia,
itself an amalgamation of a number of companies, AEG in Germany, EMI Thorn in
Britain and Zanussi in Italy.

In turn, the white goods market has, like the car and electronics industries come into
competition with Japanese and later Korean brands, developed in the post World War II
period.

CHAPTER 24

Changes on the High Street

At the same time that homes were changing with the addition of lighting, electrical
appliances and other refinements, shopping and the availability of products and services
to buy was also changing across the world.

Every city and town has a centre, usually the place where most people meet, and where
most business is conducted. In the early cities most towns had a central market, and as
time went on market stalls sometimes became permanent, as people tired of erecting and
then pulling down their merchandise every day. At places where ships berthed at a central
wharf, or trains arrived at a station, shops would also gradually be set up to service the
needs of the people arriving.
Market towns in turn became cities, and cities brought even more people.

In England the High Street became the centre of town. It usually had the most people, the
biggest buildings, and most traffic, most pubs and it was the first street lights – first gas
lit and then with electricity.

America’s main streets were much the same, as were the Central Plazas and Main
Boulevards in European cities, the main streets in Australian cities, and the Central
Markets in Asia.

England’s shops took on two distinct markets, shops for the gentry and shops for the
commoners. The Gentry shops sold snuff, gentlemen’s clothing, outfits for hunting and
fishing, and a reliable supply of the best port. Commoners could buy ribbons and
bonnets, cloth, buttons and other haberdashery items. Grocery stores, and as time
evolved, the Corner Shop, grew in prominence as cities grew larger. They became the
place to buy candles, matches, flour, tea and canned bully beef. In turn bakeries, butchers,
fruit vendors and others established their businesses on the High Street.

Shopkeepers sold their goods from a counter, with customers asking for the goods they
wanted, and waiting for them to be carefully weighed, measured and the price
determined. The shopkeeper or the assistant would then take payment and carefully wrap
the goods for the customer.

In America, while the eastern cities sold initially imported and later as industry
established itself, American goods, in the West, shops were initially established as
Trading Posts, selling everything from guns and bullets to pots and pans, and buying and
selling whatever was available to trade, be it beaver pelts or shekels of wheat.

Shopkeepers were traders. They profited from what they had to sell, and if the tinned beef
was bad, or the ribbon cut short, then that was the customer’s problem. A Shop Clerk, as
in England would both take the packages from the shelf and wrap them as well. While
some shopkeepers earned a good reputation for the quality of their goods, others built up
a bad one. They themselves had to buy well in order to sell well, and the principle of
‘caveat emptor’ let the buyer beware was quickly established. The idea of credit also
emerged, with the shopkeeper running accounts for regular customers.

In the USA in 1916 a new self-service store emerged, and the ‘self-serving store’ concept
designed by Clarence Saunders was patented by him in 1917. Customers entered through
a turnstile, shelves ran along both sides of aisles, with groceries packed high along them,
and customers had to select their own goods and take them to a cashier for payment.
The Piggly Wiggly concept he introduced took the market by storm, and by the end of the
1930’s there were 2600 Piggly Wiggly stores across America. The supermarket concept
was born.

Other companies like The Great Atlantic & Pacific Tea Company, (A&P) first set up in
1859, had grown from selling tea to selling groceries, with over 10,000 stores established
by 1923. This store group, one of the first retail chain stores to set up then they went into
decline after the owner died and by 1930 had just 15000 left, and by 1950 just 4150
stores. Then, as now, the management of business and its success or failure depended
heavily upon the people running it.

General merchandise shops on the high street, selling clothes, shoes, hats and other
merchandise also grew.

J.C Penney, named after its owner, James Cash Penney opened his first ‘Golden Rule
Store’ in Kemmeror, Wyoming n 1902, and between the 1920’s and 30’s, over a
thousand J.C Penney stores opened up in ‘Main Street’ across America.

On both sides of the Atlantic shops grew as both specialty stores and also as general
stores. Where a watchmaker may have set out to make watches, and also run a shop, at a
certain point in the development of their business, they had to choose between staying as
a watchmaker and making watches, and selling them through other shops as well as their
own. If they chose to stay as a watchmaker, they then needed to find watch sellers to sell
them. Conversely if they chose to remain as a watch seller as well, it was unlikely that
other watch sellers would buy their watches to sell, given that they were competing with
them. The split between retailing and manufacturing has been a constant battle through
the history of both manufacturing and retailing. The retail chain enabled customers to
find the goods they wanted in a number of locations, and when they walked into a store,
they also knew what they could expect to buy, along with the service level they were
likely to find. For manufacturers, the retail chain provided the opportunity to sell their
goods to a bigger market.

In the initial phase of the grocery shop development, most of the products came delivered
in large boxes or bags, and it was up to the storekeeper to cut off a block of butter or
cheese, or scoop up a pound of flour or sugar from his flour sack or from a bin designed
to keep the weevils and vermin out.

The start of supermarkets and self-service stores heralded a new era for manufacturers
too. While they could continue to sell their products in bulk, they had to rely on the
shopkeeper’s loyalty to keep buying from them, while the shopkeepers began to want
products that they could just put on the shelves ready for sale.

Canned products, cardboard boxes and paper bags enabled manufacturers not only to sell
their products ‘shelf ready’, but also to brand them. Gold Medal flour, XXX flour,
Defiance flour, Lever & Kitchen Soap Powder, Philadelphia Cream Cheese from the
Empire Cheese Company of New York, Brooke Bond’s Tea, Beecham Pills – the age of
branding had begun with local brands growing in line with the demand for their products.

Brands which became popular in a city or region grew in value as the distribution they
able to achieve grew and they became state brands, national and in some cases,
international brands. Along the way, brands would merge, and the companies which
owned them would buy out competitors, be bought out themselves, and grow stronger or
weaker as the case may be. Competition would either make them or break them, and
factors like wars and the Great Depression could take their brands to new markets or
destroy them.

In America ‘nickel and dime’ stores grew in number during the early part of the 20th
century, as well as ‘drug stores’ to sell medicines, cough preparations, brushes and
combs, as well as various pills and preparations. In England and Australia these
developed as Chemists, and the dime stores as ‘Penny stores’, selling goods at the lowest
possible price. Prices, and particularly, cheap prices always attracted customers.

At the other end of retailing, the diversity of goods for sale, meant an ever widening
choice of brands and goods for people to buy, and particularly by the 1920’s and 1930’s,
giant Department Stores were built in major cities across the world, offering the biggest
choice of goods ever available.

The Department Store, ‘Bon Marche’ in Paris, could trace its history back to the 17th
century when it was a specialty shop. By the mid 1800’s it had become a department
store, with each department specialized in a particular group of goods, and offering the
widest choice in town.

It is difficult to say exactly which store is the oldest Department Store in the world, as
there are often a number of claimants to a title like this, and it is equally hard to say at
what point many general stores became department stores in the true sense.

There were also a number of elaborate arcades set up, where individual traders facing the
arcade could sell their goods to people who could enjoy the comfort of being sheltered,
and not having horses and carriages passing by which could knock them down, as they
walked from shop to shop.

One of the earliest department stores in the world was David Jones in Sydney, Australia
that began operation in 1838. This was followed by other department stores in Sydney,
including Anthony Harder, Farmer’s, Mark Foys, and Grace Brothers while Melbourne
the Myer department store became its most famous.

The only one of these to survive today is Myers, which itself is part of Coles Myer, with
the name Grace Bros ceasing to exist in 2003, when its stores were re branded as Myer
Stores. David Jones however remains independent as a company listed on the Australian
stock exchange.
In the first half of the twentieth century every large city around the world developed their
own department stores, vying with others to be the biggest, the most stylish, elegant and
worldly in the world, with the best service, range and pricing available. In the process a
number of retail dynasty families were established.

The Department Store had shoe departments, ladies undergarments, men’s clothing,
crockery and china, furniture, radios, toy department and even a cafeteria or restaurants
and of course rest rooms for customers to refresh themselves.

Steel span structural beams had enabled skyscrapers to be built in the 1890’s, and
elevators or lifts enabled the lift operator, sitting on his stool in the corner to close the
double doors of the lift carriage, pull the lever, and then announce the arrival at “Level
Four – ladies wear”. Escalators, moving stairs, allowed people to ride up or down
between floors, and the Department Store became the place to see and be seen.

Macy’s in New York, Bloomingdales in New York, Harrods in London, Myers in


Melbourne, Anthony Horderns, Farmer Brothers, Mark Foys, and Grace Brothers in
Sydney. Every large city had their own favorite Department Store in the centre of town.

R.H. Macy and Company, named after its founder, Roland H. Macy had opened in 1858
as a dry goods store and Bloomindale Brothers, founded by Joseph Bloomingdale had
opened in 1872 in New York City.

In London, Harrods, first established by Charles Henry Harrod as a grocery store in 1849
in Brompton Road was later expanded by his son, Charles Digby Harrod in 1861,
becoming a public company in 1889. It had become a true department store by 1902, by
which time it had 80 departments and a staff of over 2000 employees.

Marks and Spencer began in Leeds in 1884 when Michael Marks, a Russian born Polish
refugee set up his business there, before moving to Manchester. He formed a partnership
with Tom Spencer, a cashier in a wholesaling company in 1894, setting up their first joint
business in Manchester. It wasn’t until the 1920’s that they began to buy direct from
manufacturers, rather than through wholesalers, and in 1926 they launched their St
Michael brand, with the main Marble Arch store opening in 1930. In 1934 they
established a first in the retail industry by setting up their own Research Laboratories to
test the quality of clothing and other merchandise they bought. During the Second World
War, under the Government’s wartime ‘Utility Clothing Scheme’, their garment
knowledge was used to help develop the policy on rationing the use of materials and
trimmings. Certainly they would be the only store group to ever buy a warplane for the
country. This occurred in 1941, when Marks and Spencer staff bought a Spitfire for the
British Air Force, naming it ‘The Marksman’.

The Department Store boom continued until around 1960. Until this time, they had in
most cases set up just one or two large huge stores in the city where they started – large
emporiums, with beautifully ground floor windows, where window dressers placed the
latest mannequins dressed in the latest fashion, and even animated window displays,
particularly at Christmas, when people would travel to the Big Stores just to see the
Christmas decorations, with Department Stores competing with each other for the best
window displays.

By the 1950’s the Nickel and Dime or Penny Stores and Grocery Stores had created retail
chains, and retailing was about to undergo a vast change.

Until this time towns had been reasonably isolated from one another by distance, and
each town had a main street with a row of shops to provide all of the local needs – from
groceries to the bakery, butcher, cake shop, dress shop and haberdashery, with a
hardware shop just down the road, and of course a few pubs, milk bars (soda shops), and
a Cinema.

In the town where I grew up, Grafton, on the Clarence River a city of just over 10,000
people, the city was a microcosm of the changes taking place in retailing during the
1950’s and early 1960’s. The main street, Prince Street contained all the shops, with cars
able to reverse park to the footpath. Parking metres were unheard of. The main corners
had a Bank or a pub on them, solid two storey buildings, built to last, with rows of shops
– butchers, bakers, bicycle repair shop, jewelers, clothing stores in between. ‘Blood’s
Emporium’ and ‘McKinneys’ were the main stores for clothing and haberdashery.
‘Gerards’ department store then set up, complete with its own supermarket. It provided
big city sophistication, along with the Peter’s Ice Cream factory, the annual Jacaranda
Festival, Grafton Races and Grafton Brewery, and it quickly became one of the symbols
of the city’s growth and prosperity. The new H.G Palmer store selling TV’s, with a
television set up in the window, and chairs set out in front of the store at night for people
to see, provided a further sign of the world coming to Grafton.

When the Fosseys chain arrived, and then Walton’s Electrical store, along with G.J
Coles, which had a drink stand in the front, parking out back and rows and rows of less
than a shilling items for sale, it became a new beacon for shoppers.

By 1960, the H.G Palmer chain had collapsed under a scandal, owing millions, and by the
1980’s the local shops, including Bloods, McKinneys and Gerards had all become
shadows of their former selves. The chain store Grocery chains were now the dominant
retail shops, and even the Ice Cream factory and Brewery had closed. By the year 2000
many of the banks had merged and many of the merged Banks had also closed their
branches on the Main Street, with the centre of retailing moving from the Main Street to
retail Malls.

What had happened, as in many small towns around the world, was that the small traders
had been swallowed, or competitively beaten by the larger organizations, which in turn
were themselves swallowed by even larger ones. Mergers, acquisitions, big city money,
and greater purchasing and financial strength had, as in almost all industries, effectively
brought about a total revolution in retailing.
The same trend could also be seen in the 1990’s in countries like Malaysia, Indonesia,
Singapore, China and Thailand, where the ‘wet markets’ which sold vegetables, live
chickens, pork at the pork shop, other meat, fish, fresh, dried, powdered and everything
else that a market could provide, were slowly but surely dying, as supermarkets and
shopping centres became the places to shop.

In Carrefour in Shanghai, live frogs, eels, chicken feet and other live fish were being sold
alongside Heinz baked beans and Kleenex tissues. The supermarket had come to
Shanghai, and while the products on sale might be different to those sold in Paris or Los
Angeles, the retailing concept of mass display, discount prices, and self service were
exactly the same.

The early 1960’s also saw a new type of retail shopping emerge, as the car became, not
just transport to get to and from work, but also a means to carry the shopping. Where
once shops needed to provide a hitching rail for horses, and a trough of water for them to
drink out front, they now needed to provide parking spaces. No longer were people
prepared to carry their own parcels on the bus, and the cost of running errant boys to
deliver goods home, had meant most shops no longer provided this service.

In Australia, two immigrants, John Saunders from Czechoslovakia and Frank Lowy from
Hungary, both experienced the upheavals in Europe, first with the Nazi invasions, and
then through the War, followed by the Communist’s control and nationalization of
businesses. John Saunders escaped from Czechoslovakia in 1949 and arrived in Sydney
in 1950 and Frank Lowy arrived in 1952 having spent time in Israel.

They brought with them, very little money, only a burning desire to succeed, with John
setting up a sandwich shop in at Town Hall railway station in the city, and Frank
delivering deli meats and cheeses to his shop. Becoming friends, they then set up a shop
together next to the Blacktown railway station, an outer suburb where there was a large
industrial cable company set up (EPT Electric Power Transmission, making cables for the
Snowy Mountain Hydro Electric Scheme). This Italian company employed many of the
new immigrants.

The shop proved very successful and it wasn’t long before they realized that a lot of
workers couldn’t find houses to live in the area, as the population in the area trebled. This
led them initially to subdivide land, then to build houses, and then shops followed.

By 1958 they had sold their shop, to concentrate on full time property development. A
year before, two large shopping centres had opened in Australia, and John then took a trip
to the United States to see first hand the Shopping Malls that were starting up there. By
1959 they had opened their first Shopping Westfield Centre in Blacktown, complete with
a supermarket, two department stores, and twelve other shops. Other Westfield Shopping
Centres followed, the name derived from the partner’s first venture in the ‘West’, and
‘field’ from the farms they had first bought.
The Shopping Centre transformed shopping in Australia, and with each new shopping
centre that was built, the Centres became larger, incorporating more retailers, more space,
greater number of parking spaces and facilities like cinemas and food courts. By 1977
they had opened their first Shopping Centre in the United States, and in 2002 they are
now one of the world’s largest shopping Centre developers and managers.

Across the world, retailing has moved from the High Street or Main Street to the
Shopping Centre or Mall, based on having a core anchor tenant to draw shoppers and the
convenience of shopping under cover in air-conditioned comfort. In turn, the giant
Department Stores have either closed merged or taken space within one of the Shopping
Centres.

Using the Shopping Centre Malls, specialist retailers have also been able to create chains
of their stores across the country.

Outside of the Malls, new Super Centres have also emerged for the sale of Bulky goods,
like furniture, lights, hardware, electrical and electronic products. These are similar to the
Shopping Centres, but are usually built around giant car parks with access of cars to pick
up bulky goods from the door.

Supermarkets have also had to compete with Food Courts, and take home fast food
outlets, as well as convenience stores set up next to high-rise residential apartments, or
next to petrol or gas stations.

One of the leaders in convenience stores is 7- Eleven. The 7-Eleven Store concept began
in 1927 in Dallas, Texas, where a company called Southland Ice Company, which home
delivered ice in the new age of refrigeration, also as a convenience dropped off grocery
essentials like bread, milk and eggs to its customers on Sundays, when all the main stores
were closed. The first stores were called Tote’m, the name based on toting up the bill, but
also symbolized by a Totem pole out front of the store. Today there are more then 21,000
7-Eleven stores worldwide.

Retailing has always been about ideas, bringing people to a place which is easy to park,
has good service, and goods that people want to buy at prices that are the best available.
In theory this is simple, yet the public is fickle and it is not always possible to see trends
emerging or the demand for goods falling away. Just as in every other type of business,
there are retailers who succeed, and others who fail. There are also new companies
emerging all the time, and such business formats as franchising have enabled individual
owners to come together under a common banner to provide a particular service or
products, gaining the advantage of group thought on their business direction, group
management and overall financial or purchasing power.

Department stores have also besides having to adjust to the move into Shopping Centres,
also faced competition from Discount Stores, which rather than provide service in every
department of a store, simply bulk display product, and allow customers to select
themselves. They rely on bulk buying, and volume sales turnover to achieve a profit.
Some of these retailers include K Mart (a name used by totally different companies in the
United States and Australia, where it is owned by Coles), Big W (owned by the
supermarket group, Woolworths in Australia), Carrefour (the French Group), Makro
(Dutch), and the biggest of all – Wal Mart in the United States.

K Mart in the United States was named after its founder, Sebastian Spering Kresge, who
opened his first nickel and dime store in Detroit, trading under the name S.S Kresge
Company. By 1912 he had 85 stores. Its first discount store opened in 1962 in Garden
City, Michigan, and its first Supercentre in Medina, Ohio in 1991, selling groceries and
general merchandise 24 hours a day and 7 days a week, and becoming one of America’s
biggest retailers, employing 220,000 employees. In January 2002 it filed for Bankruptcy,
and under Chapter 11 Bankruptcy Protection Laws it is in the process of re organizing its
affairs to try and trade out of its problems.

Makro Cash & Carry is a privately owned company that owns more than 60 warehouse
style stores throughout Asia. It is owned by SHV from the Netherlands, whose own
history is quite different to the usual retail story. The SHV company (Steenkolen Handels
Vereeniging) was formed in 1896 by a group of Dutch coal wholesalers in Utrecht, and
by 1904 they had built up a monopoly on the trading of coal in the Netherlands from
Westfalen in Germany, which they began to export from Rotterdam in 1924. Before
World War I, 94% of shipping was powered by coal, but this fell to just 48% by 1939,
and even lower after World War II. By this time the company had moved into oil
distribution and its oil bunker barges on the Rhine made it the biggest inland waterway
company in the world. They were also the main company supplying home heating oil in
the Netherlands, Belgium, Luxembourg and Denmark. In 1968 the company was forced
to diversify away from its reliance on coal and oil, setting up a retail operation, as well as
setting up a number of industrial operations in shipping, building, technical equipment
and trading. The Makro stores in countries like Thailand, Indonesia and China are huge
new stores, rivaling the biggest in America, and are all based on heavily discounted
prices and large volume sale of product.
Carrefour, the French group, has over 5000 stores around the world, with 1400
supermarkets and around 3000 discount stores, mostly in Europe, but also in Asia,
including China. The company itself was only formed in 1959 through the merger of two
French wholesaling families.

Wal Mart is even younger. It was started in 1962 by Sam Walton as a discount store and
now sells just about everything from its 2500 huge stores in the USA. It is very much
built around Sam Walton’s belief in what he calls the ‘Sundown Rule’, which means that
whatever the request by the customer, if it is humanly possible, the request should be
answered by sundown. The customer should not be allowed to wonder. The store should
go beyond the customer’s expectations, and the store sacrifice whatever is needed to
satisfy the order or request. Wal Mart is now one of the three biggest retailers in the
United States, the others being K Mart and Sears.
Sears Roebuck story began in 1886 when a Chicago jewelry company shipped some Gold
watches to a jeweler in Minnesota. At the time Richard Sears was working as a station
agent for the Minneapolis and St Louis Railroad, as well as selling timber and coal to
local residents. When the Minnesota jeweler didn’t want to buy the watches, Sears
stepped in and purchased them, selling them on to other station agents for a profit, and
then sought more to sell. He then set up his own company, the R.W Sears Watch
Company, and in 1887 moved to Chicago, where he advertised for a watchmaker to join
him. Alvah C. Roebuck answered the ad, and in 1893 Sears Roebuck was formed.

At the time farmers were often being exploited by local General Stores, which as the only
store available could charge what they wanted to local farmers. Sears Roebuck offered an
alternative – mail order purchase, and the Sears Catalogue became an American
institution selling everything from saddles, bicycles and buggies to furniture, clothing,
guns, and of course watches. By 1906 the mail order business was so large that they built
an office and distribution centre in Chicago covering close to 40 acres, at the time the
biggest business building in the world. Their mail order assembly lines were so big and
impressive that Henry Ford even paid a visit, and it became known as ‘the seventh
wonder of the business world’.

Sears had built its business on the basis of sales to isolated farmers, but as the population
in cities grew and the farming population grew smaller, times had to change. In 1925
Sears began to its own stores, with its own branded merchandise, and by the start of
World War II it had around 600 stores. By this time it had also moved into selling
insurance through its stores and catalogues.

In 1969 the 110 storey Sears Tower was built in Chicago, the world’s tallest building at
the time, and by the year 2000 it was operating 863 Stores in Shopping Centres
throughout the United States, 125 more in Canada, as well as thousands of smaller
specially stores, making Sears the biggest store operator in the United States. While it has
ventured out of the American continent, and moved at times into other business areas, it
is now concentrating on its core business of retailing.

Every retailer has a story, and perhaps one of the most interesting is Boots the Chemist in
England.

John Boot (1815-1860) opened a business called the British and American Botanic
Establishment in 1849 in Nottingham to sell herbal remedies and provide consultations to
people seeking them. Unfortunately he died, leaving his wife, Mary and ten year old son,
Jesse to take over the business. By age twenty-one Jesse was running the shop, and the
Boots Cash Chemists business by 1877 was the largest seller of patent medicines in
Nottingham.

In 1884 a qualified pharmacist joined the business, and after Jesse married in 1886, his
new wife, Florence, the daughter of a bookseller, and Jesse began to expand the business
beyond medicines and into fancy goods, stationery, artist’s materials and books. By 1893
they had 33 stores established, by 1900, 250 stores, and by 1913, 560 stores across the
country, including London where they had taken over William Dray’s Southern Drug
Company. They even set up a subscription Library, and cafés in some of the larger stores.
By this time, Boots was also manufacturing its own products on a large scale, and they
opened their 1000th store in 1933, continuing to develop in retail, manufacturing and
export areas. Today Boots the Chemist is still the leading pharmacy chain in Britain, and
herbal remedies and alternative medicine are now in revival.

In 2000 many pundits believed that the IT communication revolution taking place could
spell the end of the traditional retailer, with all their funds tied up in real estate. Would
the Malls become vacant? Would everyone buy on line? At this stage, and it is only a few
short years, many dot com companies have failed to succeed, and those who are selling
groceries on-line are now facing the reality of the cost of home delivery.

Along with the growth of large retailers, there has been a parallel growth in the efficiency
of distribution, transport, material handling and warehousing. Larger trucks, Curtain wall
sides, raised docking bays, forklifts, pallets, automatic palletizing, pallet racking, stacking
patterns, bar codes, TUN codes, lighter packaging materials, computerized ordering, just
in time principles, travel testing, containerization, rail-road freight cars, better security
and other factors have made the speed and efficiency of distribution a major factor in
keeping the cost of goods low.

The other factor is the ability to source product and services from countries where the
labour cost is cheaper than the country where the goods are being sold. Not only does this
mean that products like sports shoes are made in a low cost country, but also services like
call centres, film production and other areas are also now involved.

Just as Department stores have experienced boom times and also hard times, retailing has
changed in many other areas as well.

In the early part of the century, the general store, post office and bank were the centre of
business and trade. The people came to the store by horse and cart or carriage. When the
car replaced the horse, parking spaces in the high street replaced the hitching rail, but
with mobility, stores with car parking, grew stronger, while those without parking
became weaker. Shopping centres had to have parking, and the more spaces they had, the
greater their ability to attract ‘traffic flow’, and in turn retailers to pay rent.

As cars improved in quality and reliability, the ‘garage’ with its mechanics, grease, oil
and cars being fixed also changed. The ‘garage’, ‘service station’ or ‘gas station’ evolved
from the need to fill cars with gas or petrol and repair them. They replaced the cartwright,
blacksmith, saddlery, and livery stables where the needs of horses and fixing carts had
been attended to.

The first ‘service stations’ began to be built around 1907, first as a shed where fuel could
be pumped by hand from a drum into the car. Within a decade drive-in service stations,
with air for tyres, mechanics to fix or repair cars, restrooms, and an attendant to wash the
windscreen or windshield, and check the oil and water began to appear. Pumps also
became more sophisticated, and were slowly electrified, and the garage gauged its
success on the number of ‘lube bays’ or ‘lubritorium’ that it had, and a ‘grease and oil
change’ became its biggest business.

As highways developed in the 1950’s, service stations took their business from the centre
of towns, out of town to locate next to the highway. ‘Motels’ also followed them to the
highway, offering accommodation and easy parking, but no alcohol or bars as the hotels
in town had done.

By the 1980’s, Service Stations started to change their whole business, from a focus on
the car and its repair and maintenance, to trying to service the needs of the driver and
passengers with snacks and magazines.

By 2000, ‘self service’ began to replace ‘full service’. Lube bays had closed, mechanics
were unlikely to be available, and the service station attendant usually knew less about
cars than the driver. Service stations became convenience stores, and in turn competed
with grocery stores, selling everything from Coca-Cola, to pizzas, newspapers, banking
services, and pastries.

For many manufacturers, the greatest issue they are currently facing is the growing
concentration of retailer power. This is occurring across all areas of retailing – in
groceries, pharmacies/drug stores, hardware, electrical and electronics, clothing,
footwear, toys, music and other areas.

A number of retailers are now taking over ‘Service stations’ and introducing their own
brands. The Oil companies in turn are moving back to the refining and distribution areas
of the oil business.

Many retailers are also restricting the number of manufacturer brands that they stock, and
giving more emphasis to their own brands rather than the manufacturer’s brands. While
the manufacturer once had the power base, the retailer would cite the owner of the
shopping centre as having the power base, and they in turn would cite the banks and
financiers. The power base is always changing.

CHAPTER 25

From War to Baby Boomers

During the 20th century, the population moved in western countries from the country to
the city, as rural farming jobs diminished and city jobs increased.

There was also a move from secondary industries into services, but the greatest change of
all was the move for families to be supported by a single breadwinner to two income
families.
During World War II, women entered the workforce to support the war effort in large
numbers. They drove trucks, worked in armament factories and food factories, and in
offices as clerks, bookkeepers and in a multitude of jobs that were previously only given
to men.

The post war period also saw large numbers of people relocate to new countries, and also
within their own. As returning soldiers, seamen and airmen, they had seen the world, or
at least a part of it, something their parents had probably never done. They had also
endured hardship, fought in battles, been bombed and felt the insecurity of not knowing
whether they would live or die as the war progressed. Food had also been rationed for
many, as had clothing, with the world dressed in uniform, lights blacked out at night and
all sense of fun diminished as the world talked only of war.

Jubilation at the end of the war was immense, with people letting go of the pent up
emotions they had held close during the war period, and marriages and engagements that
had been deferred, began again, as people sought to restore their lives as best they could.

The post war baby boom began in earnest in the 1940’s and early 1950’s, and in the
1950’s and 1960’s millions of people moved from Europe, where the war had been
fought, to new countries like the United States, South Africa, Canada and Australia.
Many also went to South America and parts of Africa, and migrant populations became
huge. The new countries were also desperate to attract migrants, with views such as
‘populate or perish’ making population growth not just a compassionate cause but also a
security issue.

Children of the baby boom, the ‘baby boomers’ themselves had a very different attitude
to the world.

The gyrations of Elvis Presley on stage left parents stunned, and the coming of Rock ‘n
Roll meant teenage boys slicked back their hair, wore pointy shoes, stovepipe pants, even
with silver thread through it. Cars were no longer just the family transport, they became a
status symbol of independence, as teenagers bought and drove them too. Old cars became
hot rods.

Where their parents took trips to the beach to take in the air, teenagers began to wear
briefs and girls wear bikinis. The sounds of the Beach Boys brought bleached blond hair,
surfboards, Hawaiian shirts and the sounds of California to teenagers around the world.

This was followed in the 60’s by the Beatles and Rolling Stones, whose music and
lifestyle created a worldwide craze and new fashions, with their music played louder and
more often. Long hair fashion was in, and Bob Dylan became a symbol of the new Peace
Movement gathering pace, as the world focused on the Vietnam War.

While hair fashions jumped from slick back grease to bleached blond, and then shoulder
length hair, the longer the better, and clothing and shoes moved through a succession of
fashions with the emergence of slacks, mini skirts, bikinis and bell bottoms, a long term
change was the emergence of denim.

No other fabric, clothing or dress style has managed to evoke as much passion and
feeling as denim, and the clothing style it was made into – jeans.

Denim cloth can be traced back to the 17th century in France, and by the late 1800’s it
was being used as a fabric in topcoats, trousers and vests. While many workers wore
heavy serge cloth garments in the 18th century, overalls gained in popularity as clothing
for painters, mechanics and others, both for its durability and also comfort. Denim was
considered a very honest, unpretentious type of fabric.

Levi (Loeb) Strauss (1829-1902) was born in Bavaria, but emigrated to New York in
1847 where he worked with his half brothers in a wholesale dry goods shop selling bolts
of cloth, linen and clothing. In 1853, having just received his American citizenship, he
decided to move to California, where he continued to wholesale linen, blankets, and
clothing to shops across California and the Western states.

In 1872 one of the tailors he supplied, Jacob Davis, in Reno, Nevada approached him
with the idea of improving the strength of the overalls he made by inserting copper rivets
into the seams at their weakest points. Davis wanted to take out a patent on the idea, but
didn’t have the money, so in exchange for Strauss paying the patent fees, he was willing
to give Strauss a half interest in the idea. Davis then moved to San Francisco to join
Strauss in the business, making waist overalls with copper rivets for strength.

When Levi Strauss died in 1902, he left the business to his four nephews, with Jacob
Davis later selling his shareholding to them in 1907.

The 1920’s saw Levi waist overalls become the best known work clothes in western
USA, and in the 1930’s Levi jeans became famous as the clothing worn by cowboys in
the movies. The war then took jeans overseas with American troops.

The image of the cowboy, living and fighting for his independence in a tough, rugged
world put jeans in the movies.

In the 60’s they then became a symbol of youth and an attitude of independence and
while the cowboy as an image for jeans began to fade, jeans adapted to a new fashion
image – reflecting a new age of rebellious youth.

What has happened in the world, particularly with the advent of television and movies,
and mass distribution of products, is that people have been greatly affected by the images
they see. No longer is it simply enough to have a functional reason to purchase a product
or service, it is also necessary to have an emotional rationale as well.

While television brought the news, current affairs, quiz shows and movies to life, it also
enabled advertising to bring ads to life, with real people, even movie stars talking to
people in their home, about the latest product they were using, and how it could bring the
same joy and happiness that they had enjoyed to the home viewer.

Television, more than any other media in the past brought advertising to life, with
advertisers moving from the Glossy magazines, like Life Magazine, which died,
newspapers, radio and billboards to Television.

From cigarettes to toothpaste, hair oil to shaving cream, cars to caravans, television
became the most significant reason for advertising to grow from a relatively small
industry to a huge one. So influential was it that when the world turned away from
cigarettes, television advertising for cigarettes was one of the first to be banned in many
countries around the world.

As advertisers took their goods and services to the world, becoming multi nationals,
advertising agencies followed in their footsteps, with advertising agencies becoming also
multi nationals in the process, with the names of their founders ever changing as partners
moved in and out of agencies, and mergers and acquisitions occurred. Names like Ogilvy
and Mather, Leo Burnett, McCann- Erickson, J. Walter Thomson, and later Saatchi and
Saatchi became famous in their own right, and in the last ten years of the century, new
companies like Publicis, and Interpublic which had bought out number of agencies
around the world, created a new level of size and power, building their knowledge of the
advertiser’s needs on an international level.

What also developed over the second half of the twentieth century were what were called
lifestyle products – aimed at a particular audience, rather than a general audience.

Having identified that the biggest consumers of a product were children, teenagers, or
retirees, the products would be targeted to this audience through the selection of
appropriate programs that appealed to them.

Consumer research was also born in this time, with researchers finding out attitudes
towards particular brands, new products and ideas by conducting qualitative research,
asking people what they thought through a series of questions, discussion groups, and
interviews and then later through quantitative research validating these findings through
statistics.

Companies like A.C Nielsen also tracked the sale of products in store to determine brand
shares and market trends, while public relations companies like Burson-Marstellar, Hill
and Knowton and Edelman, and promotional agencies and other specialists in design and
marketing created both new services and new industries.

It was in the fifties that supermarkets boomed, spreading to suburbs. Gas or Petrol
Stations also spread outwards along the highways, and as the population began to move
and travel as never before, food, which could be carried, eaten away from home, without
the need to sit down, and eaten at any time of the day or night, became a reality. Where
past generations had grown up on the importance of three square meals a day, snacking
became a reality, with products like biscuits, confectionery, ice cream, potato chips and
later corn chips, as well as soft drinks, juices and flavoured milk becoming food and
drinks on the run. Convenience snacking then became convenience food with the growth
of Fast Food chains.

Refrigeration had enabled ice cream to be made and drinks to stay cold. From the first ice
cream parlours to ice cream on sticks and then sold in packets, ice cream had moved from
a product made at home to a product sold everywhere from the smallest corner store to a
service station. The ice cream chest freezer also led to upright freezers selling cold
drinks, and later self serve vending units.

By far the oldest soft drink on the market is Schweppes.

This company has a history dating back to its founder, Jean Jacob Schweppe (1740-
1821). He was born in Witzenhausen in Germany, later moving to Geneva in Switzerland
to become a watchmaker and taking up Swiss citizenship. Here he discovered the Spa
waters of Switzerland, and as an amateur scientist he developed his own carbonated spa
water version around 1783 for patients of some of Geneva’s doctors, using the Spa
Mineral water to aid their recovery. His greatest achievement was to be able to keep the
bubbles in the bottle.

In 1790 he went into a partnership to develop the Spa Mineral water business further, and
while his partners stayed in Switzerland, he went to London to establish a factory there in
London’s Drury Lane, the factory opening in 1792. In the same year he was asked to
return to Switzerland by his partners, as the French Revolution had left Europe in
disarray. He decided to stay in London, and the partnership was split with the Swiss
partners retaining the Swiss business and he the new business in London.

The London business continued to flourish, with a number of doctors recommending the
drinking of his Spa water for kidney infections, indigestion and even gout. While
Schweppe retired from the business in 1798, the business he founded went on to become
a British institution, receiving a Royal Warrant in 1831, the first of many such accolades.

In 1834 the business was sold to John Kemp-Welch and William Evill, but it continued to
grow and was selected as the catering company to supply beverages for the Great
Exhibition in 1851 in London, with a contract valued at 5,500 pounds. During the course
of the Exhibition, more than a million bottles of J. Schweppe and Co drinks were
consumed, and in the years that followed Schweppes, as it came to be known, went on to
make Tonic Water with the addition of Quinine, a perfect accompaniment to Gin, and an
aid to stop Malaria in the tropics, as well as Lemonade, Dry Ginger Ale, a perfect mixer
with Scotch Whisky, and other mixer drinks. It never succeeded in making its own cola,
in spite of a number of attempts at different times. The company merged with Cadbury in
1969, and in the past twenty years it has purchased a number of companies in the
beverage market and made arrangements to either bottle and or distribute Pepsi Cola or
Coca-Cola in a number of markets.
Coca-Cola traces its history back to Atlanta in Georgia, where in 1886 Dr John
Pemberton, who ran a Drugstore mixed up medicinal syrup using a mix of Kola Nut
extract and Coca leaves, to help make nerves function better. His partner, and
book keeper then came up with the name Coca-Cola, and they sold it as a drink in the
Drugstore mixed with water. One of the customers some time later asked if he could have
the mixture in a carbonated water, and aerated Coca-Cola became a reality.

It was a new owner Asa G. Chandler, who bought the Coca Cola Company in 1891. He
then patented the drink in 1893, and over the few years its popularity grew. By 1906 it
was being sold in a number of countries, and by 1940 some 40 countries. The business is
still based in Atlanta, and it is the largest selling soft drink in the world.

The Coca Cola Company sells its syrup base, and then bottling plants sell it in local
markets under licence. In recent years it has branched out into different variations such as
Diet Coke, Vanilla Coke, Classic Coke and others, and has also been at the forefront of
marketing Coca-Cola through heavy advertising support, multi channel distribution and
through contracts which secure beverage rights at sporting and entertainment venues.

Its archrival is another American soft drink giant, Pepsi-Cola.

Pepsi-Cola also started in a Drugstore, but in New Bern, North Carolina, a store owned
by Caleb Bradham (1867-1934). He was also wanted to develop a Health Tonic, but one
that would aid digestion and boost energy. The year was 1896, and two years later the
Tonic was renamed Pepsi-Cola.

‘Brad’s Drink’ as it was first called was made on the premises, but by 1902, it was so
popular, that Bradham decided to incorporate the company and by 1905 he had set up two
other bottling franchises also in North Carolina, with another 13 franchises the following
year, and a further 25 the next.

Pepsi-Cola was one of the first companies to move from horse drawn deliveries to
motorized trucks in 1908, but by 1923 the company was declared bankrupt, and the
company was sold for $30,000. It then went through a series of owners, being bankrupted
again in 1931 and 1933, and in 1935 the company moved to New York.

In the early years of both Coca-Cola and Pepsi-Cola both drinks were sold only in small
glass bottles, each with their own unique shape. As supermarkets grew, so too did the
need for a family size glass bottle, but it wasn’t until the 1960’s that a metal can was
introduced, and around 1970 that plastic bottles first made their appearance.

While the success of Coca-Cola and Pepsi-Cola has been driven by advertising, their
success has also been due to distribution strength, and recognizing the dynamic structural
changes taking place in retail distribution.

While drug stores, lunch stops and cafes sold small size cold drinks, supermarkets wanted
large take-home packs, and self service vending machines best handled cans, while in
service or gas stations, they wanted bulk packs that could be pallet stacked out front and
then loaded in a car. Each channel wanted the product, but wanted it in a packaging form
that suited them. At the same time the weight of the package also became important, and
any saving in the weight of packaging material used, meant more product being carried
and sold. Aluminium cans are lighter than steel, and plastic overwraps lighter and more
durable than cardboard, plastic bottles lighter than glass.

The Cola market rather than being just one single market, is therefore, because of the
universal nature of the product, and the changes that have taken place in retailing,
become a multi market product, with market share sometimes quite different from one
channel to another.

Whereas in the early days, Soft Drink sales relied on the shopkeeper having a refrigerator
to keep drinks cold, both of the brands have since bought the retail space by giving the
refrigerator to the store, on the basis of exclusivity on the sale of their product, and
exclusion of the competitor. Milk companies have also been involved in this, and they, as
well as Cola companies all now have a large investment in both in-store refrigeration
units and also vending machines.

‘Convenience’ has always been an important factor in retailing from its very inception,
with people’s willingness to buy dependent on the convenience of the store, the visibility
of stock, ease of access and parking, and ability to pick up or drop off, as well as the
quality and consistency of product and service being offered.

Just as the supermarket revolutionized the sale of grocery items, the purchase of food has
also been revolutionized by the development of fast food, available when and whenever
people needed it.

Cars created the need for better roads, which meant that people could travel greater
distances. In turn, mobility led to people not being at home as much, and roadside diners
sprang up in and around service or gas stations, and near places that people gathered so
that people could eat away from the home.

In America, the hamburger was developed in the 1920’s as a hot sandwich sold from
Hamburger stands, prepared by ‘short order cooks’. In 1921, the first hamburger chain
was set up in Wichita, Kansas by Billy Ingram and Walt Anderson, under the name of
‘White Castle’, ‘White to symbolize purity, and ‘Castle’ to symbolize strength. They
introduced standardized short menus, designed a standard store layout, and preparation
procedures, and began to franchise their operation through the 1930’s, and by 1937 they
had sold over 40 million hamburgers.

Franchising enabled essentially small business to string together a number of small


businesses to create a large one. The word, ‘Franchise’ comes from an old French word
for privilege or freedom, and was originally used to describe the right or privilege given
by the King to a merchant or business to carry on a particular activity with the exclusion
of others. This might be to brew ale, or build a road and charge a toll or other such
activity.

In the 1840’s German Brewers granted taverns, franchises to sell their ales, but it was the
Singer Sewing Machine Company in the 1850’s that created the modern version of
franchises, when they produced written franchise contracts granting the rights to sell their
sewing machines, on the basis of an exclusive distribution agreement. Water, gas and
electric companies followed this, and then oil and car franchises as each of these
industries evolved.

It wasn’t until the 1950’s that the main fast food chains we know today really began to
grow both in numbers of Chains and number of outlets.

The car had created mobility, and the fifties also saw teenagers emerge with money in
their pockets, and a burning ambition to spend it.

Rather than eat at home, with a home cooked meal, they could now hang out with friends,
and have a hamburger, fries and a Coke.

1952 saw the start of Kentucky Fried Chicken; 1954, McDonalds and also Burger King;
1958 Pizza Hut; 1960, Domino’s Pizza, and 1962, Taco Bell. There were also many other
smaller chains and single fast food stores that started up during this period, in the hope of
successfully franchising their stores. Almost all of these store franchises were American,
even though others, like Wimpey Bars in Britain, also tried to follow the concept.

The growth of the fast food chains also began to symbolize in many ways American
business and culture.

Where other American businesses had often stayed in America, or when they did venture
into foreign markets, they had bought out existing companies in those markets and added
their products and services to these companies, the fast food chains took an American
product and service model into new countries with essentially very little change to the
format or products being sold. Even when the products they were selling were in many
ways very alien to the diets of people in some of these new countries, the Fast Food
Chains managed to change the way people ate in these countries. China, with its diet
based on rice and noodles, Italy with its pasta, and England with its fish and chips – it
didn’t matter which country was involved, Fast Food and its low pricing, heavy
advertising and promotion epitomized the successful American business model.

The growth of the franchised small business also epitomized the American dream, where
a poor country boy could one day become President, and a poor struggling businessman
could go from rags to riches.

Colonel Harland Sanders (1890-1980) from Corbin, Kentucky, started Kentucky Fried
Chicken, now called KFC.When he was six year’s old, his father died, and Harland was
left to help raise and care for his younger brother and sister, learning to cook and then
taking a job on a farm at age 10.

Over the coming years, he worked in a variety of jobs, everything from a streetcar
conductor, fireman on the railroad, to selling insurance, tyres, and operating a service
station. He had also at age 16 been a soldier for six months with the US Army in Cuba.

It was when he was operating the service station in Corbin in 1930 that he first began to
sell his southern fried chicken with 11 herbs and spices to customers at his dining table.
As it grew in popularity he then moved to bigger premises, setting up his restaurant in a
Motel across the road.

In 1935, the Governor of Kentucky, Governor Ruby Laffoon, made him a Kentucky
Colonel in recognition of his services to the State’s cuisine.

By 1950-51 however Corbin was isolated, as a new State Highway bypassed the town,
and the Colonel was forced to sell up. The following year he took to the road to sell
franchises to use his chicken recipe, cooking method and secret herbs and spices, with his
first franchise sold in Salt Lake City. He was to travel an average of 250,000 miles a year
over the coming years to both set up and provide support to franchise operators across the
country.

He eventually sold the company in 1964 for $2 Million, by which time it had 600
franchised stores. Colonel Sanders stayed on however in the role of its company
spokesman until his death from Leukemia at age 90 in 1980.

The Heublein Corporation had in the meantime sold the company in 1971 for $285
million, and then Kentucky Fried Chicken was taken over again in 1982 by R.J Reynolds,
and then sold again in 1986 to PepsiCo, who paid $840 Million for the company.

In 1997 PepsiCo brought together its three franchised fast food companies – KFC, Pizza
Hut and Taco Bell, as well as A&W and Long John Silvers into a single separate
company, under the name of Tricom. In 2002 the company’s name was changed to Yum!
Brands.

Frank and Dan Carney started Pizza Hut itself in 1958 in Wichita, Kansas. It was bought
in 1977 by PepsiCo, and now has over 12,000 outlets in over 90 countries.

McDonalds also has a similar, but very different story to KFC.

In 1954, Raymond Kroc (1902-1984), from Arlinton Heights near Chicago, was a
traveling salesman, or Commercial Traveler selling paper napkins and ‘Prince Castle’
Multimixers. This machine could mix up to five milkshakes at once, and he sold it to ice
cream palours, drug stores, diners, restaurants and cafes across the country, wherever he
could, a job he had had for 30 years.
He usually sold just one machine to an outlet, so when a Hamburger store in San
Bernadino bought eight machines, he was amazed. He decided to visit the store, and met
the owners, Maurice (Mac) and Richard (Dick) McDonald.

In their San Bernardino store the McDonalds had systemized the production of
hamburgers and milk shakes into a production line, with individual workers doing
specific tasks in the production. Ray, within a day of seeing the brother’s store operation,
believed that it could be franchised, and he put together a business proposal to them.

The following year the first franchised McDonalds outlet opened in Des Plaines, Illinois,
“making a science to making and serving a hamburger”, the same year that James
McLamore and David Edgerton’s ‘InstaBurger King’, later shortened to Burger King,
opened in Miami, Florida.

In 1961 Kroc and his investors and lenders bought out the McDonald brothers interests in
the name and franchises, and it was also a turning point for the company. Where they had
previously tried to sell franchises on the basis of earning fees from the sale of franchises
and fees on product sales, they changed the system so that McDonalds bought or took out
long-term leases on premises, and then subleased these to the licensee owners.

From selling hamburgers, they moved to selling real estate, and gaining the value from
the long-term lease, and increase in value in the real estate as the stores became, with
success, prime real estate.

By the time of his death in 1981, McDonalds had sold over 50 million hamburgers, and
its real estate empire spanned the globe, with brands like Filet-O-Fish introduced in 1962,
(originally for Catholics to eat on Fridays), Big Mac, introduced in 1967, Ronald
McDonald, introduced in 1963, Ronald McDonald House, the first opened in
Philadelphia in 1974, Happy Meals launched in 1979, all becoming famous the world
over.

The business of fast food since its boom in the 1950’s has also moved from being
essentially small retail businesses, owned by individual franchisees, to be big business.

Initially the Fast Food business had none of the prestige of industrial businesses like
Steel, Cars, Food Manufacturing or Department stores, but as success has been reflected
in both sales and profit, and Stock prices on Wall Street have risen, it is now considered
very much main stream, while some of the traditional businesses like Steel have been
seen more as dinosaurs of the past.

The fast food business, like all others, has also had to keep pace with other changes
taking place, and where the emphasis has, and still is to a large extent, on speed of
delivery, it is starting to change to focus on food quality as well.

There is also the rumbling of change underway, as issues relating to the fat content in
Fast Food, and its implications start to take effect. Kentucky Fried Chicken, initially tried
to lose the word ‘fried’ because of the fat connotations, eventually settling on the name
KFC, and broadening its menu base. Pizza Hut has in turn, closed many of its sit down
restaurants, and is more focused on home delivery. McDonalds is also changing its menu
more often, and trying to appeal more as a ‘Cool’ place to be, and introducing the
McCafe concept to a changing world. They introduced salads in many of their restaurants
for the first time in 2003.

The world in the year 2000 also went café crazy, and a new age of cafés, under names
like Gloria Jeans, Starbucks, Jamaica Blue and others opened across the world.

At the same time, Shopping Centres opened up bigger and more diverse Food Courts, a
concept developed in Asia, where Hawker Stalls, each specialized in a particular dish or
cuisine had operated for many years. The range and choice, quality of food and service,
and low pricing opened up a new type of business operation, becoming at the same time a
direct competitor to the Fast Food Giants, who are now locating some of their stores in
these Food Courts.

While there have also been attempts to mass market up market restaurant franchises, none
of these have to date been particularly successful, as people seeking out restaurants look
for a more individual experience. Whether this continues to be the case is yet to be seen.

As with all businesses, the greatest costs are in people and premises, and in countries like
Japan, the vending business has reached a high level of sophistication in the products
being sold. To date in other countries vending has been largely confined to drinks and
snack foods.

As service stations move away from places to fill a car and fix it, to become convenience
stores, with add on services, they too are partnering with Fast Food Franchisors to
provide Fast Food as an additional service.

As with all services, the Fast Food business is dynamic. Who knows how it will change
over coming years.

CHAPTER 26

The age of Computers

In an earlier chapter on Accountancy, we discussed the change from Roman numbers to


Arabic numbers, and the impact that this had on business and also mathematics at the
time.

If you look at roman numbers like iv (4) or x (10), and then try and add x + iv together or
multiply them, you will immediately see the difficulties involved. A list of numbers, or
division is even harder to work out. The Arabic numbering system is far easier, and its
adoption had a profound effect on the development of arithmetic, business and the world
at large.

The earliest calculating machine was the abacus, invented around 3000 BC, in Asia
Minor, and used extensively in China, and still to this day, although modern calculators
are taking over. It wasn’t until the 16th century that calculating machines were developed
– the slide rule by William Oughtred in 1622 in England, and Blaise Pascal’s numerical
calculating machine in 1642 in France, and others developed by Schickard and Leibniz.

In 1805 Joseph-Marie Jacquard (1752-1834) developed what has since become known as
a ‘Jacquard fabric’ – a highly decorated pattern woven into the cloth, and named in his
honour. This pattern was achieved by using a loom, where the use of each coloured
thread and needle was controlled by a pattern set down as a series of holes in a punch
card. In some of the most sophisticated fabrics, this entailed using a tape of cards with up
to 10,000 cards to create a full patterned fabric.

For the first time ever, a machine was controlled by an established databank of
information, or program, rather than directly as a result of the operator’s actions, a truly
remarkable achievement.

It was an Englishman, Charles Babbage (1791-1871) and the Countess of Lovelace,


Augusta Ada Byron (1816-1852), daughter of English poet, Lord Byron, that developed
the first concept of a computer, creating the plans to build a mechanical ‘Difference
Engine’ and later a ‘Analytic Engine’ to handle large numbers of calculations involved in
creating logarithm tables for use in navigation charting, with an accuracy of up to twenty
decimal places. While the machines were never built to completion, a great deal of
information on how they were to be built, and the principles behind the machines were
documented. The reason for Babbage’s Analytic Engine being seen as the first computer
is that it had a store (databank and memory), a mill (operational and variable cards, or
processing unit, with protocols) and an engine (to calculate and print out the end
calculations) the power to be provided by steam, in line with the technology at the time.

In 1855, Georg and Edvard Scheutz, based on the work of Babbage, developed a
mechanical computer in Sweden.

A second very important step in the development of the computer was the origination of
what was called Boolean Algebra, invented by George Boole (1815-1864). Where the
most important arithmetic function had always been ‘addition’, with multiplication and
division a shorthand way to arrive at an answer, Boolean calculus saw answers,
particularly in more complex decision making coming from a series of answers which
were either ‘true’ or ‘false’, in other words, a switching between right and wrong, on and
off, based on the stimulus (number, algebra letter) applied. This concept of ‘switching’,
more than a century later would later become an integral thought in the way microchips
or semi conductors were developed.
While scribes, bookkeepers, taxmen, landlords, farmers, merchants and others had kept
books recording the day’s trading, stock numbers or taxes paid or unpaid, it was the need
for a faster way to establish the results of a Government Census that led to shortcuts
being found to compile and tabulate large amounts of data, that led to the development of
Adding machines in the late 1800’s.

In 1884 Herman Hollerith in the United States, and John Shaw Billings, who worked on
the 1880 census, discussed the idea of speeding up the processing of census return
information by using punched cards. Over the next few years this led Hollerith to develop
a system to faster collate the information and then store it, and he set up the ‘Tabulating
Machine Company’ in the 1890’s. By this time, there were a number of companies
involved in the field, and his company merged with the ‘Computing Scale Company’ and
the ‘International Time Recording Company’, renaming itself the ‘Computing-
Tabulating-Recording Company’.

CTR, as it became known, changed its name in 1924 to ‘International Business


Machines’, which in turn became better known as IBM.

Eliphalet Remington (1793-1861) was born in Suffield, Connecticut, training as a


blacksmith before turning to gunsmithing and building a business with his father making
rifles and other firearms. In turn, his son, Philo Remington (1816-1889) took over the
business, and the business became famous for its rifles, which it supplied to both the
army during the Mexican and then Civil War and also to a number of armies in Europe.
The company also began to manufacture agricultural equipment and sewing machines.

In 1872 the company was approached by a financier, James Densmore and his partner, a
Mr Yost, to produce a writing machine, a machine invented in 1867 in a Milwaukee
machine shop by three inventors, Christopher Sholes, Carlos Glidden and Samuel W.
Soule.

The idea had developed initially from the thought of developing a machine which could
number pages, to using the whole alphabet, and putting a letter of type on a little rod to
strike a plate, a bit like a hammer, with paper placed under sheets of carbon paper, later
refined into a carbon ribbon.

From this idea, they developed a keyboard to control the letters as they moved to strike
the carbon paper. Initially they arranged the letters alphabetically, but because the letters
tended to stick together they worked out a new keyboard, based on spacing out the most
commonly used sequences. The top line letters Q,W,E,R,T,Y on the left hand side, that
they worked out, became part of their patent, and the Qwerty keyboard as it came to be
known is still used today.

The first Sholes & Glidden Typewriter, manufactured by Remington was produced in
1874, taking on the look of a sewing machine, with a treadle to work the carriage return,
gold flower decals and branding to decorate the machine, with the machine painted black.
One of the reasons for this look was that the Remington engineer working on the
machine, William Jenne, had until then been working on sewing machines. The upper
and lower case letters and shift key was introduced in 1878.

Remington replaced the name, Sholes & Glidden within a few years, and in 1913 E.
Remington and Sons changed its name to the Remington Typewriter Company. It
changed again in 1927 when it merged with Rand Kardex Bureau Inc., becoming known
as Remington Rand. The Kardex system had been developed as a system of filing on
cards, as opposed to a book ledger system, by James H Rand Senior and also Junior, who
initially competed against each other, before merging their firms in 1925, by which time
they were manufacturing safes, filing cabinets and card filing systems for all sorts of
businesses as well as libraries.

Remington Rand in 1949 introduced the world’s first business computer, and in 1950
they bought out the Eckert-Mauchly Computer Company, formed in 1946 by Presper
Eckart (1919-1995) and John Mauchly (1907-1980) when they built the world’s first
large scale digital computer at the University of Pennsylvania. It was in 1951 that their
UNIVAC (Universal Automatic Computer) was built, and in 1952 it was successfully
used to predict the outcome of the Presidential Election, when Dwight D. Eisenhower
came to power.

The company then merged with the Sperry Corporation (est. 1933) to become Sperry
Rand in 1955, and in 1979 they sold of the Remington office equipment business,
including the electric shaver business, which also bore the Remington name, purchased
by Victor Kiam, “who liked the product so much that he bought the company” and in
1986 Sperry merged with Burroughs to form Unisys Corporation.

1884 also saw the launch of a new company, set up by John H. Patterson, making the
world’s first mechanical Cash Registers.

Charles Kettering, who in 1906 designed the first cash register to use an electric motor,
later joined Patterson. The company was then given the name ‘National Cash Register’.

1886 then saw the development of the first mechanical adding machine, developed by
William Seward Burroughs, whose name would also become synonymous with
computers in years to come, before eventually disappearing. He initially called his
company, the ‘American Arithmometer Company’, renaming it as ‘Burroughs Adding
Machine Company’ in 1905.

Honeywell also traces its history back to this time. In 1885 the Butz-Electric Regulator
Company, named after Albert Butz, developed a ‘flapper’ to control the heat on furnaces.
This was the first thermostat controlled heating system, and in 1904 the company, which
by this time had changed its name to the ‘Electric Heat Regulator Company’ was taken
over by the ‘Honeywell Company’, owned by Mark Honeywell. This company
specialized in hot water heat generators, and then went on to produce thermostats,
pyrometers and other instruments used to measure and control heat. It wasn’t until 1955
that they formed a joint venture with Ratheon, building their first computer, which
weighed 25 tons and took up 6000 square metres of space, and cost $1.5 Million to build.
During the 1970’s and 1980’s, the Honeywell name became very well known in the
Computer industry, selling computer systems to business worldwide, but it has since
moved away from this and into the avionics market.

In 1931 a calculator was developed in Germany by Konrad Zuse, who also went on to
develop Germany’s Z3 computer in 1941 to help design aircraft and missiles and in the
United States a mechanical calculator was developed by Vannevar Bush (1890-1974) to
solve differential equations. Professor John V. Atanasoff from Iowa State University, and
one of his graduate students developed this further in 1939, Clifford Berry using Boolean
Algebra. The following year George Stibitz at Bell Laboratories also developed a digital
computer, even creating a remote terminal to process calculations.

It was the Second World War which saw computers gain more prominence, as war
funding in Britain, Germany and the United States, saw governments seek new ways to
counter their enemies.

While the Germans worked on using computers to design missiles and aircraft, the British
created a giant computer, code named Colossus to break German code messages, and the
Americans worked on Ballistic charts for the Navy. These were typical applications of
the new computers, but the computers probably had little impact on the outcome of the
war, and very few people even knew of their existence.

The US Government also sponsored the University of Pennsylvania’s work with John
Mauchly and John Eckart to develop the ENIAC system (Electronic Numerical Integrator
and Computer).

At the time radios and early televisions used valves, or vacuum tubes, as transistors had
not been developed.

Their computer also used vacuum tubes – some 18,000 of them, as well as 70,000
resistors, and 5 million soldered joints, and used over 160 kilowatts of power, enough
energy to dull the lights of the city.

In 1945, John von Neumann (1903-1957) joined the University team and developed the
Electronic Discrete Variable Automatic Computer. This enabled data to be stored as
memory on a magnetic drum, and the idea of a CPU Central Processing Unit was also
developed.

Vacuum tubes in radios were highly likely to malfunction, and it was no different with
the early computers. In 1951 the transistor was invented, and in 1956 transistors were
used for the first time in computers, these being in supercomputers developed by IBM
and Sperry-Rand for the US Atomic Energy Laboratories. It wasn’t until the 1960’s that
computers began to be used to process data in business organizations, with the computers
being programmed using languages like Cobol and Fortran- a language developed by
John Backus from IBM.
It was in 1952 that Texas Instruments purchased the licence from Western Electric to
manufacture transistors, and entered the semi conductor business.

Texas Instruments began in the 1930’s, set up by John Clarence ‘Doc’ Kacher and
Eugene McDermott as a geophysical seismology service to the oil industry. During the
War, with new owners, it began to produce submarine detection devices, and then radar
systems.

The next major advance was in 1959 when Jack Kilby working for Texas Instruments
developed an integrated circuit, produced on a silicon disc made from quartz. By 1971
the silicon chip or semi conductor had reduced in size, but increased in power, and it was
possible to hold memory, input and output, as well as processing on the one chip. Texas
Instruments took out a patent on the single-chip microprocessor in 1972.

The chip could be split into current conductors with adjacent areas as insulators. Initially
there were two semi conducting materials tested – germanium and silicon, with a
company called the Shockley Transistor Corporation, named after its founder Dr William
Shockley, a Stanford Graduate, favouring Germanium. A number of Shockley’s
employees favoured silicon, and left Shockley to start up on their own. The company they
set up, Fairchild Computers, also spawned a number of start-ups itself, including Intel.

Intel, initially called NM Electronics, was started by Robert Noyce and Gordon Moore in
1968, both having worked for Fairchild. The new company focused on making memory
chips, with operations becoming faster and faster. In 1971 the Intel chip contained 2300
transistors, by 1982 this had increased to 134,000, and by 1993 this had reached 3.1
million transistors.

The silicon microchip, also known as a semi-conductor was one of the great inventions in
history, massively reducing the computer in size, yet increasing its reliability, power and
adaptability for use in industry, academia, government, and in homes around the world.

Just as the electricity had changed the world, so too did the invention of the microchip
and its use in computers.

The first personal computers were introduced in the late 1970’s, with IBM launching
their PC in 1981. That year there were around 2 million PC’s sold worldwide, by 1982
there were 5.5 million, and by 1989 this had increased to over 100 million.

In business, computers had moved through a cycle, where a central computer in its own
air conditioned and sealed off room held at a constant temperature took over from manual
processing of accounting and sales data, with more and more functions being centralized.
This was the era of the mainframe, and then in the 1980’s the whole idea of centralizing
all data was turned on its head, as computers began to be networked, with the network
both growing in size and extending from one physical location to link computers in
multiple locations. From single networks, this then extended to multiple networks, with
links from one to another, and computers moved from a central computer to computers
on everyone’s desk.

The initial wave of computerization had started as big business building computers for
big government and then big business, and then onwards to medium and then small
business and personal users.

As the computer revolution took hold, names like IBM, Control Data, Burroughs, Wang,
Data General, Compaq, NEC, Honeywell, Hewlett-Packard, Texas Instruments, Unisys,
DEC, and others became household words. During the 1970’s computer salesmen also
became the new rich, selling large mainframe solutions to business, and earning big
commissions in the process.

Just as Detroit had become the centre of the car industry, and Hollywood the centre of
movies, a new area was about to emerge as the centre of development for the computer
industry.

Stanford University, in Northern California was founded in 1891, by Governor Leland


Stanford, who organized a government grant of 3240 hectares of land to the university,
on condition that the land could not be sold.

With Northern California being largely rural, most graduates from the University moved
east to get jobs.

The head of the electrical engineering department, Professor Frederick Terman saw this
happening, and began to encourage some of his students to start up businesses in the
emerging computer industry near the University. It was in the 1930’s that two of his
students, Bill Hewlett and Dave Packard, set up Hewlett-Packard, their company starting
in 1937.

Initially their company began life building an audio oscillator in a garage in Palo Alto,
near the University, an instrument used to test sound equipment, and they sold some of
their early HP 200B oscillators to the Walt Disney studios.

During the War, Bill Hewlett joined the U.S Army, while Dave continued to run the
company, which by 1947 had 111 employees, and was making 39 products, including
signal generators for the U.S Navy.

Following the War, they began manufacturing frequency counters for the Radio industry,
oscilloscopes, and other scientific testing and measuring equipment, and then in 1958
they bought out a company, F.L Moseley, which manufactured plotters.

It wasn’t until 1966 that they produced their first programmed instrument control system
using integrated circuitry, and selling one of their first to for use on an Ocean Research
vessel. A programmable adding machine followed in 1968, and the world’s first
programmable pocket calculator in 1974, which replaced the use of slide rulers used in
scientific and engineering. Their first mini computer is produced the same year, and by
the early 1980’s, Hewlett-Packard is producing a range of computers and printers for
industry and scientific use – everything from pocket calculators to mainframes.

By the 1970’s, the area around Stanford University had been given the name, ‘Silicon
Valley’ and had become the centre of the microchip and computer Industry. In turn,
Professor Ternan had been recognized as the ‘father of Silicon Valley’.

While under the terms of its land bequest it was not possible to sell off its land, nothing
stopped the University from leasing off its land to companies, and this had first began in
1951, resulting in the Stanford Industrial Park being established, and the Research
facilities of companies like Kodak, General Electric, IBM, Xerox, Lockheed and others
taking up leases in the Valley.

Aside from Houston, and Texas Instruments, the Microchip was pretty much born in the
Valley, and grew up there, reaching mass production in the 1970’s. By the 1980’s the
production of microchips had however moved to Japan and then to other parts of Asia,
wherever cheap labour could be sourced, and ‘Silicon Valley’ was forced to change tack.
Texas Instruments set up a number of joint ventures during the 1980’s, including Japan,
Taiwan, Malaysia, Italy, and Korea.

During the 1960’s mechanical typewriters had become electric typewriters, and then
memory functions had been added. IBM’s Golfball typewriter then revolutionized the
way the letters hit the page. Rather than have each key attached to an individual letter, the
keys were electronically connected to a ball, which held all of the letters on its surface,
and rotated to hit the page to be printed. The page to be printed was still held, as it had
always had been, between two rollers, but mistakes could be fixed using an in-built
whiteout ribbon function. Word Processors then changed all this in the late 1970’s and
early 1980’s.

Rather than printing the typed page direct onto paper, the typed page appeared on a
separate screen, with corrections possible to letters, punctuation, style and even typeface
on-screen (although not always displayed, until the advent of WISIWIG (What I see is
what I get) screen fonts.

Where mistakes or changes might mean a whole document being retyped several times
on a traditional manual or electric typewriter, the word processor could print out a
version of a document, the changes made, and the document reprinted on a dedicated
printer. Reproduction quality was also dramatically improved, with brands like Wang,
Nixdorf, and Olivetti word processors becoming the new stars.

The word processor revolution however was short lived, as in 1981 the first personal
computers began to be manufactured.

A number of start-up companies emerged in the 1970’s. These included Atari, set up in
1972 by Nolan Bushnell to produce home video games, and Apple, which began
operations in 1976, set up by Steve Jobs and Steve Wozniak. The previous year, 1975 had
seen Bill Gates and Paul Allen set up their company, Microsoft.

In 1980 Hewlett-Packard, closely followed in 1981 by IBM introduced its first personal
computers for use in offices, schools and homes, while Gateway, Osborne and
Commodore Computers also introduced their personal computers for home use.

Home computers had until this point been seen as something out of science fiction
movies along with space ships.

In 1982 Compaq, based in Houston, Texas was formed, taking over Gateway, launching
the world’s first portable personal computer, and making history by recording the highest
first year sales of any company in the world at that time. By 1987 it had produced over a
million personal computers, and by 1994 was the world leader in PC production, in May
2002 merging with Hewlett-Packard to become the 13th largest corporation on the
Fortune Magazine’s ‘Fortune 500’ list, taking on the name of ‘hp’ to represent the
merged group.

During the 1970’s the computer industry, still only a few years old, was dominated by
companies making hardware, and it looked like these big computer hardware companies
would be the ones destined to dominate the industry.

An anti-trust action was started in 1969 against IBM on the basis that it was seen to be
dominating the industry, but this was dropped in 1982, as it became apparent that the
industry was changing. No other industry in the past had changed direction as fast as the
computer industry. The speed of change was incredible, with new inventions, technology
and applications sometimes becoming overnight sensations, and sometimes failures too in
equally fast time.

Conventional business models suggested that the best way to dominate a market was to
create a machine, and then make the most money through the supply of consumables,
parts and repairs. Initially, the computer hardware companies developed closed systems,
which meant that buyers were tied to the system they chose, and forced to buy
consumables and maintenance agreements, as part of the service. One of the unseen bi-
products of this was that it also tied operators to one system as well, so that they were
restricted in employment, and employers who bought an ‘orphan’ computer system, often
couldn’t find operators to run it. ‘Compatibility’ between different systems and
components also became an issue as well as a frustration, with the problem growing
larger, as organizations purchased more and more computers to take on greater functions.

In 1981 the idea of creating a ‘network’ of desktop computers had been developed at
Xerox’s Palo Alto Research Centre.

Two Stanford graduates, Andreas Bechtolsheim, who had seen the system, and Vinod
Khosla teamed up to set up a new company, ‘Sun’, the name an acronym for Stanford
University Network. They recruited two other Stanford Graduates, Bill Joy and Scott
McNealy, to join them, and build ‘open systems’.

In 1984 the Director of Computer Facilities at Stanford’s Department of Computer


Studies, Leonard Bosack and the Director of Computer Facilities at the Graduate School
of Business, also founded an open system, under the name of Cisco Systems.

The ability to link various computers into a single open network was a huge success.

1980 saw IBM adopt a new operating system for its new PC, using an outside supplier,
rather than an operating system developed by itself.

Microsoft developed the MS-DOS system, and this was followed in 1983 by Microsoft
Word - a word processing program, the first version of Windows in 1985, the Excel
spreadsheet program in 1987 and Microsoft Office in 1989.

Microsoft had effectively through IBM gained massive distribution for its product, and
also maintained its independence, retaining its rights to sell its operating system, but
precluding IBM from doing so.

Accusations and lawsuits followed from Apple, who saw the menu based Windows
program taking many of the ideas that it used in the development of its Mac operating
system and PageMaker program. Microsoft and Apple had worked together in the
development of the Mac computer, before it was released in 1984.

As the hardware industry went open, PC’s began to be manufactured by a whole range of
manufacturers in their own name, as badged brands and clones. While it was relatively
easy to copy existing computer PC’s and manufacture them using components, the
software was not so easy to copy, nor did the licence agreements permit it.

The Windows program, rather than being exclusively for IBM, had been developed for a
number of PC manufacturers, and it was its ability to be used on virtually all computers
that saw Microsoft develop at an incredible pace. From initially selling to computer
companies, they also moved to sell direct to the public, with licenses sold on a ‘user only’
basis. By 1990 Microsoft had sold more than a billion dollars of software, the first
software company ever to do this.

With the huge success of Microsoft’s operating system, software programmers began to
write software to work using it, and Apple became more and more isolated from the rest
of the computer companies, specializing more and more in the education and graphics
industry, rather than general applications.

While Microsoft was booming, some of the older computer hardware companies were in
trouble, including IBM, Compaq, DEC, Lotus and Unisys, who all suffered loses in 1991
and Wang, which filed for bankruptcy in 1992. The following year was no better, with
IBM recording a $4.97 Billion dollar loss on a turnover of $64.5 Billion.
Microsoft’s success also brought it to the attention of the Federal Trade Commission,
who the year before had begun to investigate Microsoft, on the basis that it could be
monopolizing the market for PC Operating systems.

The 1990’s also heralded another revolution, with the development of the Internet, which
traces its history back to 1964. At the time the Cold War between the Soviet Union and
the United States and its allies, saw both sides prepare for the possibility of a nuclear war.

In the United States, an organization called RAND, which stood for Research and
Development was set up as a think tank to develop solutions to possible attack. One of
the problems they contemplated was the question of what would happen to
communications after such an attack.

The answer they formulated, based on ideas put forward by a staff member, Paul Baran
was to develop a network that could communicate without the traditional central chain of
command. This would mean that even if part of the whole network was destroyed, it
would still be able to operate.

The University of California in Los Angeles further developed the idea, and MIT
(Massachusetts Institute of Technology) and a network began to develop linking various
Universities, code named ARPANET, with the letters representing the Pentagon’s
Advanced Research Projects Agency. By 1972 the network had grown to 37 nodes and it
kept growing as more and more other networks linked to it. By this time the Network was
moving away from its foundation in Military research area, and had become a network
linking University computer and scientific communities. It also moved internationally,
and became known as the Internet, with no formal owner, rules, controls or restrictions in
what could be sent or retrieved, as long as it was posted on the net and in the public
domain. By the 1990’s the Internet was broaching new ground in communication, linking
computers in business, schools, homes across the world.

The World Wide Web itself was developed in Switzerland by the Centre Europeenne
pour la Recherché Nucleair (CERN) in 1989, based on an idea put forward by Tim
Berners-Lee and Robert Cailliau, who developed the idea of a universal hypertext system,
HTTP and the language HTML used to create files which would enable a computer
linked to the network to download information sourced from another computer located
anywhere within the network using the protocols they set up. While the idea was there, it
required a great deal of skill and knowledge to use the system effectively, as it was slow
and cumbersome, and the protocols were difficult to work with.

Tim Berners-Lee, an Englishman was knighted in 2003 becoming Sir Tim Berners-Lee,
and in 2004 he was awarded the first Millennium Technology Prize in Finland, carrying a
cash prize of US$ 1.2 million in recognition of his invention. He deliberately never
sought to patent his idea or commercialize it, making the statement “that if I had tried to
demand fees… there would be now World Wide Web… there would be lots of small
webs”. He is considered to be the “father of the web”.
In 1993 NCSA (National Centre for Supercomputer Applications) at the University of
Illinois developed a Mosaic Client, which enabled graphic images to be imbedded within
documents, and forms displayed, which could be filled in electronically and emailed back
to the originator and this was followed by the founding of Netscape Communications by
Professor Jim Clark, the founder of Silicon Graphics and a former professor at Stanford.
Where many people viewed the internet as a means for academics to communicate via
their computers, Clark saw that it bring information together as never before, be it as text,
still pictures or moving images, with sound as well, and he hired Mark Andreesen from
Mosaic to help him build the Netscape vision, and launch Netscape Navigator.

In 1995 Microsoft introduced its Explorer software to compete with Netscape browser
technology, giving it away free with its Windows 95 program. They also teamed up again
with Apple in 1997, with Apple to work on making Explorer easier for web surfers.

The age of computers created not only a whole new range of products and services, but
also a new language in the process. Having an email address became even more
important than a postal address, and traditional mail delivery was given the insulting
name of ‘snail mail’.

The Internet by the year 2000 had touched a huge number of companies and individuals
around the world, and building a website became a pre occupation of many businesses.
At the same time, businesses worried about the ‘Y2K Bug’ and the possibility that their
computers would self destroy or corrupt data at midnight as the clocks changed to the 1st
January 2000. In turn, governments worried about the free transfer of information across
borders without censorship, and rules of law to protect or restrict access to information or
services. Fraud, computer hacking and viruses, child pornography also became front page
newspaper issues.

Email overnight created a new form of communication, and for the first time in probably
20 years, people started to write personal emails to each other, whereas personal letter
writing had almost disappeared.

The internet and World Wide Web, and the incredible speed at which the web grew,
created a wave of predictions about the business of the future as the world advanced to
the 21st century.

In the year 2000, companies were referred to not by their business activity, but as ‘old
economy’ or ‘new economy’ stocks, and valuations on them made according to their
ability or lack of it to adapt to the new e-commerce world. Central to this hypothesis was
the belief that the web opened up a new distribution channel for communication and
commerce as never before.

This prediction became for many people, organizations, politicians and companies a total
reality, as people saw the future changing before their eyes, and just as Oil strikes, Gold
rushes, Nickel booms, and the Radio boom in earlier ages had created people who made
fortunes and also those who lost them, so too did the ‘dot-com’ boom and later bust.

Where the whole world economy had been valued to large extent on ‘bricks and mortar’
security, ‘clicks and mortar’ became the new future. Predictions were made that shopping
malls would disappear as people shopped on-line, and that commercial real estate would
die as people worked at home connected to their workmates through the Internet, rather
than being a desk away.

Companies saw that the ‘physical’ restrictions of their location, and ability to attract
attention and trade, were now no longer there. They now had a world wide potential to
sell their products and services as never before. The idea of a borderless society became a
concept to many, as did the idea that ‘profits’ might no longer be the way to judge and
value a company. Real doubts were placed on the ability of accounting to truly value a
company in the ‘new economy’.

Newly formed companies which had no turnover, but had grand ambitions made
predictions that they would be turning over hundreds of millions within two or three
years of start up. Many of these claims and statements were totally believed, rather than
simply being blue-sky predictions or puffery. A great number of investors, commentators
and even some of the most established and conservative financiers saw the ‘blue sky’ as
‘reality’ themselves.

Early credence was given to success stories, both real and imagined, and even the concept
of ‘profit performance’ was in many situations abandoned, as gaining a foothold in the
new economy became a rationale for lack of profits, and also in some cases for lack of
turnover and sales.

Bookshops like amazon.com which had no physical shop on a high street, shopping
centre or mall, but had millions of book buyers on-line became early beacons as success
stories, challenging traditional booksellers like Barnes and Noble by the new way they
did business. Everything from real estate to travel, computers to cars were posted on web
sites, and many were and continue to be very successful in selling products and services.
Others however failed.

‘America on line’ (AOL) merged with Time Warner in one of the biggest mergers in
history. AOL had only been set up in 1985, whereas Time Warner was one of the
established business giants with a history dating back to the beginning of the film era.
While half the world looked on in amazement, the other half saw the merger giving total
credence to the reality of the ‘dot com’ future.

By 2004 the dot-com boom was seen as a historical term, and Time Warner formally
voted to dump the name AOL from its name, and revert to its former name of Time
Warner – with the takeover referred to as “cataclysmic”. America Online simply became
a division.
Many of the dot-coms reported major losses in 2000 and 2001, and ‘cash churn’ and
‘cash burn-up’ became new phrases to discuss the future facing them. Well over 1000
Internet companies of size closed or were bankrupted during the dot-com bust, and untold
numbers of smaller ones failed as well. One of the listed companies in the United States,
a company called Webvan is said to have burned through over US$ 800 million in around
two years, and there were hundreds of others who also burned through millions as well.

At the same time that the Internet boom was happening, there was also a boom in mobile
phones, with this boom in many ways converging with the computer boom. The new
computer networks used telephone cabling to carry their messages, and telephone
companies, long sleeping giants, were suddenly caught up by a huge boom in demands on
their cabling networks to carry bigger and bigger files, faster and further than ever before.
At the same time there was a huge demand for mobile communication as well.

A decade earlier postal services and telecommunication services had separated, with
postal services challenged by courier companies and later fax machines to carry
messages, and now it appeared that mobile communications would compete with hard
wired telephone services as well.

In many countries, telephone and postal services had often been run as government
monopolies, but in the 1980’s the attitude of governments began to change, and they
began to invite competition to these operations, and move their monopoly operations into
company structures that could be listed on stock exchanges, with shared ownership
between the Government and the public. This trend could also be seen in shipping,
airlines, banking and telecommunications, as well as the ownership of public utilities
such as electricity, water, railways and gas.

The cell phone or mobile phone first made its appearance around 1980, and where before
phones had simply been a hand set supplied by the telephone company, with a choice of
colours, push button or dialing tones, with essentially no branding, suddenly their were
choices. In many countries it had even been illegal to install any other sort of phone,
other than that supplied by the phone company.

Cell phones opened up a whole new era in communication, and just as the transistor had
given mobility to the radio, so too did cell phones give mobility to voice communication.

Two of the leaders in this revolution were Nokia and Motorola, but there were and are
many others including Vodaphone, Siemens, Samsung, Alcatel and Ericsson to name just
some of the companies.

Nokia was established by Fredrik Idestam in 1865 in Finland, who set up a paper and
cardboard mill on the banks of the Emäkoski River, with the town itself taking on the
name Nokia. In 1898 the Finnish Rubber Works also set up in Nokia, taking on the
town’s name as its identity in the 1920’s, and producing rubber galoshes, and later other
rubber products such as tyres, shoes, rubber bands, and raincoats.
Following World War II, the company bought shares in another Finnish company, the
Finnish Cable Works, which had been established in 1912, and made cables for
telegraphs and later telephones. In 1967 the two companies were merged to form the
Nokia Group, with electronics representing just 3% of the merged group’s total sales.

By this time semi-conductors were just starting to make their impact, and Nokia began to
develop digital switches for telephone exchanges that were changing from analog
technology across to digital. It used Intel microchips.

In the 1980’s Nokia developed a range of products, including the manufacture of


televisions where it became the third largest European manufacturer, as well as a range of
other electronic equipment, as well as car phones, which in 1981 had only just been
authorized in Sweden and then Finland, with access to the public network. The Nordic
Mobile Telephony (NMT) network was the first multinational network to be established,
and it became a model for others that developed through the 1980’s.

1982 saw Nokia introduce the Mobira Senator mobile phone, weighing in at 9.8
kilograms. This was followed by the Talkman in 1984, which weighed 4.8 kilograms, and
in 1987 the Cityman, which weighed just 800 grams.

Where the first phones were marketed to business executives, by the 1990’s their price
and size had been miniaturized, and the cell phone had become a fashion accessory in
much the same was as watches, with the main buyers becoming teenagers, who had
grown up with electronic games marketed by Atari, and then Sega and Nintendo. In 1995
and 1996 Nokia sold off its television and cable operations to concentrate purely on
telecommunications, and as the world moved from analog to digital technology, Nokia
overtook Motorola in 1998 to become the world’s leader in mobile communication.

In 2002 Nokia sold over 440 million cell phones, compared to 380 million the year
before, retaining its lead as the world’s leading cell phone manufacturer, with an
estimated market share of 37%, and a turnover of US$27 Billion. By this time SMS
messaging had become standard on most cell phones, with a myriad of memory
functions, with some phones incorporating such features as digital cameras, Internet
access, games, radios, and picture transmission.

Motorola, in contrast has a more diverse product base, and is heavily involved in the
manufacture of microchips as well as the manufacture of cell phones, as well as other
electronics and communication equipment. Their turnover in the year 2000 in comparison
was US$37.6 Billion.

Motorola, initially called the Galvin Manufacturing Company, was founded by Paul V.
Galvin (1895-1959) and his brother Joseph E. Galvin (1899-1944) in Chicago in 1928.
They took over a ‘battery eliminator’ business that enabled radios to be connected
directly to mains electricity in homes. In 1930 the company began to manufacture radios
for cars, using the name ‘Motorola’, and although it made a loss that year, the company
was on a winner.
The Motorola car radios became a huge success, and in 1947 the company changed its
name to Motorola to reflect the company’s main business. By 1940 it was involved in
manufacturing police two way car radios, and then in 1943 ‘walkie-talkies’ for the US
army. This was followed in 1946 with a gasoline burning car heater in 1946, which was a
disaster, and the company refocused on its car radio business, with its radios being
factory installed in both Ford and Chrysler cars in 1948. Its work in radios, two way
radios and in turn televisions led it into transistors, and then into semi conductor
manufacturing in the 1950’s, when it also became one of the leaders in automotive
electronics, and in 1969 Neil Armstrong’s first words to Earth from the Moon, were
relayed on a Motorola radio transponder.

In 1974 Motorola sold its television business to Matsushita Electric Industrial Company,
to focus on its semi conductor, wireless and electronic business, introducing such
products as computerized ignition, fuel and emission control and instrumentation systems
in cars during the 1970’s and early 1980’s. In 1983 it produced its first cellular phone,
with the last Motorola car radio produced in 1987.

For many years Motorola had been a leader in pagers and two way radio
communications, and the cell phone was perhaps a natural extension to this, giving
mobility to the general public, rather than a specific link between a base two way station
and people and vehicles in the field, be they police patrol cars, fire engines, taxis, tow
trucks, ambulances, army or other vehicles. Pagers and messaging machines also moved
forward to become mobile communication devices, linking doctors and nurses to
hospitals and technicians to their workplace.

During the 1990’s the demand for cell phones grew astronomically worldwide. In
countries like China, the cell phone created a communication network, where often no
hard wire network existed, and in countries like Afghanistan in 2002, the mobile network
was set up within weeks of the Taliban defeat, with the hard wire network destroyed
during the war. For countries that didn’t have an existing hard wire network, mobile
networks represented a far cheaper infrastructure to set up.

The market for mobile cell phones by 2002 was also changing from first time purchases,
to a replacement market, with decoration features and upgrades being the main purchase
motivators. Many people saw the market maturing, and the huge growth rates of the
1990’s coming to an end. The same was true for the computer hardware market.

Predictions have long been that mobile communications will converge with entertainment
services, and by 2003 this was underway. Mobile telephones were sold with radios,
cameras, Internet, SMS messaging, games, a diary and calendar - all with voice, music,
data and images. This enabled them to provide instant access to information, people, and
services at call, with ability to import, export, store or recall any or all of this information
at any time and place in the world. By 2003 it was possible to use a mobile phone to take
a photo, and then send it to another mobile anywhere in the world, which could see the
image in colour, and read a message attached.
Where will the computer hardware and software industries develop? What new products
or services emerge from the mobile revolution? Just as phones have been freed from their
cables, so too are computers, as wire less technology takes over from a wired world.
Perhaps predictions of the future will come true, and perhaps they won’t.

In the early days of the computer revolution in the early 1980’s, electronic games became
one of the first entrees into the computer world for many people. It must be remembered
that typists typed, managers did not, and even if they could, they didn’t, and certainly not
in front of their co-workers or subordinates! Computers were initially seen as serious
business machines, and no business manager wanted to be seen being beaten by a
machine. Electronic games in contrast were seen as toys. They were therefore not
confronting, and people could have fun, yet become in a sense computer literate at the
same time.

The game world is interesting, not just for the games themselves, but also the rapid
changes in fortune that occurred when companies captured the imagination and wallets of
game players, and also when they did not.

Traditionally games and toys were sold in toy stores, with brands like Meccano, Tonka,
Matchbox, Corgi, Hornsby dominating in the 1950’s. They were replaced by new names
like Barbie, Trivial Pursuit and others, but when the new electronic games took hold, a
whole new range of brands appeared.

Believe it or not, Nintendo traces its history back to 1889, when Fusajiro Uamauchi set
up a company in Kyoto to manufacture Hanafuda playing cards, the company named
Marufuku before changing to Nintendo Koppai in 1907. The word Nintendo roughly
translates from Japanese to English as ‘left to heaven’s hands’! It was in the 1970’s that
the company moved from cards to toys, and moved into making games for ‘video
arcades’, a craze in Japan that saw the video arcades become hugely popular.

The craze then spread from the arcade to the home markets overseas, and in the 1980’s
Nintendo and its rival Sega created electronic games that became the hottest toys across
the world, making the Atari games and their antiquated graphics and cartridges redundant
overnight. Every child wanted them, and while many adults could avoid Mario Bros.,
they could not avoid buying the game consoles for their children.

Sega, Nintendo’s main rival, began in 1951, set up by an American, David Rosen, who
moved to live in Japan after World War II.

The company, initially called Rosen Enterprises, began as an art import business, before
moving into the import of instant photo booths and coin games from the USA. In 1965 it
bought out a jukebox manufacturing business, and the merged business changed its name
to ‘Sega’, the name the abbreviation of ‘Service Games’. During the late 1980’s and up to
1982 Sega enjoyed considerable success, but when Sony Playstation was launched in
1995, Sega quickly began to lose market share, and accumulate losses, which it continued
to do for the next number of years. In March 2001 it officially ceased marketing game
consoles in its own right, and restricted itself to manufacturing games for other
companies, moving out of the spotlight.

Sony’s Playstation was incredibly successful, achieving an estimated 40% market share
by the year 2000, with Nintendo also challenged for the first time. By the year 2000, the
electronic game market had become a $40 Billion market, but it too was coming under
fire from games marketed over the Internet, and games that came with the sale of mobile
cell phones. The game market at this point was said to be bigger than the market for
Hollywood movies. Whether it will be able to maintain this sort of turnover, or continue
to capture the spending power of children and teenagers is however another question.

Sony Playstation and Nintendo also came under new competition in 2002 when Microsoft
launched its Xbox, with a huge expenditure to put the product together, and also market
it.

Ten years earlier, computer games were marketed for single and then two players in
arcades and then homes. Computers then were slow, with the Internet only just starting to
be connected in businesses and homes, whereas the speed and access to broadband, and
fast modems were making it possible to download games from the Internet.

It also became possible to play games over the Internet with hundreds if not thousands of
players. It seems amazing that it is now possible to play an international game, with
players from around the world, while sitting at home on your computer. Where will the
game market go?

On a wider basis how computerized will our world become? Will the world split into the
computer literate society and those isolated from it? Is there something beyond
computers that has yet to be developed? In years to come will we look back at the current
laptops, cell phones and digital TV’s as museum pieces, and laugh at their simplicity. In
time the answer to these questions will unfold.

CHAPTER 27

The final chapter

At the end of the twentieth century, the greatest worry for companies and governments
the world over was what came to be known as the “Y2000 Bug”.

The belief was that at midnight on New Year’s Eve when the time and date moved past
midnight to become the 1st January 2000, computers not programmed to handle the
number 2000 in their date clocks would malfunction with unknown consequences.
The world worried that aircraft could fall out of the sky, and banks, stock exchanges,
foreign exchanges, business and governments might lose all their data, or the data
become so badly corruptly that it might never be recovered.

Billions of dollars had been spent by organizations the world over in the lead up to the
year 2000 to make their computers “Y2000 compliant”.

Large and small companies sent out official letters demanding to know that all their
suppliers were Y2000 compliant, but at the same time stated that they would not be
responsible should there be any consequences, just in case.

As the world waited, watched and wondered what would happen when business re
opened after the New Year break, essentially nothing happened. Had the world been
hoaxed, or had the massive spending on new computers and software paid off?

Certainly the ‘Y2000 bug’ very fast became just part of history, and largely forgotten.

What the Y2000 bug did show however was the extent to which computers had impacted
the world of business, government, education, health, communication, and all aspects of
life.

The global network of computers was linking the whole world together, integrating both
the personal and working lives of people, and the developed world as well as the
developing world together in a level playing field.

A digital revolution had occurred, with people, governments and business totally reliant
on their computers in almost every aspect of their existence. From mobile phones, to
ATM machines, on-board computers in cars, laser controlled surgery, data analysis,
unmanned combat aircraft, palm pilots, special movie effects – the applications and use
of computers seemed endless.

Computers and the software programs that are written to run on them are all based on a
programming language – a coded system of words and symbols that a computer will
respond to as instructions. Programming relies heavily on logical reasoning. So too do
humans.

It is an innate human trait that we think that all people operate on exactly the same logic
basis as ourselves. We may recognize that other people think differently to ourselves and
have different thought patterns and experiences, but we also judge their behavior,
attitudes and beliefs based on our own set of values and logic.

At 8:46 on the 11th of September 2001, a day that became known as 9/11, American
Airlines Flight 11 slammed into the North Tower of the World Trade Center in New
York. At 9:03 United Airlines Flight 175 hit the South Tower, and at 9:05 White House
chief of staff, Andrew Card informed the President of the United States, George W. Bush
in Florida “that America is under attack”. A short time later at 9:28, American Flight 77
struck the Pentagon, and at 10:03 United Airlines Flight 93 crashed in Pennsylvania.

In the hours, days, weeks and months that followed, these airline crashes and the collapse
of the World Trade Center towers in New York became the focus of people the world
over. People were mesmerized by the life footage of the aircraft flying directly into the
towers and then watched in horror as the towers crashed to the ground. TV replays and
commentary on the events over the coming months only served to make the horror seem
even more poignant.

Nearly 3000 people died in the World Trade Center attack when the towers collapsed.

Personal tragedies, stories of heroes, reenactments, funeral processions, expert opinions,


political speeches, and the events themselves became essential viewing.

The skyline of New York had changed forever.

Who could have perpetrated such an act? Who hated the United States so much that they
could perpetrate such a crime? What did they want to achieve? Why would they kill
themselves and a lot of innocent people? Who were the enemy?

In business and government, people normally talked in terms of key objectives, processes
and outcomes – so none of this made sense.

Throughout history, wars were always ‘declared’. Warring parties wore uniforms, and
they knew exactly who the enemy was – even when they were in camouflage combat
fatigues. In the United States, which had had its share of strange sects, schoolyard
shootings, and crazed gunmen – nothing compared to this attack. Not even Pearl Harbor.
They knew then who the enemy was.

Americans felt violated. They felt that they had been attacked for no reason.

As the days passed, the name of al-Qaeda and Osama bin Laden surfaced, and the world
began to realize that this wasn’t an isolated attack. It was a deliberate attack on the
United States and the western world, and the values that it held. The name of the Taliban,
the ruling party in Afghanistan also appeared, as being the support to al-Qaeda.

The War on Terror was about to begin – with the United States leading first with a war in
Afghanistan to remove the Taliban, and then another in Iraq – when the ‘coalition of the
willing’ led by the United States, and backed up by a number of countries including
Britain, Italy, Spain, Australia and other coalition partners invaded Iraq to remove
President Saddam Hussein from power, seeking ‘weapons of mass destruction’ which
they believed were being hidden, and trying to establish a link between Saddam Hussein
and the al-Qaeda terrorists led by Osama bin Laden.
While the war did not receive the support of the United Nations, much of the justification
was based on American and UK intelligence, and the reassuring words of the US
President, George W. Bush and the British Prime Minister, Tony Blair, with other leaders
of the coalition partners supporting their assertions.

The United States and its coalition partners never found the weapons, nor did they prove
the link between Saddam Hussein and Osama bin Laden, but they did manage to capture
Saddam Hussein and take control of the country, in spite of on-going resistance.

On June 28th 2004 the United States coalition officially handed over sovereignty power
to a new Iraqi government, with the objective being to set up a democratic society, with
elections to be held in January 2005. In July 2004 Saddam Hussein was put on trial in an
Iraqi court, his trial becoming a focus of worldwide attention.

The Taliban in Afghanistan had also been defeated in 2003, and a new government
established, and now Iraq was to follow in its footsteps.

Rightly or wrongly, the United States had set itself up as the world’s only true
superpower, and was imposing democracy on Iraq and Afghanistan through their military
supremacy. Would Iraq become a beacon for freedom and democracy, which in turn
would cause the rest of the Middle East Region to take on these values?

The wars had directly cost the Americans over $151 Billion, and the lives of over 1000
Americans. More than 15,000 Americans had been injured out of the 150,000 military
personnel on the ground. At the same time an estimated 10,000 Iraqis had lost their lives,
and with much of the business and infrastructure destroyed, and over 50% of people
unemployed. Freedom certainly had a price.

Iraq did however have one of the world’s biggest oil reserves, and there was great debate
as to whether freedom was the US agenda, or Operation Iraqi Liberation really stood for
OIL.

With the collapse of the USSR in Eastern Europe at the end of the twentieth century, the
United States had become a beacon for the success of the free enterprise system. The cold
war was dead. Communism as an ideology had proven to be flawed. The Eastern and
Western Europe blocks, which had balanced the power structures in Europe for so long
were no longer.

New economic ‘power houses’ however were emerging in the form of China and India,
the world’s most heavily populated countries. China particularly has become the
manufacturing engine for both Europe and the United States, with millions of containers
filled with manufactured goods heading for these markets, with many to return empty
only to be filled again with goods and returned.

Terrorist attacks however continued post 9/11 with new splinter terrorist groups, not just
al-Qaeda, continuing to menace the world, both in active terrorist attacks and threatened
activity. From car bomb attacks in Turkey, to the bombing of a Bali nightclub in October
2nd 2002 when 202 people died, and the bomb explosion in a commuter train in Madrid in
2004, the terrorist attacks continued to provide a constant reminder that Terrorists were a
reality, and that their attacks on innocent people would continue to be random and affect
people throughout the world. Terrorists and terrorist cells were an invisible army, which
could attack and then melt away.

Many of these terrorist groups were seen as Muslim extremists, and the Arabic word
‘Jihad’, emerged as both a reason and rationale for suicide bombers and terrorists to kill
people, people they referred to as ‘infidels’. The Jihad Holy War proclaimed that all
Muslims, according to the strict teachings and interpretation of the Koran, had an
obligation to drive infidels out of the Holy Lands. They referred to this as a Crusade.

For the western world, the Crusades were a vague historical event, with few people
remembering that they were a series of military wars conducted by European Christians
in the 11th, 12th and 13th centuries to recover the Holy Lands from the Muslims. Generally
people in the West, in countries like Britain, only remembered the Crusades as being
associated with Robin Hood stories, when Richard the Lion Heart returned to find King
John had taken over his crown.

On the other hand, Muslim radical fundamentalists and extremists saw the Crusades as
very real and still happening. They saw Israel as an alien nation within the Arab world
and western presence as an invasion. Western values, lifestyles and influence distracted
their youth away from traditional values in their societies and strict adherence to the
teachings of the Koran. They also saw that moderates in the own Muslim world were
moving away from the strict teachings of the Koran.

It was not just a clash of cultures, but also a clash of values – a clash between those
wanting to hold on the values and traditions of the Arab world, which some Westerners
and also Arabs saw as medieval, and those wanting to break free and move to the new
century discarding the past, and taking on the values of the developed world.

The extremist view of Western infidel decadence was re-confirmed in early 2004 when
they saw TV footage of Americans torturing and humiliating Iraqi prisoners, the pictures
beamed around the world.

While the Pentagon reeled in the wake of these images, and loudly proclaimed that this
did not represent the values of the United States, Muslim extremists retaliated by
capturing an American and then showing live images of them beheading the captured
American in Saudi Arabia. A week later a Korean translator in Iraq was first shown
pleading for his life and then beheaded.

The beheadings were presented to the world via a website, and then on an Arab TV
channel, with those who committed the beheadings loudly proclaiming that they were
doing this in retaliation for the US prison atrocities. The tape, mainly in censored form
was then replayed on TV channels around the world, reconfirming the stereotype view
that Muslims were barbarians.

Within hours of the first beheading, the Saudi authorities had shot dead the Arabs who
had committed the crime, stepping up security in their country, and proclaiming that
terrorists would be dealt with severely.

Just as Americans claimed that the atrocities in the Iraqi Gaol were not representative of
American values, so too did the Muslim world proclaim that the Muslim extremists did
not represent their religion or values.

The only possible positive aspect of these macabre events was that the terrorists were also
using the Internet and TV broadcasts to communicate their message to the world.

The first war in Iraq had brought live CNN broadcasts of the Iraqi invasion of Kuwait and
subsequent defeat by the Americans under General ‘Stormin-Norman’ Swartzkopf. This
was the first war ever to be played out on TV, and indirectly this had helped spawn a
whole range of free speech initiatives in the Arab world. Communication and free speech
were perhaps in their infancy, but they were happening just the same. Who knows where
this trend might lead, or what effect it would have on the populations within the Arab
world and beyond. The two main Arab broadcasters, Al-Arabiva and Al-Jazeera which is
based in Doha in Qatar, and set up in 1996, while heavily criticized by the Americans for
their portrayal of the events in Iraq, were nonetheless expressing freedom of speech.

As the war in Iraq played out on TV screens around the world, another event was
happening. On May 1st 2004, the fifteen member countries in the European Union
accepted ten new nations into its trading block – Poland, Hungary, Estonia, Lithuania, the
Czech republic, Slovakia, Slovenia, Malta and Cyprus. This created the world’s largest
trading block, with a population of 450 million people, representing a quarter of the
world’s Gross Domestic Product, and 40% of all world trade. In 2007 Bulgaria and
Romania are due to join, and possibly Croatia.

The EU brought together many divergent cultures and languages and broke down many
of the traditional barriers that existed between competing nations. The whole purpose of
the EU was to provide greater security, economic prosperity and certainty to the peoples
within its borders, creating a giant trading block for companies to operate in, with a
European Parliament to govern it.

While many Arab states with majority Muslim populations have embraced western
values, many have not, but neither too have Muslim values been taken on by the West.
Within the EU there are around 12 million Muslims. Potentially, if the EU were to
embrace countries like Turkey or Iraq, this number would dramatically increase.

Trade Blocks have always proved successful for those companies and organizations
within them. The discontent arises when businesses and organizations that are not part of
the club, and cannot get in, are economically excluded or disadvantaged through trade
barriers. The same applies to people, and there are a constant and growing number of
people in the world who are classed as illegal immigrants, asylum seekers, refugees and
displaced persons. Throughout history, people have emigrated from one place to another
looking for a better life for themselves and their children – and whole nations have
developed on the basis of these population shifts.

On May 3rd 2004, two days after the European leaders of the EU met in Dublin and
expanded the EU to take in the new nations, another important event was occurring in
Shanghai, China.

China, Japan, and South Korea agreed to plans to build a 140,000-kilometre road, bridge
and ferry link road to Europe, called ‘Asian Highway One’. This road network will link
Tokyo to Istanbul in Turkey, and then onwards to the network of existing roads in
Europe. The road system is expected to open by 2010, opening up many of the
landlocked countries in central Asia, and the interior of China and Mongolia, and
providing a road link between South East Asia, Central Asia, through the Middle East to
Europe.

China itself will build over 16,000 kilometres of new roads, and link up another 11,000
kilometres of its road infrastructure.

While the new Silk Road will not follow the exact route of the old Silk Road, it will
traverse jungles, as well as vast distances across the plains of central Asia, through desert
areas, as well as cross the Himalayan Mountains. It will also be subject to massive heat
and dust storms in the desert areas, as well as the freezing winds and snowstorms in the
mountains. Just as the old Silk Road trade route was a perilous and dangerous journey, it
is likely that the new highway will also be.

The greatest challenge however is to gain full agreement and co-operation between all the
nations that it crosses. There are 32 nations directly involved, and within each of their
borders there are many divergent ethnic and factional groups. Much of these areas have
been isolated for hundreds of years, if not thousands.

Plans for the road were first tabled in 1959. It was only in 2004 that the plans were signed
off by 23 of the nations involved. A lot of politics has yet to be played out.

Throughout this book we have traced the history of many of the world’s leading
companies, industries, brands and the people who were instrumental in their development
and success.

Over the last two centuries there has been massive changes in the type of products
produced, the way they are sold, and also the way that they are purchased. In turn
people’s lives, the way they live, where and how they work has changed immeasurably
too.
Today we take for granted the products and services we use like cars, phones, television,
movies, health services, trains, the internet, supermarkets, shopping centers, airlines,
fashion, restaurants and hundreds of other products and services. All of these are such a
central part of everyday existence that we don’t even think about them as being anything
other than a normal and basic part of our existence. The fact that we can read, write,
travel, buy products and services, and spend time relaxing is taken for granted.

A hundred years in world history is just a few generations. There are many people alive
who are a hundred years old, yet the world they were born into is so vastly different to
the one they live in now.

One of the remarkable effects of much of this new technology is that people of all ages
and socio-economic groups have taken it up so readily. It has become affordable to a
mass market. It has not been confined to a ruling elite, the rich, or just to business or
government. It has been available to all people, with cost and affordability improving
rapidly as new technology has become accepted and moves from initial trial to eventual
mass production.

Four year olds, who play games on their computer, are programming TV’s and DVD
players. Often they are more aware than the parents of the technology features.

The internet, mobile phone, and television has also played an important role in
overcoming isolation caused by age, illness and disabilities – enabling these people to
see, hear, learn, converse, study and interact with people across the globe, without the
prejudice or issues involved in physical disabilities, age or movement away from a home
computer, hospital or sick bed.

The Internet is very much pushing the idea of a global community.

Where in the past communication has largely been from a centralized source outwards to
an audience of viewers, listeners or readers, the Internet is enabling people individually to
‘democratize’ the communication – creating a two-way communication, where people all
have a more equal, though not equal chance to communicate on a one to one basis or a
potential worldwide audience.

The world has to date largely been divided into the developed world and the developing
world – based on assessments of their stage of development.

Globalization of business has occurred rapidly, in line with the ability to centrally control
more business functions, and run bigger and bigger organizations efficiently. Where once
a global corporation might be an accumulation of hundreds or thousands of individual
businesses reporting through a pyramid of management structures to a central structure,
now the central structure can run the whole operation itself, with the individual
companies within the structure becoming just line operations. Faster production, bigger
distribution channels, better control systems and logistics, financial planning, and ready
access to capital have facilitated bigger companies, bigger mergers, acquisitions and
business deals.

Some of the world’s largest companies are now greater in turnover than many of the
countries that they operate in, but equally there are millions of individual companies that
are not. Most of these operate as family companies, partnerships, private companies, joint
ventures, and as listed companies on individual stock exchanges around the world.

Core business has become a management mantra, and dominating a market segment has
become the driving force behind the growth of many business operations, both large and
small.

The bigger multi-national and national companies have in many ways become like giant
ships where shareholders, employees, management and chief executives continually hop
on or off the ship, while the ship just keeps steaming ahead. The company may well alter
or adjust its course, develop faster or slower, or even change direction, but it steams on
nevertheless.

These companies are in many ways just like the governments that run countries. There
may be many changes of presidents, politicians and party members, but the government
just rolls on.

Companies, like government have in many ways been democratized, and while
shareholders may have a vote, most don’t bother to.

While in principle, the president of a corporation will loudly proclaim to be working in


the interests of shareholders and employees; often they are simply concerned with the
stock price and its value, relative to their own interests. This is very much the same as
government, proclaiming its commitment to the electors.

Democracy is politics, and while it may be imperfect, it still seems to be the best system
to deliver the greatest good to the most people.

Over the past century living standards in the developed world have lifted tremendously in
line with the growth of business and the economies.

People like prosperity. They want a better life for themselves and their children, more
money to spend, and to buy the products and services that they consider important – a
bigger house, a newer car, a swimming pool, overseas holidays, and the latest electronic
gadgets.

Every society however, even the very wealthy ones still have both their rich and poor
people.

Not everyone in France, Germany, Australia, the United States or Britain is wealthy.
These countries have their share of poor people and also face many issues in their
societies. At the same time not everyone in a poor country lives in poverty. In Asia,
Africa, Eastern Europe and South America not everyone is poor, there are in fact many
immensely wealthy people.

In the Developed countries issues such drugs, urban decay, unemployment, alienation,
depression, crime, violence, health problems, family breakdowns, housing issues are
apparent, yet in spite of these negatives, the overwhelming majority of people are better
off than the people in the developing nations.

The United Nations believe that in the year 2000, that there were 1.2 billion people living
in extreme poverty in the world, earning less than US$1 per day, and another 1.6 billion
people living on less than US$2 per day.

According to the United Nations, “Poverty is hunger. Poverty is lack of shelter. Poverty
is being sick and not being able to see a doctor. Poverty is not being able to go to school
and not knowing how to read. Poverty is not having a job, is fear of the future, living one
day at a time. Poverty is losing a child to illness brought about by unclean water. Poverty
is powerlessness, lack of representation and freedom.”

The global economy has enabled the developed world to grow financially stronger, and
there are clear indicators that trade also brings prosperity to the developing countries that
develop their economies and take part in this trade.

Finance flows to those regions and economies that are able to make products and supply
the goods and services that the developed countries are wanting. In the short term, cheap
prices may be the attraction, but as production grows, so too does the flow of technology
and financial resources. China’s economic miracle is largely a result of this flow of both
technology and financial capital.

The International Monetary Fund certainly claim that trade and active participation in the
global economy is the most certain way to overcome poverty.

Business investment however will only be made to countries that are considered safe to
invest in, meaning that there is a financial reward for taking the risk and the investment is
secure. If it is possible that the financial capital could be lost through corruption,
violence, incompetence, lack of infrastructure, poor employee skills, the remoteness of
the area, or the outbreak of war, then it is unlikely that finance will flow to these areas,
other than as aid, regardless of the potential profit.

Many of the poorest nations on earth are caught in this poverty cycle. They may well be
very isolated, and their people lack skills, or their country may have entrenched violence,
unstable governments, or corruption may be rife. Any or all of these factors are reasons
for business not to invest. Sadly, many countries fall into this category, and it is very hard
to break down the endemic nature of this, and therefore the poverty cycle continues.
In Sub-Saharan Africa, Aids has infected millions of people. In 2003 an estimated 3 to
3.4 million people were newly infected with aids in this area, more than the rest of the
world combined.

According to United Nations statistics, there were between 25 and 28 million people in
Africa infected with Aids in 2003, while in Asia, the number was between 4.6 and 8.2
million people. Europe had between 1.2 and 1.8 million, and North America somewhere
between 790,000 and 1.2 million. Worldwide there were over 40 million people living
with Aids. These numbers certainly show the enormity of the Aids epidemic.

While countries in the developed world have drugs to help combat Aids and have put in
place education and medical procedures to slow the spread of Aids, the poorer countries
do not have the money to buy the drugs, or the education programs to stop the spread of
the disease.

There are now some 14 million orphan children in the world, orphaned through the Aids
epidemic. Most of these are in Africa, and the poorer parts of Asia, and the financial,
emotional and social impact on these societies is immense.

The world faces many issues, and none are easy to resolve or overcome. Is crime and
violence in a society worse than poverty? Are individual rights more important than
collective rights, or are health and education so important that they should be the main
focus of governments?

Environmental sustainability - the idea of balancing the needs of the environment and
development, has moved from being a side issue in many countries, to become a central
issue for governments and people.

According to the World Wildlife Fund, 60% of the world’s 227 largest rivers are
disrupted by dams, and there are over 1500 new dams in the process of either being
planned or built, many of these huge in size, and causing massive dislocation of people.
Many rivers pass through several countries, and what one country wants may greatly
affect the people in the other countries through which the river passes. These projects
have both a massive environmental impact as well as a human and economic impact.

Huge logging projects are underway in jungle and rainforest areas, and at the same time
there is fear of global warming and long term climate changes, with the ice caps in the
polar regions in a state of slow meltdown as the polar areas become warmer, and coral
reef areas such as the Maldives, Australia and elsewhere declared to be dying.
Climate change has massive repercussions, and in 2004 was described by Britain’s Prime
Minister, Tony Blair as “The greatest long-term problem facing the world”.

The Kyoto Protocol, which has set targets for the reduction of carbon dioxide, said to be
the cause of much of the climate change phenomenon, has yet to be ratified by many of
the major countries. As the world develops there are more and more carbon emissions
from cars, industry, coal based power stations, yet these carbon emissions may well cause
these climate changes.

Genetic engineering of food crops is underway in many countries, while others hover on
the outside of this deciding whether it is good or bad science.

In 2001, an outbreak of Mad Cow Disease in Britain saw the destruction of almost
200,000 livestock, and the death of around 80 people. Swine fever in Asia and Africa also
led to the destruction of hundreds of thousands of pigs, while bird flu in Thailand, China
and other Asian countries led to over 19 million chickens and ducks being slaughtered.
While Bird Flu directly led to the death of less than 50 people, the worry was that the
Bird Flu could adapt to a human flu, and potentially kill millions of people.

The most worrying of all these diseases was the outbreak of SARS, Severe Acute
Respiratory Syndrome, a disease that had never been seen before in humans. Not only did
the disease spread rapidly from person to person, but it also traveled to countries around
the world, carried by aircraft passengers who picked up the disease in China and then
unknowingly spread it to the countries where they landed. The world was connected in
more ways than one.

SARS directly killed 774 people, and traced back to China, where it was thought that the
disease had come from people who had eaten Civet Cat meat, bought from a wild animal
market. More than 10,000 Civet Cats were killed to try and control the disease.

The SARS epidemic brought the travel and airline business to a grinding halt, directly
affecting all of the businesses that had been built on tourism around the world. The
impact was immediate on places such as Mainland China, Hong Kong and Singapore,
and as far away as Canada, where cases were found, with tourist numbers and airline
travel reduced within days to a trickle around the world. Nobody wanted to travel, or run
the risk of catching SARS.

The 1997 Stock market crash in New York and the subsequent Financial Crisis
throughout Asia, showed how closely linked individual economies were within the global
economy.

The world has lived in dread of another Great Depression, like the one in 1929. While
economists say that it would never happen again, and Governments reassure people as
well, this 1997 Financial Crisis did have dramatic effects on a large number of countries,
with currencies collapsing overnight in places like Indonesia and Thailand, two of the
countries worst affected.

Equally, the world has lived in dread of another Great Plague, or Spanish Influenza
outbreak as had happened in 1918 –20 at the end of the 1st World War, when some 20
million people worldwide died from the disease outbreak, more than had died in the war
itself.
Diseases, volcanic eruptions, earthquakes, tidal waves, droughts, floods, locust plagues,
fires and all the natural disasters which occur around the world, along with such human
mass murder exterminations as the Holocaust, Rwandan mass murders and Cambodian
mass murders under Pol Pot are a constant reminder of the fragility of life on earth.

Life itself has always been a balance between hope and fear. This is nothing new, though
the sources of these hopes and fears continually change, and differ from one country to
another and also from person to person. We all have different hopes and fears. While we
are no longer worried about Communism, we are now worried about Terrorism. As one
fear fades, another rises, yet we remain overall positive on the future.

In 2003 the Human Genome was mapped for the first time, revealing 99% of the 30,000
genes that essentially provide the blueprint to the make up of the human body. This was
hailed as probably the most significant scientific breakthrough of all time.

Another exciting frontier of science was also underway in the development of molecular
nanotechnology.

While this is still at a research stage, nanotechnology promises amazing advances in


technology.

Traditional technology and manufacture has always been based on combining different
materials to create a product – timber, plastics, steel, a computer, ceramics, and the list
goes on. We have also been able to make products smaller and smaller through
miniaturization, and semi conductor microchips are the world’s best examples of this.

When we compare what mankind has been able to create with the God’s miracle of
creation, there is however no comparison. One has only to look at a tree, a flower,
animals, people, all of which mankind has never been able to create to see this miracle.
We understand that these are all built as an accumulation of cells, made up of atoms,
every atom linked to the others in a unique combination, and while we may understand
this, we have never been able to replicate nature’s creative power of taking a seed and
growing it into a giant tree.

Nanotechnology is looking at the whole process of cell and atom replication. Already we
are growing skin for use in treating burns, and in time nanotechnology is looking at
growing bones or new limbs. It is also looking at all types of what is called “clean
manufacture” where products are manufactured with no residues, bi-products, emissions
or pollution. Sounds like science fiction? At this stage it is, but so too did a number of
products that we take for granted today.
It is always hard to make predictions on the future. No matter how well considered, they
will invariably be wrong, as the world has a habit of taking new twists that we would not
have thought possible.

One hundred years ago people were just coming to terms with cars taking over from
horses as a means of travel, and that electric lighting would replace their candles and gas
lighting. Governments were also just starting to recognize that their role was changing
from simply providing law and order to one where they would be required to provide a
whole range of community services – everything from roads and health systems to
electricity supply, central banking to space exploration.

In many ways we now beginning to recognize the idea that people are just part of whole
interconnected world environment – that the environment and natural resources are not
just there to be used up or exploited by people. We have to be conscious that the air we
breathe, the water we drink and fossil fuels that we use are not an unlimited resource just
there to be used up or taken for granted.

It is much harder to look at a long-term view then a short-term one, but therein lays the
challenge.