Encyclopedia of american business history part 5

E Eastern Airlines The company, originally Pit-cairn Aviation, began in the early 1920s when civil aviation consisted mainly of barnstorming and stunt flying. Founded by Harold Pitcairn, who shocked his wealthy family by announcing his intention of making a business out of air-planes, the young company entered the market-place as a contract mail carrier. In a surprise move, Pitcairn sold the airline in 1930 to Clement Keys, who moved the airline’s headquarters to Brooklyn, New York, and changed its name to Eastern Air Transport. As a promo-tional gimmick, 22 women were selected as cabin attendants—among them Mildred Aldrin, whose nephew Buzz found fame as an astronaut. The company remained relatively healthy throughout the depression years until Keys took an extended trip to Europe. In his absence, his business associates diverted funds into the still-plunging stock market, leaving Keys to face financial ruin. Keys saved the airline through negotiation, in exchange for his resignation. On January 1, 1935, a new general manager was named to (then called) Eastern Air Lines whose name would forever be associated with the com-pany. His name was Edward Vernon Rickenbacker. Rickenbacker, a World War I flying ace, ruled the company with an iron fist for a quarter of a century and left a glittering record of 26 consec-utive years of profit to his successors. When Rickenbacker turned over the leadership of East-ern to Malcolm MacIntyre in 1959, the airline served 128 cities in 27 states, encompassing almost three-fourths of the American population. MacIntyre was an accomplished lawyer but had virtually no experience in the rough-and-tumble game of running a major airline. When he left office in 1963, Eastern was headed for financial oblivion. MacIntyre will be remembered for two bright spots in the company’s history—the intro-duction of the Boeing 727 and the development of the Shuttle. The former became a workhorse of the indus-try, and the latter involved a brilliant customer relations strategy. Shuttle flights between New York, Washington, and Boston required no reser-vations and guaranteed a seat to anyone who showed up. The Shuttle immediately became a way of life for people moving along the heavily traveled Washington–New York–Boston corridor. In 1975, Eastern’s fortunes were entrusted to a man who was called the real inheritor of Captain 131 132 Eastman, George Eddie’s leadership mantle—former astronaut Colonel Frank Borman. As president and CEO, Borman brought a familiar military ethic back to Eastern. He negotiated wage concessions from the employees in an attempt to save the company from disaster, but failed to compensate for the exorbitant cost of the new airplanes he had ordered or the costly effects of DEREGULATION. Borman and Eastern’s machinist unions clashed furiously and frequently. Industry analysts blamed Eastern’s troubles partly on poor management and partly on the company’s uncooperative labor unions, but the root of Eastern’s troubles lay in a poor route structure and huge debt. As a result of these seemingly incurable financial distresses, Eastern succumbed to a takeover bid by Frank Lorenzo and his Texas Air empire. The conflict over Texas Air’s acquisition extended to several employee groups and proved to be the beginning of the end for Eastern. A period of severe employee unrest followed. In March 1989, a strike against the airline was called by the machinists and supported by the flight attendants and the pilots. A week later, East-ern filed for BANKRUPTC , and its management fought to retain control over Eastern in the face of furious resistance from labor and rapidly diminish-ing confidence among its investors. In April 1990, bankruptcy court judge Burton Lifland ruled that Frank Lorenzo, the brash corporate raider who had acquired Eastern, was unfit to run the com-pany and appointed a trustee for the airline. A last-ditch effort for order failed, and on January 18, 1991, the company folded its wings for good. See also AIRLINE INDUSTRY; PAN AMERICAN AIRWAYS. Further reading Bernstein, Aaron. Grounded: Frank Lorenzo and the Destruction of Eastern Airlines. New York: Simon & Schuster 1990. Saunders, Martha Dunagin. Eastern’s Armageddon: Labor Conflict and the Destruction of Eastern Air- lines. New York: Greenwood Press, 1992. Serling, Robert J. From the Captain to the Colonel: An Informal History of Eastern Airlines. New York: Doubleday 1980. Martha Dunagin Saunders Eastman, George (1854–1932) businessman Born in Waterville, New York, Eastman moved to Rochester with his family as a young boy. The death of his father forced him to leave school at age 14 and find work as a messenger. While working in that capacity, he studied accounting in the evenings and gradually worked his way up to the position of clerk in a Rochester bank. But it was not until his first planned vacation that he became interested in photography. He bought his first camera for a vacation that was never to take place. The large, cumbersome camera he purchased intrigued him, however, and he decided to improve upon the design of the photographic plates that were until that time covered with gelatin. By 1880, he had devised a process for dry plates and opened up shop in Rochester to manufacture them for sale to other camera manufacturers, initially operating as a partnership called the Eastman Dry Plate Co. After manufacturing plates for several years, he hit upon the idea of producing film on a roll, which in turn would help make cameras smaller. He began producing film in 1885. Three years later, he produced the first Kodak camera, which was unique for being able to be operated with the click of a simple button. The trademark name was registered and quickly became synonymous with photography itself. The original camera had film installed capa-ble of taking 100 pictures. The price was $25. When the customer used the entire roll of film, it was returned to the factory, where the film was developed and the camera reloaded before being returned to its owner. Previous partnerships gave way to the Eastman Co. in 1889 and finally the Eastman Kodak Co. in 1892. Eastman served as chairman of the company’s board from 1925 to 1932. Eaton, Cyrus 133 From the beginning, Eastman emphasized MASS PRODUCTION combined with low costs so that he could reach as wide a market as possible. He was also much more generous to his employ-ees than many other industrialists of the period. As early as 1899, he began distributing a portion of his own profit to his employees. He later estab-lished a program called the “wage dividend” that paid each employee a percentage equivalent to the common stock dividends above his or her salary. After World War I, he gave one-third of his stock holdings to his employees. The gift was worth about $110 million. Eastman Kodak Company became the largest American producer of cameras and film until challenged by the Polaroid Co., founded by Edwin LAND, and later by imports, mostly from Japan. Eastman remained a generous philanthro-pist throughout his life. He was a major benefac-tor to the University of Rochester, M.I.T., Hampton Institute, and Tuskegee Institute. The University of Rochester was the main beneficiary, especially its Eastman School of Music. He died in 1932. Further reading Brayer, Elizabeth. George Eastman: A Biography. Balti-more: Johns Hopkins University Press, 1996. Swasy, Alecia. Changing Focus: Kodak and the Battle to Save a Great American Company. New York: Ran-dom House, 1997. edlow, Richard S. Giants of Enterprise: Seven Business Innovators and the Empires They Built. New York: HarperBusiness, 2001. Eaton, Cyrus (1883–1979) financier and industrialist Born in Nova Scotia, Eaton was a member of an established New England family that moved to Canada in 1760. He graduated from Amherst Academy in Ontario and decided to become a Baptist minister. After graduation, he visited an uncle who was a Baptist minister in Cleveland, where he was introduced to John D. Rockefeller, a member of his uncle’s congrega- tion. After working at a summer job for Rocke-feller, he was persuaded to attend McMaster Uni-versity and study business. He graduated in 1905 and went to work for Rockefeller after a brief series of odd jobs. Eaton began working for Rockefeller in Man-itoba in 1907. He was put in charge of acquiring franchises for power plants in Canada, although the Panic of 1907 intervened, and Rockefeller was unwilling to pursue the enterprise. Eaton then assumed part of the project himself, bor-rowed money, and built a power plant in Mani-toba. He soon followed this success by building other plants, and he eventually established the Continental Gas and Electric Company with holdings in the United States and Canada. In 1913, he returned to Cleveland and estab-lished a partnership in the investment banking firm Otis & Company. Over the next 10 years, Eaton became one of the major investors in the UTILITIES industry, which was expanding rapidly in the 1920s. He merged Continental Gas and Electric with the Kansas City Power and Light Co. and the Columbia Power and Light Co. to form United Light and Power, a giant utility that served more than 5 million people in a dozen midwestern states. During the late 1920s, Eaton was best remembered for engaging in a takeover battle with Samuel INSULL for Insull’s holdings in the Commonwealth Edison Company. In order to fend off Eaton’s unwanted advances, Insull was forced to seek the help of New York bankers, who forced his downfall and the notable bank-ruptcy filing that followed in the early 1930s. He also entered the STEEL INDUSTRY in the 1920s and merged several smaller companies into the Republic Steel Corporation, destined to become one of the country’s largest producers. The same year that he created Republic, he also took con-trol of the Goodyear Tire and Rubber Company. The stock market crash of 1929 reputedly cost Eaton more than $100 million in losses. Three years later, he became associated with Harold Stuart of the Chicago investment banking 134 Eccles, Marriner S. firm Halsey Stuart & Co. Halsey Stuart was the former financier of much of Insull’s utilities empire. One of the firm’s major contributions to finance during this period was the introduction of competitive bids for underwriting mandates for new securities issues, especially in the rail-road industry, which was later made standard by the Securities and Exchange Commission. In his later years, Eaton remained active in industry by becoming the chairman of the Chesapeake & Ohio Railroad and the Kaiser-Frazer Automobile Co. after World War II. He also developed a close relationship with the Soviet Union and organized a series of meetings at his home in Nova Scotia between American and Soviet scientists designed to ease world ten-sions. These meetings became known as the Pug-wash Conferences. He also helped develop the St. Lawrence Seaway. Further reading Allen, Frederick Lewis. The Lords of Creation. New York: Harper & Brothers, 1935. Gleisse , Marcus. The World of Cyrus Eaton. New York: A. S. Barnes, 1965. Eccles, Marriner S. (1890–1977) business-man and banker Born in Logan, Utah, Eccles was the oldest of nine children. After attending Brigham Young College, he became familiar with investments and established an investment com-pany that acquired many of his father’s successful business enterprises. In 1924, he and his brother joined with a prominent banking family in Utah to form the Eccles-Browning Affiliated Banks, which rapidly began to expand by acquiring banks in Utah and Wyoming. In 1928, he and several part-ners organized the First Security Corporation, a HOLDING COMPANY that managed the acquired banks. The company was one of the first multi-bank holding companies in the United States. Eccles’s banks survived the Great Depression without serious disruption, and he became the most prominent banker in the West during the 1930s. A Republican until the early 1930s, he shared many of the Roosevelt administration’s goals and became an avid supporter of the Democrats. He helped the administration draft the Emergency Banking Act of 1933, the Federal Housing Act of 1934, and the BANKING ACT OF 1933 (Glass-Steagall Act). As a result of his public service, Eccles was named chairman of the Fed-eral Reserve System in 1934 and assumed the position in 1935 after being confirmed. He was also the principal force behind the Banking Act of 1935, which reorganized the Fed-eral Reserve System. Since its inception, the cen-tral bank had been criticized in many quarters as being elitist, but it lacked power in many crucial areas that would allow it to maintain control of the creation of money and credit. The central bank was restructured by the 1935 act and given spe-cific powers that were lacking during the 1920s and were widely blamed for contributing to the 1929 crash. The Fed was now allowed to perform system repurchase agreements. Prior to the law, the branches could perform open market opera-tions, undoing board policy as the New York Fed-eral Reserve Bank had done in 1929. The Fed’s membership also was redesigned so that members of the board would be full-time employees. After World War II, Eccles helped work on the agreements drawn up at Bretton Woods, New Hampshire, that created the World Bank and International Monetary Fund. In 1948, President Truman did not reappoint him chairman of the Fed, but he remained as vice chairman until 1951, when he resigned. He died in Salt Lake City in 1977. Eccles is widely remembered as a successful banker with wide practical experience, which eventually contributed to the most significant reforms of the FEDERAL RESERVE since it was founded. The Federal Reserve building in Wash-ington, D.C., is named in his honor. Further reading Eccles, Marriner S. Beckoning Frontiers: Public and Per- sonal Recollections. New York: Knopf, 1951. Edison, Thomas A. 135 Hyman, Sidney. Marriner S. Eccles: Private Entrepre-neur and Public Servant. Palo Alto, Calif.: Stanford University School of Business, 1976. Edison, Thomas A. (1847–1931) inventor Born in Milan, Ohio, to Samuel and Nancy Elliott Edison, Edison began experimenting while still a child. Not academically talented as a child, his mother often instructed him at home, and he developed an early interest in chemistry. He sold sundries on trains to earn money and suffered an accident that caused lifetime deafness. After learning how to telegraph messages from a rail-way agent, he took a job as a telegraph agent in Canada before returning to the United States. After working at a series of jobs as a telegraph operator, he began inventing and patented a stock TICKER TAPE machine. While working in New York City, he made improvements for a stock ticker while working for the Gold Indicator Company. The patents he registered were sold to his employer for $40,000, and he promptly took the proceeds and opened a workshop in Newark, New Jersey. While in Newark, Edison improved the stock ticker and also made substantial improvements for the TYPEWRITER. Both developments helped increase business efficiency once the devices were put into use. Shortly thereafter, he moved his headquarters to Menlo Park, New Jersey, where he made improvements on the telephone. His most important invention to date was the phono-graph, which he invented as a way to record telegraph messages, but it was the electric incan-descent bulb that earned him the nickname “The Wizard of Menlo Park.” In 1879, he succeeded in placing a filament in a bulb that burned for many hours before going out. He was also one of the first developers of the electric chair, bringing him into direct competition with George WESTING-HOUSE. Edison’s version of the electrocution device used direct current (DC), while Westing-house’s used alternating current (AC) and eventu-ally became the standard model used. Thomas Edison and his original dynamo, Orange, New Jersey, 1906 (LIBRARY OF CONGRESS) In 1887, Edison moved his laboratories to West Orange, New Jersey, and continued to invent while perfecting his older inventions. He also spent considerable time marketing his ideas. The electric lightbulb was only a part of the process of electric generation, and Edison spent considerable time organizing power sta-tions to support his invention. The first power station in New York City was at Pearl Street, near Wall Street, and J. P. Morgan was the first user of the power that it generated. Morgan later bought Edison’s operation, freeing the inventor from business matters, and used it as the basis for the GENERAL ELECTRIC CO. Edison’s assistant at the time was Samuel INSULL, who would later build a massive UTILITIES empire in Chicago. Using research first developed by George EASTMAN, Edison also invented the motion pic-ture camera. He connected the phonograph and the camera in order to produce talking pictures ... - tailieumienphi.vn