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History of Proctor-Silex, 1788 to 1972

By Arthur L. Redstone

PART II - PHILADELPHIA TEXTILE MACHINERY CO. - 1883-1921

In 1883, Proctor, backed by lathe builder, Ed Harrington, organized and headed the PTM Co. Despite the fact that he contributed only $3,000 of the original $18,000 capital, he occupied the position of president of the company for thirty-six years, with a short break, despite the fact that, at no time did he ever own over twenty-five per cent of the shares. The Harrington family, with a fifty per cent control, never held an operating job with the company. PTM Co. (unincorporated through 1884) first operated in a plant at 23rd and Noble Sts., just in front of the present library off the Parkway. By the end of 1884, they incorporated and then rented a three story 50,000 square foot brick building at Hancock (Front) and Somerset Sts. for $1200 a year. This structure, first owned by Galbraith Carpet, still stands sturdily and full use, denying its 100 year age. At the beginning, the PTM business consisted of fiber preparatory machinery, cards, garnetts and pickers plus a mere trickle of drying machinery, which J. Proctor had determined to broaden and expand.

Some quotes from 1885-1889 board minutes are revealing:

1884 - "Shipments totalled $20,000 the first full year."
1885 - "The potential benefits of a telephone does not justify $100/yr. cost."
1886 - "Board authorizes $50 to build racks for 40 bicycles."
1887 - "Job costs to be estimated at 19�/hr. labor, 29� burden." (5 1/2% of 1972)
1888 - "In view of the year's poor results, Jos. Proctor voluntarily returned 50% of his $800 proposed salary increase."
1889 - "Board meeting called for 8:00 P.M. at the offices, but no one held a key although a quorum was on hand, the bad weather forced an adjournment at 8:18."

By 1892 the business had quintupled, but Proctor's insistence on expansion and development, particularly in the field of drying machinery, had curtailed distribution of dividends. The financial backers, restless after seven years of meager dividends, replaced Proctor as president, with George Allen as conservator. (No connection to T.W. Allen, president from 1946-53.) They made no effort however, to replace Proctor as vice president, general manager and board member. The demotion of Proctor lasted but three years, until C.W. Schwartz, a Lehigh graduate, assumed fiscal control of Philadelphia Textile Machinery Co. The young Schwartz would operate the company for twenty-six years, followed by thirty-six years of his younger brother, Walter.

Charles Schwartz's father, C.W. Schwartz Sr., hailed originally from near Lancaster, where the family had farmed for 100 years. Migrating to Philadelphia in 1861, he achieved success as a rug and furniture dealer in center city, although he lived the major part of his life in Germantown. C.W. Schwartz possessed a steel trap mind and the ability to make the right decision quickly. But primarily, he knew how to get the most out of people. Once he had the chance to analyze the PTM situation, he realized that basically J. Proctor was right, and that the future of the company lay in encouraging him, not in throttling him. His ability awarded him promotion to treasurer, and board member in 1893, at which time, he bought ten per cent of the outstanding stock. From this time on, C.W. Schwartz Jr. backed development and expansion, reasoning that the drying machinery end of the business, is expanded out of the fiber field, held an infinite potential.

The first deviation from textiles would be in the burgeoning tobacco industry in which Proctor had pioneered. In fact, the lack of equipment to dry the crop, provided a major deterrent to the growth of the industry. At PTM, with cash dividends now coming in nicely, the board showed reluctance to spend money to meet the expanding trade. In 1895, Proctor and C.W. Schwartz Jr., with only thirty per cent control, pleaded with the board to expand to meet this demand. As Proctor stated, "This new business will be placed, and if we do not supply it, someone else will," while C.W. Schwartz predicted that the company's volume could be doubled in three years. Convinced that fiscal control was the only answer, C.W. Schwartz quietly built up his holdings, so that on 9-18-85, he and J. Proctor, took over the business, electing Proctor once more as president and C.W. Schwartz as treasurer. This team would control the company until 1921, and business, instead of doubling in three years as Proctor had predicted, actually tripled! Net profit came to sixty per cent on net worth.

A period of phenomenal expansion then took place, with C.W. Schwartz setting sales and fiscal policy, and J. Proctor directing manufacturing and research. Real management control policies were applied and after this, things seldom went wrong for years to come. J. Proctor began to taper off in 1900, when he had purchased a stately suburban home in Wyncote and Ocean City. He thoroughly enjoyed himself for the next twenty years with his numerous grandchildren. He would, however, retain the office of president for nearly twenty years.

Growth and profit provided the motif for the period 1895-1904. A dividend, though earned was postponed in July of 1896 because of the board's fear of Bryan victory in 1896. The minutes described the danger, "The irresponsible policies of the Democratic candidate would have a disastrous affect on business." After the McKinley victory, a twenty-four per cent cash dividend was declared. Most all of this growth rested in the drying machinery end of the business under the control of Walter Schwartz, spear headed the expansion with the tobacco dryer. Schwartz had come into the shop in 1896, but served in Cuba in the Spanish American War. He aggressively expanded the dryer fields into plywood, chemical and hosiery fields. He was promoted to vice president in 1904. Sales in this period quintupled, while net worth and growth maintained the same startling rate.

The buildings at Hancock and Somerset Sts. were purchased for $38,000 in 1901. (Sold in 1921 for $130,000.) Also, in 1901, PTM purchased for $60,000, the M.A. Furbush Co. in Camden, maker of cards and spinning machinery. This company had once been much larger, but had dwindled largely because of their stubborn faith in the obsolete spinning mule. The situation may be likened to Baldwin and the steam locomotive, in 1850. C.W. Schwartz planned to use Furbush's quality reputation to enlarge the textile division. In the end, as would often happen later, they acquired little beyond the sales of Jim Booth. The Furbush facilities in Camden were either moved into PTM or scrapped.

Hughte Tate, superintendent, on 2-13-04, hired two lads of fifteen, Will Hauck and Harry MacEachern. Each would remain fifty years with the company, Will as dryer superintendent and Harry as textile. In most ways, they were opposites, Will dressed immaculately, had a gruff approach, and ruled with a firm hand, while Harry dressed as a foreman and corrected his men in a voice only a little above a whisper. They were however, much alike in their basic fairness and in their fierce loyalty to the company.

By 1903, C.W. Schwartz felt the need for the consolidation to an enlarged textile division, integrally operated and based on amalgamation with a reasonably large company. How about J. Smith which Proctor had left twenty years ago? Smith, stagnating on a never risk policy, had reached a critical point with the death of Cunningham, their president and largest stockholder, and were ripe for merging. Cunningham, Horatio Lincoln, John Brown and Pendleton had rounded out thirty years in the saddle. Losses had been the rule, but strict husbanding of capital permitted the company to continue for years, constantly losing a little. Management consultants were engaged but when their recommendations threatened the company's "sacred cows," they were never executed. Eighty-five year old Cunninghan, too ill to even attend board meetings, was re-elected as president although he was not destined to live out the year. Horatio Lincoln became president and F.E. Schermerhorn, an attorney and Penn graduate, would remain with the company for fifty years. His son, Tom, is currently employed, marking 123 years continuous with the company for over four generations.

The consolidation of the textile machinery division of PTM, including Furbush, with J. Smith took place in 1904. The assets, patents and good will of J. Smith and of the textile machinery division of PTM, each valued at around $200,000 were merged into a new company, with $400,000 valuation (Smith-Furbush). Half of the shares were held by the PTM Corporation and the other half split between the Cunningham Estate, John Brown and Lincoln. J. Proctor and C.W. Schwartz held the title of president and treasurer respectively, while Brown and Schermerhorn were vice president and secretary. At no time did Walter Schwartz exhibit more than a proprietary interest in Smith-Furbush. While originally the stock of Smith-Furbush was split equally between Smith and PTM, greater personnel strength and fiscal clout soon dominated the merger. From 1905-1922, all the company's textile machinery was produced by Smith-Furbush while Philadelphia Textile Machinery, despite its name, made only drying machinery.

In 1909, J. Proctor went into semi retirement although retaining the title of president. M.A. Shrueder, a Cornell graduate, replaced Hugh Tate as shop superintendent. Hughie had been adequate for direct foreman type of supervision, but the company was ready for a more sophisticated management control. The changeover from wood to steel construction at the same time as the introduction of the Taylor system of management required a complete revision of our shop system. Although steel construction offered a design years ahead of our competitors, it was bitterly opposed on the basis that the changeover cost would be ruinous, and also, because we would lose a lot of business generated by the replacement of burned up machines. An intangible gain resulted from the use of an accurate bill of material, a vehicle for better routing, cost and time study. Shrueder unfortunately passed away in four years.

Bill Bokum, chief engineer of J. Smith, had been hired away before the merger but was induced to return to Smith-Furbush by a stock offer. Designs were improved, but the poor control of textile costs and labor remained, and the overall performance was unacceptable. C.W. Schwartz insisted to the board that the only viable remedy lay in the installation of the Taylor System. Although Schwartz may have been correct for the need of this system, he way undervalued the difficulties. The problem was similar to computerization in the 1950's except that there was no background of reference. All the "snafus" of careless paper work, inaccurate definition and unplanned engineering changes had to be surmounted. Little rapport existed between line organization (who considered the system a nuisance) and the procedure en who had little concern for operation problems. The latter displayed but one policy, "Make the system work." The cost written off to install the system amounted to seventy per cent of a year's shipment. (Equivalent to two million dollars a year at Proctor and Schwartz in 1972). Management, caught in the middle, had to modify the systems priorities. They put Mr. Allen in charge, and released Mr. Barth and his retinue of Taylor.

The business continued to grow as indicated by these yearly figures: 1884 - $20 million, 1894 - $65 million,1904 - $350 million, 1914 - $850 million, total sixteen per cent per year. It was evident that within four years, new plant space would be needed. The pay structure of 1911, roughly nine per cent of 1972, ran: shop worker - eleven dollars a week, clerical - ten dollars a week, an average of ten top administrative employees (except president and vice president), chief engineer, sales superintendent, treasurer - forty dollars a week, annual shipper employee - $3000.

An eleven dollar per week man paid ten dollars a month rent, twenty-three cents a pound for beef, and four cents a trolley ride. For salesmen, the new twenty-five story Hotel McAlpin advertized, "A room and a bath for a dollar and a half."

Up until 1910, most of all the administrative decisions were made by C.W. or Walter Schwartz. However, a new group of administrators were emerging. Four men to be vice presidents by 1920 would under W.M. Schwartz operate the company for forty years:

1. E.B. Ayers started on the erection floor in 1883, then through outside erection to sales, chief of special dryer sales in 1908, and vice president in 1916. E.B. Ayers drove everyone including himself. Not one to work for, if you could not produce, but a great one, if you could. E.B. Ayers displayed pride that he was self made and contempt for those who tried to impress him with their erudition.
2. Fred Kershaw, a young draftsman in 1907 complemented E.B. Ayers as a direct opposite. Soft voiced, never ruffled, Kershaw displayed a mathematical mind and the ability to bring dissidents together through his calm logic. In 1909, W.M. selected him as his assistant in job cost and pricing. Elevated to vice president in 1918 when W.M. was on leave, he was elevated to president in 194 but died a year later.
3. W.W. Allen started in 1901 as a tool maker, and became such an expert on card clothing that he headed the department in 1907. His leadership at this job earned him the hot seat of pulling the Taylor System out of the fire. Superintendent of Smith-Furbush in 1913 and vice president of textile machinery in 1922, he served as president of the company from 1945-1953. Painstakingly careful, Allen usually played the part of the conservator.
4. H.T. Hershey came from Link Belt in 1908 to help administer the Taylor System. A handsome, full-back type, he utilized his agility in math and his ability to get along with everyone so well, that he was a natural for drying machinery superintendent when Schrueder died. Promoted to vice president in 1919, he supervised through Will Hauck until 1950. Only major policy decisions were referred to Hershey.

In 1912, the company developed the soap to chip and bar, this system for forty years proved consistently major part of our line, until the unthinkable occurred! After 1000 years lye/fat soap was replaced by detergents, and out business collapsed. The company's only alternative, to replace it with a new development! Many Philadelphia firms could not make this adjustment: Balden, Stetson, Bromley, Disston, Foerderer, and Atwater-Kent. Woodrow Wilson's election plus a Democratic Congress in 1912 created:

1. A fear of business recession. Although the company's profits were high, the Board postponed dividends, and ordered strict expense control.

2. An income tax of up to ten per cent on the four per cent of the population whose income exceeded $5000. The tax was denounced as socialistic. What would they have said of a tax colossus which siphoned off fifty per cent of all corporation profits?

The automatic hosiery dryer, for the production of heavy service weight of cotton and silk hosiery, created a business that would operate as a self contained unit. During the depression this was the only profitable unit. This entire business line terminated abruptly when DuPont found that man could spin a finer thread than a worm.

1915 saw the beginning of the synthetic fiber industry, the American Vixcose Co. of Marcus Hook, Pa. Art silk, as it was then called (the name rayon did not even exist) produced only twenty million pounds a year. Today synthetics account for 2000 million pounds. The quality of the first rayon was so poor that Henry Blum of United Piece Dye said he'd never finish a yard of it.

Two men hired in 1915 were destined to become dryer chief engineers, Phil Bur and Herman Bogaty. Both were intellectuals, loved music and possessed analytical minds, but here the similarity ceased. Where Bur was smooth shaven, quietly dressed, and as American as the Battle of Gettysburg, Bogaty sported a Walrus mustache, a red Windsor tie and a Polish dialect. Bur deeply respected authority, while Herman flouted it by obtuse and devious opposition.

The move from Hancock and Somerset Sts. to the new 80,000 square foot plant at 7th and Tabor Rd. started with the move of the dryer division (PTM) only, in 1916. The Smith-Furbush textile division then filled the entire building at Somerset St. In the years following, the operation of Smith-Furbush continued so unprofitably, that it was decided to liquidate the corporate structure of Smith-Furbush and bring the operation of the textile machinery division under close management control at 7th St. in 1922. The 1916 plant at 7th St. was doubled at that time. This building, of saw tooth construction, housed the most modern equipment. A glassed-in planning room in the middle of the plant served as the nerve center of the plant. The offices were finished in a charming Colonial motif.

The contractors completed the 7th St. plant just in time for the war boom. Business dropped off in 1914, but the influx of orders from Britain and France, plus the cutoff of chemicals and dyes from Germany create a business boom by 1916. 1917 produced our first million dollar year. Thirty years later we had our first million dollar month The Philadelphia and Reading (Reading) along side the plant was always loaded with six cars. During WWI the company, convinced of post war growth, stressed the urgency of continuing research programs. The war also created the first appearance of women in sizeable numbers. Prior to this, all the clerical help in the shop and most of the stenographers were men.

Walter Schwartz took leave of absence for the war duration to serve as a Lt. Col. of Ordinance, first officer procurement in Washington and then in charge of inspection for the Eastern Pennsylvania area. In the latter post he commanded 4000 officers and men, and received a military commendation for his efforts. During the war, he was ably assisted by Captain Harxthal, a clever, clear thinking officer who displayed originality in running down the cause and recommending a cure for excessive rejection. Col. Schwartz was determined to bring Hurxthal into the PTM organization.

After the war, the company established three branch offices: Joseph Tiers Jr. in Chicago, Ed Kerst in Providence and Herb Landell in New York. Landell, destined to be the company's largest sales producer for the next thirty years, represented the typical salesman; big, florid, a sharp dresser and a smart entertainer. He knew the best places and was well known. Doors were just never closed to him. In direct contrast to Landell, the number two man in this period, Bill Riehl used the factory level approach. A Kensingtonian in dress and speech, his support came from the superintendent, the boss dryer or the master mechanic, since he knew their problems and spoke their language. Billy figures that if his clientele specified a Proctor machine, top management was not likely to deny their request. He would have denied using any sales psychology. He just naturally knew. Herb and Billy, two directly opposite types with opposite sales approaches, yet each successful. Sales theory?

Early in 1922, the board, recognizing the fact PTM now produced non-textile machinery equipment, and desirous of a broader name, discussed changing the name to one which would pay tribute to Proctor's early contributions. C.W. Schwartz and W.M. Schwartz suggested Proctor Manufacturing, but the board felt that the name should also reflect the Schwartz ownership and management for the past quarter century. Accordingly the name, Proctor and Schwartz became official on 2-27-20, just sixteen days after the death of Josiah Proctor. No change of personnel or ownership occurred with the name change. However, with the death of C.W. Schwartz a year later; the consolidation and enlargement of 7th St.; the expansion in products and the emphasis on R&D; the company really emerged into the big business category.

With Walter Schwartz as president and T.W. Allen as vice president of the Textile Division each with very suitable administrators, C.W. Schwartz had built up a fine organization that would continue and grow after his passing. The consolidated shop maintained divisional separation only in the erection floors and certain functional shops, such as wire punching. In the offices, however, sales, engineering and research were divisionally separated; only accounting and purchasing were consolidated. Naturally, very heavy write-offs of textile machinery inventory parts occurred with the move. Much of the inventory was barely active enough to justify retaining it on the shelf in the old plant but when subjected to the new criterion, "Does it justify the cost of moving and restocking," out it went.

In the operation of Smith-Furbush at 7th St., two names emerged after Bill Bokum, who had been chief engineer since the Smith merger in 1905. John Senior, who had worked closely with C.W. Schwartz in setting up textile machinery sales controls in 1908, took over management of sales controls in 1919, although not promoted to vice president until 1946. Harmon Riehl somewhat younger (he came to PTM in 1915), worked in the planning room before promotion to sales in 1919. Very shortly after this, he was sent to Cohoes to manage that shop and from there to Boston where he remained until 1942 when he came to Philadelphia where he became textile chief engineer. His promotion to vice president in charge of the textile division occurred in 1949.

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