IBM and the Holocaust by Edwin Black Read Free Book Online Page B

Bureau's own payroll, Herman Hollerith. Moreover, the new reform-minded Director of the Census Bureau, Simeon North, uncovered numerous irregularities in the Bureau's contracts for punch card machines. Hollerith was gouging the federal government. Excessive royalties, phantom machines, inconsistent pricing for machines and punch cards, restrictive use arrangements—the gamut of vendor abuses was discovered. 19
    Worse, instead of the Bureau being Hollerith's best-treated customer, Tabulating Machine Company was charging other governments and commercial clients less. North suspected that even the Russian Czar was paying far less than Uncle Sam. American taxpayers, it seemed, were subsidizing the newly ascended Hollerith empire. 20
    When he investigated, North was astonished to learn that his predecessor, William Merriam, had negotiated lucrative and sometimes inexplicable contracts with Hollerith's firm. Then, little more than a year after Merriam left the Census Bureau, Hollerith hired him as president of Tabulating Machine Company. A rankled North inaugurated a bureaucratic crusade against his own agency's absolute dependence on Hollerith technology, and the questionable costs. He demanded answers. "All that I de sire to be satisfied of," North asked of Hollerith, "is that the [U.S.] government is given as fair and as liberal terms as those embodied in the company's contracts for commercial work and . . . for other governments." 21
    Hollerith didn't like being challenged. Rather than assuage his single most important customer, Hollerith launched a tempestuous feud with North, castigating him before Congress, and even to the man who appointed him, President Theodore Roosevelt. Tabulating Machine Company's technology was indispensable, thought Hollerith. He felt he could pressure and attack the U.S. government without restraint. But then North fought back. Realizing that Hollerith's patents would expire in 1906, and determined to break the inventor's chokehold on the Census Bureau, North experimented with another machine, and, finally, in July 1905, he booted the Holleriths out of the Census Bureau altogether. Tabulating Machine Company had lost its best client. 22
    A rival tabulator, developed by another Census Bureau technician named James Powers, would be utilized. Powers' machines were much faster than Hollerith devices. They enjoyed several automated advances over Hollerith, and the units were vastly less expensive. Most of all, Powers' machines would allow the Census Bureau to break the grip of the Tabulating Machine Company. 23
    Despondent and unapproachable for months during the self-inflicted Census Bureau debacle, Hollerith refused to deal with an onslaught of additional bad business news. Strategic investments porously lost money. Several key railroad clients defected. Tabulating Machine Company did, however, rebound with new designs, improved technology, more commercial clients, and more foreign census contracts. But then, in 1910, in an unbelievably arrogant maneuver, Hollerith actually tried to stop the United States from exercising its constitutionally mandated duty to conduct the census. Claiming the Census Bureau was about to deploy new machinery that in some way infringed his patents, Hollerith filed suit and somehow convinced a federal judge in Washington, D.C., to issue a restraining order against the Thirteenth Census. But the courts eventually ruled against Tabulating Machine Company. Hollerith had lost big. 24
    Continuing in denial, the wealthy Hollerith tinkered with new contrap-tions and delved into unrelated diversions while his company floundered. His doctors insisted it was time to leave the business. Frustrated stockholders and management of Tabulating Machine Company welcomed that advice and encouraged Hollerith to retire. Ambivalently, Hollerith began parceling out his interests. 25
    He began with Germany. In 1910, the inventor licensed all his patents to a German adding machine salesman named