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From Factory to Family: The Creation of a Corporate Culture in the Larkin Company of Buffalo, New York

Published online by Cambridge University Press:  13 December 2011

Howard R. Stanger
Howard R. Stanger
Affiliation:
HOWARD R. STRANGER is assistant professor of labor relations and human resources at theState University of New York College at Buffalo.
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Abstract

The Larkin Company of Buffalo, New York, was established in the 1870s as a small soap producer and grew to become a large mail-order house. Larkin's success could be attributed to a unique sales strategy created by Elbert Hubbard, called “The Larkin Idea,” which had as its motto, “From Factory-to-Family: Save All Cost Which Adds No Value.” The company sold its products exclusively through the mail to women in cooperative buying clubs. Employing a variety of marketing, advertising, and employee welfare practices, the Larkin Company built a unified corporate family of “Larkinites“—employees, customers, and executives. Larkin executives also hired architect Frank Lloyd Wright to construct a modern office complex, which became the physical representation of Larkin's culture. But changes in marketing, the departure and deaths of key executives, a seemingly anachronistic corporate culture, and poor business decisions combined to undermine the company in the mid-1920s, and by 1940 the company was virtually dead.

Type
Articles
Information
Business History Review , Volume 74 , Issue 3 , Autumn 2000 , pp. 407 - 433
Copyright
Copyright © The President and Fellows of Harvard College 2000

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References

1 Larkin financial records, Darwin D. Martin Papers, mss. B76–1, box 2, folder 3, Buffalo and Erie County Historical Society (BECHS), herein referred to as Martin Papers, BECHS. Given the frequent name changes, I will refer to the company generically as the Larkin Company or Larkin throughout this paper.

2 The Home of the Larkin Idea (1906), publicity pamphlet for factory tour guests, vertical files, herein referred to as BECHS.

3 See Lipartito, Kenneth, “Culture and Practice of Business History,” Business and Economic History 24 (Winter 1995): 1–45Google Scholar, and select articles from Business and Economic History, 26 (Fall 1997), especially pages 1–4, 5–26, and 101–23. Lipartito argues that culture helps to account for organizational capability, or what goes on in a firm. It can also assist in understanding the relationship between the organization and its external environments, specifically technology and the market, Lipartito, “Culture and Practice,” 5. In his book on the twentieth-century American locomotive industry, Albert Churella shows how organizational culture was responsible for success and failure alike as the industry changed from steam to diesel engines. Churella, Albert J., From Steam to Diesel: Managerial Customs and Organizational Capabilities in the Twentieth-Century American Locomotive Industry (Princeton, 1998)CrossRefGoogle Scholar.

4 They were motivated to do this by a number of reasons. Some acted out of a sincere wish to improve worker welfare, while others hoped to stem accusations of corporate “soullessness,” and to stave off government regulation. See Marchand, Roland, Creating the Corporate Soul: The Rise of Public Relations and Corporate Imagery in American Big Business (Berkeley, 1998), 7–47.Google Scholar

5 The word culture has many different meanings and connotations. In general, culture emphasizes the role of rituals, symbols, beliefs, and myths within companies. Dellheim, Charles, “The Creation of a Company Culture: Cadburys, 1861–1931,” American Historical Review, 92 (1987): 13–44.CrossRefGoogle ScholarPubMed Organizational theorist Edgar Schein enhances the definition of culture as follows: “A pattern of shared basic assumptions that the group has learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” In general, there seem to be many competing definitions of “culture.” Schein, Edgar H., Organizational Culture and Leadership (San Francisco, 1997), ch. 1.Google Scholar

6 Tone, Andrea, The Business of Benevolence: Industrial Paternalism in Progressive America (Ithaca, 1997), 124–126Google Scholar; Strasser, Susan, Satisfaction Guaranteed: The Making of the American Mass Market (New York, 1989), 7–19.Google Scholar

7 Tone, The Business of Benevolence, 124–36. Nancy F. Koehn demonstrates how Heinz's advertising won not only the trust and loyalty of millions of consumers, but how it was instrumental in building a popular brand. Koehn, Nancy F. “Henry Heinz and Brand Creation in the Late Nineteenth Century: Making Markets for Processed Food,” Business History Review 73 (1999): 349–93.CrossRefGoogle Scholar

8 Scholarship on companies such as Heinz and Hershey emphasize welfare work and advertising and only infer the presence of a corporate culture. However, these companies used rituals, symbols, beliefs, and myths to unify workers and company management.

9 By 1900, NCR's unrivaled welfare programs combined a variety of physical, mental, moral, social, and financial improvements that were the envy of the world. After a bitter strike in 1901, the company's benefit programs became more narrowly focused on recreation and health care. For greater details on these practices, see Sealander, Judith, Grand Plans: Business Progressivism and Social Change in Ohio's Miami Valley, 1890–1929, (Lexington, 1988)Google Scholar, chapter 2; Nelson, Daniel, Managers & Workers: Origins of the Twentieth-Century Factory System in the United States, 1880–1920 (Madison, 1995, 2nd ed.), 104–7.Google Scholar See also Friedman, Walter A., “John H. Patterson and the Sales Strategy of the National Cash Register Company, 1884–1922,” Business History Review 72 (1998): 552–84CrossRefGoogle Scholar, for an examination of NCR's innovative sales organization.

10 Judith Sealander, Grand Plans, ch. 2.

11 John D. Larkin's religious background helped to shape his paternalism toward employees.

12 John's mother, Mary, maintained the iron works for a few years before the company's foreman, Robert Bingham, assumed ownership. Larkin, Daniel I., John D. Larkin: A Business Pioneer (Buffalo, 1998), 17–18.Google Scholar

13 Ibid., 13–14, 19–37, 45–46.

14 Soap slingers went door-to-door persuading housewives to try the products. They would leave a sample with them and return a few days later to collect either unused samples or money for sold products. Soap slingers were typical during this time. However, Larkin retired them much sooner than his competitors did.

15 Larkin, John D. Larkin, 51–2, 55; Quinan, Jack, Frank Lloyd Wright's Larkin Building: Myth and Fact (Cambridge, 1987), 11–12Google Scholar; Darwin D. Martin Family Papers, Mss 22.6, box 2, folder 5, University at Buffalo Archives, herein referred to as Martin Papers, UB.

16 Martin Papers, box 2, folder 5, UB.

17 Quinan, Frank Lloyd Wright's Larkin, 14; Larkin, John D. Larkin, 69, 87; Martin Papers, box 2, folder 5, UB.

18 Martin Papers, box 2, folders 6 and 7, UB.

19 Bushman, Richard L. and Bushman, Claudia L., “The Early History of Cleanliness in America.” The Journal of American History 74 (March 1988): 1231–8.CrossRefGoogle Scholar Parisians had preceded the Americans in the use of toilet soaps. Larkin's Creme Oatmeal soap was modeled after dainty soaps from Paris and made consumers of modest means feel part of the burgeoning American middle-class. See also Norris, James D., Advertising and the Transformation of American Society (New York, 1990), 51.Google Scholar

20 United States. Department of Commerce and Labor. Bureau of the Census. Manufacturers. Part I, United States by Industries (Washington: GPO, 1880–1909); United States Department of Commerce and Labor, Bureau of the Census, 12th and 13th Census of the United States (Washington: GPO, 1907), 1913.Google ScholarDepew, Chauncey, One Hundred Years of American Commerce, Part 2 (Westport, 1968), 426.Google Scholar

21 Information about Buffalo's soap industry is sparse. A 1884 local history notes the existence of two large soap manufacturers: Wm. Lautz (later Lautz Bros.), founded in 1853, and R.W. Bell & Co., founded in 1865. Lautz employed 200 people, had six teams of horses and maintained three branch offices in Philadelphia, New York City and Chicago. By the late 1890s, Lautz had over 300 employees, 50 commercial travelers, and six branch offices, five of which were different from the earlier ones. The United Trades and Labor Council of Erie County praised Lautz as being a union-friendly company. For reasons unknown, the company faded away sometime in the 1920s. Bell employed 150 but disappeared from the scene during the early 1900s. Smith, Perry, ed., History of Buffalo and Erie County, New York, v. 2 (Syracuse, 1884), 255Google Scholar; United Trades and Labor Council of Erie County (1897), 208–9.

22 Laird, Pamela Walker, Advertising Progress: American Business and the Rise of Consumer Marketing (Baltimore, 1998), 53–4.Google Scholar

23 Norris, Advertising and the Transformation, 50–1.

24 Soap producer B.T. Babbitt began using premiums in exchange for quantities of soap wrappers as early as 1851. Most soap producers made use of this selling technique at one time or another. Laird, Advertising Progress, 53–4.

25 Quinan, Frank Lloyd Wright's Larkin, 12.

26 There is no evidence to refute Martin's claims.

27 The Larkin Idea, The Pan American Exposition Number 1, Buffalo, March 1901, BECHS. Not until 1920 did the largest soap producer, Proctor & Gamble, announce to wholesalers and retailers that it would begin selling directly to retailers in July, bypassing other middlemen. Schisgall, Oscar, Eyes on Tomorrow: The Evolution of Proctor & Gamble (Chicago, 1981), 88–92.Google Scholar Compared with P & G, known for its advertising, Larkin was more innovative in selling.

28 Schlei, Margaret, “The Larkin Company—A History” (M.A. thesis, University of Buffalo, 1932, 12–13)Google Scholar; Quinan, Frank Lloyd Wright's Larkin, 12–13.

29 After 1893 the company dropped combination boxes and replaced them with premiums with any ten-dollar order of Larkin products, or individually from the premium lists first begun in 1893. Larkin, John D. Larkin, 70–1.

30 Quinan, Frank Lloyd Wright's Larkin, 12–13. The Larkin Company went to great lengths to try to convince customers that the “Factory-to-Family” plan was superior to both retail and installment buying. For example, in the October 1906 Larkin Idea, an article titled “The Wasteful Installment-Plan” detailed the different cost structures and savings realized from Larkin's selling methods. Using an example of the Larkin Mantel Clock No. 35 premium, the company demonstrated how the same clock, costing five dollars of a ten dollar soap purchase, would cost the consumer at least twelve dollars under the installment plan. The article concluded by noting how Larkin's “Factory-to-Family” dealing had all the advantages of the installment plan, primarily the easy payments. In addition to club dues of a dollar per month, “co-operation and economic methods of manufacture here give money three times the buying power it would have under an installment system.” The Larkin Idea (October 1906), 1–3, BECHS. Articles similar to this one appeared in numerous company publications directed at its customers.

31 Larkin Company records are sketchy on who originated the Clubs of Ten. Jack Quinan and Robert Beisner argue that Elbert Hubbard was responsible for the club plan as a logical extension of reducing middlemen. Quinan, Jack, “Elbert Hubbard's Roycroft,” in Head, Heart and Hand: Elbert Hubbard and the Roycrofiers, ed. Via, Marie and Searl, Marjorie B. (Rochester, 1994), 12Google Scholar; Beisner, Robert, “‘Commune’ in East Aurora,” American Heritage 22 (February 1971): 74.Google Scholar It is possible that the Larkin Company failed to credit Hubbard for this innovation in the wake of the acrimonious parting with John D. Larkin in 1893.

32 Larkin financial records, mss. B76–1, box 2, folder 3, Martin Papers, BECHS.

33 Quinan, Frank Lloyd Wright's Larkin, 12–13.

34 Susan Strasser, Satisfaction Guaranteed, 6, 16–17; Bronner, Simon J., “Country Stores, County Fairs, and Mail-Order Catalogues: Consumption in Rural America,” chap, in Consuming Visions: Accumulation and Display of Goods in America, 1880–1920 (New York, 1989), 343–7.Google Scholar See also Chandler, Alfred, The Visible Hand: The Managerial Revolution in American Business (Cambridge, 1977), chaps. 7–9.Google Scholar

35 Biggart, Nicole Woolsey, Charismatic Capitalism: Direct Selling Organizations in America (Chicago, 1989), 20–3.Google Scholar

36 Ibid., 162–7. One of the most prominent late nineteenth century direct selling organizations was the California Perfume Company, later Avon Products. In her study of the California Perfume Company between 1886 and 1938, historian Katina Manko illustrates how corporate culture and social culture overlapped and combined into a unique business venture. Manko, Karina L., “‘Now You are in Business for Yourself’: The Independent Contractors of the California Perfume Company, 1886–1938,” Business and Economic History 26 (Fall 1997): 5–26.Google Scholar

37 Margot C. Adams-Webber, “Larkin Club Secretaries, 1894–1916: Managing a Volunteer Sales Force.” Paper presented at the Fifth Canadian Business History Conference, McMaster University, October 16–18, 1998: 6.

38 Premium List, 46th edition, 29th year, August 1904; Product and Premium List, 60th edition, 34th year, fall-winter, 1908–09, BECHS. These lists contained all the available premiums and products and instructions on the workings of the premium system and clubs. The first list was established in 1893.

39 Strasser, Satisfaction Guaranteed, 88.

40 The Larkin Idea, March 1901, BECHS.

41 Product and Premium List, 60th edition, 34th year, fall–winter, 1908–09, BECHS.

42 A February 1907 Larkin Idea contained a small advertisement for itself. The company noted the following: “our magazine is a wide-awake periodical containing stories, poems, special articles and departments of interest and value to the housekeeper. Special interest is given matters of interest to Club-of-Ten Members. News about the very latest Larkin Products and Premiums is also included.” The Larkin Idea, February 1907, 23, BECHS.

43 The Larkin Idea, February 1907, 8, BECHS.

44 Ibid.

45 The Larkin Idea, May 1906, 25–6, BECHS.

46 The Larkin Idea, September 1906, 20; August 1906, 19, BECHS.

47 The main column, “The Larkin Club-of-Ten,” focused on adults, while “The Larkin Boys' Symposium” and “The Larkin Young Folks” columns targeted youths.

48 At Roycrofters, Hubbard employed many of the same marketing, sales, manufacturing and employee relations practices that he either created or that were used at Larkin. Jack Quinan, “Elbert Hubbard's Roycroft,” 12–14.

49 The company discontinued the plan after a few years, although there is no record why. Larkin, John D. Larkin, 87–8, 184; Larkin Company Stockholders’ Meetings, 1893–99, v. 23, LCR, BECHS; Letter from John Larkin and Elbert Hubbard announcing the creation of a new stock plan, 2 May 1892, Advertising Scrapbook, LCR, BECHS.

50 Box 1, folder 1, LCR, BECHS.

51 Stockholders' Meetings, 17 Jan. 1905, 16 Jan. 1906, 22 Jan. 1907, LCR, BECHS.

52 Ibid., Ourselves, 16 Nov. 1903, 5 Dec. 1903, LCR, BECHS.

53 Schlei, “The Larkin Company,” 38–9.

54 Population figures cited in Brinkley, Alan, The Unfinished Nation: A Concise History of the American People, II (New York, 1997), A–37.Google Scholar

55 The cities in which Larkin established showrooms all were in the top ten in population for the census years 1890 through 1920. Only Pittsburgh fell outside this range, but only until the 1910 census.

56 Schlei, “The Larkin Company,” 44–5; Ourselves, 5 Sept. 1903; Stockholders' Meetings, 17 Jan. 1905, 16 Jan. 1906, 22 Jan. 1907, LCR, BECHS. The company's records indicate the Cleveland branch opened in 1905; Schlei dates it to 1907. While Peoria prospered over the years, the New York, Boston, Pittsburgh, and Cleveland operations fared less well and were shuttered between 1913 and 1914.

57 Ourselves, 1 Aug. 1904, LCR, BECHS.

58 The Larkin Idea, March 1901, BECHS; Ourselves, 12/1/06, BECHS. A dozen girls opened the mail. Most other clerks were women, except for supervisors. Men were concentrated in the general packing room.

59 Larkin Company correspondence with the press, various years, box 1, folder 1, LCR, BECHS.

60 Ourselves 2 May 1904,15 Oct. 1903, 15 Feb. 1904, 1 Mar. 1905, 15 Feb. 1906, 25 Dec. 1906, LCR, BECHS.

61 Minutes of Stockholders' Meetings of 17 Jan. 1905, 16 Jan. 1906, 22 Jan. 1907, LCR, BECHS.

62 Leary, Thomas and Sholes, Elizabeth, Buffalo's Pan-American Exposition (Charleston, 1998), 7–8.Google Scholar Both of these gigantic mail-order houses were not in direct competition with Larkin as they sold a more diversified line of goods. Larkin premiums, to some extent, could be found in these companies' catalogues, but Larkin customers could acquire them by selling soaps and related products.

63 Buffalo Courier, 6 Oct. 1901. Letter from Chicago sculptor and art critic Hugo Loeb to the Larkin Soap Company, 10 October 1901, Darwin Martin Scrapbook, BECHS.

64 Buffalo Courier, 6 Oct. 1901, 2.

65 Buffalo Courier, 6 Oct. 1901, 2.

66 Ourselves, 2 May 1904, 1 July 1904, 15 Aug. 1904, 1 Oct. 1904, 15 Sept. 1906, LCR, BECHS.

67 Ourselves, 1 May 1905, 16 Oct. 1905, 15 Feb. 1906; Stockholders Meeting of 22 Jan. 1907, LCR, BECHS.

68 Ourselves, 1 Oct. 1904, LCR, BECHS.

69 Ourselves, 5 Dec. 1905, 1 Feb. 1906, LCR, BECHS.

70 Ourselves, 15 Feb. 1905, BECHS; The Larkin Idea, Dec. 1906, 8–10, reports on the New England showrooms, offering glowing press reports, BECHS.

71 Ourselves, 16 Oct. 1905, 1 Nov. 1905, LCR, BECHS.

72 The Larkin Idea, March 1901, BECHS; Stockholders' Meetings, 16 Jan. 1906, 22 Jan. 1907, LCR, BECHS.

73 At its 1906 stockholders' meeting, the company reported labor costs per $1,000 in business to be $15.22 for 1905, an increase from $14.62 one year earlier. It attributed the increase to two factors: a surge in business in the fall months that left a partially trained workforce unfit to handle the volume efficiendy, and second, to the crowded office conditions: “We have been obliged to put cabinets and desks wherever we could find space to plant them abandoning our logical arrangement and so some degree, our ability to supervise.” Stockholders' Meeting, 16 Jan. 1906, LCR, BECHS.

74 The Larkin Idea, March 1901, BECHS.

75 Tone argues that the institutionalized segregation of the sexes served to “buttress employers' claims of respect for canons of sexual propriety and respectability, assuring critics of the protective features of corporate custodianship.” She contends that some companies tried to project an image of the factory as tantamount to the middle-class home—clean, domesticated, and cultivated. However, much of these efforts were directed toward creating the appearance of being middle class, endowing women with the manners but never the means to transcend their economic status. Tone, The Business of Benevolence, 154, 164–5.

76 Ourselves, 3 Jan. 1905, LCR, BECHS.

77 Stockholders' Meeting of 22 Jan. 1901, LCR, BECHS; The Larkin Idea, March 1901, BECHS; Ourselves, 15 Feb. 1906, LCR, BECHS.

78 Ourselves, 16 Apr. 1906, 1 May 1906, 1 Jun. 1906, 1 Sept. 1906, 1 Dec. 1906, 25 Dec. 1906, LCR, BECHS.

79 The competing philosophies of efficiency and uplift were occasionally used side by side in the same company, even though the “Father of Scientific Management,” Frederick Taylor, called welfare work “a joke.” See Brandes, American Welfare Capitalism, 36; Tone argues, as does Brandes, that the two approaches could be complementary since both stressed workplace efficiency. She contends that “Welfare work sought to control and mold the personal attributes workers brought to their labors; scientific management tried to direct the application of those attributes … the deployment of both management strategies gave employers added power to regulate all variables potentially affecting workplace efficiency.” Tone, The Business of Benevolence, 76–7.

80 Ourselves, 1 Feb. 1904, LCR, BECHS.

81 Ourselves, 15 Jun. 1903, LCR, BECHS.

82 Ibid.

83 Ibid., 84.

84 Quinan, Frank Lloyd Wright's Larkin, 38, 44–56. Quinan's book provides the best scholarly treatment of the Larkin Administration Building.

85 Ibid., 56–66.

86 Ibid., 76–84.

87 Quinan, Frank Lloyd Wright's Larkin, 89. Also see chapter 5 for a detailed discussion of the messages inscribed on the building.

88 Ibid., Appendix G.

89 The row houses were never built. Hitchcock, Henry-Russell, In the Nature of Materials, 1887–1941: The Buildings of Frank Lloyd Wright (New York, 1988), 55.Google Scholar The Jamestown fair celebrated the three hundredth anniversary of the Jamestown, Virginia, settlement. The front section of Wright's building contained a large display area where Larkin showed off its many products and premiums. The rear space contained a theater used to show films and stereopticon views of Buffalo, Niagara Falls, and Larkin's factories. Trolley cars linked the Larkin pavilion with the others at the fair. At its peak, 4,000 people attended the exhibit on July 4. They were likely impressed not only by the dazzling display of goods, but also the building that won the exposition's gold medal for design excellence. Lind, Carla, Lost Wright: Frank Lloyd Wright's Vanished Masterpieces (New York, 1996), 150–1.Google Scholar Lind notes the U.S. Navy bought the land in 1917 to create the Norfolk Naval Base. The Larkin pavilion was destroyed, although some structures remained and became offices; The Larkin Idea May 1907, 11–13, BECHS.

90 Larkin financial data, box 3, folder 7, LCR, BECHS.

91 Lebhar, Godfrey M., Chain Stores in America: 1859–1962 (New York, 1963), 48–56.Google Scholar

92 Tedlow, Richard S., New and Improved: The Story of Mass Marketing in America (New York, 1990), 287.Google Scholar

93 Tedlow, New and Improved, 284–93.

94 Jackson, Kenneth T., Crabgrass Frontier: The Suburbanization of the United States (New York, 1985), 162.Google Scholar

95 A Chronological Record of Larkin Activities, 29 July 30, box 1, folder 1, LCR, BECHS; Schlei, “The Larkin Company,” 40–1, 51–3.

96 Schlei, “The Larkin Company,” 54–5.

97 McCraw, Thomas K., American Business, 1920–2000: How it Worked (Illinois, 2000), 40–1.Google Scholar

98 McCraw, American Business, 42–58.

99 Manko, Katina L., “‘Now You Are in Business For Yourself’: The Independent Contractors of the California Perfume Company, 1886–1938,” Business and Economic History 26 (Fall 1997): 1–26.Google Scholar

100 Golden, Claudia, Understanding the Gender Gap: An Economic History of American Women (New York, 1990), 17, 55.Google Scholar

101 Kessler-Harris, Alice, Out to Work: A History of Wage-Earning Women in the United States (New York, 1982), 225, 272.Google Scholar

102 Larkin, John D. Larkin, 184–6; Quinan, Frank Lloyd Wright, 119–23.

103 Quinan, Frank Lloyd Wright, 123.

104 Quinan, Frank Lloyd Wright, 123. Beginning in the mid-1920s, the company began closing numerous branches, manufacturing facilities, and retail establishments. It also sold other operations.

105 Larkin, John D. Larkin, 188.

106 Larkin, John D. Larkin, 192.

107 For the only treatment of the company's dechne, see Quinan, Frank Lloyd Wright's Larkin, ch. 7.

108 Manko, “Now You Are in Business for Yourself,” 25; Biggart, Charismatic Capitalism, 41–7.