Here we go again – another decade of the “twenties” – hopefully these twenties roar in the good sense. This is a perfect time to look back at what was going on in business history one hundred years ago.
1920 was an important year in business history. Two developments stand out. On January 16, the Prohibition of alcohol became the law of the land. And on November 2, the first radio station, KDKA of Pittsburgh, took to the air. Prohibition had immediate effects on how Americans spent their money and lived their lives and thus on the world of business for the next thirteen years. Radio, on the other hand, has had a lasting impact on all of us and lives on around the globe today.
There were other business developments as well that we’ll touch on here. Perhaps the most remembered are the nefarious activities of one Charles Ponzi.
Let’s start with Prohibition. The end of legal alcohol in the United States meant that brewers went out of business or switched to other products, including soft drinks. Hotel bars became soda fountains, bartenders replaced with soda jerks. And Americans (who could not afford to fly on newly-created airlines to Cuba or the Bahamas) turned to other affordable pleasures. The coffee, soft drink, and candy businesses boomed.
A top candy product was Life Savers, patented as “nothing enclosed by a circle.” Co-owner and marketing wizard Edward Noble placed racks full of the candy beside the cash register at cigar stores and restaurants across the nation. He urged cashiers to always include a nickel, the price of a roll, in the change they gave customers. In the year 1914, the company had sold nine hundred thousand rolls. In 1920, that number rose to sixty-eight million rolls!
On North Halsted Street in Chicago, 28-year-old Otto Schnering’s Curtiss Candy Company was four years old. He had used his mother’s maiden name to avoid using a German name, unpopular after World War I. In 1920, he trademarked Baby Ruth candy bars, named after President Grover Cleveland’s daughter, not the famed baseball player (who was traded from the Boston Red Sox to the New York Yankees in the same year, one of the worst business decisions of the era).
Not far away, in downtown Chicago, another candy entrepreneur, George Williamson, introduced the Oh Henry! candy bar. He began a highly successful advertising campaign in the leading magazines of the day, including the Saturday Evening Post and Collier’s.
These sweet innovators were not alone. The Henry Heide company introduced Jujyfruits and in Youngstown, Ohio, Harry Burt created the Good Humor bar, covering ice cream in chocolate.
Americans pursued other distractions to replace drinking. The Miss America Pageant was begun. In Paris, Chanel No. 5 was introduced, bringing men and women closer together. Coco Chanel’s product goes on to become the most popular fragrance in the world. In Trenton, New Jersey, 33-year-old Merle Youngs founded Youngs Rubber Company, introducing Trojan condoms, which become the best-selling brand in drugstores. Youngs died in 1958, perhaps unsurprisingly without offspring.
While these consumer products are still with us, few 1920 innovations have had the impact of radio. Invented by Italy’s Guglielmo Marconi and others, the technology was first considered a tool for navies and shipping companies, for ship-to-shore communications. Few saw any other uses. In Pittsburgh, Westinghouse engineer Frank Conrad began dabbling with broadcasts from the roof of the Westinghouse buildings to his house. No one took him seriously until a Pittsburgh department store, Joseph Horne, decided to demonstrate the idea on their selling floor. When Conrad’s bosses stumbled across the exhibit, they gave him the green light to do more. On November 2, 1920, Westinghouse launched station KDKA to broadcast the results of the Harding-Cox Presidential election, the first Presidential election in which women were allowed to vote. Within ten years, there were hundreds of radio stations across America, and most homes had radios, even those without indoor plumbing. Within thirty years, television grew from the same technologies. The world has never been the same.
These were not the only important business beginnings of 1920. Future chemical giant Allied Chemical was formed by consolidating other companies. International Telephone and Telegraph and the Pitney-Bowes Postage Meter Company were founded. Donald Douglas founded his airplane company, which soon dominated the manufacture of airliners, led by the DC-3 which enabled commercial aviation. George Halas paid $100 for a franchise in the new National Football League for his Decatur, Illinois, team sponsored by the Staley Starch Company. Two years later he moved the team to Chicago and renamed it the Bears.
But all was not fun, games, and forward progress.
38-year-old Charles Ponzi offered investors a 50% return in 45 days or 100% in 90 days through his cleverly-named Securities and Exchange Company (though the like-named Federal Commission was not created until the mid-1930s). He told people he could buy postage stamps in Spain for one cent and resell them in America for six cents. While this was true, budding financial reporter Clarence Barron pointed out that the most one could make from this scheme would be a few thousand dollars. Nevertheless, people sent Ponzi hundreds of thousands of dollars each day. By July, prosecutors caught up with Ponzi, but not before he had raised fifteen million dollars, and spent most of it on his lush lifestyle, including a mansion and limousine. Ponzi then spent three-and-a-half years in jail, his name ever emblazoned on financial scandals.
And so began the decade of the Roaring Twenties. Let’s hope that the 2020s are equally innovative, and perhaps without too many Ponzi schemes! Stay tuned to the American Business History Center for more great stories from the illustrious and sometimes not-so-illustrious past.
(A tip of the hat to the late James Trager, whose chronology books are among the best history reference books ever. Check out his The People’s Chronology.)