We wrote this five years ago, before the American Business History Center was founded, but we stand by our choices.

For the last 52 years, I have been obsessed with understanding what makes a company great. What leads to success; what leads away. This led me to ruminate on which might be the greatest US companies so far.

I grew up in a General Motors factory town (Anderson, Indiana) in the 1950s and 1960s. GM at the time was the largest and most profitable company on earth. At the peak, they employed 877,000 people worldwide. It was considered a premier place to work. It was a great technological inventor and an innovator in business methods without peer.

When my teachers taught about leadership, competition, and strategy, I discovered political and military leaders. But what about the people who started, built, and ran this enterprise? At the age of 12 I discovered the Fortune 500 list of largest companies, began my lifelong subscription to that magazine, and fell in love with lists and rankings.

Though I am also interested in the greatest companies globally, such a list would likely be these same three. The 20th century was not only the American Century, it was also in many ways the era of the giant corporation, dominated by American corporations along with a few European giants like Shell and Unilever. The biggest difference between this list today and this list in 100 years will be the great rise of companies based in Asia and the Southern Hemisphere.

What makes a company great? That can be very subjective and hard to pin down. It includes size, but it is not determined by size alone. I believe a great company changes society: through innovation, impact on business practices at other companies, and pure reach – the number of people it affects. I have thought long and hard about the three companies that top my list. They are:

  1. Pennsylvania Railroad from about 1870 to 1920
  2. General Motors from about 1925 to 1975
  3. IBM from about 1930 to 1980

Note that Apple, Google, Microsoft and many other more recent companies are not on my list. I think it is still too early to tell how those companies will pan out. A company can appear great and permanent one day and be gone, transformed, or acquired not long after. The digital age is just beginning to build up steam; we have a lot of history ahead of us.

Here is why I chose these three firms, whose rich histories I only skim:

1. Pennsylvania Railroad from about 1870 to 1920

The railroads were our first huge industry. They opened up the nation to trade and communication. Alongside them came the telegraph and Western Union, the first giant company consolidated from smaller ones. The big railroads were leaders in technology, employment, and as investments.

The railroads were the first giant, geographically-spread enterprises. Districts, regions, supervisory structures, middle management, forms, pay scales, and ultimately use of computers (punch card machines) were pioneered by the railroads.

The greatest railroad of all, the largest in revenue and most innovative, called “The Standard Railroad of the World,” was the Philadelphia-based Pennsylvania Railroad. Competing to open the west with Vanderbilt’s New York Central System, the Pennsylvania was not family-run, but hired professional managers. Executives like J. Edgar Thomson and Thomas Scott trained youngsters like Andrew Carnegie and Thomas Edison.

By the 1870s, the Pennsylvania was the largest business enterprise in the world. Around 1900, the Pennsylvania’s securities on the stock market exceeded 10% of the value of all such securities. That would roughly equal the combined importance of Apple, Microsoft, ExxonMobil, and Berkshire Hathaway today. The company paid dividends starting in the 1850s for over 100 years in a row, a remarkable record.

Peaking at a 1920 employment of 279,787, the “Pennsy” did everything from serve food to build its own locomotives at its giant Altoona shops. Just west of Altoona is the great engineering feat of the Horseshoe Curve. East near Harrisburg was the enormous railyard at Enola, which sorted over 20,000 freight cars in one day at the peak of World War II, and was later replaced by Conway Yard west of Pittsburgh, shown below.

But perhaps the railroad’s greatest accomplishment was under the Presidency of Alexander Cassatt, brother of the painter Mary Cassatt. The Pennsylvania, unlike the New York Central, did not reach Manhattan Island. People and freight arriving from the West were taken by ferry from the rail’s end in New Jersey to piers in Manhattan.

Cassatt conceived and executed (but did not live to see the completion of) a set of tunnels under the Hudson, extending across Manhattan and then under the East River to railyards in Queens. Between, in Manhattan, the railroad built an enormous beautiful terminal, Pennsylvania Station. Across the street, they built the largest hotel in Manhattan, the Pennsylvania Hotel. This great railroad station was demolished in the 1960s, perhaps the greatest loss ever to historic American architecture. But the hotel lives on, quite profitably last I looked. The area has in recent years come back to vibrancy, with massive new construction planned.

Taken in its entirety, this construction cost over $100 million when completed in 1910. 100,000 people came to see it on opening night. This was reportedly the most expensive project ever built by private enterprise and private capital at that time. It would cost many billions today. At its peak in 1945, 100 million passengers passed through Penn Station.

The Pennsylvania had imagination and cared about design. They hired one of the founders of the industrial design profession and one of its greatest practitioners, Raymond Loewy, to design their locomotives. Their advertising, calendars, and car interiors reflected high design standards.

This is the only company in my list that no longer exists. What brought down this amazing enterprise?

The Pennsylvania and other eastern railroads ran into severe financial difficulties in the mid-20th century. As always, there were multiple causes: truck competition, over-regulation, poor leadership to name a few. Facilities and service decayed. In the 1960s they merged with their arch-rival New York Central to form the Penn Central, which lasted less than three years before collapsing into the then-biggest corporate bankruptcy in history. I was working as a summer teller in the bank in my hometown on the day it happened, and we were told not to cash Penn Central paychecks; luckily none came in. Today the old Pennsylvania routes and track are still hard at work, mainly as Norfolk Southern but in some places as CSX or other railroads. Both of these rail giants are healthy, profitable companies today, and the railroads are efficient and busy. The key Amtrak line between New York and Washington is another remnant of the late, great Pennsylvania Railroad.

2. General Motors from about 1925 to 1975

By 1920, Billy Durant had assembled a hodgepodge of smaller automakers into General Motors, including former industry leaders Buick and Oldsmobile. But even taken together, they were like a flea to Henry Ford, who was making over $100 million a year in profit in some years – a company wholly owned by him, his wife, and his son. In 1921, GM sold 12% of the automobiles sold in the US. In 1954, GM outsold all others combined, with a 52% market share, in what was by far the world’s largest and most competitive auto market. For 77 years, from 1931 to 2007, GM was the largest automaker in the world. No company has since equaled its size relative to US GNP.

In those roughly 35 years, an amazing team of leaders under the ultimate guidance of Alfred P. Sloan created the first great modern corporation. Sloan had sold his Hyatt Roller Bearings company to Durant, who wanted to control his key automobile parts suppliers. The DuPont chemical company invested in GM. Pierre S. DuPont and the board gave Sloan the task of thinking through the best organization for the disorganized group of companies. Durant stepped aside and Sloan became chief. The result was the most famous organization chart in business, the birth of the decentralized company. Operations were controlled locally or by brand, whereas finance, accounting, capital allocation, staff functions, and general corporate-wide policies were overseen centrally.

In technology, GM had Charles Kettering, one of the top patent holders in US history and the inventor of the commercially successful electric starter, which eliminated the need to crank the car. The company’s research centers created innovation after innovation in the auto industry, as well as significant efforts in aerospace and other fields. The diesel locomotive pioneered and commercialized by GM drove the stake through the heart of the steam locomotive, in one of the biggest productivity gains ever for world industry.

In design, eccentric chief of design Harley Earl gave us most of the great American cars of this classic era. From fins to long low slung babies, “concept cars” to stunning Futurama exhibits at the great World’s Fairs, his visions were seen by millions.

At the peak, GM employed 877,000 people worldwide.

A 1935 aerial view of the General Motors Baltimore Assembly Plant. (General Motors Photo)

GM’s collapse provides enough examples to fill another newsletter. There are many challenges that are widely discussed, such as labor unions, management mistakes, bureaucracy, Asian competition, and perhaps most importantly: cultural isolation (an ingrown corporate culture).

But I would also note that, after the 1937 sit-down strikes and ensuing labor-management relations, no one who ever worked on a car assembly line or hand-built a car led the company, and very few ever crossed through the huge wall that labor and management built between themselves. (Compare, for example, the restaurant business, in which most CEOs and founders began as cooks or waitstaff.)

By 2009, at age 101, the company was bankrupt and effectively a ward of the state.

Today a new, restructured General Motors is still among the largest employers and still one of the largest global automakers. Chevy and Cadillac have some hot products going, including an awesome-looking new Corvette. I will personally continue to root for them, but refrain from making any forecasts after their tortured history.

3. IBM from about 1930 to 1980

It is hard for technology companies to make this list, because it is especially hard for them to endure. The business and its requirements change so fast compared with, say toothpaste or beer, that few technology companies can retain leadership and maintain innovation for decade after decade (3M being the great exception).

The IBM I list here is the predecessor of, but not the same as, the IBM of today, which represents a remarkable turnaround. Today’s IBM, like the first one, employs over 400,000 workers and is again a prosperous innovator. The IBM of old was the world’s largest computer hardware company and the world’s largest computer software company. In 1993, between those “two companies,” IBM had an $8 billion loss, the then-biggest in US history, approaching death.

The first arc of this history, the rise of the first IBM, is one of the great beauties of corporate history.

Thomas J. Watson, Sr., was the head of sales at John H. Patterson’s dominant National Cash Register Company in Dayton. Patterson was the great American salesman and sales innovator, developing pitches and attitudes that worked. (R. H. Grant whose sales methods drove Chevy past Ford in the 1920s also came from “the Cash.”) Watson was hired by Charles FlintGeorge Fairchild (semiconductor pioneer Sherman Fairchild’s father), and other major stockholders of the Computing-Tabulating-Recording Company to run the small combination of punched card, time clock, and other office equipment makers. Watson soon adopted the name of their Canadian subsidiary, International Business Machines.

The punched card machine had been developed by Herman Hollerith, whose old company was now part of IBM. He leased his machines rather than sold them. During the depression, IBM was far more profitable than its older competitors: while new machine sales collapsed, IBM’s monthly lease payments kept coming in.

In the early 1950s, Remington Rand (and its predecessors) had pioneered the Univac machine and was poised to dominate the rapidly emerging market for mainframe computers. But Watson’s IBM, by focusing on what customers were looking for and making technology serve them, overtook the pioneer and went on to 30+ years of global dominance. Competitors from NCR to GE, RCA to Honeywell were dwarfed.

In those same 1950s, Watson handed the reins to his son, perceived playboy Thomas Watson, Jr., who then took the company to much greater heights.

Watson the younger knew how to take bold moves, betting the company on the totally new IBM System 360, which was premiered to a group of the press at a secret warehouse on launch day – precursor of Steve Jobs!

The company was one of the first big American companies to develop a complete corporate identity and design program, which touched everything from the office buildings and notepads to the computers themselves. IBM hired top designers including Eliot Noyes and Paul Rand.

The company also became a huge employer, highly regarded as a great place to work. It was one of the top “corporate citizens” in supporting education and other important and popular causes.

By the mid-1980s, IBM peaked at over 400,000 employees. By 1993, they were posting enormous losses, threatening the company’s survival. Luckily for the people of IBM and their stockholders, Louis Gerstner came along and re-energized this great company. The reborn IBM continues to be a leader in patents, ideas, revenues, and profits.


I am sure we could go on at length debating this list, adding more thoughts on these companies, and seeking to discover what made them great in their best days. Not unlike remembering Rome or Constantinople in their most glorious days.

Do not take what I say to claim any of these companies was or is perfect. Any human enterprise has weaknesses and makes mistakes. Alfred Sloan said that you would be a hero if you were right 51% of the time. Any organization of size is going to have a few crooked employees and some unhappy ones. And most, if not all, technologies have in one way or another a dark side. None of this detracts from the achievements of these great companies.

What did they have in common?

Each was highly regarded among business people worldwide at its peak. Each was an ambitious company, without modest goals. They were highly creative. Each created enormous numbers of jobs. But they also created things that worked, that served a purpose, that were often beautiful, and whose vestiges, descendants, and visual impact remain with us today. Many of our parents and grandparents spent their lifetimes working and socializing at such companies. Taking employees together with customers and suppliers, millions of people’s lives were affected by their actions and innovations.

Each of these companies in its best days followed a consistent vision crafted by outstanding leaders. They understood what mattered, what the purpose and priorities of the company were. These companies were all about will and imagination, not the management fad or financing method of the day.

In future newsletters, I will continue musing about greatness in enterprise. I would love to get your thoughts on what makes a great company, and which companies past and present are the greatest. Comment on this newsletter below!

Gary Hoover
Executive Director
American Business History Center

Please add your thoughts and comments here on LinkedIn.

To learn more

There is an enormous amount written, in print and online, about each of these companies, their products, and their industries. If you can only get one book on each company, here are my choices:

This article first appeared on January 16, 2015 on Hooversworld.com.

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