PROCTER & GAMBLE
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Procter & Gamble
The following is an excerpt from the book Ideas that
Became Big Business by Clinton Woods. Published by Founders,
Inc. Baltimore, MD, 1959, 414 pages.
Buy this book:
Became Big Business
The Procter & Gamble Story
The far-sighted policies of the founding
partners live today in a business over 120 years old. Their
pattern was one of durable values: fair dealing with
employees, with the trade, and with consumers; a drive
toward greater usefulness as a business institution.
"In Cincinnati, Queen City of the West, in the year
1837 two men, young and married to the daughters of a
chandler, went in a business as partners at the suggestion
of their father-in-law. William Procter was a candlemaker;
James Gamble, a soap boiler.
Each partner brought $3596.47 into the formation of Procter
& Gamble, plus ambition and courage. Mr. Gamble and a single
helper handled production, while Mr. Procter attended to the
buying of raw materials, to sales and deliveries and the
bookkeeping. A wheelbarrow could handle the day's output at
Volume increased as population soared; new types of soap
were tried out and sold. By 1859, the factory had 80
employees, and annual sales totaled $1 million. Mr. Procter
had five sons, James Gamble four, but only those who showed
an aptitude were taken into the business. Cautious in
admitting family members, the founding fathers were
gratified to have worthy backstops in their eldest sons,
William Alexander Procter and James Norris Gamble.
In 1878, experiments with a formula for a hard white soap
without expensive olive oil were capped by a stroke of luck.
The new mixture was poured into a blending machine.
Apparently a workman forgot to shut off the power when he
went to lunch. The result, a hard soap, floated! Customers
who received the accidental batch called for "more of that
floating soap." The company surmised that intensive whipping
had beat air into the mixture, and thereafter, the accident
was deliberately repeated. P&G found a catchy name, "Ivory".
By advertising Ivory extensively, P&G became committed to
brand name marketing, large-scale advertising, and mass
production of goods of uniform excellence.
In 1886 P&G built its Ivorydale (Cincinnati) plant, the
biggest in the industry. Many men came on the payroll who
regarded their jobs as only temporary and their interests
opposed to those of management. In a time of general labor
unrest across the nation a new point of view was developed
by William A. Procter's only son, William Cooper Procter.
Some of his ideas such as giving Saturday afternoon off
without wage loss seemed radical. But the innovation was
adopted in 1886. More fundamental was his plan for inducing
all hands to have a personal interest in the business by
joining in a common effort to earn and share profits. A plan
of profit sharing was announced in April, 1887--one of the
earliest such attempts in American industry--and the only
one of those pioneer plans that has endured to this day.
William Cooper Procter became president in 1907, and Procter
& Gamble was reflecting his restless energy. The chemical
laboratory first set up in a corner of the plant at
Ivorydale in 1887 to maintain quality standards was becoming
a source of new products. P&G was building regional plants
and had become a truly national manufacturing company. Also,
Procter & Gamble led in research to perfect a method for
making a liquid oil plastic and creamy through the use of
hydrogen. The result was Crisco--the first creamy-white,
digestible, all-vegetable shortening--introduced in 1911.
In these years William Cooper Procter studied an
industry-wide problem: speculative buying by wholesales
alternatively slowed or speeded production, causing
irregular employment for factory workers. Realizing that the
public brought soap and shortening at a fairly even rate the
year round, he reasoned that production (hence employment)
should be geared to consumption and not spasmodic wholesale
buying. To overhaul the entire mechanism of distribution,
Mr. Procter called upon his 32-year-old general sales
manager, Richard R. Deupree. Mr. Deupree had joined the
company as an office boy in 1905 and had advanced to his
high post in only twelve years. He realized that a
switch-over to direct selling to the retailer was involved.
It took the years 1920-23 to accomplish the change.
With direct selling a practicality, Mr. Procter was able to
announce in 1923 a guarantee of 48 weeks of work every year
to hourly-paid production employees, after a two year
probationary period. Employment had never before been
guaranteed by a major manufacturer.
Richard Deupree became president in 1930. In the depression
years, the guaranteed employment plan received its sternest
test and continued in full effect. Mr. Deupree made sure his
company leaped ahead of the industry with new synthetic
detergents. In 1933 he introduced these marvels of chemistry
to homemakers in the form of Dreft and liquid Drene Shampoo.
He also unchained Camay, a milled, perfumed toilet soap
introduced in 1926, from sentimental subordination to Ivory
and authorized free sway in advertising the merits of the
newcomer. Each soap must fight for itself and make its own
way in the market. To Neil McElroy, a young man in the
advertising department, went the job of helping to promote
the new brand. The upshot was, Camay won its place and good
old Ivory went right on floating along. From this came a new
idea in marketing: P&G brand promotion teams, each concerned
with the success of its own product; each competing against
similar company brands as vigorously as against competitor's
The postwar years marked the period of Procter & Gamble's
greatest growth to date. New and improved products were
introduced to meet consumer preferences. Moreover, synthetic
detergents provided a wedge for wider overseas operations.
Foreign subsidiaries including manufacturing plants were
In 1948 Neil McElry was elected president, while Richard
Deupree moved up to chairman of the board. In 1957, when Mr.
McElroy became Secretary of Defense, Howard J. Morgens
succeeded him as president.
Procter & Gamble history is a single thread and pattern
lasting well over a century, which is unusual in American
industry. The basic idea that has guided P&G from its
earliest days can be summed up thus: "Our organization has
maintained a healthy discontent with the present and a
confidence that new and better products are always possible,
that there are better ways to make and sell them, better
ways to solve every problem in the operation of our
By 1956 Procter & Gamble's policy of internal competition,
diversification of the business, ability to move quickly to
an objective, enlargement of post-war markets and suitable
increase in factories had brought annual sales to $1
billion. By 1957 the business was active in eight major
fields: soap products, food products, toilet goods, paper
products, cellulose and specialties, oil seeds crushing
overseas and liquid bleach. And all of it started with one
man on the payroll and a daily production that could be
carted in a wheelbarrow."