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Transcript: "Gamblers"

Narrator: In 1959, a hard-driving toy executive named Ruth Handler poured her vision into an 11-inch piece of plastic. Barbie was unlike any doll ever created. Many had predicted Handler's brainchild would be a flop. But Barbie became the most popular toy in history - and a symbol of America across the world.

Miriam Forman-Brunell, Historian: She represents the ideology of America, this idea about the American dream: this is what we do. This is what we offer. We do it better than anybody else. And if you want a piece of that, you know, this is the first step.

Narrator: In the years following World War II, a generation of innovators pushed the image of America and its ingenuity onto the world stage. One of them opened the skies to ordinary people, shrinking the globe with his pioneering airline. Another bet his company to make a revolutionary computer that, in one giant leap, brought the world squarely into the information age.

Harold Evans, Author "They Made America": None of those things existed. They weren't even in the imaginations of people. These three innovators didn't ask what people wanted. They wanted to explore the frontiers of the possible. They changed the way we play, changed the way we think, changed the way we travel. Not only do they change the way Americans do these things; they change the whole world.

Narrator: You may not know their stories, but they made America

TOY FAIR ANNOUNCER: "Things are really spinning at the Toy Fair in New York. A little girl goes for a great big whirl in a tumble tub. One of the hits of the exhibit featuring the latest in fun and games for the small fry. This is revolutionary."

Narrator: In the winter of 1959, Ruth Handler, the vice-president of Mattel, arrived at the New York Toy Fair, bursting with excitement. Handler had founded the company with her husband Elliot. But this was the first time the idea for a new toy had been entirely hers. Her creation was a curvaceous doll, named Barbie after her daughter Barbara. But Barbie was a big flop with the adult buyers for toy stores.

Sid Kahn, Retired Mattel advertising agency executive vice-president: Nobody had ever had an adult toy for children. And it just didn't seem right. The whole concept of the long legs, the breasts, the beautiful looking girl. That wasn't- That wasn't a doll for children to play with.

Narrator: Handler hoped to make one million Barbie Dolls. Now, chain stores like Sears were telling her a doll that shapely would never grace their display windows.

FORMAN-BRUNELL: She feels actually quite shaken when the doll is rejected. You know, in fact she refers to it as "My baby was rejected,"

Narrator: Handler went back to her hotel room and burst into tears. Growing up, Ruth Handler didn't play with dolls. The youngest child of Jewish immigrants from Poland, she helped support herself from the age of 10, working as a soda jerk in Denver.

FORMAN-BRUNELL: She was an extraordinarily resourceful person - not as well educated as-as (you know) as she could have been, but extraordinarily bright. She was very determined not to be dependent but to be independent. She was the subject, you know, of her own life.

Narrator: At 19, she moved to L.A., where she married a young design student, named Elliot Handler. The couple struggled to make ends meet, after the birth of their two children, Barbara and Ken. To brighten up their modest apartment, Elliot had been making Plexiglas knickknacks. Suddenly, Ruth had an idea.

EVANS: She sees that her husband has design skills, and it's her inspiration to make a business of those design skills. He would never have made a business out of it at all. And I think the moment which I admire her for is: one day she takes along some of Elliot's knickknacks into a very snooty Los Angeles store, where the woman looks at her with great disdain. but Ruth Handler persists and finally sees the owner. And she makes her first sale. This is the most exciting moment in her life.

Narrator: "I found that I loved the challenge of selling," she would recall. "Adrenaline surged through me whenever I walked into a store with samples and walked out with an order." Soon, the Handlers were receiving large orders for picture frames, then dollhouse furniture and other toys. By the late 1940s, the Handlers were running a dynamic toy company, Mattel, with Elliot as the president and Ruth as the vice-president. Music toys, like the Uke-a-doodle, the Jack in the box, and the baby grand piano, established the company as an original new force in the industry. But in the mid-1950s, toys were still being bought and sold the old-fashioned way.

KAHN: Normally if you wanted to buy a toy, you went to your toy store, and you said to the clerk, "I'm looking for something for a bright 3-year-old, 6-year-old, boy, girl, whatever, but always-always bright, of course. And the toy dealer was the expert. He was the one that reached to the shelf and said, "This is what you want to buy."

Narrator: Toys were marketed to grown-ups, through ads in newspapers and magazines.

KAHN: There was Life. There was Look. Still the Saturday Evening Post. I mean, this was- this was where the bulk circulations were. And advertising went into those media.

Narrator: In 1955, Ruth Handler and Mattel changed that forever.

Mickey Mouse Club Mouseketeers singing: M-I-C-K...

EVANS: She had this instinct that if she advertised on television through the Mickey Mouse Club, she would reach children direct, and they would no longer be dependent on their parents.

ANNOUNCER: "See ya real soon!"

Narrator: Handler committed to sponsoring the new program for a full twelve months. The price tag was half a million dollars, almost the entire value of Mattel.

KAHN: That was a hefty expenditure. It was something that in your wildest imagination you didn't think you could ever afford.

Narrator: The new Mattel ads for a toy gun started airing in October.

AD ANNOUNCER: "He's off again, hunting tigers in India. But don't worry..."

EVANS: It worked. It worked because it enabled children to say what they wanted when they saw it on television. Now, many a parent groaned when "Mommy, I want this!" But nonetheless it was a great coup. It was really Ruth Handler's great distinction, that she went straight to the child and empowered the child. It's a kind of consumer democracy. By Christmas, there were only two Burp Guns left in the factory. They were both broken.

Narrator: After the burp gun success, Ruth wanted to create something for girls, something her daughter would play with, like a doll.

FORMAN-BRUNELL: The kinds of dolls that were readily available, and that were being mass-produced domestically, were largely baby dolls- the emphasis was on maternity and domesticity.

AD ANNOUNCER: "Aww, is something wrong? No! Like all little babies, Betsy Wetsy just wants to be changed."

KAHN: They were playing mother, basically. And that's, I think, pretty much what the doll market was.

Narrator: Through her daughter, Handler sensed that girls' desires were changing with the culture around them. "Little girls dream of being curvaceous, dreamy, exciting," she said. "They want - some day - to have gorgeous clothes, be chic and look like movie stars." Little girls wanted more than to be mothers, Ruth realized. They wanted to be big girls. In Switzerland on a family vacation, Ruth found just what she was looking for. In a shop window, she spied a doll named Lilli.

KAHN: Lilli was anything but a nice lady, girl. Lilli had the short skirts and rather large breasts, and it was really a doll for men.

FORMAN-BRUNELL: The Lilli doll was really a kind of sex toy. It was a doll that had been based on a cartoonish character of a kind of saucy, coquettish woman It was a doll that men put in their cars. They carried it around. They fondled it. Ruth sees this thing and she figures, "Okay, now what can I do? How can I tweak it?"

Narrator: Back home, Handler tried to convince the men at Mattel that they could turn Lilli into a doll for little girls.

KAHN: When Ruth and Elliot came into the office and had this doll wrapped // in a paper sack or something... I took a look and I said, "You must be joking," because where do you think you're going to go with this."

Narrator: But it was hard to say no to Ruth Handler. A chain-smoker, she peppered her language with swearwords and could hold her own with any man at Mattel. "I think that the squeamishness of those designers - every last one of them male - stemmed mostly from the fact that the doll would have breasts," Ruth would write. "Even Elliot feared that no mother would buy her daughter a doll with a chest."

KAHN: If you wanted to find Ruth at certain times, there was one little town, a suburb of Los Angeles, called Gardena, where poker parlors were legal. And you would see Ruth at those poker tables. She was a gambler and (you know) this was her thing, and I would not want to sit down at a poker table with Ruth Handler, because I think she probably would beat everybody there. She was phenomenal character, really.

Narrator: Ruth convinced her husband Elliot to take on the new project, and pushed Mattel's R&D Department to design the doll she wanted.

KAHN: I bet you Mattel had at least 200 people in their R&D department. No toy company spent money on R&D. This was ,you know, the aircraft industry, military, whatever. But it was- It-it was just an unusual thing to even have that department.

Narrator: Handler wanted the doll to keep Lilli's pronounced curves and impossible anatomy - but be made out of a softer, more skin-like plastic, and have hair that would be sturdy, yet realistic. She worked with a fashion designer to create the doll's minuscule outfits. Since she wanted as many girls as possible to identify with the doll, she insisted that the face be pretty - but not exotic. By the winter of 1959, Barbie was ready for her closeup. When toy buyers at the New York Toy Fair rejected her new doll, Ruth was devastated. But four years after the Mickey Mouse Club ads, Handler knew who her real customers were.

KAHN: The big concern of course was: Were we going to be able to sell any? If it had been up to the mothers, they never would have. So we had to do what we knew we were going to do anyhow, and that was go on television, get to the kids.

FEMALE ANNOUNCER: (sings) "Barbie's small and so petite, her clothes and figure look so neat. Her dancing outfit rings a bell, at parties she will cast a spell. Purses, hats, and gloves galore, all the gadgets gals adore"

MALE ANNOUNCER: Barbie dressed for swim and fun is only $3...

Narrator: Mattel's commercials started airing just weeks after the Toy Fair.

KAHN: They were fairly primitive. But they got the message across. Barbie's a teenage fashion model, and you're going to play with Barbie and have fun changing her costumes and (you know) doing this and doing that.

FORMAN-BRUNELL: They generated enthusiasm and excitement among girls. Kind of, "Look, girls! Look what we have for you!"

ANNOUNCER: "What is it about Barbie that makes her so much fun?

FORMAN-BRUNELL: And then to stimulate desire in girls, but then also to stimulate anxieties.

ANNOUNCER: "If you had Mattel's Barbie and some of her new outfits, just think of the fun you could have together"

FORMAN-BRUNELL: This idea that, you know, if you don't have these things, you know, your life somehow is going to be empty and meaningless.

Narrator: With Barbie's endless wardrobe and accessories little girls could fantasize about being fashion models or airline stewardesses - and, later, doctors or astronauts.

ANNOUNCER: (sings) Like a little pink skirt, a light blue sweater, add a pair of shoes, what could be better?

Narrator: The doll sold for only $3. The profit - and the excitement - lay in the clothes and accessories. Barbie was a shopper - and so were her millions of fans.

FEMALE ANNOUNCER : (sings)Barbie, beautiful Barbie. I'll make believe that I am you.

Narrator: Barbie's exaggerated figure was an instant hit with its new owners - although the doll's impact on girls' body image would be debated for decades.

FORMAN-BRUNELL: How do you measure up to this ideal? I felt that my legs weren't as good as Barbie's, and there's nothing I could do to make my legs look like that. She is saddled with that kind of, you know, responses that people have to-to you when you're perfect, right?

Narrator: Within a year Ruth Handler's doll was getting 10,000 fan letters a week. It took Mattel three years to catch up with the demand. Barbie became the most popular toy ever created.

EVANS: The success of the Barbie doll is the fact that it's not a static toy. It has a dynamic relationship with the young woman who's playing with it. It has infinite possibilities And this versatility, this endless appeal, is very similar to many engineering innovations.

FORMAN-BRUNELL: There's something about her She's like a screen, and people can project onto her, their various feelings, their various identifications. And she's brilliant in that sense, And it-it helps to perpetuate her from generation to generation, from one nation to another nation.

Narrator: By the mid-1960s, Barbie was on her way to becoming a global icon. In 1963 Mattel started marketing the doll in South Africa, Italy, Mexico and Germany, then in Latin America and throughout Asia. Ruth Handler's creation became one of the most immediate and powerful symbols of America across the world.Barbie dolls are now sold in 150 countries at a rate of two dolls per second.

KAHN: There's-there's got to be a universality there, I- that escapes me. I have no idea. If anybody had said to me then, "you know, forty years from now you're going to still be talking about this", I would have said you're out of your mind.

JUAN TRIPPE

Narrator: In the summer of 1955, Juan Trippe, the president of Pan American Airways, paid a visit to engine manufacturer Pratt & Whitney.Roaring deafeningly across the glass from an insulated control room was the most powerful jet engine in the world.The J-75 was being tested for the military, but it was far from ready. Juan Trippe wanted it "now", so that Pan Am could be the first airline to fly across the Atlantic non-stop.

EVANS: Juan Trippe never met an aircraft engine he thought was big enough. He was always way ahead of the manufacturers insisting on bigger and bigger and bigger engines all the time, because he wanted to carry more and more people. And if he carried more and more people, he could carry them more cheaply.

Narrator: When Trippe tried to place an order for the J-75, he was told to wait: the engine needed at least another two years of development. But waiting had never been an option for Trippe.

Ed Trippe, Son of Juan Trippe: Dad was one of the most persuasive individuals I've ever run across. He always used to say, "Well, if I can't win the argument through the front door, there's always the back door, the side door, the cellar door."

Narrator: In his determination to build a plane no one else thought possible, Juan Trippe would shrink the world. Trippe's obsession with flying machines began as a ten year old, when he saw Wilbur Wright flying around the Statue of Liberty. The son of a Wall Street investment banker, Trippe went on to study business at Yale. But it was the adventure of flying that he craved.Soon after graduating, he and a few of his classmates bought seven old Navy planes to start a beach taxi service on Long Island.

TRIPPE: Aviation in the twenties was really barnstorming. It was risky, it was exciting. It was still pioneering in the sense that people didn't fly over the- over the- over the ocean. They crashed a lot.

Robert Gandt, Author: Juan Trippe was a member of a generation who had flown in World War I, became smitten with the glamour of aviation. And he also had this great entrepreneurial spirit, so that he and people like him thought they could make a living in aviation, they thought there was a future there. Now mind you, no one was sure of this. There was no such thing as an airline, and no one had yet made money at it.

Narrator: In 1927, after intensive lobbying in Congress, Trippe won a government contract to carry mail by air to Cuba. It was the first U.S. international airmail service. In a remarkably short time, his small airline, Pan American, had a monopoly flying letters, packages and wealthy passengers to the Caribbean and Latin America. But Trippe had a grander vision. No one had found a way to fly passengers across the 10,000-mile Pacific Ocean, and thirteen aviators had died trying to cross the vast expanse. But caution was not part of Trippe's vocabulary. He obsessively pored through 19th century ships logs until he found a tiny speck of land, Wake Island, where his planes could stop and refuel.Then he pushed his pilots to survey the risky trans-pacific route.

EVANS: He'd always found that if he- if he demanded things, if he forced engineers, radio manufacturers, pilots, to do the impossible, they would do it. His personality was uh, arrogant, selfish if you like, as well as being visionary. And what he- In a sense, he must have been asking himself, "What have I got to lose?"

Narrator: In 1935, Trippe stunned the airline world by announcing a new trans-pacific service. To fly it he introduced a line of planes called the Clippers. Even though flying the Clipper was an expensive luxury, it was often grueling.

GANDT: The experience of crossing the ocean by airplane was unpleasant for a lot of reasons, mainly the time one spent. Plus, the airplanes were forced to fly usually in the weather which often put them right in the tops of these horrendous cloud formations.

Narrator: As uncomfortable as it could be, many Americans wanted to travel overseas. World War II had created a whole new interest in the world beyond America's borders. Trippe realized that with bigger planes he could make international travel affordable for ordinary people.

GANDT: It's clear now that Trippe was already thinking about jets, even while he was still flying flying boats. He wanted it before anybody else, at least American carrier, could have it. Nobody was going to steal a march on Juan Trippe.

Narrator: It was Trippe's instinct that brought him to Pratt & Whitney in search of the engine at the center of it all. A plane fitted with the J-75, Trippe believed, could fly twice as fast as propeller planes and carry twice as many passengers. When Pratt & Whitney kept refusing to sell him the untested J-75, Trippe used psychological warfare. He let it be known that he was in talks with Rolls Royce, a British competitor, about a similar engine. Pratt & Whitney gave in, and agreed to speed up the development of the J-75. Trippe bought $40 million dollars worth of engines. But still, he had no planes to put them in. Most airline executives thought the jet was more trouble than it was worth. It was noisy, it guzzled fuel - and its cost seemed prohibitive.

GANDT: The airlines and the money handlers of most of the airlines were afraid of jets. And certainly the builders were afraid of jets, because this was such a giant gamble for which there might not be a return. Just a few years before, three British passenger jets had crashed, killing everybody on board.

ANNOUNCER: "The pieces of the plane were taken back to Britain and slowly reconstructed. The water tank test finally caused a failure in the fuselage. A point of high stress at the corner of an escape hatch failed, and rest developed. This, the experts say, is a result of metal fatigue."

Narrator: Trippe was undeterred. He knew that aircraft manufacturer Boeing was making progress on solving the metal fatigue problem, but for a smaller short-range plane.

ANNOUNCER: "In a year of hydro-fatigue testing, the pressurized cabin of the jet transport has undergone 50,000 flight cycles."

Narrator Trippe wanted to put his engine on a much bigger plane than Boeing had built - a plane that could carry two hundred people across the Atlantic non-stop.

EVANS: People have an impression: The aircraft were made, and airlines bought them and flew them. Not at all. What happened with Trippe was, he would say to a manufacturer "I want you to build a plane this big, which will carry this many people. To carry that many people, you need this size of engine."

Narrator: Boeing president William Allen knew that yielding to Trippe's demands meant he would have to completely redesign Boeing's plane around an engine that hadn't even been tested.

GANDT: Time and time again, Trippe had been told that something was technologically too ambitious. This step was not available. He'd have to take a baby step in between. And Trippe, who wasn't even particularly technologically inclined, would simply say, "Yes, but I want it to happen." He wanted this jet to be bigger and longer. He wanted this engine to be bigger and more powerful. And when told that this was not technologically feasible, it just went right past him.

Narrator: Once again, Trippe pitted one competitor against another. He secretly went to Boeing's rival, Douglas Aircraft, and talked them into building the larger jet. But Douglas had to start their plane from scratch - and Trippe was in a hurry. He pushed Douglas to move quickly - then, went back to Boeing.

TRIPPE: Dad was convinced that Boeing would have to, at the end of the day, compromise further and build the larger 707. He knew he had both of them.

Narrator: In October of 1955, Juan Trippe hosted a cocktail party for executives of the airline industry.

GANDT: Trippe chose to announce that he had, oh by the way, just ordered 45 jet airliners. Within seconds, everybody realized they had just been dragged kicking and screaming by Juan Trippe into the jet age.

EVANS: He drops the news that he's bought these 707's, which means they with their turbo props, they with their elitist idea of air travel, are all going to be put out of business. So they all flock to Boeing and Douglas to buy these large jets. So Trippe has started a revolution. He's imposed his will on the entire industry.

Narrator: In October of 1958 just three years later, a crowd of 12,000 gathered to witness first lady Mamie Eisenhower christen the 707.

GANDT: To the traveling public, particularly Americans, this was a huge leap and experience. Everything about it was different. And-and the passengers gushed about this-the press was on board this flight also, of course-gushed about how smooth it was, how quiet it was, how comfortable it was. this distant whine of the engines, as opposed to this dull throbbing roar of the propeller engines. And of course- of course the speed of the thing was astonishing. There was one woman on board who bought a ticket simply to go to lunch in Paris and then take the return flight.

ANNOUNCER: "Near sonic speed but inside one of the most stunning discoveries, there is no feeling of movement at all, no vibrations, hardly any sound. A new concept in air transportation. The travail has been taken out of travel."

Narrator: By pushing others to build the biggest and fastest plane ever, Trippe had introduced international air travel for a whole new market at affordable prices. In the first five years of the Jet Age, overseas traffic doubled and Pan Am's revenues swelled. But the impact of the 707 reached far beyond America's borders.

TRIPPE: He knew that it was going to catapult American aviation into the lead, and they weren't going to give it up.

GANDT: Almost from the minute Trippe announced his acquisition of this fleet of jets, the rest of the world suddenly scrambled to catch up. As soon as he did this, it meant that every-every country, including Third World countries, if they wanted to show their flag anywhere, they had to do it with their own national airline. And they had to have jets.

Narrator: Pan Am's fleet of 707s would become a symbol of the United States' new role as a global power in the postwar years. By the mid-1960s, the skies were crowded with 707s. But that wasn't enough for Trippe. In 1968, he launched a plane twice as big: the 400-seat 747. That same year, Trippe retired from Pan Am. Though the company he had founded would eventually falter, Juan Trippe had, more than anybody, pushed the industry into the jet age.

EVANS: The world opened up when the 707 came. I mean, at this very moment, probably half a million people are in the air in a Boeing plane, thanks to Trippe, at this very moment. Maybe more.

THOMAS WATSON

Peter Petre, Senior editor at large, "Fortune Magazine", co-author "Father Son and Company": It was the 1952 election.

MAN: Uh, Have you got a national uh prediction from Univac? Yes, we've got...

PETRE: Stevenson was running against Eisenhower for the first time. And CBS went on the air, and they had a miracle electronic brain to help them predict the election results.

COLLINGWOOD: UNIVAC, can you tell us what your prediction is now, on the basis of the returns that we've had so far?

Kevin Maney, Author, "The Maverick and His Machine: Thomas Watson Sr. and the Making of IBM": Very early on, the UNIVAC predicts a landslide victory for Eisenhower, As it turns out that the UNIVAC is correct, the public saw a computer do something magical. And all of a sudden the UNIVAC becomes this household name.

Narrator: For one household watching that night, though, the word UNIVAC spelled disaster. Thomas Watson Sr., the founder and chairman of IBM, and his son and heir apparent, Tom Watson Jr., had just seen a competitor cut the ground from under them. Over forty years, Senior had built IBM into the leading business machine company in the country. His son Tom had tried to coax his father away from mechanical punch-card tabulators and into the new world of electronics. But in 1952, IBM's first fully electronic computer wasn't ready yet.

EVANS: It's a total humiliation for Tom Watson to see that UNIVAC has totally left them in the dirt. And I think from that moment, my guess is that easy defeat is what impelled him to take the most enormous chances.

Narrator: Tom Watson never forgot that night. He vowed he would not be one-upped again - but in his search for the computer to beat all computers, he would almost destroy the legendary company his father had built. The very idea of working at IBM had made Tom miserable from an early age. Growing up in the shadow of the legendary president of IBM was traumatic.

MANEY: Men had his picture in their office. They sang songs about him. And one of the things that really affected Tom Watson, Jr., a lot as a child was this sense that his father was somebody so large and so big that ,you know, maybe he could never live up to what his father wanted him to be.

Narrator: When he was 13, his father paraded Tom before a sales conference - father and son dressed identically. He did poorly in school, and was caught stealing. As a teenager, he began to suffer from depression.

MANEY: These bouts of depression just haunted the- him as a child, as a teenager, and even into his adult life.

Narrator: His father's pressure was relentless.

PETRE: When it came time for college, his father, took Tom's record to the dean at Princeton. He said, "Mr. Watson, I'm sorry but I have to tell you, your son is a predestined failure."

Narrator: After graduating from Brown, Watson Jr. - exactly as planned - joined IBM as a sales trainee.

YOUNG WATSON: I have known Mr. Watson for 24 years as a father and three months as a business superior (laughter)...

Narrator: His father saw to it that he got plum sales contracts. Tom felt demeaned by the special treatment. When the U.S. entered World War II, Watson joined the Army as a transport pilot. Flying risky missions gave him what his privileged life had not: a chance to prove himself.

PETRE: The Tom Watson who came back to IBM after the war was a very, very different and much more self-confident man than the- than the confused late-adolescent kid that went to war.

Narrator: He was 32 and prematurely grey - but now at last he was eager to be an IBM man. In 1952, Watson Sr. made him president of the company.

WATSON JR.: I wish it were possible for me to speak personally to each one of you in IBM this morning...

Narrator: But as chairman, the elder Watson kept challenging his son - second-guessing and undercutting his every decision.

EVANS: Tom Watson wanted to embrace the future and he was frightened that his father was clinging to the past too much.

Narrator: When the future outdistanced both Watsons on election night, 1952, Senior finally let his son go into electronics in a big way. But before Junior could make his mark, his father died.

PETRE: There's a photo of Tom Watson that was taken 3 or 4 days after his father died. Now he's the leader of IBM. He's sitting in front of some circuitry and-and he's devastated. You can just feel the weight of what's just happened, and how exposed he feels now.

Narrator: "Fear of failure became the most powerful force in my life." Watson would write. "There was such a long way to fall." With almost manic energy, Watson threw himself into building more and more advanced computers.

EVANS: He's not only fighting fear. He's imposing extra fear on himself all the time. And he's imposing this extra fear all the time because he's trying to say to his father, in a sense, "I was right, I was right. See?" So fear was a tremendous impetus for innovation.

Narrator: Under Watson Jr., IBM took advantage of Cold War funding to pioneer a sophisticated air defense network for the military. IBM also developed the first computerized airline reservations system.

MANEY: Computers allowed Tom Watson, Jr., to be his own man. . He could now be the person who was about electronics, who was going to remake the company. It gave him an identity.

Narrator: By 1960, Watson had tripled IBM's revenues, turning it into the dominant force in the industry.Still, Watson was restless.

PETRE: He's fantastically successful. He's one of the great leaders of American business. And yet here's a man that even though he had 70% of the market, was ultra-sensitive to the- to the single loss of a single customer.

Narrator: Determined to wipe out the competition, Watson decided to build a revolutionary computer system. At the time, computers were programmed to perform one specific task, like doing a company's payroll and billing, or calculating the path of an earth satellite.

Atsushi Akera, Historian: IBM has something on the order of nine different major computers, each with different software, so that they can't work with each other. You know, they're hearing tremendous complaints from their own customers, saying, "You know, I'd love to move up to the next computer, but to do that I have to rewrite all of my- my programs." And this becomes unacceptable IBM's always prided itself in its idea that it sells a solution, not a problem. And here it was with these nine different computers doing different things.

Narrator: In the fall of 1961, Watson and his second-in-command locked thirteen of IBM's top staff in a motel in Connecticut and told them not to come out until they had found a way to satisfy every need of every IBM customer with one family of computers.

MANEY: There was - a lot of battles inside of IBM. And they literally ended up staying at this hotel for almost a month, before they emerged with this huge document that ended up becoming the blueprint for this System/360.

Narrator: With the flexible 360, IBM's customers would now be able to perform many different tasks using variations of the same hardware and software - and upgrade to more powerful models as their needs changed.

EVANS: So you could use the 360 to work out your payroll and hourly rates and taxation; then you could change it to digitize electrocardiogram results for transmission. Or you could use the 360 to control a nuclear power station.

Narrator: Named for the 360 degrees in a circle, the new computer would be all things to all customers for all time. Watson was excited about the new blueprints. But he soon found out that the 360 was going to be a wildly expensive project. To build it, Watson would have to hire tens of thousands of new employees and open several new plants. He would also have to make all other IBM computers obsolete and gamble the future of the company on a single new product.

MANEY: It was a- literally a "bet the company" decision. And Tom Watson, Jr., acknowledges being scared. He would wonder if he was going to bring down this entire enterprise that his father had spent his whole life building.

Narrator: Worried that others might catch up with IBM, Watson announced his new 360 in April of 1964, before it was anywhere near ready.

PETRE: Lots of things started to go wrong. What actually happened was that IBM sales force turned out to be so good at selling it that they were swamped with orders. But, on the engineering and production side, they were running into problems. Probably the most profound and interesting problem was no one had ever tried to program a whole line of compatible equipment like that before, and they really didn't know what they were getting into.

AKERA: This was still a time when computer programmers were just beginning to discover that you have things called bugs, that make programs problematic. And that the cost of the software effort, you know, maybe it was initially estimated at $50 million, it begins to skyrocket, you know, it reached $200 million. It keeps growing. And it starts, most importantly, to delay the product delivery schedules.

Narrator: For the first time in its history, IBM was running out of money. Nine years after his father's death, Tom Watson Jr. had driven IBM to the brink of collapse. By the fall of 1965, "everything looked black, black, black," Watson recalled. At home, he often lost his temper and struggled with the depression that had plagued him as a teenager. He was so desperate he fired the head of production - his own brother. Soon, though, Watson's relentless drive began to pay off.

MANEY: He basically went out and planted a stake in the ground, and said, "This is where we have to be. I know we have the greatest technologists in the world. You guys get there."

Narrator: After the equivalent of 5,000 man-years of work and billions of dollars, they finally did. When it came together, the new System 360 was an immediate success.

MANEY: All of these companies that had never before wanted to buy a computer finally felt comfortable with: "I can buy a computer I can use now, and I can upgrade and build on it as time goes on." And this starts that whole process of the computerization of America.

AKERA: The System-360 really does define for many people what a computer is it helps to sort of domesticate the computer. It takes it from this object that's in the scientist's or the engineer's laboratory, and instead makes it something that is comfortable within a business setting.

Narrator: By 1970, the number of IBM computers installed across the U.S. had tripled to almost 35,000. Across the world, three quarters of all mainframe computers were IBM's.

AKERA: Today we're used to a computer lasting only a year and a half or two years. This is a basic design of the computer that sustained IBM's business and growth for a period of 30 years.

Narrator: Thomas Watson had bet the company on a machine that his father could never have imagined - and made IBM synonymous with computers across the world. Like Watson, Ruth Handler and Juan Trippe found in the seemingly limitless possibilities of postwar America the opportunity to create innovations we now take for granted.

EVANS: People sometimes think of the fifties as being kind of staid before the excitement of the sixties. In fact, the fifties were bursting out all over. These three innovators were bursting with their own talents. And they change the way we work they change the way we play, they change the way we travel. Not only do they change the way Americans do these things; they change the whole world.

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